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In my previous article, we looked at the emergence of the metaverse, its roots and its implications for the way we live, work and play. In discussing the instantiation of social gaming as a metaversal phenomenon, we looked at Pokémon Go as a social expression and the positive economics, or lack thereof, behind it. 

Gaming, in particular online and subscription titles, had a negative carry to it. The pay-to-play model was analogous to a truck with one foot partially on the brakes and the other foot having to step harder on the accelerator to maintain speed. The energy in game development was centralised on the need to deliver an experience and not necessarily player competitiveness and betterment. The advent and popularisation of blockchain changed all that. 

Enter the metaverse of crypto-gaming.

From pay-to-play to play-to-earn

Crypto-gaming is a phenomenon borne out of positive economics and made possible by the Layer 1 (L1) infrastructure of blockchains that provide the machinery and the thoroughfare for application-based functions (or ‘smart contracts’) to be written on top – the so-called Layer 2 (L2). Layer 1 holds the highly generalizable storage and computation logic across a public ledger system while Layer 2 uses that ledger system to create programs for specific use cases thereby giving it purpose. The entire ecosystem, as applied to human socialisation, is an expression of the future of work and play – a true agent of the fourth industrial revolution! 

Necessity is the mother of innovation. Luca Pacioli authored the first book on double entry accounting in the 15th century as a system for error checking in the flow of commerce and goods, particularly across the great oceans between Europe and Asia at the time. This naturally gave rise to the limited liability corporation in the 17th century with the East India Company (London) and the Dutch East India Company being two of the most emblematic examples of profit-sharing from mercantile ventures. In both instances, the creation of systems and structures were motivated by the compelling positive economics of a nascent globalized trade network.

The forces that drove crypto gaming into existence are equally compelling and borne out of the network effects and economies of scale of social inclinations:

dApps: As discussed earlier, with the development of Layer 1 (L1) blockchains as fundamental building blocks, this paved the way for Layer 2 (L2) applications that offer more tangible utility. The monetization of gamers’ efforts in-game was an age-old problem and NFTs built on L2 networks became the natural release valve for those express desires.

Adoption: As is the case with any social network, the value of a protocol and its tokens is a function of its use. In the early days, protocol founders are keen to get their tokens into the hands of users. One apparent method was to allow gamers to earn these tokens by building tokenomics into in-game mechanics.

Market: The forces of willingness-to-play and willing-to-pay emerge from the natural tendencies of stakeholders. Gaming, even in its infancy, was never an individualistic affair as users shared stories and traded experiences offline. The internet merely provided a scalable outlet to bring out the social aspects of players’ tendencies. Now, it has become an entertainment Mecca infusing play with spectatorship, sponsorship and betting. Blockchain provided the backbone to democratise the distribution of rewards – fair pay for fair play.

These forces described have clearly manifested in the case of crypto gaming (or gameFi) as indicated by the growth in unique active wallets attributable to gaming where the rate of acceleration far outstripped that of other NFTs and DeFi applications. A wallet address is required to make deposits and withdrawals of credits earned through gaming. As a vanguard of the Fourth Industrial Revolution, gaming has cemented itself as a social and economic force to be reckoned with.

But does crypto gaming have staying power?

Reinventing the Bazaar

Non-Fungible Tokens (NFTs), for those who don’t already know, are programmable application-layer logic that run off the L1 blockchain. NFTs have tapped into the very fabric of art, culture, music and gaming – these forces are huge purveyors and enablers of adoption. As per the Australian Financial Review“People are speculating with assets that are fun. Speculators are everywhere, but they play a role in funding this new wave of innovation.” 

Within the subculture of gaming, NFTs represent a radical re-tooling of the most basic building blocks of micro-economic expression in gaming-as-a-service. It has: 

(1) made possible, and feasible the ability to earn passive income at scale and en masse and 

(2) created a vibrant marketplace for vast amounts of capital to flow into the tokens and assets that underpin the means of productive expression in gaming.

