Original title: Notes from 2.5 Years in SocialFi
Original by: 0xKipit
Photo by Peggy

The editor declared it closed after two and a half years of operation and would refund the full amount to pre-seed and seed investors. Although the team stated that Fantasy had never used investor funds to sustain operations on his own income and had returned approximately $20 million to the community, this once-high-heat encrypted social game had failed to find a sustainable growth path。

What is really interesting about this article is the team's reflection on the reasons for its failure: When a product is financialized from the outset, it attracts not users or fans but speculators. Fantasy tried to superimpose encryption to a game of swap cards, but card prices, air drop expectations and asset properties, which in turn limited the play of the law. The team is no longer just "playing games" but managing an economic system driven by prices and expectations。

This dilemma does not belong solely to Fantasy. The article further extends this lesson to SocialFi, social tokens and early tokens: if a project introduces tokens or financial incentives before product market convergence, the team, the user and the community move prematurely around prices and the product itself is marginalized。

The end of Fantasy Top is more like a failed note to the late. There is a distinct ceiling in the current form of encrypted TCG and social products that start in the original financial language. But that does not mean that the experiment is worthless. The real problem is that the next generation SocialFi can no longer simply superimpose crypto on Web2 products, but must redesign the relationship between users, incentives and product experiences。

The following is the original text:

Two and a half years later, we decided to close Fantasy Top。

TL;DR

all pre-seed and seed investors will receive 100 per cent refunds at the equivalent of one dollar per input。

Fantasy has been operating on his own income for the past 2.5 years and has returned approximately $20 million to the community。

2.5 THE CENTRAL LESSON WE HAVE LEARNED OVER THE YEARS IS THAT WHEN A PRODUCT IS FIRST A FINANCIAL PRODUCT AND THEN SOMETHING ELSE, IT ATTRACTS SPECULATORS, NOT USERS. WE LEARNED THIS IN A DIFFICULT WAY AT A SWAP CARD GAME (TCG), BUT THE SAME MODEL EXPLAINS WHY MOST SOCIAL TOKENS AND EARLY TOKENS ARE IN TROUBLE。

This decision was not made overnight. It took us months to look at all the remaining directions, to communicate with those we trust and to explore the transition carefully, and finally to come to the clear conclusion that we do not have enough faith to continue. We have therefore chosen to do something responsible and to put an end to it。

This article is more like a set of notes: what we did, why it didn't succeed, and what we learned in social products, encrypted currency and token mechanisms. We're not the first to try, and we're not the last. If anything here helps the next team avoid the wall that we hit, the experiment is worth it。

What did we do

In the last two and a half years, Fantasy has been feeding himself on his own income. Although we've completed a round of $5.6 million invested by DragonFly, investors' funds have never been used for day-to-day operations. In this industry, very few companies can do this. We did, and we are proud of it。

The numbers are more convincing than anything we can write:

DISTRIBUTION OF 2,665 ETH TO PLAYERS, APPROXIMATELY $8 MILLION

DISTRIBUTION OF 1,078 ETH, ABOUT $3.2 MILLION, TO HEROES

A TOTAL OF $12.2 MILLION BLAST WAS DISTRIBUTED TO PLAYERS AND HEROES

If you include the Blast incentive, 86% of the players eventually achieve net profit。

Fantasy gives back to the community far more than it gets from the community. This is our legacy on paper。

In addition to the distribution of proceeds, we have made one of the most contagious and participatory products in the field of encrypted socialization. We have advanced a number of new mechanisms: the assessment of mental shares, a projected market based on social maps, and a lighter free play method. We have high-intensity experiments and fast delivery。

But that is not enough。

Why didn't Fantasy succeed

There is only one reason for our failure: we are trying to superimpose encryption on a model that was not designed for encryption。

The block card game itself is set up. Magic, Pokémon, Yu-Gi-Oh are among the largest and most sustainable entertainment IPs in the world. People like them, collect them, trade them, and play for decades。

But all encrypted TCG failed. TopShot, SoRare, and now us. This is not a coincidence, but a structural problem。

The greatest TCG in history, first of all the game, and secondly the asset. People buy Magic cards to play Magic. The financial value of cards is the result of the quality of play and the depth of the community, not the point of entry for users。

WHEN YOU BUILD A TCG IN AN ENCRYPTED WORLD, THIS ORDER IS REVERSED. CARDS ARE FIRST FINANCIAL ASSETS, THEN OTHER THINGS. YOU'RE NOT ATTRACTED TO PEOPLE WHO LOVE GAMES, BUT WHO WANT TO MAKE MONEY THROUGH CARDS. THE TWO CATEGORIES ARE NOT THE SAME。

Every decision-making process becomes more difficult once an economic system is financialized from day one. You can't play free because every change affects card prices. You can't try a new model because it redistributes value. You're no longer playing a game, but managing an economy. It's a trap, and we're heading in。

We saw this trap and tried to escape it. Arena goes away from the friction of ownership; Clout is a softer entrance; F2P offers a free way into Fantasy. Turned to the forecast market in order to preserve the social games segment while completely stripping the NFT layer. Each adjustment is an attempt to return to the Game First. But none has really changed the situation。

