Written by: Lucy, BlockBeats

Editor: Jaleel, BlockBeats

“Oh, my first exposure to cryptocurrencies was when I started playing Axie Infinity.”

Many people would say this when talking about their experience of entering the circle. It seems to be a common routine to learn about the metaverse or cryptocurrency through GameFi. There is no doubt that Web3 games are one of the most exciting categories in this field, and it is an important way for people to understand the technology and its functions.

As GameFi continues to grow, so will our understanding of the Metaverse, and GameFi is a well-deserved window into the Metaverse. There has been a lot of discussion about the Metaverse since it was coined in the 90s, but especially during the pandemic, after Facebook changed its name to Meta. The 2018 hit movie Ready Player One also attracted a lot of attention from the Web2 world to the Metaverse.

In a project analysis report on institutional fund investments in the crypto industry from May to August 2022, it was pointed out that in terms of investment direction, funds on the market are more willing to invest in application layer projects mainly based on games and NFTs in a bear market. In today's bear market, a16z has once again set its sights on the Metaverse market and led an investment in Pahdo Labs, a Metaverse platform development studio, on September 12.

Related reading: "Unveiling the bear market investment preferences of the primary market: games, NFTs and the metaverse"

According to Pahdo Labs, this is a Series A round of financing with a total financing amount of US$15 million. In addition to a16z, which led the investment, Pear VC, BoxGroup, Long Journey Ventures, Neo and Global Founders Capital also participated in the investment. It also raised US$2.5 million in seed financing from angel investors such as Kevin Hartz, Mark Pincus and Cyan Banister. Currently, Pahdo Labs is about to launch Halcyon Zero, a virtual world game built by players.

Why does Pahdo Labs do UGC?

One of the major features of Web3, “immutable ownership”, is almost tailor-made for user-generated content (UGC) creators in the gaming field. Jonathan Lai, general partner of a16z, said: “My personal assumption about web3 is that in the long run, it will actually end up being part of every game.”

Since the number of Web3 users is far less than that of Web2, the project must try its best to convert users into creators, increase user stickiness to the project, and establish a consensus to hold NFTs or tokens and not sell them. In Web2, players cannot use a consensus to determine that the UGC they create is their own digital asset, nor can they automatically share profits according to the contract. Web3 uses NFT to transform the creator's UGC works into digital assets in Web3 games. They have copyrights and can share profits. As long as the works are good, there is no need to worry about not making money, so WEB3 projects should be more inclined to the UGC model.

Related reading: "Web3 Metaverse Track Outlook (Part 2) - Exploring the Current Status of User Generated Content (UCG)"

Pahdo Labs' plan is to create anime-style role-playing games and UGC platforms, which is one of the reasons why a16z chose Pahdo Labs.

a16z's $600 million gaming fund

As we all know, the famous venture capital firm a16z has a $600 million dedicated game fund and a $4.5 billion cryptocurrency fund. After a decade of preparation, a16z created its first game fund, Games Fund One, in May last year. Games Fund One firmly believes that games will play a key role in defining the way we socialize, entertain, and work in the next century, and firmly believes that in the long run, the game industry itself is worth $300 billion.

Games Fund One has three main investment themes. The first is game studios. They believe that the best games today are online services that are constantly updated. Players become an integral part of the game through multiplayer games and UGC. These "games as services" have become rich interactive social networks. The friendships that players build in the game are as meaningful as face-to-face friendships. As games become the main way people spend their time, Games Fund One believes that some of the most innovative consumer companies will be built around player communities, so they invest in games x consumers.

The last one is infrastructure. As games evolve into virtual worlds and online services, the demand for the tools and services needed to build great games is skyrocketing. This infrastructure is not only important for the games themselves, but Games Fund One also believes that the coming metaverse will be built by game companies using game technology. From content creation to multiplayer support to virtual economy management and real-time operations, the game industry has solved many of the problems that need to be solved to create a metaverse.

