Canaan: 0:00

You may not agree with people playing to earn games, you may not agree with them having a vested interest in the financial upside in the game, but you talk to these people, you understand how they think about it and you're remiss if you don't understand. This is the future of gaming. You may not have gotten it right yet, but these communities are indicators of why this is the future and why Web3 gaming will succeed above all else.

Joeri: 0:23

Hello everyone and welcome to the Web3 CMO Stories podcast. My name is Joeri Billast and I'm your podcast host, and today I'm joined by Canaan. Canaan, h ow are you?

Canaan: 0:36

Good. Thank you, Joe juri, for having me on today, and good to meet everybody.

Joeri: 0:40

Yeah, happy to have you, Cana Kanan Guys. If you don't know Linder, he is the CEO of Stardust, and Stardust is a $35 million funded Web3 gaming infrastructure and user acquisition service providers wallet as a service product and provides game development tools to build and scale blockchain games. Test wallet as a service is used by more than 90 active game studios. Yeah, it's impressive. Tell me what about your journey as an engineer to becoming the CEO of Stardust?

Canaan: 1:20

Of course, so Stardust started very long ago six years ago, right at the start of the whole NFT boom, and this was in 2017. I was a software at Bloomberg in Manhattan in New York City. I loved looking online for the next really big, interesting technology and how it was trending toward mainstream, and I happened across CryptoKitties, one of the earliest NFT projects. They were blowing up. They were taking out the Ethereum blockchain. This was like scaling before the word scaling even was a thing and it was one of the most interesting projects I've ever seen in terms of actually owning a digital collectible. You don't think when you're running around the internet and you own some of these cards and some of these characters, that you don't actually own them. They're just in the virtual world.

Canaan: 2:10

And this concept of ownership in gaming with NFTs in a digital realm really captivated me, and I was a indie game developer in college.

Canaan: 2:21

I really wanted to figure out how to put these NFTs within a small game online, and I couldn't figure out how to put these NFTs within a small game online and I couldn't figure out how to do taking a step back from that.

Canaan: 2:29

If I didn't know how to do so as an engineer, I'm sure others didn't know as well who were less technically savvy than I, and so started on a journey six years ago to help game developers integrate NFTs in games. But ever since then, our mission, since day one, was to make game developers successful at Web3. And that's taken a couple different paths toward products, first starting as Wallet as a Service, now transitioning in addition to Wallet as a Service, helping Web3 users scale to millions of players through our user acquisition products. A good backstory to the name of the company is I actually played Yu-Gi-Oh, the card game competitively growing up and in high school, and my favorite card being the Stardust Dragon, and so Stardust Cards Corporation. Actually, the first thing that Stardust tried to tokenize was physical collectible cards. We work a lot with game developers now not as many TCGs or any sort of card games, but it was always our goal to help game developers and to help individual players and whoever they are and wherever they are, gain access to NFTs and blockchain technology Awesome.

Joeri: 3:40

Now I mentioned it wallets as a service. Now different people listening to this podcast probably have a wallet. But how can we a wallet, a digital wallet, on a Web3 wallet? But how can we understand wallet as a service? How does that work?

Canaan: 3:56

So, an ytime you play game whether R oomscape, or Devour Craft, Clash of Clans, Flappy Bird when you open the app, when you log in that first time, on the back end you have a digital inventory created by the game for all of the items that you earn with it.

Canaan: 4:13

A wallet as a service is a very similar service, but for games and Web3. And so when you create the start the game for the first time, when the game integrates Web3 components for potentially an already existing player base, the wallet on the back end they create with Stardust is just your blockchain inventory and, as you in any game today would have an inventory with items, creating an inventory on the blockchain with a wallet for game developers is a little bit more difficult, since that's what the back end of Stardust really gives them the power to do is create a game to the end user that looks like a game with an inventory any MMO, RPG, FPS, CSGO, whatever it may be and on the back end have that blockchain based inventory that, through Stardust, they can interact with and give every single one of their players, whether it be currencies or NFTs, on the blockchain.

