Immutable and Merit Circle Join Forces

Welcome to Bankless, where we explore the frontier of crypto gaming, just like we did last cycle, and now two years later, we're starting to see some of the seeds of the crypto gaming thesis that were planted in 2021 start to bear fruit. This week on the Monday podcast, we had Vance Spencer and Michael Anderson reawaken the crypto gaming thesis. And today on the show, we've got a continuation in activity in the world of crypto gaming. Today we're hosting two leaders from different corners of the crypto gaming ecosystem Robbie Ferguson, who longtime bankless listeners will be familiar with from Immutable, and new to the show, Marco van den Hovel from Merit Circle. And they've got an announcement. I'm sure you can put the puzzle pieces together. Merit Circle is announcing their migration from Avalanche to Immutable, which is built on the Polygon ZK EVM.

What's Merit Circle? It's a DAO with a hundred million dollar treasury. It's got a k gaming tech stack, some games, some players, investors, a whole ecosystem really, deciding to join forces with Immutable so they can go further together.

I'll save all the details for Robbie and Marco to explain themselves. A quick disclaimer before we get into the episode Ryan and I are angel investors into Immutable. You can see all bankless disclosures at bankless.com/slash disclosures. And now let's get right into the episode with Robbie and Marco. But first, a moment to talk about some of these fantastic sponsors that make this show possible. Bankless Nation, I'm excited to introduce you to Robbie Ferguson and Marco Vanden Huovel. Robbie is the CEO and co founder of Immutable, the leading Web3 gaming platform that recently, not too long ago, moved to the Polygon ZK EVM. We've had Robbie on before, back I think in like 2020, talking about roll ups before anyone even was talking about roll ups. Robbie, welcome back to Bankless.

Thanks, David. Good to be here.

And Marco is the co-founder and CGO, Chief Gaming Officer of Merit Circle, often described in Merit Circle as a spider in the web, involved in various activities in the Merit Circle DAO. He's got a large focus on strategy gaming and the community side, as well as their weekly Twitter spaces. Marco, welcome to Banklist for the first time.

Thank you, David. Glad to be here.

There is an exciting announcement that we're about to unpack between Immutable and Merit Circle. But just to just completely rewind and start at the uh setting the table, I think we want to talk about with what Immutable is, which you know, most bankless familiar uh longtime bankless listeners will uh have seen Robbie here or two a few times on the show. Uh and then also we're gonna need to go into what Merit Circle is uh to really kind of just set the table here. So we'll get started with that. Robbie, what's immutable?

Immutable is the one-stop shop leading Web3 gaming platform. So our goal is whatever game's requirements are to get them live, you can come and build on us. We'll connect you with the relevant ecosystem partners. We'll help you build with fully integrated ZKEVM, which we're launching sort of in beta next month with Immune ZKEVM, part of obviously the Polygon tech stack. We have our global order book, which aggregates liquidity and unifies liquidity across marketplaces. We're launching cross-roll up liquidity next year.

And our goal is basically any single user experience requirement, developer experience requirement, scaling or liquidity fragmentation issue that games face to get live, we will solve. We've been around now since 2017, where we built the first ever Web3 game on any blockchain, which was an on chain game. It's funny to see it come back in vogue now. But really, our mission is there's 3.1 billion gamers. They're each spending the vast majority of in game revenue on items. And none of that is ownable or saleable. And our thesis is pretty simple.

Rather than future projections around how could DEXs be used in the future of foreign exchanges, which in my opinion will happen. The least controversial thing is gamers already spend 150 billion US each year on in-game items they don't own and can't sell.

Giving them ownership of that via Web3 is a direct 10x value proposition on a market that already has major demand. So that's our goal. We're nearly 300 people today, raised well over 300 million US dollars. And as of this partnership with Polygon over the last year, we've expanded our market share to close to 70% of all Web3 games today.

