Key takeaways
- RLY Network provides middleware software enabling games, social networks, and creator apps to launch branded token economies without requiring deep web3 expertise.
- Token bonding curves offer automatic pricing and liquidity for small to large communities unable to access centralized or decentralized exchange listings.
- Successful token economies require four primary components: token circulation through airdrops or earning, holder perks, community governance, and sustainable tokenomics.
- Gaming platforms in Asia and creator economy apps in Southeast Asia are leading adoption of RLY Protocol for play-to-earn and creator reward models.
- Web3 social networks must flip the creator exploitation model of web2 platforms by enabling fair token distribution and peer-to-peer economic participation.
Token economies in a box
Ashton Addison: What has RLY Network been building?▶ 00:21
Jeremiah Owyang: RLY Network is an ecosystem of consumer apps that have token economies, in particular fungible tokens. They use our software, Rally Protocol, which is a permissionless, open-source, no-fee, multichain protocol. It helps games and social networks create economies and launch their own branded tokens.
Ashton: Why would a company join RLY Network rather than just make a token on its own?▶ 01:11
Jeremiah: Many of our partners, whether Web3 or Web2, want to focus on the core thing they do, which is their game, their creator economy or their social network community. Adopting Web3 takes knowledge and resources that make it challenging, so a partner that makes it easy to launch a token economy is key. One challenge is small market cap. Projects can't get listed on a decentralized or centralized exchange, so there's no liquidity and they don't know how to price. They also need a way to kick-start a market. We offer token bonding curves, which work for small communities up to very large ones. A bonding curve is a form of market maker. We have four curves, which are basically quadratic formulas that say if the quantity is this, the price is automatically this. They're bonded to our own token, the Rally token, which is ERC-20, so projects get instant pricing and liquidity. It's token economies in a box. We also offer grants and a reward structure, which we're changing at the moment to make it easier.
It's token economies in a box.
Games, social apps and creators
Ashton: Are you seeing a wide variety of blockchain companies use this, or is there a common trend?▶ 04:29
Jeremiah: We're absolutely seeing adoption of consumer and casual games, specifically in Asia. Joyride Games has a platform where other developers can load their own games, and it has produced its own, such as Solitaire Blitz and Trick Shot. It also has a tennis game that uses fungible and non-fungible tokens in combination. Gamers use the tokens for play-to-earn, but also redeem them for upgrades. Most social networks act like games too, because people vie for followers and likes, and a lot of that can be tokenized. One of the big challenges with Web2 is that platforms exploit creators. Taki, also in Southeast Asia, rewards creators and participants with tokens. They can have their own branded tokens built with Rally Protocol, and users earn and tip each other peer-to-peer. We also have Gambit, which is focused on sports fantasy gaming.
Ashton: No one has gotten Web3 social media right yet, and creators can still be exploited. How will RLY Network help?▶ 06:27
Jeremiah: There's no one perfect solution. We also work in the creator economy, with individual creators whose communities often live on Discord, Telegram or Twitter, and each has its own token and economy. There's no silver bullet. But I see four levels that a token economy needs to reach network effects. First, get the token into circulation. You need a business plan and a marketing plan, and the community either gets it by airdrop, earns it, or swaps or buys it with crypto or fiat. Second, provide perks for token holders. This is critical. When the market collapsed in the spring, a popular play-to-earn game saw massive liquidation and sell pressure because it hadn't provided enough perks. Whether it's fungible or an NFT, people need to know what they get by holding, and there has to be a roadmap. Third, redemption utility, where you can turn in tokens for goods, services or experiences. Fourth, network effects, a peer-to-peer ecosystem. We haven't seen many examples. The closest is probably ApeCoin from Bored Ape, which is used by Animoca gamers and in The Sandbox, with swap mechanisms on other exchanges. That's the highest order, when the community chooses how to use the token peer-to-peer and the creator of the token may not even be involved in those decisions.
Open to any developer
Ashton: Do companies have to meet any requirements, such as product-market fit, to join RLY Network?▶ 11:19
Jeremiah: The official name of our group is Rally Network Association. We're a nonprofit based in Switzerland, backed by Andreessen Horowitz, Coinbase Ventures and other investors. The founding team comes from the gaming space, including the original Kabam team, and we're associated with the prior Forte team. We're a permissionless protocol, so any developer can grab the code on GitHub and implement it. Developers already working in Web3 can spin up a branded token in 30 to 60 minutes. One Web2 developer, who works on Microsoft Azure products, took two hours. There's no approval process and no registration. We also provide grants, and we're looking for apps with growth opportunities. We're on Solana, Ethereum and Matic, and many of our partners use Flow.
Ashton: Do projects stay tied to the Rally token as they grow, or can they branch off?▶ 13:56
Jeremiah: Some of our projects are in a multi-token scenario, and having one, two, three or four tokens is fine. The Rally token is our core token, and from there an application can launch its own coin. You can also have sub-tokens for individual creators, such as an Ashton coin as a sub-token of an app's token. It's also fine if a developer wants to use our open-source code, such as the token bonding curves, with a different token. We've made that available to all. We encourage people to use the Rally token, and we have financial incentives such as grants and rewards for that. But we understand that at some point they may want to launch their own token or use a native token like Solana or Ethereum.
We would love to see a hundred logos in a year from now.
What's next for RLY Network
Ashton: Where will RLY Network be a year from now?▶ 15:47
Jeremiah: I can't spill the specifics, but one pain point we've identified is that Web2 developers are struggling with wallets. Do I use a custodial wallet or a non-custodial one? If it's self-managed, how do I get users to sign up without security concerns around managing their seed phrase? An in-app experience might be easier, but then I'm managing somebody else's assets. We're working on products that will enhance the existing protocol to help solve those onboarding issues, with more news soon. Secondly, one of our key partners, the Rally DAO, which is now called Summer Street, will be launching some unique perks for token holders. That team is Web3 native and understands how to foster community. On our website there are around a dozen logos of Web2.5 and Web3 projects. We would love to see a hundred logos in a year from now. We're preparing the infrastructure to build while the market is down, so we're ready to onboard Web2 games, communities and social networks as the market picks back up. We're well funded to achieve that.
This interview has been edited for length and clarity. Recorded October 2022.