The employment of NFTs, according to Bitcoinist, encourages amateurs and hobbyists to become active blockchain participants and, in doing so, access previously landlocked gig-economy revenue streams “through engaging in a hobby likely already integrated into their daily routine”. But this business model offers more than just the attraction of play-to-earn. In 2020, there were 2.5 billion gamers on mobile platforms, 1.3 billion on PC and 800 million on consoles. Arguably, a substantial and growing proportion of these players will migrate over to crypto games over time. This is perhaps more true for developing nations where play-to-earn proceeds can make up a significant portion of one’s monthly income

The engagement rates, and ad revenue, that come with these types of mind-blowing numbers will open the door for an entire product ecology to grow from these gaming roots. And this is already happening in the eSports arena but also across the diaspora of community level events where funding has come pouring in in the form of guild sponsors, brand sponsorships, merchandise and betting markets. 

The market capitalization of metaverse tokens is a measure of their dominance among players as these tokens are the lifeblood of the economy within and around the game. For many months, Axie Infinity was the crown jewel of the gaming metaverse and remains in pole position to this day. Competition is fierce however and as shown by Axie’s persistent usage deceleration in recent times and the exponentially increasing popularity of its close competitors, the leadership board and the flow of capital between titles is in constant flux.

Still, play-to-earn gamers remain incentivized as a whole and the market continues to grow, with no sign of apoptosis, despite the rapid waxing and waning of individual titles. Volatility has yet to dissuade participation in crypto and gaming looks to be of no exception.


Every genre and subgenre in traditional gaming has seen a direct DNA clone instantiated in the crypto metaverse. And that shouldn’t come as a surprise – if something was fun and popular, it will remain fun and popular but with the added feature of participatory compensation. The following is a short summary of the various genres that are becoming popular across blockchain games.

World builder – Fans of Sim City and The Sims will be familiar with this playstyle. Resources are expended to purchase real estate and build physical environments within the game e.g. building structures, cities and other explorable spaces. Players can then charge visitors a patronage fee to explore their creation or even lease it out. In Sandbox, a Minecraft-inspired game, the SAND token is the unit of currency used to purchase, develop and improve in-game real estate.

Grand Real-Time Strategy (RTS) – In the crypto successor to MMORPG titles like Eve Online, players operate in an adversarial network where they must compete against other players for resources and/or influence. Gameplay is often immersive, collaborative and involves longer playthrough sessions. Star Atlas, a space-based combat strategy title, is one of the most ambitious and anticipated crypto game titles in development at the time of writing. Using the Solana blockchain for game logic, game mechanics are built around two tokens: (1) the ATLAS token as the in-game currency and (2) the POLIS governance token which is used beyond the game as a voting mechanism to influence its development path (see DAOs below).

First Person Shooters (FPS) – As the genre suggests, your character runs around a map with guns and the goal is to kill off the other players before they do it to you. The basic playstyle is usually survival, or last person standing, but team-based Capture the Flag (CtF) is also popular. War Field by Golder Games is very similar to Counterstrike: GO and uses the GLDR token as its base currency. Every kill earns the player GLDR which can then be used to purchase better equipment and training for enhanced lethality.

Turn-Based Arcade – Players take turns making their moves to try and best one another. Players have the opportunity to plan and strategize their moves, however, in Player-vs-Player settings these moves are almost always timed to maintain gameplay cadence and intensity. Illuvium, based on the popular Pokémon franchise and set for release in 2022, allows players to capture creatures (Illuvials) and train them for battle. Illuvium uses the Ethereum token as the game currency. Players earn ETH through battles won and Illuvials can be traded on an NFT marketplace powered by Immutable X, a Layer 2 protocol built on ETH’s Layer 1, to improve transaction efficiency. Governance, on the other hand, is powered by an in-house token ILV (see DAOs below).

Cards – Dungeons & Dragons basically. This is a cross genre between turn-based play and strategy. Players buy playing cards that possess special powers, characteristics and abilities. Each type of card has its strengths and weaknesses against other types of cards. Similar to Chess or Go, players have to be forward-looking and anticipate future moves by their opponents in order to decide the best order of play. Note that we use the term ‘card’ loosely to represent a particular gaming style. Guild of Guardians, for example, is a free-to-play mobile app that operates the game-as-a-’free to play and earn’-service. Players form teams (or guilds) and enter dungeons to fight and defeat monsters. Artefacts and equipment dropped by defeated enemies are used to craft valuable items which can be equipped or sold for CGG, the in-game currency.

Avoiding Animal Farm: fair representation for fair work through DAOs

DAO stands for Decentralized Autonomous Organization. It is another line of effort in the creation of the metaverse economy but an important one. Structurally and conceptually, it is analogous to the corporation but also much more featureful. The corporation is owned by shareholders where each common share entitles the holder the right to one vote and the right to any dividends declared for that class of shareholders. 