Joeri: 5:04

And maybe that's you call them also invisible wallets, right.

Canaan: 5:09

Exactly Because players won't even see them. To them it just looks like an inventory, and as it should. We differentiate Web3 gaming from gaming a lot and from mobile gaming. At the end of the day, these are all games. The experience should be the same, the enjoyment should be the same, and our goal is to put Web3 gaming on the same footing as everyone else and just call it great games, which they are.

Joeri: 5:32

Yeah, indeed, because it doesn't matter if it's Web3 or NFTs or blockchain, just it's what it offers the benefits and the joy of playing and all the features involved, and the joy of playing and all the features involved. I mentioned also that wallets as a service. It's been used by over 90 game studios.

Canaan: 6:00

And this is a question that goes all the way back to when I first started Stardust, and the mindset of Web3 developers has changed over time and, for context, user acquisition is an incredibly, incredibly mature industry in the Web2 space and by 2027 alone, a billion dollars will be spent on acquiring users to games. It's a mind-boggling number and that's per year. Acquiring users to games it's a mind-boggling number and that's per year. $57 billion is spent. And in the Web3 space, as games have launched, if you look at the last cycle in 2021, this was the cycle actually that Chris Dixon had just wrote 1,000 true fans and every NFT project had sold 1,000 NFTs to 1,000 community members for something like a thousand dollars, and they were less actually interested in user acquisition back in 2021, because back then, the propensity and the upside for scaling games to millions of players wasn't necessarily what game developers were looking for. They had their community of a thousand players, their thousand true fans, and they thought that would sustain them from then to five to 10 years from now.

Canaan: 7:07

That unfortunately didn't happen, and what we're seeing today in the blockchain industry in late 23 to early 24, we started seeing this shift of Web3 game developers starting to think like Web2 game developers.

Canaan: 7:20

With a lot of mature games starting to launch, they started asking those questions how do I bring millions of players to my game? Web3 and the way it monetizes and how we're seeing the best game developers use it is actually to extend the highest users LTV and actually better monetize and give ownership to those highest class of users who want to spend in your game. But that doesn't preclude you from needing tens, hundreds, if not millions, of players in your game. And user acquisition is one of the hottest topics in Web3 gaming right now and you see it taken hold in a couple different ways questing platforms, programmatic DSPs such as ours. You see a lot of incentivized traffic sources other than questing platforms. Programmatic DSPs, such as ours. You see a lot of incentivized traffic sources other than questing platforms which are very reminiscent of Web2, early mobile app store optimization on iPhones. But yeah, with Stardust we really seek and are achieving millions of players for the largest games in Web3. And it's our goal to continue to do so and bring the next billion players into Web3.

Joeri: 8:24

Well, that's a great mission. And when I talk to people around Web3, and it's our goal to continue to do so and bring the next billion players into Web3. Well, that's a great mission. And when I talk to people about Web3 and Web3 gaming and maybe other stuff they also think about yeah, about digital wallets and security and scams and safety and integrating wallets in your gaming platforms also raises these questions, of course, and these concerns

Canaan: 8:48

Of course, security and compliance is one of those things that, at the same time, is important. Incredibly important is also an incredible barrier to entry, and if you look at the SEC today in the US, you see a lot of that give and take of what's too much regulation to help protect consumers and what's too little regulation that lets consumers do what they will but will inevitably, unfortunately, be exposed to scams, lose a lot of money and then say to the government why didn't you help scams lose a lot of money? And then say to the government why didn't you help me?

Canaan: 9:21

From a Stardust perspective, we believe that regulatory compliance is incredibly important for every company that seeks to hold money on behalf of others and within the US and even internationally, we have a framework called money services businesses and money transmitter licenses that help companies like Stardust Stripe, coinbase any exchange or any transmitter of money hold money on behalf of others.