And Robbie, I remember we had uh we had you on very, very early in uh one of the earliest bankless panels. And you were one of the first people talking about roll-ups as a technology to scale Ethereum, but not just rollups, specifically ZK rollups. Uh so the whole immutable ecosystem has been working in the ZK layer two space on Ethereum for a number of years now. Is it safe to say that so like immutable? It wants to be the gaming ecosystem. So the immutable thesis is pretty synonymous with the gaming thesis, the crypto gaming thesis, I would say, added on to you know, add on Ethereum to that and to ZK roll ups to that as well. And you smash all of these things together and you get the immutable ecosystem. Is that a fair uh characterization?

Absolutely.

Yeah.

Cool. Okay, so that's immutable. Uh Marco, let's turn to to Merit Circle. What is Merit Circle?

Sounds good. Yeah, try to beat Robbie's intro, eh?

So, Merit Circle in a nutshell is a Web3 gaming DAO. Proud to say the largest Web3 gaming DAO there is right now. And we're largely focused on four things, which would be investments. That's something that we've been doing from the beginning, as well as gamers, something we've been involved with from the beginning as well and still love very much. We are working very closely with a couple of studios on the studio projects that we do.

And finally, we do infrastructure. And I think the infrastructure is something that we'll be talking about quite a bit today, and I'm very excited about. Yeah, I think you know Merit Circle is a DAO in essence. So we have contributors from all over the world and have been operating alongside of some mandates that have been created through proposals by the QME from the beginning. So that could be an investment mandate that we have, a D-risking mandate that we have. And that's been very exciting. Yeah, I think you know on the DI side DAO side, sorry, we obviously have transparency is key, and therefore we have quarterly reports, which I think have been very interesting for people to read to see not just who we're working with, but also who we've been investing with. And that's been super exciting uh along the way.

Yeah.

So when we say uh merit circle is a DAO, sadly DAO is not a very, very like illustrative word in this day and age. Uh so if you tell me you're a DAO, I'm like, okay, I'm starting to get an idea for what you are. Uh, you know, Ave DAO, for example, governs the Aave protocol. Or uh, you know, Maker DAO, for example, governs the maker protocol. It sounds like this is a little bit different. You uh uh Merit Circle DAO is more of just more of the 2020, 2021 version of a DAO of like an on chain organization with certain mandates and directions. Uh, but other than that, it's like it's mostly a governance system with people interested in the gaming space uh investing in gaming and building products in gaming and a collection of other things. Is this a fair articulation?

Yeah, I think that's pretty fair. Yeah, I think, you know, from the beginning, like I said, the main thing that we wanted to focus on was one transparency, but be also enabling people from all across the globe to be able to build with us. And I think especially on the gaming side, it's been interesting to see, you know, different guilds pop up. And one of the things that we saw in the beginning was, you know, those treasuries that were being worked with. And we were like, what if we put the power in the hands of the community to decide what we do with the treasury that we have? And the really interesting part of that that I find is that it took us from where we started, very small, to where we are today. And today that focuses mainly on the infrastructure side. And so, right now that we're talking with Robbie from Immutable, I think something that we'll be talking about quite a bit is Beam. And so, what I didn't mention when I introduced Merit Circle was Beam. And that was, you know, purposely done because Beam is a part of the infrastructure component that I mentioned earlier. So

Throughout these past two years, if I were to summarize in a nutshell, we've been working with so many studios and they kept saying, you know,

We know how to build a proper game, but we're not quite sure what we want to do on the Web3 side just yet, or which blockchain to choose. And I think one of the fun facts that I heard in your previous episode with your guests was 50% of the studios that are building game right now don't necessarily have a chain picked yet. And so for us it was like you know, what do we want to do? What do we want to work with? And so the products that we build on the beam side

is basically what we feedback we've gotten from those studios. And the things that we have built, if I were to summarize it, is a toolkit of tools for both the gamers and the game studios.