The DAO embodies the characteristics of ‘decentralized’ and ‘autonomous’ because it allows users anytime and anywhere to exert influence over the ecosystem and express their share of voice. This is achieved by virtue of requiring “a consensus to be reached by holders of governance tokens” in order to make changes to protocols. The programmability of DAOs make it easier to foster an online community around a shared mission – a community where participants are socially connected despite being geographically distanced. As CoinTelegraph reports, “governance of DAOs and their operations are written in smart contracts, consisting of automated if-then statements, making them transparent and auditable”. In these respects, the flexibility and access of voting in DAOs make them a superior structure relative to the corporation.

A DAO is owned and controlled by those that own its governance tokens. To have a say over the running of the business governed by the DAO, governance token holders will need to stake their tokens. These tokens give holders the right to influence the activities overseen by the DAO but do not bestow any direct economic benefits – these are represented by a different token. This is a point of distinction between holders of governance tokens in a DAO vs. holders of common shares in a company. Whenever you hear or read the words “governance token” you know the topic must be DAO-related. These structures represent innovations in politech and add a politically meritocratic dimension to the metaverse.

Every crypto game is instantiated with a DAO sitting above it as its governing body. The DAO governs the development of the game as well as the distribution of economic benefits to participants (tokenomics). Theoretically, the DAO helps create a player-owned system where the will of players (workers) as an ensemble can be expressed through its governance tokens. From Forbes: “Each governance token gives its owner the power to take part in the game’s development and internal fund allocation, with that power, of course, being proportional to the amount of tokens each user holds.” In practice, players can sell their governance tokens to a capital-rich participant who can accumulate enough votes to project their will on the majority. So a DAO is fair insofar as providing the opportunity for participatory representation…but DOES NOT GUARANTEE it. People can always choose to forfeit their share of voice and influence by selling their votes.

The endgame

We’ve come a long way. We finally have all the pieces we need to begin to understand the big picture of where crypto gaming, as a metaversal phenomenon, might take us – and what could be a logical steady state for the industry. For this whole thing to not be a Ponzi scheme, there has to be sustainable and justifiable positive economics stemming from the natural tendencies and inclinations of participants. If there is money to be made, it must be money made off of gamers’ willingness-to-play which means there must be a matching willing-to-pay out there somewhere that attributes value to said gamers’ efforts. Otherwise, we would simply be funneling capital from new entrants to incumbents and the house of cards collapses the moment we run out of bodies to throw at the network.

Before we embark on an analysis of the ecosystem and its sustainability, we first take stock of all the stakeholders in crypto gaming and what they bring to the table.

Gamers – The ‘workers’ whose willing-to-play efforts become the productionized units of labor powering the ecosystem. Incentive schemes to encourage this ‘production’ of effort can range from limited gain / limited loss through to unlimited gain / unlimited loss and any combination in between. The risk profile will scale with the format of competition but, suffice to say, the expected payoff ought to be positive to ensure that a sustainable ‘living wage’ yield can be earned from playing.

Developer / Publisher – The creators and distributors of the game, responsible for creating the game’s built environment and its rules engine as well as setting up its governance.

DAO – A highly programmable structure encoded with the rules and logic for popular representation in how the game operates and the manner in which rewards are distributed.

NFT Creator – The entities responsible for minting the smart contracts that provide exclusivity of ownership to game assets. NFT creators are, first and foremost, game developers but in certain instances the developer SDK may be made available to the community to allow decentralized creation of game assets under a creative commons license.

NFT Curator (Investor) – NFTs that encapsulate sought-after assets become extremely valuable to players that deploy these assets in the game and to rent-seeking collectors looking for yield and capital appreciation.

Sponsor / Trainer (Investor) – Entities that finance the training and equipping of players under a profit-sharing model. As most crypto gamers hail from capital poor developing nations, trainer sponsors play an essential role in injecting liquidity into the ecosystem at the operational and coalface level. More on this point below.

Speculators – Observers and spectators who make up the audience and betting markets around a game. Through their participation, they add a powerful and non-linear boost to the ecosystem’s network effect. 

Brand Sponsors – Individuals and corporations looking to market to an audience. Given the breadth and depth of the gaming community, brand sponsors will look to target professional as well as community level events.

