Wizard Wednesday Recap, 2023-07-19

Elf returns this week, and as the show starts, he speaks about community member Matt DWrecker's Christmas in July and the out-of-season holiday card that appeared on Matt's doorstep. Elf blames it on the postal service and / or the Quantum Shadow.

Cult Questions

The Shadows

Then, Elf launches into Cult Questions, the first from Feckless about the upcoming Ordinals collection, "The Shadows". Feckless asks if The Shadows are generative and if there is any indication of what they will look like. Elf refers to a storyboard the team posted. Elf says The Shadows will be generative and will look like the images in the storyboards, although they will be pixelated.

Dotta notes the team has shared an early animated draft. He says they don't have "affinities", though there will be coherence through the collection. "One of the important parts of the lore of The Shadows is that each one of The Shadows is a servant to a particular Shadow Hat."

Dotta says, "The bodies of these Shadows will represent the Shadow Hat that they serve."

Will There Be More Shadow Hats?

Then, Malevolent asks if any more Shadow Hats will appear in the upcoming Shadows mint. Elf says the 10 current Shadow Hats are all of the Shadow Hats that will ever exist.

Rarity Of The Shadows

Malevolent also asks if The Shadows will have any rarity metrics within the collection. Dotta says that there will be traits with varying rarity, and many of the collection's pieces will be animated. He notes they will all look good since there aren't that many of them.

Nightmare Imp's Treat Boxes, Gas Costs, & Books of Shadows

Next, Giveahoot asks a question about the gas cost required to open the Nightmare Imp Boxes. Dotta says there might be a way to optimize the contract a little bit, but it was important to create the contract in a way to prevent knowledge what might be inside. Dotta says they didn't want any unfair advantages for opening the Imp Boxes, and that was part of the idea of a "commit" and "reveal" on-chain, which is why it requires two transactions. He says he doesn't have any suggestion for lowering the gas.

However, Dotta says there is no urgency in finding the remaining 7 Books of Shadows that remain in the Imp Boxes. "Really, I'm happy to hold on to those Shadows for the Book of Shadows holders for as long as it takes."

Elf also hints that there may be another item out there that will also be used for a Shadow redemption, but that is to be announced.

Kids Summer Art Marathon

The last question comes from Vmark, asking Elf if he has heard that there is a new Kids Summer Art Marathon with weekly ideas. Elf says that sounds awesome, and that he loves that it's become an ongoing thing. Dotta says he will have to encourage his own kids to enter.

3D Wizards

Elf transition the conversation to the topic of 3D Wizards. He says he thought it would have launched 2 months ago, but building the website after completing the characters has taken longer than expected, as the team familiarized themselves with Three.js. Elf says he's hesitant to say it, but he feels 95% sure that the 3D Wizards will launch next Wednesday. Elf says along with the website, it was important to him to emphasize the individuality of each Wizard.

"When you see your Wizard in 3D, its lore will be displayed next to it. We decided to launch with the items, the spells, and the runes. Originally, we weren't going to do that, but we made all of them...the only thing missing is the Familiars. I hope to have those someday soon."

Elf reiterates the point that 3D represents an exponential vector for Forgotten Runes. He says that there are already a lot of 3D partners lined up that the team is working with, and he imagines there will be many more in the coming years as the metaverse is built out.

"This is what they were built for. These characters were designed with metaverse interoperability in mind. They're very lightweight. They're optimized for the web. They're probably even light enough to run on mobile."

Elf makes an open call to the Cult to reach out or connect any upcoming interoperable 3D meta projects with Magic Machine. "We'd love to integrate. That's sort of the whole point of these. This is how Forgotten Runes spreads. It's how we expand our network effect."

Dotta says they are likely able to write scripts to convert all of the models to any format needed. "It takes some time, but for launch we should have a variety of downloadable formats. We'll probably add a bunch more after launch."

Market Sentiment

Then, Elf steers the conversation to the overall market sentiment, noting the bear market is tough on everyone — both holders and founders. He says that he has seen people naively say that NFTs are dead, and he thinks that is incredibly misguided.

Raoul Pal's Global Liquidity Cycle Theory

Elf speaks about Raoul Pal, a macro economist who he says is "big in the crypto scene" and has a lot of great takes on crypto. Elf says one of his topics lately has been the idea of a global liquidity cycle, meaning all markets (not just crypto) trade on a 4-year cycle. Elf notes that a lot of people in crypto believe the market is based on the Bitcoin halving cycle. Though he used to believe this himself, he now thinks that the halving cycle coincidentally correlates to the global liquidity cycle.