So for the game studios, if I were to you know dive into that a little bit, we have the Beam chain, which has you know its own AMM bridge, etc. We have a Beam Hub, which is more of a content platform that came from the beginning of Merit Circle, where we did a lot of content so people could explore different games. So that's more for the gamers. And we have Sphere, which is an NFT marketplace that is 100% focused on gaming. And yeah, I think the Sphere part, especially what we'll be talking about quite a bit uh today, and what I'm very excited uh to talk about with Roby as well.

Yeah, I'll stop there for a minute.

Okay, so Merit Circle is a DAO. Beam is like a gaming tech stack that is a product of Merit Circle. Is that a fair articulation?

Yeah, yeah, exactly.

How can we um measure like the magnitude of these things, like how big these products are, or how big Merit Circle is, like this the number of users or participants in the DAO or like value of these things? Is there any way we can start to illustrate how big the system is?

Yeah, I think so. I mean to start with the treasury. The treasury that we have right now is over a hundred million dollar worth. And that is

excluding, you know, native tokens. So we like to do this in a way where you exclude native tokens because we want to

The right way to do it, yeah.

Yeah, we want to calculate what we can actually work with, basically. And so that treasury is quite big, but also we have, you know, on the user side, obviously you have token holders, you have people that just hold, you have people that actually actively contribute to the DAO and vote on proposals, and you have the gamer side. I think the gamer side here is probably most relevant. And what I can say there is right now on the mirror circle side, we have a couple of thousands of gamers that are actively trying out different games. And honestly, mainly the games that we've been working together with because we've been doing marketing activities with them, and that's something that we are obviously excited to continue to do, but also games that are outside of our you know investment portfolio or ecosystem simply because it's a community of gamers, and that's the way that I liked to build it from the ground up. You can play Web32 games in our Discord as well, I don't mind. But you know.

A majority of them likes to try out those different uh games. But what I find interesting here as well, too, is that if you look across the board in web pre gaming, um there's not a lot of gamers out there yet in total, if we compare it to what we see on the other side, if you will. And so I think for us, you know, we haven't necessarily been particularly uh focused on user acquisition, but I think now that we have a lot of web pre games coming into action, coming with fun to play early versions, I think we can do a lot more on the marketing side from here on to grow that community further.

Okay, so I feel like the table has been appropriately set. I know what immutable is. I now know what Merit Circle is. And well, you guys are both here on the podcast together with me. So these so I'm hearing that these particles are getting smashed together. Uh can we go into the specifics about what's actually going on here? Robbie, can you give us like the TLDR? Just download us real quick.

Yeah, I might start with a bit of historical context, which is obviously we're actually on the show, start of the year, announcing the Immutable Polygon partnership, uh, which was effectively immutable and polygon at the end of last year, both had 35% market share. The vision was well, if we created a united product stack, because tech no part of our technical stacks are actually competitive, you know, immutable building of this platform layer, polygon building of this scaling protocol layer.

We could simplify the choice for game developers and you know massively improve our ability to work effectively in market. You know, since that partnership, we've gone from a hundred to over 220 well funded games. I'm talking high seven figures of funding, all with credible shots of hits. I mean thousands more in test net. Uh our win rate has gone from 35% to now close to 70%, which means in any given deal.

The amount of deals that we would win relative to other blockchains who are bidding for a gain. So effectively a good proxy for market share. And that's all, by the way, with every single grant that we uh recommend to the foundation is not, hey, just go dump this on market. Everything is underwritten, which is, I guess, one of the you know the magical things about uh our foundation is it's extremely efficient um relative to I think uh you know how how some other approaches have been.

Executed. And a very similar story, I think, happened with MeritCircle and with Beam, which is, you know, over the last uh couple of years, we've been competing in market together. There's been uh deals where and and for no reason because of the tech sacks themselves, it's just the underlying blockchain infrastructure. Uh, because obviously, you know, we care about where things are minting and and uh the the infrastructure of MeritCircle and Beam is also you know uh built on different infrastructure previously.

And the vision was well.