Canaan: 9:48

And for players in all of the Stardust games, the wallets that are actually spun up behind the scenes for them have this whole MTL and MSB compliance framework that we've been working on for the last two and a half years and is the same exact compliance steps that we've taken in registering with the US government that Coinbase, any crypto exchange, any money transmitter such as Stripe, has done as well Within the broader ecosystem of the world. We see VASP in Korea. We see some regulation recently passed in the EU surrounding wallet compliance and we've also seen the FBI most recently take down a couple wallet providers because they were unlicensed money transmitters, and it's one of the reasons the largest games in Web3 use us. It's one of the reasons that public companies in the gaming space leverage Stardust is because we have this compliance framework and we're always looking ahead right, making sure that the companies we support are fully supported on the backends. Once they create billion dollar games, no government agency has any sort of way to stop them from being successful.

Joeri: 10:51

Yeah, that's really differentiated and I must say, because when I came back from Paris, Blockchain Week regulations and all of that and everyone was talking about it that's a real challenge. Of course, another challenge is if you're building games and you want to onboard so many users that you have a mixed audience of Web2 players, Web3 projects, Web3 players. What are the challenges involved there and how are you bridging those worlds of Web2 and Web3?

Canaan: 11:19

Yeah, so invisible wallets definitely helps, right the capability for a user not to know they're playing a blockchain-based game, but just having a better experience because of it. And from the Web3 side, with Web3 players, it's actually sometimes counterintuitive because the Web3 players are like where's the blockchain? Actually, that's the whole point. You don't see the blockchain and you'd be surprised. It's very counterintuitive. Some individuals actually want to interact with the blockchain more than you're a typical individual and one of the things we see successful games do is actually support both of those player types those who want to connect in an external wallet like Metamask and don't want to play through an invisible custodial wallet but on the other side, actually supporting players that do.

Canaan: 12:05

And we have this thesis going forward that no game is going to be completely Web3 and no game is going to be completely Web2. And the average game is going to skew somewhere along the scale of a Web 2.1 game to actually a 2.9 game, with the highest LTV users wanting more of those web 3 features and ownership and the game actually attempting to onboard very high performing web 2 users and introduce them to some web 3 concepts over time to actually better monetize. And so, from the perspective of the game we really like to dig into their mindset and help them understand the best way to monetize their core audience, which, for some games that come to us, are Web3 native. Some games that come to us are Web2 native, but over time you're going to see these games coalesce into having both types of players and needing to support them both as well as they do Interesting To grow and to reach so many users, millions of players, which you want potentially have on your platforms.

Joeri: 13:08

Partnerships are really important. I guess Collaborations are important. Can you talk a bit about that and what you have been doing with Stardust?

Canaan: 13:16

Sure, so we always put games first. And one of the interesting tidbits about Stardust is we're very well known in the gaming space. But from a B2B perspective, right, other businesses know Stardust Consumers and players. We hope to never be known, right, and in future that will change, as we hope to bring the Stardust brand into a little bit more of the limelight, into the actual player sphere. But from the developer sphere, we're quite on the back end.

Canaan: 13:44

But what we do have at Stardust is incredible access to other businesses who want to interact with games on our platform and games that actually want to interoperate or do co-branding on our platform as well.

Canaan: 13:57

And so from a partnership perspective, we have a whole client success team that is dedicated to understanding our clients needs and what they need to be successful and then bringing in others that we can introduce them to better make them successful, and that could be anyone from a marketplace partner to a community partner, to any sort of streamers that can help them really showcase their game to an audience, all the way through to connecting the games themselves for differing collaborations Maybe they're both first person shooters with some overlap there and how they can actually go to market and leverage each other's communities, and so we do a lot of that because, at the end of the day, we're only as successful as a business is. Our customers are on top of our platform, and if we can't make our customers successful, we're not going to be in business, and so, for us, customer success and making sure those games get to market and are successful is our top and our only priority, because everything else we do is derived from it.