Andrew Chen, manager of Games Fund One, said in commenting on the fund’s 2022 fundraising deck, “If I were writing this deck today and talking about why I’m investing now, I would definitely write “AIAIAIAI” and use AI as a new investment theme.”

In the view of a16z, software and tools built for games will become the building blocks of the metaverse. Andrew claimed that Games Fund One focused mainly on game studios, Web3, and infrastructure last year, and will continue to maintain this focus this year, but will really turn to the field of artificial intelligence. In addition, Games Fund One encountered more than 100 AI x Games companies in the first quarter alone, and by 2023, 80% of the investments in the game fund will have a major artificial intelligence component-reshaping core gameplay or creating tools.

Related reading: "Interpreting a16z: $600 million game fund raising Deck, what is the appeal of games?"

At the end of November last year, Createra, a metaverse project led by a16z, also positioned itself as a "UGC gaming platform with more than 30 million gamers/pixel content creators." Createra aims to build a community-managed "metacity" where players can explore different types of game worlds or artworks created by creators with other players. Creators can use the tools provided by Createra to create and sell them on its market.

Related reading: Createra: Free Mint to 1.75 ETH, a16z-led investment in the new metaverse land

According to its official disclosure, Createra has accumulated nearly 15 million Generation Z users and 500,000 creators in Asia, and its development focus is also mainly on Generation Z. In the project, Genesis land is the main core asset, which will determine the subsequent distribution of rewards and assets as well as exposure opportunities in Createra.

In March this year, a16z led an investment in CCP Games to develop a new AAA game set in the EVE universe. Since 2018, 50 million EVE players have created more than 276 billion items, and the EVE community has also built a rich ecosystem of third-party tools and applications supported by APIs.

Creating UGC with Godot

The goal is to revolutionize the anime RPG genre by letting players build their own virtual worlds with the help of AI tools and procedural generation, Pahdo Labs founder Daniel Zou said in an interview with GamesBeat.

Pahdo Labs said it prioritizes player creativity, making user-created maps and game modes an integral part of the story and overall player experience. The developer hopes that AI tools and procedural generation will lower the barriers to creating anime-style worlds with beautiful visuals. Therefore, Halcyon Zero chose the Godot engine. Compared to UE and unity, Godot is simpler, and the games written in it can run as long as the files meet the specifications.

Godot is a multi-platform 2D and 3D free open source game engine developed by thousands of contributors from all over the world. Users can download and use it for free for personal, non-profit, commercial or any other purpose, and can also freely modify, distribute, redistribute and remix it for non-commercial or commercial purposes. Using Godot, you can develop various types of games on any platform without restrictions.

Godot Engine provides a comprehensive set of common tools, allowing users to focus on making games without having to reinvent the wheel. Games can be exported to multiple platforms with one click, including major desktop platforms (Linux, macOS, Windows), mobile platforms (Android, iOS), as well as web-based platforms and consoles.

Godot is based on object-oriented design, with a flexible scene system and node hierarchy, in order to get rid of the strict programming mode and provide an intuitive way to build games. On the one hand, like nested prefabs, it allows users to aggregate scenes. For example, users can put characters into levels and then drag and drop scenes as their children. These scenes can be weapons, characters, items, doors, levels, parts of levels, and can be inherited and used.

Godot engine scene design page, image source: Godot engine documentation

On the other hand, Godot is different from prefabs in other 3D engines in that it is able to inherit and extend these scenes. Users can create a magician and extend other characters from it. When the character is modified in the editor, the magician is also updated, thus structuring the project so that its structure matches the design of the game. Godot's nodes do not work like components in some other game engines, but provide many different types of nodes, most of which work independently of each other. Nodes are part of a tree and always inherit from their parent to the Node class.

Image source: Godot engine documentation

Godot has a dedicated script workspace, an animation editor, a tile map editor, a shader editor, a debugger, a profiler, the ability to hot reload on local and remote devices, etc. Its goal is to provide a complete game production package and a continuous user experience. This is also part of the reason why Godot provides its own programming language GDScript and C#.