Ultimately, what matters is where the game's building and how can we simplify the value proposition to end users. And I think this was again an opportunity to take the largest Web3 gaming DAO, which is Merritt Circle, with all of the infrastructure it's built across Beam and Sphere and their deep knowledge of gamers, and combine it with the leading Web3 gaming platform Mutable, and under the hood, of course, Polygon.

To create ultimately an unstoppable force for games. So we're pretty excited for, you know, if if the Polygon Partnership brought our combined market share to uh 70%, what's this going to do? We're pretty excited for, again, making sure gamers don't have to have their number one thing be what's the underlying infrastructure and for game developers to spend countless hours talking to every major blockchain or infrastructure provider and trying to pick every, you know, like a piece of a jigsaw part of the stack. We want that to be an incredibly simple decision, but also a decision where that stack is incredible for them. So, Marco, I don't know if you want to add anything on, but I know we're incredibly excited about what this is going to do for uh gamers, for game developers. Uh, and you know, I think when we when we go and market together, it's gonna be a pretty unstoppable value proposition.

Wait, Marco, before I give it to you though, Robbie, I think you told me what the details are without actually telling me what the details are. The details are uh beam is coming to immutable. Give me give me the the mic draw. How do you put it into a sentence? What is this announcement?

Yeah, I would say, you know, uh Merit Circle plus Beam plus Fear uh is uh choosing immutable to expand to and we're gonna be focusing a lot of our efforts on developing infrastructure, uh publishing, services for games, and uh, you know, jointly trying to operate and market together.

Okay. Marco, you w what do you want to add to all of this?

Yeah, what do you still want to add to this, right? I think it's already been pretty well summarized overall. I think for us, you know, when we started with Merit Circle, or better said, when we started with uh Sphere and Beam,

Sphere 2 came out of the

feedback that we've gotten from developers. And so for us when we're thinking about, you know, this whole marketplace experience, but also beam being the ecosystem of gamers, we want to be where the games are. We want to be where the gamers are.

And for us, you know, that's in essence chain agnostic. Having spoken with Robbie, having spoken with you know Polygon, all the other ecosystems, for us, it's very clear that, you know, immutable, polygon are among the biggest players. Well, they are the biggest players in the Web3 ecosystem right now. And there's a lot of games building on Immutable at the moment. And for us, it's just really excited to have, you know, we have a common goal. And like Robbie said, we have been competing over DealFlow and whatnot. And now you get to collaborate more towards that common vision that we have and that common goal. So yeah, I'm super excited to put this into action. I think the emphasis here today is on this is the start of a collaboration, and it starts mainly on the sphere NFT marketplace side of things. But we'll see what the demand is from the game studios and from Unmutable to see you know which other products might be could fit here. What can we do we do together other than that? Um, and go from there.

Okay, so I think the most interesting thing about this, Robbie, is kind of that progression that you uh told with the collaboration between Immutable and Polygon ZK EVM. So yeah, I think you said each had a roughly about 35% of the market share. And well, I mean, what is Polygon doing? They're not really building gaming infrastructure. They're they're building chain infrastructure. They're building the ZK part of the ZK EVM. It's and it's immutable that's building the gaming infra. So if we're talking about the tech stack, you got Polygon, which is the chain, and then you got immutable, which is the actual infra built to support specifically games. Uh and then you slap these team, these two things together, which were splitting uh the market share, splitting the deal base of games. You set, like you said, 35% each, slap that together into 70%. And this is a similar story of just like, well, Merit Circle is also the other ecosystem elsewhere that is also splitting up gaming market share in the Web3 space. And now Merit Circle is all it's all coming into one gigantic fold between Polygon Immutable and also Merit Circle. So all these things are kind of compiling on top of each other to just put all the gamers into one space. We don't have to split this ecosystem, put all the infrastructure, we can all go further together. That's kind of the spirit of this whole announcement, correct?