Joeri: 14:57

You mentioned it already. Yeah, communities, W web3, W web3 communities. I bought maybe even more in Web3 gaming. Talk to me about that.

Canaan: 15:07

Yeah, community is everything. It can make or break your game In Web3, you see it more than ever. It's an interesting tidbit, but when I started in early 2018, late 17, stardust Actually, alex and Devin were working out of the. We work in New York, the founders of OpenSea, and I think that is a core project that you have seen ride the wave of community both up and, fortunately, down at times, and you've seen this through Web3 communities. When you give people ownership in a project, they turn a little bit from mercenaries to zealots, and that gives these projects the opportunity to form extremely rich communities of players who are not only indicative of those who have ownership in the game but want to see the game succeed. And, of course, there are some who want to succeed for financial interest, but many who want to see it succeed because they love the game. And you saw this early with communities on Reddit and Discord. I'm a big RuneScape player myself Unfortunately now only a YouTube video watcher, but I used to play quite a bit and RuneScape both Reddit and Discord saved that game because there was no way for the developers and the community to interact and have that relationship and make the game better every day because of it and with those communities emerging, it really saved RuneScape. It's now an extremely flourishing game 20 years after it was created, and many games as well, from World of Warcraft to EVE Online, have the same similar take.

Canaan: 16:41

In Web3, community is the core of every project and that's not to say they're going to have a million true fans.

Canaan: 16:48

But Chris Dixon in his article was right that there has to be a core of your community that cares more than just financial upside, that cares more than just about playing the game but actually cares and feels a vested interest in the success of a game.

Canaan: 17:03

And you've seen incredible games like Axie Infinity being one of the original ones, to Pixels Online, now really to Shrapnel and Midnight Society, and these shooters that have huge communities surrounding personalities that are playing the game, like Dr Disrespect, or the games themselves and how high fidelity they are in coming to market. You see these zealots that are really there in the community for the success of the game from day one through the day the game ends, and that is everything in Web3. And you won't be successful without a community, and when I say that that's not to mean that you cannot be successful without a community or that everybody in the game has to be within your community. But for a game developer to make a great game, they have to understand the player base, and that community is the one that drives the game forwards. Even if the game developers are the one creating it, the community is the one that is shaping it to their needs and what the players are going to enjoy.

Joeri: 18:05

And where does community now happen these days? Is it when I think about Web3 Gaming? I obviously think about Discord, but maybe there are other places.

Canaan: 18:13

Yeah, there's Discord, there's Twitter and there's also a lot of in real life meetups, especially in the Southeast Asian region. I think post-COVID. We've been out of COVID for a while now, but obviously Axie was during that time originally. But coming out of that we've seen a lot of meetups in Southeast Asia and on Twitter. Actually, they call all of these players and pixels and Axie and all of some of these Web3 games bots.

Canaan: 18:38

But you go to some of these Web3 meetups and you see these pictures and there are tens of thousands of players playing Web3-based games and it's very reminiscent of early mobile, right? You look at the early mobile days. It's the same with free-to-play it's a scam. We're not covering this in our articles, right? Kotaku will do a piece on why. It's not the future, right? This kind of playbook plays out again and again. But if you go, talk to the people playing these games, it is the future and you may not agree with why. You may not agree with people playing to earn games, you may not agree with them having a vested interest in the financial upside in the game, but you talk to these people, you understand how they think about it and you're remiss if you don't understand. This is the future of gaming. We may not have gotten it right yet, but these communities are indicators for why this is the future and why Web3 gaming will succeed above all else.

Joeri: 20:27

Yeah, when I was in Paris, there were this and also at NFT Paris, the Blockchain Game Alliance was there and I was also invited to a few events. Really interesting to meet those people and to be in these communities, even if I follow everything in all the community and the passion. So that's exciting. And what I always like to ask, also at my guests, C canaan, is what are you now, at this moment, the most excited about? Ah, specifically in W web3 gaming, or maybe about both things that's happening with your company or in W web3 gaming, or? It's an open question and I always love to ask that, even if I didn't tell you that I was going to ask that.