In bringing it all together, we start to form an image of this ecosystem. The diagram above is a possible, but not necessarily definitive, topological representation of a game’s ecosystem with all pieces in place. It represents a practical endgame steady state founded on the realities of positive economics of organic human endeavor. This system can be sustained, and avoid becoming a runaway positive feedback loop, so long as:

The willing-to-play dynamic is founded on a sustainable play-to-earn model.


The willing-to-pay dynamic does not come from actors in their role as players but rather from actors in their role as investors, sponsors, speculators and spectators who are willing capital contributors to this ecosystem in a manner that fully funds the play-to-earn dynamic.

I need to point out that the ‘sponsor’ role within the guild ecosystem plays almost as important a role as the gamers. Many crypto game titles have taken off as a result of speculative long positions in the underlying game token. 

An increase in the value of these tokens also increases the value of NFTs which are denominated in these tokens. Hence, the upfront capital commitment required to start playing can become a significant barrier to entry – an almost guaranteed conclusion for gamers with lives entrenched in the third world. Guild operators help alleviate that pressure by fronting the capital that will train and secure the livelihoods of their guild members – in return for a share of their profits as specified under a DAO.

And this leads to the essential and functional operation of the DAO to ensure fair rules in reward distribution are consensually agreed upon to stave off disquiet. As discussed, reality can deviate from ideology here since participants can sell away their influence by myopically offloading their governance tokens. To that extent the DAO, and by extension the game ecosystem, is at the mercy of its constituents when it comes to efficient and equitable operation. Ultimately, history has shown repeatedly that the masses do not always act logically in accordance with their own best interests. And that’s part of the reason why we can’t have nice things.

From ‘Play-to-Earn’ to ‘Play-and-Earn’ and back

Although the play-to-earn model discussed has the potential to reach a sustainable steady state, I envision that, as the industry matures, the ecosystem will gravitate toward a center of mass between play-to-earn and play-and-earn models. This is important because the play-to-earn crowd are generally and mostly enticed by the financial reward from their participation whereas play-and-earn players are mostly in it for the gaming experience – the reward is more a convenient and opportunistic byproduct. 

The vast majority of play-to-earn crowd are from poorer developing economies where the proceeds from gaming can make up a significant proportion of their periodic income. They’re in it for the income and many of them will have to go through guild sponsors to access financing and training in order to get started. And given the fiercely adversarial domain of competitive gaming, the necessity of training is almost a foregone conclusion – especially for players who rely on peak performance to maintain their game-derived income. 

On that front, guild operators can be (and should be) a source of innovation within the gaming ecosystem. In financing players with upfront capital commitments, and curating an NFT vault, they become asset managers. And in training and managing player guilds they become human resource managers and allocators. 

The capital needed to acquire NFTs for play is only one barrier to entry. Another barrier, especially for gamers that hail from lower socioeconomic strata, are the delayed payment protocols embedded in most game DAOs. Players can often wait up to a fortnight or longer before their rewards and winnings become available. A player from the Philippines or Malaysia or Indonesia whose primary source of income is from gaming would not be able to stomach that kind of lag. To that extent, professional guild operators have the opportunity to develop actuarial models that provide players with the option to access certainty equivalent cashflows, in part or in whole, at the time of their need.

Further up the value chain are the less numerous but more coveted play-and-earn crowd where the business model is based more around providing an enjoyable and immersive gaming experience and where the financial rewards are more of a convenient byproduct of their participation. 

While play-to-earn business models require more effort and deliberation in their design and implementation, play-and-earn models are arguably less onerous since participation is more equitably distributed across two sources of motivation: entertainment and reward. 

In my view it is important, for the maturation of the crypto gaming subculture, to mitigate concentration and contagion risk by (1) creating incentives that attract a greater share of the play-and-earn crowd and (2) developing titles and gameplay that are attractive from a leisure and entertainment perspective. 

After all, it is primarily the latter (the ‘play’ aspect) that best aligns with one’s social tendencies. Income is a necessity while leisure and entertainment is a want. And since positive economics in this sector require connectivity and balance between the centers of willingness-to-pay and willingness-to-play, we need to ensure that there is sufficient nexus between entertainment value and humanity’s social needs to subsequently generate the capital inflows that sustain the livelihoods of players who rely on that income.

