Web3 Divided Our Team — Here’s How We Talked It Out and Got Over It

Powder.gg
9 min readMay 25, 2022

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Born out of a Discord community of gamers, Powder was launched in April 2020. Back then, there was hardly any talk about blockchain, NFTs, and DAOs in games. Our goal was to unlock new ways for players to enjoy highlights of their favorite gameplay — thanks to the power of AI.

Today, blockchain is shaking the foundations of the gaming world. For players, the promise of web3 is huge — bringing real value to in-game assets. What better way forward for an industry where, of the $50B generated from in-game asset sales in 2020, players got zero?

We were intrigued too. Dipping our toes into web3, we created an NFT collection — Powder Heroes — and sold 1,111 game clip NFTs on Solana, enabling 13 creators playing three partner games (The Sandbox, Life Beyond, DNAxCAT) to receive €100K+ in less than a minute.

The drop was a success, which validated the strategic potential of web3 for Powder and marked the beginning of a new chapter for our company.

The chapter that kicked off with an internal backlash from our team.

To some extent, we saw it coming. We had heard of companies like Ubisoft facing internal resistance as they ventured into web3. Which makes sense — for all its potential benefits, web3 represents an entirely new, and often risky, terrain.

In our case, the team was divided. About 35% of the team was concerned and raised red flags: Is blockchain really the way to go for us? What will it add to our infrastructure? What can we do with the blockchain that we can’t do with existing technology? How risk-averse do we need to be? Is this the future we want to build?

As a response, in the spirit of openness that defines our culture at Powder, we organized a series of workshops, where every single teammate — that is 40+ people — got to bring up what excites and frightens them about web3 tech, business models, and new value propositions, such as P2E gaming.

As a result, we identified the 6 most common concerns that our team had about blockchain and NFTs, which turned out to be exactly the common questions and concerns that gamers and the market have too. What’s curious is that the aspects of web3 that our pro-blockchain teammates loved were the exact things that made skeptics nervous. Here are the conclusions we came to as we talked it out.

1. The blockchain is still immature

Actually, blockchain tech has been in development for more than 10 years already.

While it began as the basis of cryptocurrencies such as Bitcoin, it’s now spreading across a wave of industries as varied as gaming, fashion, and insurance, to name a few. Last year, funding to blockchain startups surged 713% YoY to reach $25.2B; with the global blockchain market predicted to grow to $56.7B — from $6.0B in 2021 — by 2026.

As the metaverse continues to gain commercial momentum, blockchain and NFTs are bound to become more prominent. In this context, the fear of being “too early” to the market doesn’t seem justified, particularly in industries like ours, where the first use cases of blockchain have been successfully validated.

The conclusion we came to was: being too early to the market is better than being too late. And given the lightening speed at which web3 is moving, those that wait too long risk becoming obsolete sooner than expected.

2. The blockchain is not fully decentralized

Indeed, it is not. Decentralization is a powerful philosophical (and marketing!) aspiration, of which the current tech infrastructure falls short.

In theory, a blockchain is a distributed database spread out among several network nodes at various locations. Its decentralized arrangement helps to maintain the fidelity of the data stored therein — if somebody tries to alter a record at one instance of the database, the other nodes would not be affected. Compared to a network reliant on a single actor, a decentralized system is beautifully immune to shocks: no one can either hijack, alter or ‘unplug’ it. It also enables more transparency, often praised in the context of decentralized financial transactions, which become immutable as a result.

In practice, a lot of blockchains today do not achieve the degree of decentralization needed to deliver on the security promise, with some nodes actually being hosted on a single server — and no authority to disincentivize such practices.

What we all agreed on was: despite the current limitations, web3 has given us some cool tools to play with already, unlocking more transparent and equitable ways to monetize and split ownership, as we did during the Powder Heroes drop.

In our view, the ‘semi-decentralized’ phase of web3 shouldn’t be blocking anyone from seizing the exciting commercial and creative opportunities that have emerged as a result of web3 innovation.

3. Gamers don’t like crypto, and adoption can be challenging

Gamers may not (yet) like crypto, but they still do like games. There’s no reason why web3 gaming should be an exception to that rule — we just have to overcome the stigma.

While the concept of in-game trading is not new at all, blockchain games have been struggling to receive popular support among the traditional gaming community. Onboarding to blockchain games is usually confusing and time-consuming, while the quality of gameplay of the web3 pioneers falls short of the AAA web2 blockbusters.

Traditional players — backed by equally skeptical gaming media — generally find it hard to trust web3 games, expecting to be robbed of their investment at the first opportunity. For many, the promise of web3 gaming feels too good to be true — and the games are just not that fun.

What we all agreed on was: web3 studios with non-predatory business models to back their games do exist and can truly make a difference — as long as, on top of the blockchain, they build a fun gaming experience. Studios aiming for mass adoption will need to prioritize the quality of their gameplay and become more accessible for traditional gamers through engaging marketing and gamified onboarding. More on that in our recent post “Game First, NFTs Second”.

4. Crypto pollutes

How polluting is blockchain really? The short answer is: it depends on the blockchain.