Canaan: 21:14

No, not a problem at all, and I love the question. One of the things that I think has really held Web3 gaming back is, every time we talk to a game developer, they're stuck in the mindset of what blockchain is today, and that was true in 2017. That was true in 2019, 2021, and true today and every bull market right. People are so design constrained and, even in the bear market, so design constrained by the technology of the day, and they think about Ethereum doing 15 or 10 transactions per second and they're like I have to build a game that conforms to those standards and it unfortunately does not lead toward great games that are using blockchain technology for what it can be, but for only what it is. Today. And what we're finally starting to see in the Web3 space is the community start to accept different sorts of scaling technologies and that could be faster blockchains. You have Solana, you have SWE, you have Aptos, but you also have different kind of scaling options on Ethereum with Optimism, Arbitrum, Matterlabs and ZK-Sync. These all twos, these all threes allowing game developers to now with 5, 10, 15, 500 transactions per second. And I don't want to be the guy who stands up here and rings a bell and says more TPS. I'm proud for that and I'm happy for that. But I really want to take it from the perspective of designing great games right. Game developers are no longer constrained by the features or bugs, depending how you look on it of blockchain technology, but instead can leverage it for its full capacity while still building great games, not design constrained because of the limitations of the technology. And that's a really important mindset, especially as it brings more mainstream game developers into Web3. Because they were seeing the downsides upweigh the upside. Right, Because they couldn't do all of the flexible things they wanted and that they can do in a database, but now can do with true ownership on-chain. And that's one of the most things I'm excited, the biggest things I'm excited about.

Canaan: 23:22

And to quickly go back and to lend a story, Stardust actually started on the Loom SDK, which goes way back into a 2017 project that unfortunately ended in mid-2018.

Canaan: 23:33

There was a Cosmos ecosystem app chain, and so it was a chain dedicated to gaming and we'd spin up a new single chain for each game and this was in 2017, and it wasn't really in vogue then to do. But fast forward to today and you have roll-ups as a service providers, like Caldera, Conduit Gelato, where you can set up a chain in five minutes for yourself to handle tens of thousands of transactions for your game. And that is a realization of the vision that we started with and understanding how games can scale, and it's being realized today and it's allowing our customers, first and foremost, to build better games on this technology, because they're no longer constrained of what was and now understanding what is and what will be and are planning for it and really excited for that. And as we go forward, we're going to see the blockchain technology that we have today continue to improve in games, get a whole lot better and a whole lot interesting, more interesting, built on this technology whole lot better and a whole lot interesting, more interesting, built on this technology.

Joeri: 24:32

Because, yeah, I think it's really inspiring to hear the stories, because storytelling it's important also in W web3 and W web3 gaming. You mentioned discord, because it's for community that you have, but it's also about building building community. Do you have a specific advice for those entrepreneurs or developers who are eager to enter the Web3 space, and maybe especially in gaming.

Canaan: 24:57

Yeah, let me start off. It's not easy. It doesn't matter how much money you raised, how long you've been in the space, how many times you've done this before, how large or small your company is. Being an entrepreneur is hard is being an entrepreneur is hard, and a lot of people even myself when I started in the industry, did not realize how many times it goes up down sideways. You're obsessing over this. It keeps you up at night. I'm thinking about it as I'm taking a walk, as I'm driving everything right. Your life starts to revolve around your business. A couple of things that I'll say is understand that there is no pathway from zero to a billion dollars. There's no straight line. There's no exact way to do it.

