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The Hoboken, New Jersey-based company hopes to transform games by adding new revenue streams powered by cryptocurrency, blockchain, and other technologies.
Zebedee enables programmable payments and small transactions to power economies for virtual worlds with near-zero fees. That is, it takes the big transactions fees out of blockchain-based cryptocurrencies such as Bitcoin and enables much smaller transaction sizes.
Lakestar led the investment round, with participation from Initial Capital, New Form Capital, TVP, and numerous gaming angels investors, including CCP Games (creator of Eve Online) CEO Hilmar Veigar Pétursson, Alexis Bonte, Chris Lee, Timo Soininen, and John Salter.
Existing investors Collab + Currency, Cadenza, and Fulgur Ventures also participated. With the money, Zebedee will accelerate development of its tech and continue onboarding game developers to its end-to-end game payments platform. The payment service provider will also continue to scale its compliance capabilities, enabling games developers to capitalize upon the play-to-earn (in which players can earn cryptocurrencies as rewards for playing games) trend without regulatory risk, the company said.
Zebedee hopes its transactions will unlock massive untapped potential from play-to-earn, which has powered the growth of games such as Sky Mavis’ Axie Infinity.
The lower the minimum transaction size, the more economic activity gets unlocked in games. But with Bitcoin and Ethereum, the transactions have been slow and they require a lot of computing power, resulting in high transaction fees that make small transactions impractical.
With Zebedee, nanotransactions as low as $0.0005 are both technically possible and economically viable due to extremely low fees, the company said. With the rise of the digital economy and the new financial paradigm offered by Bitcoin, there is an opportunity for game developers to integrate the currency of the Internet into their games as a new method of monetization.
Zebedee said it gives game developers the tools to add financial transactions to any in-game interaction through simple application programming interface (API) calls. It also facilitates the sending of in-game currency across games, as well as into the real world.
The company was founded in 2019 by CEO Simon Cowell, André Neves, and Christian Moss. In an email to GamesBeat, Cowell, an experienced institutional investor who was fascinated by Bitcoin, said he saw the immense economic implications virtual worlds will have on the future.
The CTO, Neves, was a software engineer who started playing around with Bitcoin and become one of the first qualified Lightning Network engineers. Since then, Neves has been dedicated to establishing instant, frictionless and (almost) free transactions. The gaming lead, Moss, has been a pioneer in Bitcoin-powered game development since 2013. He was the first person to release an iOS game with Bitcoin, and he said he was the first to experiment with the use of nonfungible tokens (NFTs) across multiple games.
Players of Counter-Strike: Global Offensive (CS:GO) use Zebedee Infuse and Zebedee Wallet to compete for Bitcoin in one of the world’s most popular online games. It has also demonstrated the viability of integrating Zebedee’s offering more widely across games of all genres, as numerous developers are now integrating Zebedee’s API.
“Blockchain changes what is possible with a game,” said Ben Cousens, a principal at Lakestar, in an email to GamesBeat. “Players now seek to be rewarded for their time, want to own and trade digital assets, and expect to gain value for their skill. Zebedee enables any developer to build play-to-earn games to serve this demand with an out-of-the-box solution that is staggeringly easy to implement.”
The company has 25 employees and it has raised $15 million to date.
The tech side
Zebedee runs on the Bitcoin Lightning Network, which is a second layer on top of Bitcoin that enables instant transactions with near-zero fees.
This means that the environmental impact of the platform is practically zero and it does not change if transaction volume increases. To put it more simply: Scaling Zebedee has no environmental effects, the company said.
The Bitcoin blockchain itself uses a lot of power, as is well documented at this point. But Zebedee does not add to it. In response to questions from GamesBeat, the company said, “We could also go into how Bitcoin has a very clean energy mix and is actually low-emissions compared to traditional currencies (it uses a lot of electricity, but doesn’t need mints/printing presses, transportation, large storage units etc), but it is not our place to defend Bitcoin mining, because we do not directly rely on it.”
As far as dealing with other challenges such as money laundering, the company said It has a U.S.-based compliance department that has implemented robust “know-your-customer” and transaction monitoring processes in compliance with U.S. money transmitter licensing requirements.
“A major part of our strategy for using the resources we’ve just raised is to scale these processes and make sure we’re reaching the highest standards of compliance with all current and future regulations in all jurisdictions where we’re present,” the company said. “Our goal is to offer game developers a fully compliant platform that they can use without worrying about any regulatory implications and we’re willing to invest heavily in that. We are building a fintech for the gaming industry and, besides building the best payments infrastructure available, that also means building the best compliance infrastructure for the unique challenges that come with gaming, acting on a global scale and nanopayments.”
The company noted that Bitcoin itself is also inherently highly traceable and Zebedee can carry out very efficient transaction monitoring on it.
“Our team features veterans of the crypto space with executive experience from (among other places) Bitstamp, which was the first crypto exchange to obtain a payment institution license in the European Union and is known for very high compliance standards, so a focus on running a clean platform with strict compliance is something we’ve been dedicated to from the start and have experience with,” the company said.
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