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There’s been a lot of hoo-ha around crypto-gaming as of late and as a resident pseudo-expert on all subjects crypto in my neck of the woods, I often get asked questions by family, friends and colleagues enquiring just what the fuss is all about. I have to say that, in the beginning, my response was more or less “I wish I knew”. I often wondered about crypto and blockchain-based games myself yet never ventured in that direction, not even remotely, despite being part of the target audience. You see, I grew up in the Golden Age of PC gaming. By the time I graduated high school, I and most friends I kept company with had each spent tens of thousands of dollars on game titles and PC upgrades. Yet, crypto-games and the metaverse never really took off for the vast majority of gamers in my demographic.

As CEO of Cypherpunk (CSE:HODL) and adviser to the Investment Committee, one of my responsibilities is to apply a first-principles approach toward dealflow analysis and provide framed recommendations. The past week has been clarifying to say the least – it’s amazing how a couple of days’ research into a subject matter can change a person’s entire perspective toward an industry.

Let me save you the hassle of repeating that journey and give you a rundown of what I, and many before me, have concluded is a literal game-changer without any intention for pun.


Humans as social beings love being social and we are constantly reinventing ways to better structure and participate in different forms of group dynamics. Radical innovations in socialisation are often triggered by the adoption of technology. So what is the metaverse and what makes it so compelling that even Facebook couldn’t resist rebranding itself as such?

The use of the prefix ‘meta’ is intended to be self-referential, either as a reference to oneself physically or to a set of beliefs, values or ideas we subscribe to. Metaphor, for example, is an expression used to replace the original with an analogue for comparative purposes. Metamorphosis, likewise, is a process that abruptly and radically changes the state of an object. Metaverse, by extension, is a transmutation of the physical world (or universe) around us in a manner that reinterprets and reimagines that reality. It is very much a fourth industrial revolution phenomenon.

Virtual Reality (VR) is an instantiation of the metaverse concept where real world features and functions are virtualized, manipulated and perhaps even exaggerated to create a unique yet relatable experience for the user. More recently, Augmented Reality (AR) has entered the metaverse phraseology which describes the amalgamation of the physical with the reimagined (digital) as a new cohesive whole. The grafting of electrode dot matrices onto the retina of the blind to create synthetic vision is one life-changing example. The use of holography and interactive surfaces at scale to render virtualized dashboards and simulated artefacts on top of physical environments is yet another application of AR.

These are examples of the metaverse where user experiences are enhanced through the application of technology to alter and manipulate the physical environment thereby creating a hybrid digital-physical ecosystem if you will. It is essentially our physical universe undergoing forced and intentional metamorphosis – from universe to metaverse.

The end goal is to exponentially expand socialisation and radically alter social dynamics in the way we work and, perhaps more recently, the way we play.

The way we play

In 2016 a trilateral collaboration between NintendoThe Pokémon Company and software developer Niantic saw the release of Pokémon Go, a live action augmented reality title that thrust the venerable Pokémon series deep into the metaverse. Players ranging from hardcore Pokéfanatics to newbies downloaded the game app en masse and took to the literal streets to hunt for these mythical and coveted creatures which can be trained to do battle. For those in the dark, Pokémon is basically virtual and bloodless cockfighting but with the breeding and brawling of fictional creatures in lieu of the taloned game. Pokémon Go makes use of the phone’s nav system and superimposes its game environment and assets onto the physical world. Players go about their daily business – whether that be work, school or shopping – and the app will alert them if (1) the game spawns a Pokémon near their location or (2) another human player is in close proximity and has challenged them to a duel.

According to Wikipedia, “The game had over 147 million monthly active users by May 2018, over a billion global downloads by early 2019, and grossed more than $6 billion in revenue as of 2020.”

The game’s internal logic contained rules for impassable and restricted areas so that players aren’t sent down a ravine to chase a Pokémon and Pokémons won’t spawn inside, say, the Pentagon or a sensitive government installation where trespassing is liable to get one shot. Otherwise, the game is largely restricted to public spaces and players can have at it running around chasing virtual creatures, battling other players and trading Pokémons. So sudden was the success of the game’s initial launch it “may have contributed to nearly 150,000 traffic accidents, 256 deaths and economic costs of $2 billion to $7.3 billion in the first 148 days after its introduction to the US”. The merging of metaverses with physi-verses can be jarring and abrupt – cognitive dissonances can result. Nonetheless, Pokémon Go is a successful case study of fourth industrial revolution phenomena that radically altered social dynamics and undeniably reshaped the physical landscape.

