At a Glance
Galaxy Interactive managing partners Sam Englebardt (media background) and Richard Kim (financial background) co-founded the fund in 2018, with the core thesis that immersive digital experiences will become the dominant mode of human interaction in the future. The two believe that Web3 is driving the convergence of art, finance, and gaming, but the most overlooked risk in the market is: bringing a zero-sum game mindset into Web3, which should be an environment of "abundance," and conflating financial KPIs with real usage KPIs.
Theme 1: Digital Art — "Come for the Market, Stay for the Art"
Sam Englebardt argues that NFT art is reshaping the underlying logic of art collecting, and the power structure of the traditional art world is being redrawn.
- Historical Context: Generative art is not new; it can be traced back to the practices of conceptual artists like Sol LeWitt in the 1950s and 1960s. Philip Gallanter defines it as: "Artists use a system (natural language rules, a computer program, a machine, or other procedural invention) that is set into motion with some degree of autonomy, ultimately resulting in a completed work of art." The key point is that this is not the same as algorithmic art — generative art has decades of history, while blockchain technology has, for the first time, brought "global scarcity and global status" to native digital works.
- Mechanism Breakdown: The Art Blocks platform exploded because it combines three elements: Robinhood-style speculation (discussing which series will rise), the "unboxing" mechanism from gaming (each piece within a series is unique, determined by random entropy at the time of minting), and algorithmic creations that even the artist has not curated. This stands in stark contrast to the traditional art world: traditional collectors can hardly participate in the artist's creative process, while generative art collecting inherently includes a direct relationship with the artist, community interaction, and the experience of "participating in the creative process."
- Data Chain: Taking Dmitry Cherniak's Ringers series as an example, the floor price rose from 0.1 ETH to approximately 100 ETH. He subsequently launched the "Rapture" experiment: 50 holders of Eternal Pump each received one Rapture, but if anyone sold or transferred it, the supply of Rapture would expand from 50 to 666 — over a one-year period. As of the recording (about one month later), no one had defaulted.
- Extrapolation and Falsification: Sam believes that if generative art eventually becomes part of the art historical canon, early collectors and "brokers" will wield significant power in shaping the direction of the field. However, Richard adds a key risk: the infinite supply problem. On open minting platforms (such as FXHash on Tezos), supply is effectively infinite, and the community becomes the new "gatekeeper." Therefore, Richard argues that a "beta strategy" (i.e., index investing) for generative art is a poor approach — value will concentrate on a few "blue-chip artists" and "platform proxies" (such as Art Blocks' first series, Squiggles).
Theme 2: The Triple World of Financialization — "Don't Be a Trader, Be a Builder"
Richard Kim argues that Web3's "financialization of everything" should be broken down into three distinct domains, and the greatest danger today is conflating them.
1. Speculative Domain: Tokenization massively expands financial infrastructure such as markets, price discovery, and lending.
2. Participatory Domain: Zero capital entry, earning tokens by participating in networks/DAOs.
3. Consumption Domain: Using tokens to purchase NFTs, game skins, etc.
- Core Judgment: "Don't be a trader, be a builder, and play the game of abundance." Richard illustrates with his own experience: In 2015, he bought 10,000 ETH at $0.97, sold three weeks later when the price rose to $2.25, and ETH never returned to that level. He believes that zero-sum thinking is the most destructive mindset for entering Web3 — Web3 is an environment of abundance, not scarcity.
- Risk Warning: Retail investors are not yet prepared for the psychological shock of "financializing everything." As an asset with volatility exceeding 100%, token price fluctuations trigger constant anxiety over "should have sold at the high, bought at the low," ultimately "killing you." Richard emphasizes that "earning without capital outlay" is the key to long-term sustainable participation in Web3.
- Sam's Addition: From personal experience, the "psychological cost" of participating in the NFT world is severely underestimated — the constant notifications from Discord, the always-on pace, the erosion of focus, and the potential for "a generation's radicalization" when financial value disappears. He poses a sharp analogy: "Is this like cigarettes? Thirty years from now, will we look back and can't believe we let 16-year-olds trade these things on their phones?"
Theme 3: Gaming — "First a Great Story, Then a Token"
Sam emphasizes that regardless of technological evolution, the ability to tell a compelling story is timeless; Richard argues that the core issue of tokenomics is not supply, but demand.
- Sam's media perspective: From filmmaking to traditional media investment and then to gaming, he observes that passive "lean-back" entertainment will always have a market, but active "narrative creation" will become dominant. The key lies in balance: user-generated content (UGC) requires sufficient tools and freedom, but also needs a top-down story framework to "guide" — just as a film camera has a limited frame to direct the audience's gaze. "If you can look anywhere in VR, the dilution of the story could become an insurmountable obstacle."
- Richard's tokenomics framework: Citing legendary game designer Raph Koster — "Communities exist because of shared values and interests; currency is to reduce friction with people you don't know, don't trust, and don't like. You build a currency around a community, not a community around a currency." Richard believes that nearly all current Play-to-Earn projects are mistakenly building the token first and the community second.
- The key question on the demand side: "Who will come to buy these constantly inflating virtual items?" He argues that a sustainable virtual world requires "simulating real life" — his 11-year-old son chooses to spend time in Minecraft rather than The Sandbox because Minecraft has "redstone" (basic building blocks for simulating electricity), while The Sandbox does not. User-generated content (UGC) is the core of a sustainable simulated environment, but UGC cannot function in a vacuum — it needs a top-down story to unite it.