The Blast phase makes the situation more difficult. At the time, Blast was extremely hot, with a large influx of users in Fantasy, investing in the hope of capturing an air drop of hundreds of millions of dollars. We're about 70 percent of the historical income that happens in the first month after the main online line. The starting point is too high to make everything look like it's going down. We are not running a steady-growth product, but managing a downturn。

Financialization changes who enters the product

The same pattern is repeated in the encryption industry。

Social tokens were supposed to reshape the relationship between creators and fans. But so far, every attempt has failed. The reason is the same: real fans are not here to make money first. They come for artists, teams and communities. Put a price map between the fans and the things they love, and it turns this relationship into something else. The most active "holder" is no longer a fan, but a trader。

This is not a small issue, but a core one。

Encryption money is good at creating incentives and coordinating participants. That is its core strength. But we bring in what is already available in Web2, games, socialization and communities, assuming, of course, that if we add financial language, they will be better. That is not the case. It doesn't make them better. It just makes them something else. In most cases, it weakens what they want to be。

You can't just put encryption on Web2 and expect to experience natural expansion. The financial sector is not a function, it rewrites who enters the product and why they come。

About the token

The same logic applies from the product to the company level。

We never issued a token. We have thought about it many times, but we have never done it, because we have never reached a milestone where we can issue tokens honestly. The so-called Rugging is knowing that a token will be zero like 95% of the coin, but still chooses to issue. We refuse to do so。

But outside of Fantasy, the more I watch the issuance of tokens in this cycle, the more I feel that the mechanism itself is broken for most companies。

It was a bad idea to allow any project to issue tokens at any given time, especially before there was no product or market. I used to think that traditional financial regulation was excessive. Now I understand it better. Those rules exist for the purpose of protecting the diaspora from investing in companies that are not ready to receive public capital. The encryption industry has completely bypassed this layer of filtering, and the whole industry is paying for it。

The issue of a token before the product market matches is almost poison. Every employee will start looking at prices. Each user will also start to focus on prices. You're not building a product, you're managing market sentiment. Even Across Protocol, an excellent company with real income and real growth, openly concluded that the tokens hurt them more than they helped. This should be given sufficient attention。

The strong tokens of the cycle are the exception, not the rule: Hyperliquid, Pump, Jupiter. They are real business, have real income and are being bought back. They are established before they are eligible to issue tokens。

DePIN may be a structural exception, but most of the early DePIN projects were issued under crazy valuations that are no longer possible today, and we still do not see a long-term success story of certainty。

LIKE THE FINANCIALIZED TCG, IF INTRODUCED TOO EARLY, IT BECOMES A VICIOUS CIRCLE. IT LOCKS YOU INTO FINANCIAL EXPECTATIONS THAT HURT WHAT A YOUNG COMPANY NEEDS MOST: THE FLEXIBILITY NEEDED TO FIND AN EFFECTIVE DIRECTION。

Return of funds to investors

All of Fantasy's pre-seed and seed investors will receive 100% refund. For each dollar invested, one dollar is returned。

We can do this because we never had to use that money to keep the operation going. The business itself feeds itself. The investors gave us the capital to build something that really had the chance to become a billion-dollar company. Fantasy won't be that kind of company, and we don't have enough faith in spending that money on a transformational direction that we don't fully believe in。

We respect that trust too much to burn it on a bet we don't believe。

To the heroes

Thank you. When everything has not been proven, you will allow us to build a game around your names and reputations. You guys got over $3.2 million from this. We hope you feel that it was worthwhile to risk believing in us。

To the community

It was you who made Fantasy. None of these figures would have happened without you. We tried to bring you the most interesting social games in the encrypted world, and for some time we did. I thank you for the week after week, the deck after deck, the game after game。

Unfortunately, we have not been able to deliver the results expected by some. We understand that disappointment and take it seriously。

For those who still believe that Fantasy has a billion-dollar-class idea, try it. This space is still open. We are willing to share everything we have learned with anyone who seriously wants to try. We have hit some fundamental walls and you do not need to rediscover them in the same painful way. Another angle, learn from where we're stuck, and then make something better than us。

That is what we want this article to be: not a farewell letter, but a set of notes for those who follow。

ENCRYPTED TCG IN ITS CURRENT FORM, VERY HARD CEILING. SOCIAL PRODUCTS THAT BEGIN IN THE FINANCIAL LANGUAGE WILL CONTINUE TO ATTRACT SPECULATORS RATHER THAN FANS. BEFORE PRODUCT MARKETS MATCH, TOKENS ARE ISSUED, MOSTLY POISONS. THESE ARE NOT JUST OUR PROBLEMS, BUT THE WHOLE INDUSTRY. THEY CAN BE SOLVED, BUT NOT BY REPEATING THE PATH THAT HAS BEEN TRIED。

We're not the first to try, and we're not the last. The best time for encrypted money is still about experiments. There are often more failures than successes. But that does not mean that the experiment itself is not worth it。

Thank everyone who believes in Fantasy。

[ Chuckles ]Original Link]