More importantly however the success of the title, and also its failings, helped to set the scene for a crypto-fuelled metaverse…

The way we got played

Pokémon Go suffered from a number of intrinsic design limitations which stalled and stunted its growth in popularity in the years following its release. After the novelty had worn off, the gameplay soon became stale. Developers tried to implement a host of new features but that introduced unintended consequences and issues such as gameplay-crippling latencies and platform-specific bugs which all served to erode end-user experience.

And then there’s the biggest sin of them all…

Pokémon Go, as an example of Metaverse v0.1 alpha release if you will, had a constant cost of carry which required users to pay-to-play … and it wasn’t cheap either. Players had to spend their hard-earned real world fiat to procure an in-game resource called ‘stardust’ to train their Pokémons. Worst of all, painstakingly nurtured and curated in-game assets are locked and localised entirely within the game environment – there is no way to monetise and integrate player efforts and achievements with the real world. In effect, what one did in Pokémon Go could never translate into paying off one’s bills.

The absence of positive economics in metaversal products like Pokémon Go proved to be their ultimate death knell.

The way we play: Metaverse 2.0

What Pokémon Go had lacked was the express recognition of players’ efforts – countless hours of training, battling and running around physical spaces to accumulate a formidable set of Pokémons to do battle against other human competitors. The Player-vs-Player (PvP) format had a competitive element to it that was taxing on the user – a phenomenon which was largely mitigated in single player games where gamers can play at their own leisure, save progress and really enjoy the sights, sounds and narratives of the game environment’s built world. In PvP settings, the competition is real-time, fast-paced and mistakes and errors carry immutable and irrevocable consequences. To not only have their efforts been unrecognised and unrewarded but they had then be charged for the privilege of toiling and suffering through the ordeal of building in-game value – that, quite frankly, was just too much.

Gamers need to feel a sense of accomplishment. In immersive single player titles, that sense of accomplishment is attained through the completion of story arcs and challenging battles which the gamer can experience at their OWN PACE and OWN LEISURE. In PvP, the reward centers are slightly altered. It is hard to justify building and training to become a competitive gamer and defeating gamers of more casual ilk with nothing other than a high score display to show for it. Meanwhile, those casual gamers have paying day jobs with concrete financial and personal reward centers to justify those efforts. The game means nothing to them over and above an avenue for relaxation. The metaverse and its experiment of radical socialisation is dead in the water if there is no way to connect commensurate effort with a commensurate reward system.

Witness the rise of Pay-to-Play.

Please stay tuned next week for the second and final instalment where we will attempt to answer the question: “where to from here?”

The Australian launch came hot off the heels of a flurry of Bitcoin strategy ETF launches in the US last month, namely: Proshares (BITO), Valkyrie (BTF) and the much anticipated but now-delayed Van Eck (XBTF). However, investors who think these are one and the same are encouraged to exercise caution. It is important to note the ins and outs of each and how the Australian product stacks up against its US counterparts.

A new dawn

Gary Gensler, a former Goldman Sachs partner, was appointed Chair of the SEC in February 2021. A tech progressive, people such as yours truly best knew Gensler from his MIT open source lecture series in blockchain and fintech. The crypto community was right to be enthusiastic about the appointment. Gensler, in becoming a public servant, needed to serve his masters in Washington D.C. In the early months of his role as regulator he moved cautiously and circumspectly. By August however, Gensler began to signal the Commission’s openness to a Bitcoin ETF in the US but one focused exclusively on Bitcoin futures where the laws governing them offered enhanced investor protections under a 1940s mutual fund law. The crypto ETF space reached a crescendo and by September Coindesk reported the SEC was “reviewing almost two dozen ETF filings for bitcoin, bitcoin futures, ether and ether futures products”.

Why futures?

A pure-play Bitcoin ETF would be superior to existing futures ETFs, in terms of its ability to closely track the performance of the coin, yet SEC approval is unlikely to materialise any time soon ”due to concerns about regulation in the underlying Bitcoin market” according to Bloomberg.

Futures and forwards are legal contracts that lock the buyer and seller into future-dated transactions where the price, date and form of delivery are predetermined at the outset. Futures contracts are exchange-traded instruments standardised for features such as quantity and quality whereas forwards are private and customizable agreements that trade over-the-counter. A Bitcoin ETF that invested in futures contracts carries different risks to one that held BTC outright because the price of the futures will deviate from the price of BTC as time passes by.