I think one of the beautiful things you touched on is ultimately we want to be building where the game developers are building and where the gamers are building. And to the extent we can create vertically integrated infrastructure with really sane recommendations to excellent products, it makes total sense to unify that. And I actually think my thought on the Web3 space as a whole is people are really trying to build castles for no particular reason. They're trying to build the entire stack. And oftentimes to sort of justify VC-driven valuations because they think they need to have a scaling protocol team in order to be a legitimate team in the space. You know, the vast majority of companies you would talk to in the e-commerce industry would not say, hey, we have to build cloud infrastructure. The vast majority of cloud infrastructure companies would not say, hey, we have to build the infrastructure for cloud machines to be stored and reliably kept at 99.999% power supply. That's a company called NextDC. And I think there's just been this funny inversion of the product stack in Web3. Over time, things should modularize, and that will be a much more efficient solution for the end.

But I think this is a very healthy part of strategic consolidation, where people are finding partners where we can reduce costs, where we can service game developers and games better.

The way I describe it is immutable is almost like at the stripe layer, uh Polygon is like at the the AWS layer. Uh and Marco, I don't know if you wanna come in as the Shopify or or what what do you want to position uh Beam and Merit Circle as?

Yeah, I think that's a that's a good comment. I think it could be the Shopify. I mean, honestly, like I said, we want to be mainly where the gamers are and build for the gamer experiences. So a lot of the blockchain tech. I mean, it's cool to talk about tech, but end of the day, the gamers want to play games. And I think taking a lot of that

tech experience in the games in a way that feels natural to the gamers, I think that's where we come in and what we want to do. Um, I think Immutable does a good job on that as well. So yeah, strengthens efforts.

So, in terms of this uh partnership, in a in a partnership, every everybody brings something to the table. So maybe I'll make you guys say something nice about the other person. So, Marco, what are you excited about that Immutable has? So you can now use it over in Merit Circle. Like what's the infrastructure that you're really excited to be able to tap into or really the thing that excites you the most?

Yeah, very good question. I mean, what I said earlier was this is the start of something. And so where we are starting today is with Sphere, and Sphere is integrating, you know, the immutable order book, it's including the immutable passport. And I think those two in particular really are beneficial for the gamer experience that I just was talking about. So, say on the passport side, you are now have a really easy way to connect and interact with your NFTs in the games, across the games, transfer them, etc. Whereas on the other book side, you don't have to be, you know, jumping across different marketplaces all the time. No, you can do this all in one place and combine that liquidity, if you will, to have the good experience for the gamers. And for us, the exciting part on that end is that we want to take that partially in the games for the studios that want to do that.

And if they want to keep their, you know, maybe on their own custom domain, maybe on a general domain, interact with those products that Immutable offers, and we can, you know, display that in a really nice NFT marketplace that is 100% focused on gaming, allows the studios to customize their pages, tell lore, show gameplay, and really bring the NFTs to life. I think that those you know two sites just really complement each other. And so yeah, I think again, this is the start of the product that we're really excited to use from Immutable, CK EVM as well, just makes sense. So uh yeah, we'll see where it goes from there.

Okay, so uh Marco is really interested in the passport from Immutable, which I know is one of the subjects of our uh our uh podcast a while ago, Robbie. But Robbie, same question to you about Merit Circle. What what since we're talking about modularizing development, allowing people to specialize and narrow their focus so they can do what they do best, what is Merit Circle bringing to the immutable ecosystem that really excites you?

Yeah, a couple of things. I think on the infrastructure side, marketplace, primary sales infrastructure, things where they can truly improve the end user experience. I think there's a ton to be done there. The Sphere Marketplace is exceptional, but more importantly, I think that just the when we met the team, we were very impressed by execution capabilities, focus on gaming, understanding of gaming. And then of course, I think the Treasury is enormous and represents a good ability for us to go win deals collectively and together and to sort of help invest in and stoke the Web3 gaming ecosystem together. And on immutable side, you know, we have uh a quarter billion dollars across uh balance sheet in the foundation. Obviously, a you know a large uh foundation we're working with in IMX, roughly I think 1.5 billion we hadn't spent uh in IMX. So