Hustler or pioneer? Meet the architect behind S.T.A.L.K.E.R. 2’s canceled NFTs

This week was supposed to be a huge moment for the future of NFTs in mainstream video games, but the celebration was cut short. On Wednesday, GSC Game World announced that it was partnering with popular gaming blockchain service DMarket, which sells NFT items for games like Dota 2 for upwards of $1,000 a pop, to bring NFTs to S.T.A.L.K.E.R. 2: Heart of Chernobyl. Players would get the chance to bid on unique items with cryptocurrency and maybe even get scanned into the game as an NPC. It was a much more ambitious pitch than the comparatively conservative Ubisoft Quartz.

One day (and a lot of angry tweets) later, the project was fully canceled. GSC Game World decided to remove any NFTs from the game on Thursday evening, just an hour after posting a statement that doubled down on the technology. It was a shocking 180 that dealt a blow to the technology’s future in gaming.

pic.twitter.com/mffnmpiQiw

— S.T.A.L.K.E.R. OFFICIAL (@stalker_thegame) December 16, 2021

No one was more disappointed by the decision than DMarket CEO Vlad Panchenko, a champion for the tech and a fan of the S.T.A.L.K.E.R. series. He’d been communicating with GSC Game World for years, attempting to get the studio on board with the tech. After a promising pitch, he finally got the studio to give him what he was looking for, only to have that yanked away in less than 48 hours.

“The thing I was most sad about was S.T.A.L.K.E.R. itself, because I adore the game,” Panchenko tells Digital Trends. “I have no doubt that we will live in a world with tons of games with NFTs, and actually live in a metagame itself. But because of the community not yet understanding what’s happening, S.T.A.L.K.E.R. won’t be part of that metagame. And that’s what I was sad about, because I love them, and now they’re off that grid.”

In an interview, Panchenko explains both how the project came together and how quickly it fell apart behind the scenes. Despite such a high-profile misstep for the tech, Panchenko still has hope for the future of NFTs in mainstream games. Though players who find themselves already skeptical about the prospect of pricier microtransactions with an environmental cost may not be convinced by his vision of the future.

How did the S.T.A.L.K.E.R. 2 collaboration originally come together in the first place?

We had a huge ICO in 2017, so we were pretty much well-known at the time. GSC Game World were friends of a friend. So, they just asked to talk about the blockchain. So I did the first, like, evangelization at that time.

A player looks out at a barren wasteland in STALKER 2.

Since then, we’ve been talking every six months about what’s happening, because they were developing the game and thinking about what else they could do to enhance the experience. So at some point, maybe a year ago, I came to them with a proposal of 100 different things we could actually put together, and they really liked it. New technologies like metahumans, which could make it more fun. They are gamers. I’m a gamer, and I’m a huge fan. We were building that for us together.

Part of this project involved players being able to transfer assets between games. How was that going to work?

The idea was that in GSC’s next game, which they are developing right now, you would be able to use that metahuman there as well …. It’s an item representing the ability of the person to become a better human.

Also, an important point from a legal standpoint, they give the whole IP rights for the items. They allow any other game to use that IP and put it in the game for free, if any other game was willing to use that. And that was amazing stuff.

A digital figure stands in front of text that reads "Become the first meta human."

Right now, we have like three more clients and we’re now sitting together and developing a common lore. So there will be a set of items that are common for three different games. It’s not going to change the economy of those games, but it’ll prove to everyone else that this is important.

DMarket noted that a chunk of money earned through the project would go toward charity. What was the plan for that?

We set specific goals, and when we’d meet them, we’d go and buy specific equipment for children’s hospitals. It’s still going to happen. It would be unfair if someone can’t get their important equipment because we couldn’t explain what we were doing. So we’ll proceed with that, maybe at a slower pace.

We did discuss that there could be some negative outcome, but we did it in a very right way.

What was your reaction to GSC pulling the plans after working on them for that long?

After the event blew up, we actually got more requests, because of the amount of PR coverage and everything. So for us, it’s a huge investment in the platform, and I’m not worried about that, to be honest.

Were you surprised by the backlash the project got?

We did discuss that there could be some negative outcome, but we did it in a very right way. When they just published the announcement two days ago, they saw the negativity and their first reaction was, let’s publish the explanation. Because it’s a good thing; we just have to explain it. We helped them craft that.

Ten minutes later, it seemed that the negative reactions were stacking more and more. So, they decided to delete it. They called me and said, “Vlad, we’re going to pull off, because it’s emotionally too much.” It’s physical cyber-bullying.

We have to talk more about the blockchain and NFT, and we have to lay down more positive experiences, because the press was mostly negative. It’s called a Ponzi scheme and it’s not. Maybe a month ago, Tim Sweeney, the CEO of Epic Games, was saying that NFTs are bad for the industry. When I was asked about my main goals for the next 12 months … one was to prove that Tim Sweeney is wrong and show him that this is beautiful. It can enhance the experience, it’s gonna be amazing.