The Ethereum network, which is home to the majority of NFTs, has stirred quite some controversy in that sense. Until recently, it relied on the proof-of-work (PoW) model to confirm transactions on the blockchain, which is highly energy-hungry. According to Digiconomist, Ethereum’s annual energy consumption has been rising, with a single ETH transaction taking 236.26 kWh, which is equivalent to the power consumption of an average U.S. household over 7.98 days!

As a consequence, Etherium is currently switching to proof-of-stake (PoS) — a less polluting alternative, which will reduce its energy consumption by 99.95%, according to the Ethereum Foundation.

PoS was the reason we chose Solana. In contrast to Ethereum, a single Solana transaction takes just 0.00051 kWh, according to their in-house reports. Some blockchains seem to be even more green: minting an NFT on the Flow network reportedly takes less energy than a Google search!

Whatever the blockchain, carbon offsetting can make a big difference to the overall footprint of the industry. Last year, the Solana Foundation announced that their blockchain has achieved carbon neutrality for 2021 thanks to a process called ‘refrigerant destruction’.

What we know now is: the world of crypto is becoming more conscious of its footprint, and it’s down to each and every one of us to assume our share of responsibility by offsetting (or partnering with those that do).

5. Some gaming projects are scammy

They definitely can be. In web3 jargon, there’s even a special term for scams — ‘rug pull’ — when a team promotes a project through false and misleading claims and then disappears off the face of the earth with your crypto or NFTs. Since the surge of NFTs in 2021, some rug pulls, while not systemic, have resulted in pretty tragic losses for the communities.

For this reason, the web3 community encourages everyone to DYOR — that is, ‘do your own research’ — before investing in a new project.

Research is indeed key to being safe. At Powder, we benchmarked 40+ blockchain games and came up with a rubric to conduct in-house auditing of gaming projects we affiliate with.

Among the criteria we find most relevant for filtering out legit projects were:

  1. Nature of the game. The gameplay quality should be judged by the standards you’d apply to any other traditional game of the same genre: would it still be fun without NFTs?
  2. Business model. Solid in-game tokenomics is a must. Look out for business models that are prone to scaling, be it thanks to multiple revenue streams, UGC, and partnership potential.
  3. Team quality. Teams that are not public (aka “doxxed”) are a big red flag. Beyond that, it’s important for web3 studios to have core members with complementary expertise, including in gaming and economics.
  4. Financing. Where possible, it’s important to check the profile of institutions or private investors who have backed the project from the start.
  5. Roadmap. Projects that have a clear and regularly-updated roadmap are more trustworthy.
  6. Community. Great web3 projects are all about communities that tend to be vibrant on Discord and other social media, and often participate directly in the project’s governance.

To learn more about these, check out our latest article on HackerNoon on this very topic.

What we all agreed on what: to dismiss the entire NFT space because of a handful of scammers would be shortsighted. If we do our homework and develop the right analytical frameworks for auditing projects, we can almost certainly avoid falling into the traps set by scammers.

6. There is speculation around NFTs

That was particularly true for the first-generation NFT projects — but things are changing, with value now consolidating around utility.

Pioneering NFT projects that made it big have been created around generative “blue-chip” pfps collections, like CryptoPunks or the Bored Ape Yacht Club. Those came with impressive marketing campaigns, creating demand and attracting jaw-dropping levels of investment.

But speculation on works only as long as people still want to buy. Once the hype goes down, so does the potential for circulation.

And now the hype is going down. If we look at the graph below, NFTs are entering the descending part of the cycle. At the time of writing, the market is actually crashing — which according to experts is a perfect occasion to filter out empty projects and double down on the community ethos.

What became clear to us is: the current financial downturn is not the end of NFTs — it’s the beginning of a new, more meaningful chapter. The future of NFTs is in real utility, and only those who can deliver it will stay afloat in the long run.

Now, back to our internal backlash. What was the outcome?

To be fully transparent, not everyone at Powder is equally bullish about NFTs today. But thanks to the collective discussions, we did manage to air out fears and concerns, and destigmatize what possibilities working with web3 could open for gamers. The overall discourse has shifted from a black-and-white debate to a more nuanced and open perception, which leaves room for experiments and innovation around the next-generation tech.

For a lot of companies, web3 will be a game-changer. It represents a new way of doing business — of creating and monetizing, of sharing ownership, and of building and rewarding communities.

That said, companies need to be conscious of web3’s current shortcomings. It’s still a young infrastructure: it can be immature and unsafe if poorly implemented. It can consume energy. It can alienate existing communities. There is a cost associated with embracing it, and gamers don’t necessarily perceive it well.

The weight given to each of these concerns will depend on your objectives and execution capacity. The tech is relatively neutral — it’s the way we use it that matters. The fear of the unknown shouldn’t stop us from trying new things. Moving forward, education and open debate, like the kind we embraced in our workshops at Powder, will be key in determining which companies will succeed in the web3 transition — as well as in how the space will evolve as a result. After all, we’re all shaping web3 as we contribute to it.

💡 To learn more about Powder, visit our LinkedIn and website.

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