He looks at the last crypto bull run, starting with DeFi, which pumped liquidity in the market that was then compounded. He says the first thing people do when they make a lot of money is splurge and flex. The digital correlation to these luxuries is NFTs. Instead of exchanging the money earned from DeFi for fiat, these people flexed digital assets. Elf notes this was Phase 2 of the bull run: the NFT craze. DeFi cooled off, and NFTs started heating up. He said that ~8 months of NFT madness was one of the best times in his life.

Elf says he isn't here to reminisce, because he thinks that time will come back.

"Ouroboros is slowly churning, and that liquidity cycle is playing out as it always does. The liquidity is bound to return, and when it does, we will all flex again."

Elf says that now, the name of the game is to just make it until the next bull run. He notes that many projects are dying in the bear market and says he doesn't think any new project will mint out right now, regardless of how good it might be, because there is no liquidity. Elf even calls out the Ether project, noting that he thought it looked "freaking amazing." He says he saw all of the "what went wrong" threads, but says in the bull run, those things would have been just fine. The biggest thing is low liquidity in the market.

There are exceptions to this, Elf says, and there are projects that will mint out. There is a little bit of volume on NFTs, but he says it's rare. Dotta says he also has a lot of thoughts here, noting a theory that the bull run was a product of low interest rates.

Dotta notes a comment Elf made earlier that "cash is trash" might be bullish for crypto, but is bearish for the global economy.

"Why do people put their money in these investment vehicles where they have, basically, risk? The reason is because if you put your cash under your mattress, you're losing 3% or, post-COVID, 10% per-year. So it's really a losing game to hold on to a significant amount of cash."

He says that's good for crypto holders in a philosophical sense, but it's bad for everyone who doesn't hold crypto and is bad for the big debt crises. He says when you look at the DeFi coins that lasted, they came up with a singular business that found revenue-generating niches.

Dotta relates this to Forgotten Runes:

"OK, fine, we were born out of this low interest rate phenomenon, but what we basically found was this creative collaboration decentralized IP that now can be built on top of."

Elf speaks about one interview he saw with Raoul Pal where he overlayed the price of Rolex watches with an NFT chart, and they matched exactly. Dotta says it makes sense because with the hyperconnectivity of the internet, putting your money in one place is as easy as any other. Dotta notes that you no longer have to go to a property to buy a piece of real estate, you can invest in a real estate ETF, which he says is just as easy as buying a Rolex, which is just as easy as buying an NFT, because you're doing it all through your browser.

Elf asks Dotta if he thinks the global liquidity cycle aligning with the Bitcoin halving cycle is coincidence or by Satoshi's design. Dotta says he feels that the global cycle moves more in 7-year cycles rather than 4, but he says he isn't an expert on this. Elf says he believes the best thing Forgotten Runes can do as a project is to build in the bear. He says this is valuable because it will set the project up for a much stronger position by the time the next bull run comes. Elf speaks relates this back to 3D Wizards.

The Nature of Trends In Crypto

Dotta also speaks about how everything that he has seen in crypto always moves on, and talks about the move from Bitcoin to BTC Forks for speculative mining of new coins in hopes that the new coin would be listed on an exchange. "It was just like the shitcoin craze right now." He says out of these speculative mining chains, we got Litecoin and Doge, and that was about it. "The rest pretty much fell by the wayside." He also goes on to speak about alt L1 chains in the time of Ethereum, the DeFi coins, the "food farm" craze, and algo-stables.

"When you look at every one of these trends through time, they all fail except for 3 or 4 out of the cycle, and the ones that survive are the ones that are quite big and quite singular. They're very unique in a particular way. You didn't get that [food farm] wave again. You didn't get algo-stable wave again. I'm just not really sure you're going to get PFP Summer again...I think that you will see people drop 10k PFP collections...but I don't think that's going to be the main event."

Elf says he agrees that there's going to be some "new thing" in the next bull, but he isn't convinced that PFPs are going to go away because they are an avatar for social media. He says there will always be a need for PFPs. Dotta says there is always room for more art and art collecting.