From an outsider perspective, it kind of does look like a Ponzi scheme, with everyone buying and selling to more people. Why is it not one?

I have a master’s in history. I read a lot about the history of the world. Any time there was something new, the first people coming were hustlers. With Bitcoin itself, it all started with Silk Road. It started with buying, selling, and trading some really bad stuff. But that was the very beginning of it. Right now, so many good things and applications are being built. Right now, a person anywhere in the world can get access to capital, use it for its own good, and bring it back. This is freedom.

I've been wondering how the business model for "play-to-earn" games, which are raising billions of dollars and being adopted by industry titans from Ubisoft to Will Wright, could possibly be sustainable.

Think I figured it out! pic.twitter.com/7UmKkhZlXi

— Jason Schreier (@jasonschreier) December 13, 2021

Sometimes in the very beginning, it starts with some bad things. That’s fine. Smart people will come, creative people will come, and we’ll see some beautiful things.

How do you think this project’s failure is going to impact the future of NFTs in mainstream gaming?

I believe that we set a very important example. EA, Square Enix, and many others are planning some announcements. Now they see what’s right, what’s wrong, what’s working, what’s not. You should first evangelize and explain what you’re going to do. The hate speech is like 90%, and you just can’t help it. So I believe we actually helped a lot with this example. And helping the industry will help ourselves as well.

Are these microtransactions? Yes. Is it more money people are spending? Yes.

What do studios need to do if they want to prove to players that this technology is good for gaming?

First of all, we need good examples. For the first people who are doing something new, it’s always hard. So we’re kicking off the doors, and that’s sometimes painful. As they say, it’s a first mover disadvantage. Yesterday, I saw a tweet from a journalist who said that anytime you see so much hate and suppression, it means that the amount of change which will come is amazing. Do you want to still have buttons on your phone? I’ve seen videos from 1981 where people were laughing about the internet.

The homepage of NFT marketplace DMarket.

We probably need to set the expectations right from the very beginning with more detail. We were maybe in a little bit of a bubble, understanding so much more than the community understands. We should have started explaining things, then building up the trust, and then building.

Some people just see this tech as more expensive microtransactions with artificial scarcity. What’s your counterargument to that?

They’re 100% right. Are these microtransactions? Yes. Is it more money people are spending? Yes.

But it’s just 0.01% of what is actually happening. In real life, if you buy a phone or keyboard, it’s a transaction. But you buy what you want. This is you deciding what you want to do or how you want to spend your money. Will you spend more? Probably. Will you have more fun? Yes. We will be able to express ourselves and change everything. So this is inevitable.

Is there any reason this stuff has to be so expensive?

It doesn’t. When I play Counter-Strike, I have maybe two expensive items. I love them, I just love the design. This is just what I want. It’s my decision, nobody’s pushing that in my throat.

Counter Strike skins appear on the DMarket NFT shop.

One of the questions we talk a lot about with game developers and publishers is “how do we manage all that from an economical standpoint?” Start by not selling any items which change the game balance. Just give me the opportunity for me as a human to look different. Connect me with another person who will actually create that outfit for me. That’s it.

It’s the same as physical goods. This is what has to change the mindset. It’s not like artificial scarcity; it’s just scarcity. If you want to buy a cryptocurrency do it, if you don’t, don’t.

Why does this have to be done with blockchain at all?

The only fair answer from my standpoint is interoperability. That’s a holy grail for everyone. I did speak with the guys from Activision Blizzard. And they were not able to do the interoperability between the different Call of Dutys because there are different studios, different databases. But at the moment, it’s just one item and I, as a game developer, can decide whether I allow it to come to the game or not. And then maybe I decide to allow it, because the people will come and I will maybe sell them other experiences, but they will be able to look the way they want. That’s the holy grail.

You and me and everyone will live in a metagame in maybe five years. 

The environmental concerns are the biggest sticking point for many. How do you address that challenge?

We won’t be able to change that. Bitcoin and Bitcoin Network will still require lots of energy. All Layer 2 networks, like what Polygon is doing or what we’re doing with DMarket, require as much energy as a server in AWS or Google Cloud. So that’s totally fine.

We don’t want to require that much power to trade an item. It’s just crazy. From a technology standpoint, you’re not able to trade that many items or have that ease of use if you have to mine every other transaction. Maybe like 90% of people who work right now in DMarket, the younger people, are worried about the environment, and I’m happy that it’s changing.

What’s your grand vision of what this technology can do for gaming?

The maybe scary, but true answer is that you and me and everyone will live in a metagame in maybe five years. This whole world will become a metagame. The applications built on top of it, the software, the products, the new connections and creativity is the world we’re going to live in.

This interview has been edited for length and clarity.

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