Canaan: 25:37

I think starting a business we all look at Facebooks and Apples and Googles and younger companies Figma, slack of the world and saw them get to a hundred million dollars ARR in the shortest amount of time. But no matter how fast they got there, it wasn't a short journey and it wasn't a journey that started at zero and only got higher. Facebook had its troubles, apple was days away from bankruptcy. Amazon barely survived at certain points in time after the dot-com crash, and so, from the perspective of starting in the space. A lot of people join it and think it'll only go up and to the right. That's not true at all. Of course, as you take a step back, you hope that, in hindsight and looking back and a 50,000 foot view, the line only goes up and to the right. But it's not a straight line. It's a very curved path to get from zero to success, and even once you're there, there's still a curved path to become even more successful.

Canaan: 26:31

And so for any entrepreneurs who want to join the space whether you're a solo, whether you have a co-founder, whether you have a team or not it's really not about how many times you get kicked down, because you will be kicked down. It's really about how many times you get back up and be aware that the market's going to go up. It's going to go up, it's going to go down. Our seed round, our million dollar seed round, kicked off on Black Thursday as COVID started and Bitcoin tanked from $20,000 to $4,000. And Ethereum was at 90 bucks. I should have bought some, but from that perspective, it's an incredibly rewarding journey and I suggest everybody take the opportunity to do so. But remember, there'll be times where you cry and there'll be times when you're overjoyed with success. And that's the journey and get ready for it and it's one of the most rewarding experiences of my life and I'm sure will be as a viewers as well.

Joeri: 27:20

Yeah, for me exactly. If you follow your passion, you're working towards something, you're building something. I also had these backlashes or things that don't go as you plan, but then instead of I always see rejection or something that doesn't work as redirection, that you go in another direction. And sometimes it's also good. We as entrepreneurs or maybe as humans in general we always are looking what do we want to get, what is the next, and so on. But sometimes it's also good to look back where you came from and see, oh, because that we take for granted Now some things like the same for my podcast. It started from zero and now I'm here and it's doing really well, but it came. I just started somewhere and now always I'm thinking what is the next step and the next step? And that's always a good idea to look where you came from.

Canaan: 28:05

Yeah, look, I have the saying two steps backward is just two steps forward in a different direction. Right, there's no only up. Right, you're going to get hit down, but take that opportunity to understand why and how you can leverage that to your advantage I'm sure, yuri, yours as well. Right, you launch a podcast and the first one had 10,000 listeners. The next one has very similar. For us, six months later, we've been working on a project and our product and we come out with it and it doesn't have the reception from the market or our clients that we predicted. But that is an opportunity to understand why and get better from it, and you'll only be more successful because of it. And nobody has been successful every time, neither will you, and it's just getting better over time and learning from those mistakes.

Joeri: 28:49

Exactly, and you just also believe in it and never quit, because if you quit, you don't know, maybe you're really short of your goal, but if you stop too early, so that's. Yeah, it's like that, C anaan, it was really fun to have you on the show, really interesting. If people they want to learn more about you, they want to know more about Stardust, where would you like to send them?

Canaan: 29:13

Sure, so we're Stardust on Twitter. I think is the first way you can see who we're working with and a little bit more about us. Our URL is stardustgg. My personal email is clynder C-L-I-N-D-E-R. Stardustgg. I'm always on LinkedIn. I love chatting with and helping other entrepreneurs, and so please come if interested in our business, learn a little bit more. But if interested in starting one, feel free to always reach out and I'm always a resource for other entrepreneurs.

Joeri: 29:39

Awesome. I will put all this information in the show notes. As always, there is a blog article, there are show notes. All the links and the email address that Cana Kanan mentioned will be in there. So thanks again, Cana kanan. It was really fun to have you.

Canaan: 29:54

Thank you and have a great rest of your day for everybody listening.

Joeri: 29:57

Thank you, Guys. What an amazing episode again. I'm sure people around you that could also be interested in this podcast episode. Be sure to share it with them. If you're not yet subscribed, this is a really good moment to subscribe to with them. If you're not yet subscribed, this is a really good moment to subscribe to the podcast. And if you haven't done it yet, please give me a review, because if you give me these five stars, it helps me even reach more people. And yes, that was it for today and I hope to see you back next time. Take care.