"I actually still don't think even today that art collecting in terms of 1/1s or these smaller collections is as wide-spread or as wide-spread as it could be."

Dotta also speaks about his thoughts on NFTs as leveraged ETH and how, when you use leverage to trade, what you get is either a bigger win or a bigger loss, depending on the movement of the underlying asset. On the topic of buying NFTs to flip, Dotta says:

"I'm always thinking: Is this going to appreciate faster than just holding the ETH that I've already got, and 9 times out of 10, the answer is 'no' right now if I'm trying to flip. If you have a piece that you love, or that provides other benefits for you in an ancillary way, then it's still totally worth it. There's still pieces that I'll buy because I like them...and know that I want in on the community."

Elf says that's mostly his personal NFT buys and that he's a terrible NFT trader. Madotsuki also says that he's noticed 1/1 markets are doing better than PFP markets.

"People are mostly buying stuff that they like more than stuff they want to flip...I think that's a good sign."

Dotta agrees and says that if there are projects that you like and want to be a part of, and you think are going to last, you can get good prices on it. He references Toadz as a collection that Magic Machine likes. "They're way cheaper now than they're going to be."

Dotta's Thoughts On Meaningful Decentralization

Elf notes there are about 20 minutes remaining in the show, and segues into dialogue about Dotta's recent thoughts on decentralization. Dotta says he has been thinking about how to make Forgotten Runes decentralized in meaningful ways.

A CC0 Card Game

Dotta references a talk that Miles Jennings of a16z gave, which he says some of the ideas are borrowed from. He says he was reminded of the Forgotten Runes mission in his frustrations with creating Magic cards and notes his fascination with creating cards as pieces of art. Dotta says that he generated around 3k cards of which he liked about a few hundred of them.

"What was frustrating is that they were this commercial dead-end...I feel like Magic has transcended into a format, but in practice, there's no way for me to commercialize these."

In a tweet earlier in the week, Dotta mentioned about his desire for a CC0 collectible card game.

"I think this idea is way more broad than just cards. You can think of Magic: The Gathering as this piece of infrastructure, but it's private infrastructure."

One of the great things about crypto, Dotta says, is that there are public infrastructures. He points to Uniswap as an example. "Forgotten Runes is like this. For Forgotten Runes to succeed, it needs to be this credibly neutral, composable structure that anyone can build on"

Benefits of Decentralization

Dotta says there are 3 big benefits to decentralization:

1. It encourages participation Dotta says it's impossible for a single person to create a franchise — It takes armies to make the infrastructure. You know you're allowed to participate in something that's decentralized

2. Decentralization safeguards your freedoms With decentralized IP, you have something you know you can hold on to. It creates a feeling of robustness as this idea becomes shared.

"We only ever need one Wizard to carry the torch for the project to continue."

3. You can reward your stakeholders You can equitably reward people who contribute to the IP. Unlike centralized IPs, decentralized infrastructures can equitably serve the interests of everybody who owns the tokens.

The Hollywood Strike

Elf uses this to launch into a discussion about the strike in Hollywood. He says this is a big deal because it's different due to AI's involvement.

"The entertainment industry is never going to be the same. No matter the outcome of this particular strike, AI is here to stay."

Elf notes the studios are moving in attempt to scan human actors, digitally recreate them, pay them a single time for their likeness, and then use that likeness in perpetuity. He says prosperity for human beings in the entertainment industry is bleak. However, Elf feels that a model like that of Forgotten Runes with decentralized share of equity may serve as an antidote.

South Park Episode Generator

Dotta references a recent tweet he saw concerning a South Park episode generator where the AI agents served as the "production staff" for the show. Elf says he also saw the South Park episode generator tweet and notes that the creators disclaimed they did not hold the rights and weren't making any money from it. "Imagine: What if there was a community that did own the rights to the IP and they had a tool like that?"

Dotta adds a qualifier:

"We have to obey the laws of the United States as Magic Machine because we are subject to them. We always have to be careful to make sure we're not overstepping any securities laws, which is why I think decentralization is important. It's not that the token holders have this expectation of profit based on the efforts of Magic Machine, but rather that there's a system that's built...that is meaningfully decentralized... [that] becomes self-sustaining as it goes."