GDScript is designed to meet the needs of game developers and game designers, and is tightly integrated in the engine and editor. It allows users to write code using an indentation-based syntax, but it detects types and provides auto-completion quality of static languages. It is also optimized for game code with built-in types such as vectors and colors. With GDExtension, users can write high-performance code in compiled languages ​​such as C, C++, Rust, or Python without recompiling the engine.

In terms of rendering, the 3D workspace does not have as many tools as the 2D workspace, and users need external programs or add-ons to edit terrain, animate complex characters, etc. Godot also provides a full API to extend the editor's functionality using game code.

Why is a16z optimistic about Pahdo Labs?

Jonathan Lai said that a16z has been paying attention to the topic of anime for a long time and believes that the influence and impact of the anime category are exploding worldwide. In addition, Jonathan Lai’s analysis pointed out that 69% of Generation Z and half of Netflix subscribers watch anime, and anime games will generate approximately $17 billion in revenue in 2022, accounting for nearly 20% of the total spending in the mobile game industry.

Pahdo Labs plans to democratize anime game creation, starting with their first IP Halcyon Zero. Jonathan Lai, general partner of A16Z GAMES, said: "We are impressed by Pahdo's execution speed and believe that the team has the ability to deliver an incredible next-generation anime RPG platform."

Pahdo Labs and its team

In 2021, a group of game developers interested in anime and action role-playing games met online and hit it off, some even quit their day jobs and moved to New York to develop multiplayer video games day and night. Daniel Zou was one of them, and he led a small team to found Pahdo Labs in his apartment in Irvine, California.

Before becoming CEO of Pahdo Labs, Daniel worked on the Robinhood growth team, helping Robinhood increase its user base from 4 million to 15 million, while also working on cryptocurrency, recommendations, SEO, international expansion, and product launches. Later, Daniel Zou went to Anduril Industries, an artificial intelligence company, as a software engineer. These two work experiences have further deepened Daniel's interest and technology in various fields such as the metaverse and AI.

While building an early community, Pahdo Labs, like other game studios, attracted millions of views on TikTok by showcasing the early indie game development process and the office life of these young game developers in New York. As a result, the gaming niche market continued to grow, attracting an audience early in the game development process.

In fact, it is no accident that Daniel chose the game track. His growing experience is full of various online role-playing games, such as "MapleStory", "Runescape" and "Mabinogi". The online virtual world provides Daniel with a sense of agency, friendship and purpose. Therefore, Daniel spent all his time making his own games, which stimulated his early interest in technology and computer science, and the early members of the team were also avid players of Japanese role-playing games, fighting games, and independent adventure games.

In 2021, Pahdo Labs developed a 4-player action RPG inspired by their favorite action games.

"Creating a world where players are empowered to create things of lasting value" is the vision of Pahdo Labs. For Daniel, lasting value means lifelong memories and the pride that comes from the act of creating and releasing creations into the world, so he founded Pahdo Labs to ensure that the next generation can have access to similarly rich and rewarding online social and creative experiences.

Since then, Pahdo Labs has hired 21 full-time international staff in New York, Vancouver, South Korea, Berlin, and more, a collaboration between technologists from Boston’s Silicon Valley and industry veterans from Riot Games, Capcom, and Electronic Arts. The past three years at Pahdo Labs have been both challenging and rewarding for the team, who have shown a high level of commitment and will continue to work hard to bring their vision to players.

Halcyon Zero

Halcyon Zero is an isometric anime fantasy role-playing game and online game creation platform built on the Godot engine. The game takes place in an ethereal fantasy world, centered around a bustling town that serves as a social hub where players can band together to explore the Chaos-infested wilderness, challenge anime-style bosses, and discover the secrets behind Chaos.

Halcyon Zero will be designed as a free game, and the official said it will be monetized mainly through cosmetic-based micro-transactions. Blockbeats reminds that due to the current unstable monetization path of blockchain games, the development cycle of large-scale games is long, complex, and risky. Halcyon Zero is still in the game test application stage, so it is recommended that users should do enough research and understanding of its built-in economic model before participating in the on-chain game.