In restricting US crypto ETFs to futures contracts traded on the CME they effectively became subject to regulation by the CFTC, a sister agency to the SEC. It was a way to maintain a tight leash on an industry which regulators regarded as a fickle beast.

In fact, participants are so bearish on the prospect of a Bitcoin spot ETF they believe U.S. regulators are “more likely to approve an Ethereum futures-based ETF before giving the greenlight on a fund that holds Bitcoin directly”. Bitcoin, followed by Ethereum, has the highest market cap of all coins. However Ethereum has a high volume relative to its market cap largely due to its popularity as the, current, go-to protocol for developers and users of decentralized apps (dApps). However, other protocols – aptly named ‘ETH-killers’, such as Solana (SOL), Polkadot (DOT) and Polygon (MATIC) are rapidly ascending that throne.

CRYP, BTCR – A different approach

So how is BetaShares’ Crypto Innovators ETF different to its US counterparts?

Short answer – equity.

But more specifically CRYP is an equities ETF. It does not hold cryptocurrencies directly. Rather, it invests in companies that are exposed to the blockchain and crypto industry. Looking at its top 10 holdings below, CRYP primarily invests in blockchain tech companies which have exposure to Bitcoin but also so much more. The fund is therefore more akin to SPDR’s Tech Sector Fund (XLK) than it is to the BTC futures ETFs currently listing in the US.

Mind you, CRYP isn’t exactly an innovator in the crypto and blockchain equity space either. Volt’s Crypto Industry Revolution & Tech ETF (BTCR) beat it to the punch having listed in the US in early October. Like CRYP, BTCR invests in companies that generate a significant portion of their earnings from crypto-related services.

To say that blockchain-based ETFs are similar to pure-play Bitcoin ETFs like Grayscale (GBTC) is a gross mischaracterization. That’s akin to saying gold miner ETFs like the GDX are similar to gold trusts like the GLD. The former carries business risk while the latter carries the volatility of the underlying commodity. Blockchain ETFs hold companies that are exposed to Bitcoin and, by extension, carry bitcoin risk. In addition, however, they also carry the non-systematic (business) risks that are inherent in every tech company seeking to create value through innovation and experimentation.

Is CRYP worth it?

If you set up an online broker with access to international equities, it would not at all be difficult to buy any and all of the securities held by CRYP, sans the fees. What investors in CRYP pay for are the quarterly systematic rebalancing of the portfolio to mark its investments to market and generally removing the hassle of portfolio management while maintaining equity exposure to the sector. And the price of that convenience?

Under its fund profile, CRYP charges a management expense ratio of 0.67%, however, with certain additional costs applicable. Those tenacious enough to explore the weeds of its Product Disclosure Statement will discover the following:

To put it simply, the fund will charge investors 0.67% in management fees AFTER deducting for its costs incurred. These costs include:

  • Recoverable expenses normally incurred in the day to day operation of the Fund.
  • Indirect costs.
  • Transaction costs.
  • Application and redemption fees.
  • Stockbroker fees.

Final note

CRYP heralds a new dawn for Australian investors seeking portfolio diversification. And not just diversification into crypto and crypto-related investments but also diversification across these investments to partially reduce non-systematic risk associated with any one company. These crypto tech ETFs have a role to play alongside crypto ETFs that buy the coins or their futures.

TORONTO, ONTARIO, Canada, October 28, 2021 – Cypherpunk Holdings Inc. (“Cypherpunk” or the “Company”)(CSE:HODL, OTC:KHRIF), a sector leader for privacy-technology investments, announces that Daniel Cawrey, Chief Operating Officer, is leaving the Company. Incoming Chief Executive Officer, Jeffrey Gao, will assume full strategic and operational responsibility at the management level.

Jeff Gao stated: “On behalf of the Cypherpunk,  I would like to thank Daniel for his contributions to the Company. I enjoyed working closely with Dan in my role as Advisor to the Investment Committee prior to my appointment as CEO.  The Cypherpunk team wishes Dan well in his future endeavours and knows that he will enjoy every bit of success in his next role.”

About Cypherpunk Holdings Inc. 

