Dear Friends and Family,

You may not know this, but Germany has played an important role in the history of Ethereum.

The Genesis block, the first block of the Ethereum blockchain, was mined (those were the days of proof-of-work) on a Berlin Ethereum node on July 30, 2015, marking the official launch of the Ethereum network's Frontier phase.

Today, there are over 14,197 Ethereum nodes worldwide. According to Eth2 Nodewatch, no country has deployed more nodes than Germany, currently counting 4,977.

Who would have thought?

ETH Munich

Since the early days of 2015, there have been Ethereum events happening in many cities around the world.

Berlin has hosted a handful of ETH events, but Munich, the city that prides itself on being at the forefront of the digital revolution, has never had one.

Our Indian colleague Sagar, a self-declared Bavarian Lederhosenträger since 2013, decided that this could not stand.

Under the banner of the PretzelDAO, he and the board members of this Foundation (Serge Lotz, Christian Ziegler and Nick Stracke) organized the first ETH Munich co-hosted by the Technical University of Munich (TUM), TUM Venture Labs, and Blockchain Founders Capital.

Needless to say that they could only do it with the help of countless volunteers and generous sponsors.

It took place on the weekend of August 11-13, 2023, on the TUM campus at Garching Forschungszentrum, just outside of Munich.

192 Attendees and 142 hackers from 20+ countries arrived armed with their laptops and sleeping bags for a 36-hour coding frenzy.

The hackathon was a great success, with many exciting projects being developed.

In typical Bavarian fashion, it ended in a beer garden.

It was also a great opportunity for people from all over the world to come together and learn about Ethereum.

With its strong attraction for technical talent and deep commitment to innovation, Germany is still well-positioned to become a major hub for Ethereum development in the years to come.

To those who say that Europe will play no role in future technological innovation, I say: "Don't give the naysayers too much headspace. It's up to us to make things happen. Complaining never changed anything."

You can read more about the hackathon on our blog.

Gamescom

With already three portfolio companies in the Gaming space under our belt, Ben (our uncontested gamer-in-chief) and I ("Microsoft Solitaire" - gaming level apprentice) took a trip to Cologne to attend Gamescom 2023.

‍Gamescom is the world's largest gaming trade show, with over 300,000 visitors and more than 1,000 exhibitors from 100 countries.

A must-go event for every gamer.

Our key objective was to understand the state of Web3 in gaming and meet the founders of our current and potentially future portfolio companies.

The early days of Web3 gaming were characterized by a number of poorly made games that focused solely on the speculative crypto side, with little regard for gameplay quality.

The rise and fall of Axie Infinity is a prime example of the lack of sustainable product-market fit.

To understand the potential of Web3 in gaming, it helps to take a step back and understand what blockchains are all about.

At the core, they are a way of registering and transferring ownership rights, whether for copyrights, currency, shares, or real-world or digital assets.

As Christina Macedo, founder of Ready Games Network, told us in Cologne, "Gamers are starting to see the advantage of being the owners of their creations and data.”

“Web3 allows gamers to own their in-game assets across platforms, for the lifetime of those assets.”

“This, and the platform-independent ownership of a gamer's data kept in their personal wallets, is only just beginning to be explored."

Web3 is all about giving users ownership and control over their data and assets.

The number of iterations in Web3 business models is so similar to the early days of the internet, when companies like Webvan and Pets.com failed in 2000 only to see the same business models become successful twenty years later when clients were ready.

So, just because early attempts at Web3 gaming failed doesn't mean that the advantages for gamers and content creators aren't convincing enough.

It simply means that game developers need to learn from the mistakes of the past and build better products.

Sending emails from your Nokia communicator was no fun. The iPhone had to come along to get the user experience right.

Portfolio Snapshot

At Gamescom, we spent an hour with Carsten van Husen, the CEO of our portfolio company ELEET Games.

We have a particular interest in founders with a lot of industry experience, and Carsten fits our investment profile perfectly.

He is a veteran in the gaming industry, having served as the CEO of Karlsruhe-based Gameforge (a major German gaming success story) for ten years.

Carsten gave us a demo of "Oathbound," the latest release from his studio, and explained his vision for Web3 gaming.

He believes that one of the key advantages of the Web3 architecture is the reduced customer acquisition costs, as the community can be financially incentivized through tokens.

Gaming used to be a hobby that was not monetizable.

However, in the Web3 universe, the trading of NFTs and revenue sharing creates an opportunity to not only enjoy the game but also make money from it.

Our takeaway from Gamescom is that the value proposition of Web3 and blockchain for the gaming industry and players is strong.

Digital ownership of assets and personal information, the opportunity to co-own the value of a community, and the portability of assets across platforms and games are all paradigm shifts that may be controversial now but will ultimately prevail because they provide undeniable benefits.

We are proud support founders in the gaming space like Carsten, Shail Mehta from Gameboard, or Jared McCluskey from The Mirror.

Token2049 in Singapore

Sagar and I will be attending TOKEN2049 in Singapore from September 11-15 to meet potential fund investors, venture capital colleagues, and founders.

If you are in town during that week, please do not hesitate to reach out.

We would love to meet you.

Recommended

I recently enjoyed reading the book "Chip War: The Fight for the World's Most Critical Technology” by Chris Miller.

It is an epic account of the decades-long battle to control microchip technology, the world's most critical resource.

The book explains:

• Why chip production moved to Asia early on (higher dexterity of Asian workers)
• Why modern chip production is the single most complex production process in the world (replicating just one laser in an extreme ultra-violet system requires assembling 457,329 parts)
• How the automotive chip shortage during the COVID-19 pandemic was entirely the fault of car companies (they canceled orders in anticipation of lower demand)
• Why China should have no interest in making things complicated around Taiwan (because producing the latest chip technology in other parts of the world will not be an alternative for decades)

‍

The book is full of insights and analysis that will help you understand the chip industry and the global geopolitical landscape.

And I promise you that you will not be able to put it down until the very end.

We’re investing

We're always on the lookout for founders leveraging Web3 tech to solve problems 10x better, faster, or cheaper.  If you should come across a great team in this space, we would love to hear about them.

As always, if you have any comments or questions, you can reply directly to this newsletter.

Thanks for reading!

Wolfgang, Ben and Sagar