- The lesson from Diablo 3: Blizzard "internalized" the behavior of players trading items on eBay in Diablo 2 by introducing an auction house, but as a result, all in-game behavior was driven by extrinsic motivation (making money), destroying the core player experience. Richard sees this as the central argument of blockchain game skeptics, but believes it can be improved: allow players to earn "soft currency" (sellable) through time investment, while reserving "hard currency" (the ecosystem's economic rent) for more core believers — and throughout the process, "make players not even realize this is crypto."
- Investment perspective: Richard is highly skeptical of projects that call themselves "platforms" from the outset — "Any pitch that says it's building a platform with zero users, I immediately view with suspicion." The successful path is: first create a world and experience (top-down), then monetize through UGC and Web3.
Theme 4: Divergence from the Web3 Investment Community — "FDV Illusion" and "KPI Confusion"
The two guests highlighted two widely overlooked issues in current Web3 investing.
- Richard's "Token Incomparability" Argument: Two seemingly identical tokens — one launched fairly (no insiders, no lockups), the other with 25% allocated to investors, 25% to the team, and a standard four-year unlock schedule — the hedging characteristics of the latter resemble binary options rather than continuously liquid assets. The current market compares tokens using fully diluted valuation (FDV), but FDV is a "book value top mark" that fails to account for liquidity depth and unlock timelines. The result: "We are seeing bad projects raising funds at valuations of $100–200 million that would never secure capital outside of Web3."
- Sam's "KPI Confusion" Argument: "Conflating financial KPIs with actual usage KPIs is a mistake even some fairly sophisticated investors are making." They look at token price performance and infer game success or user engagement, but "in so many projects, actual usage is zero." Compared to traditional gaming, the user numbers for these projects "shouldn't even count as a blip," yet their valuations are astonishingly high.
Mentioned Positions
| Position |
Analyst View |
Key Data |
| Art Blocks (Platform) |
Bullish (as a generative art curation platform) |
The first series, Squiggles, is seen as the "seed-stage convexity" of the platform itself; the Ringers series floor price rose from 0.1 ETH to approximately 100 ETH |
| FXHash (Platform) |
Neutral (open minting, unlimited supply) |
The community acts as the gatekeeper; RGBs (created by the founder) is viewed as a proxy for the platform |
| Dmitry Cherniak (Artist) |
Bullish (as a generative art pioneer) |
Ringers series; "Rapture" experiment: 50 supply, expands to 666 if sold |
| Beeple (Artist) |
Bullish (as a historical milestone) |
"Whether he becomes a chapter or a paragraph in the book remains to be seen, but he is already solidified by his close association with this moment" |
| Matt Kane (Artist) |
Bullish (as a case of community engagement) |
Gazers series: evolves over centuries based on the lunar cycle |
| Quantum Art (Platform) |
Bullish (the fund invested in equity plus two Twin Flames) |
Twin Flames floor price exceeds 108 ETH |
| Axie Infinity |
Risk warning (as an early but non-mainstream model) |
99% of blockchain games fall into two categories: "buy NFTs and stake to earn" or "buy Axies and battle to level up" |
| Minecraft |
Positive reference (as a benchmark for UGC simulation environments) |
Its "Redstone" system is core to a sustainable virtual world |
| Diablo 3 |
Risk warning (as a cautionary example) |
The auction house undermined the core player experience |
Judgments Worth Remembering
1. "Don't be a trader, be a builder, play the abundance game." — Richard Kim believes that zero-sum thinking is the most destructive mindset for entering Web3, which is an environment of abundance rather than scarcity.
2. "Communities exist because of shared values and interests; currency is meant to reduce friction with people you don't know, don't trust, and don't like. You build currency around a community, not a community around currency." — Raph Koster's response to Richard, who considers this a principle every PFP community should ponder.
3. "FDV Illusion" : Richard points out that fully diluted valuation (FDV) is a "mark-to-book top," ignoring liquidity depth and lock-up schedules. Two identical tokens, due to different distribution structures, can shift from "continuous liquid assets" to "binary options" in terms of hedging characteristics.
4. "Conflating financial KPIs with actual usage KPIs" : Sam argues that many investors infer game success from token prices, but "actual usage is zero"—compared to traditional games, the user numbers of these projects "shouldn't even count as a blip."
5. "First a great story, then a token" : Sam emphasizes that the ability to tell a great story is timeless. UGC requires a top-down story framework to unify; otherwise, it will "go off the rails."
6. "Make players not even know this is crypto" : Richard believes that introducing crypto concepts in a "soft currency/hard currency" layered manner into games, allowing players to earn sellable soft currency through time investment while reserving hard currency for core believers, is the path to mainstream adoption.
7. "Is this like cigarettes?" — Sam raises a sharp question: Looking back 30 years from now, will we find it unbelievable that we let 16-year-olds trade assets with over 100% volatility on their phones?
8. "Any pitch that claims to be a platform with zero users immediately raises my skepticism." — Richard believes the path to success is: first create a world and experience, then monetize through UGC and Web3, rather than calling yourself a platform from the start.