Cypherpunk is a company set-up to invest in companies, technologies and protocols, which enhance or protect privacy. Its strategy is to make targeted investments in businesses and assets with strong privacy, often within the blockchain ecosystem, including select cryptocurrencies. Current equity investments include Samourai Wallet, Wasabi Wallet, Chia, NGRAVE, and Animoca Brands. 

Cautionary Note Regarding Forward-Looking Information 

This news release contains “forward-looking information” within the meaning of applicable securities laws. Generally, any statements that are not historical facts may contain forward-looking information, and forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or indicates that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, “occur” or “be achieved”. Forward-looking information includes, but is not limited to the Company’s goal of making investments in the blockchain and other sectors and enhancing value. There is no assurance that the Company’s plans or objectives will be implemented as set out herein, or at all. Forward-looking information is based on certain factors and assumptions the Company believes to be reasonable at the time such statements are made and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Forward- looking statements are made based on management’s beliefs, estimates and opinions on the date that statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by law. Investors are cautioned against attributing undue certainty to forward-looking statements. 

Officer/Director Contact:Investor Relations Contact: 
Jeffrey GaoVeronika Oswald
Chief Executive OfficerInvestor Relations
Office: 1-647-946-1300Office: 1-647-946-1300

TORONTO, ONTARIO, Canada, June 11, 2018 – Khan Resources Inc. (“Khan” or the
“Company”) (CSE: KRI) is pleased to announce that further to its announcement on March 6, 2018
signaling a potential change in corporate direction, it has elected to pursue a strategy going forward
that will focus on investments in selected cryptocurrencies as well as high impact investment
opportunities related to Blockchain technology. To implement this new direction it is announcing
today two immediate additions to its team that will better position the Company for entry and success
into what is steadily being recognized as an entirely new asset class as well as a significant new
growth area within technology.

Effective immediately, the Company has appointed Moe Adham as Chief Investment Officer (CIO)
and will also nominate Mr. Adham for the board of directors at the upcoming Annual and General
Meeting (“AGM”) which is now scheduled for July 18, 2018. Mr Adham is currently the CEO of
Ottawa based Bitaccess (www.Bitaccess.ca) which developed the world’s first Bitcoin Teller Machine
(BTM) and whose software currently powers the one of world’s largest network of such machines.
Bitaccess was also recently selected by the Government of Canada to run one of their first pilot
programs trialing a Blockchain application, in this case one intended to make government research
grant and funding information more transparent to the public. This application runs on Bitaccess’
Catena Blockchain Suite platform and the pilot program is being overseen by the National Research
Council, Canada’s leading industrial research organization. Mr. Adham has a Masters Degree in
Nanotechnology from the Swiss Federal Institute of Technology ((EPFL) and a degree in Engineering
/ Economics from the University of Waterloo.

Also effective immediately, the Company has added Dominic Frisby to the board of directors,
replacing Kal Malhi who has resigned. Mr Frisby, who resides in the UK, is a well known author,
journalist, market commentator and speaker, whose diverse accomplishments include being the author
of “ Bitcoin : The Future of Money?”, the first known book published on Bitcoin by a recognized
publisher. Mr Frisby contributes regularly to Moneyweek and the Guardian and is considered an
authoritative figure on the world of cryptocurrencies by the British media.

As a reflection of the new corporate direction, the Company intends to propose a name change at the
upcoming AGM to “Cypherpunk Holdings Inc”, a name which references the important contribution
of the Cypherpunks and the Cypherpunk Manifesto to the development and ultimate emergence of

Finally, the Company has today granted a total of 5 million options at 10 cents to directors and
employees for a period of five years. This is the first grant of options since the new board took control
in May 2017, a period of time where no other executive compensation was paid pending a decision on
the Company’s new direction.

Cautionary Note Regarding Forward-Looking Information

Please read Cypherpunk Holdings Cautionary Note Regarding Forward-Looking Information at the following link.

Cautionary Note Regarding Forward-Looking Information

For further information contact:
Marc Henderson, interim Chief Executive Officer
Toronto, Canada +1 (416) 599 7363

Suite 3680
130 King St. W.
Toronto, ON M5X 1B1
Tel: 416.599.8547
Fax: 416.599.4959
KHAN RESOURCES INC. www.khanresources.com

Seeing that Cypherpunk Holdings holds many cryptocurrencies including Ethereum and Bitcoin and the philosophy of HODL aligns well with the organization’s vision for the future, they selected HODL as their Canadian Securities stock ticker.