Forgotten Runes & Decentralization

Dotta also speaks about different ideas for meaningful decentralization of Forgotten Runes: The digital assets need to be part of normal standards and interoperable with the broader market. Supporting smart contracts also fall into this category. Wizards meet this requirement. Dotta says the most significant contract for Forgotten Runes is The Book of Lore, which he says is decentralized in the most important way.

"We can't turn off The Book of Lore. We can't prevent holders from writing in it, and so the Book of Lore is decentralized."

On the topic of the Book of Lore, Dotta speaks about the contracts on Ethereum versus the clients that host the content. For example, Magic Machine doesn't want to host NSFW content, so the client on the official site which displays the Book of Lore will not show NSFW entries. However, this does not mean that Magic Machine prevents holders from writing NSFW entries. This is a part of the decentralization. Dotta mentions the client built by TV which does host NSFW Book of Lore entries called "Forgotten Lewds".

More on that subject, Dotta says that he wants to make the Forgotten Runes website open source again, because that makes it much easier for people to build on top of. He says it is closed now because they don't want to leak any upcoming surprises that might happen.

Dotta also speaks about "Canon Decentralization" and the idea of "Ours Over Official" While Magic Machine does work to create foundational material, the true canon of the Runiverse is the Book of Lore.

"You are your Wizard, and the rest of the franchise is really subject to whatever is in the Book of Lore. It's the Book of Lore that...tells The Loracle what's true in the Runiverse, and it's from the Book of Lore that we pull the stories for the comic, the art, the show, [etc.]"

Elf says what's fun about The Loracle is that it helps to bring continuity to any sort of developing canon within the Runiverse. Dotta mentions The Loracle is rudimentary in that right now it searches for lore and tells you what it found based on a few entries, then forgets it. Dotta says for decentralization, The Loracle should also be open source. The data (The Book of Lore) is already open source. Dotta has also created a dataset for The Loracle that has been uploaded to Hugging Face. Dotta notes that his Loracle code is "pretty messy", and he isn't quite ready to share it, but he says that it needs to happen. Another pillar for decentralization is around IP rights and economic decentralization. Magic Machine wants to protect the freedom to create, but also protect the freedom to earn.

"Magic Machine shouldn't be the only business built on Forgotten Runes."

Dotta says it's "super important" to preserve these principles of decentralization now so that projects in the future have a solid footing to build a real business. "Every new economic center strengthens the entire network."

"Nearly everybody enjoys these IPs because of their eternal archetypes, but there really has never been a serious, large fantasy IP that has allowed for economic decentralization, so we're going to be the first."

The XRP Verdict

Following this, the team is asked about the XRP verdict and how it relates to Forgotten Runes. Dotta thinks it's early to say that you can launch a token without consequence in the US. Dotta says he doesn't understand the court circuits super well, but he would be surprised for it not to be appealed.

"Ultimately we need laws from our congresspeople, but that seems like years away."

He says that you might be able to launch a token if you don't charge for it. Dotta notes what he finds interesting about the Ripple case is that when Ripple sold some of their tokens on the open market, they did so through a third party, meaning the people buying those tokens couldn't have known the money was going to Ripple. The judge of the case seemed to think that didn't imply expectation of profit through the management of Ripple, which Dotta says surprised him. He says it's hard to know if that will hold up, but says if you are careful, it's a good sign. Dotta says:

"I don't know that I'm brave enough to launch an ERC20 any time soon; we'd need some better legal council before we do that."

Elf says it established a bit of judicial precedent but didn't give any clear regulatory guidelines.

Closing Thoughts On Open Source Gaming

Dotta circles back to his idea of a fun CC0 collectible card game and puts out a call to the community to get in touch if anyone enjoys TCGs and knows of any open source games or other trading cards games that Magic Machine could borrow mechanics from, revitalize, or acquire.

Elf asks for any other thoughts on decentralization, and Madotsuki notes he thinks that games are where the idea really shines, referencing a fan-made Metroid 2 game that Nintendo issued a Cease and Desist for.

Dotta says he would love to create asset packs with the 3D Forgotten Runes models. "I would love to be able to build more asset packs out of the Forgotten Runes assets...Part of building a decentralized infrastructure is lowering the bar by building these kinds of pieces."

Cult Content

With that, Elf outros the show. Though it was not covered in this week's Wizard Wednesday, take a look at some of these ideas put into action by the Forgotten Runes community — collected in Tania del Rio's 26th Issue of The Cult Content Chronicle.