Compiled & TechFlow by TechFlow
Participants in this issue : Jason Yanowitz , Founder of Blockworks; Santiago R Santos , Investor
Podcast source : Empire
Asia 's Crypto Boom, Stablecoin Wars, and Crypto's Global Shifts | Roundup
Air Date : September 21, 2024
Background Information
In this episode, Jason and Santi dive deep into their experiences at Token2049 in Singapore. They discuss the staggering size of Asian cryptocurrency exchanges, the emergence of yield-generating stablecoins, and the stark contrast between user adoption rates in Asia and the West. The conversation also touches on founder fatigue in the crypto space, Singapore’s unique governance model, and the evolving venture capital landscape.
Token2049 Review
The scale and atmosphere of the Singapore conference
Yano and Santi discussed the Token2049 conference in the podcast. Santi expressed his mixed feelings about the conference, saying that while he didn’t enjoy attending conferences, it was important to be able to talk to founders and feel the atmosphere. The conference attracted 20,000 attendees, double the number from last year, and felt more like a SaaS conference, with many participants actively negotiating and closing deals.
Asian Market Observation
Yano pointed out that although he previously thought Token2049 was a mostly American event, there were actually a large number of Asian participants, and he emphasized that the Asian market is not just a "bot farm" but a large group of real users.
Santi further mentioned that the development of consumer finance in Asia and the rise of Internet giants have made the application of cryptocurrencies more common, and applications like Grab have integrated crypto wallets into their services.
Surprises and new discoveries at the conference
Yano also mentioned that he found many unfamiliar companies and products at the conference, which shows the diversity and development potential of the crypto industry. He and Santi participated in several panel discussions, including topics on crypto and AI, and investors' views on liquidity and venture capital.
Strong performance by Asian exchanges
Yano also shared his observations about Asian exchanges, noting that their profitability far exceeds that of exchanges in the United States. For example, Bybit is expected to make $3 billion in profit this year, and Bitget, as the fifth largest contract exchange, is also performing strongly in profitability. These data show that the market size and profitability of Asian exchanges are impressive.
The Growth of Cryptocurrencies in Asia
Santi learned from a conversation with a ByteDance executive that the company believes India will be its largest market in the next 5 to 10 years. He mentioned that although China is their main market, India's demographics and demand potential make it a key market in the future.
Santi further pointed out that the market demands in Asian countries vary significantly. For example, Vietnam and the Philippines have a large number of developers, while India and Indonesia are huge markets that are expected to achieve rapid growth in financial infrastructure and demand.
The evolution of crypto platforms
Yano believes that current crypto exchage are transforming into broader financial service platforms. For example, OKX is no longer just a crypto exchage, but hopes to become a comprehensive platform similar to WeChat. With the regionalization of the market, exchanges need to obtain licenses from various countries, which has led to a large number of mergers and acquisitions, and the competition between exchanges is becoming increasingly fierce.
Competition for Stablecoins
Yano also mentioned that the stablecoin market is about to usher in new competition. With the launch of new types of yield-generating stablecoins, stablecoins like PY USD and PayPal will put pressure on the existing USDC. USDC's partnership with Coinbase has given it an important position in the market, but other players are also looking for opportunities to provide competitive products without relying on Coinbase.
The future of the stablecoin market
Santi and Yano looked forward to the future stablecoin market and believed that there might be a situation where multiple stablecoins coexist in the future.
Yano mentioned that Rune's new stablecoin USDs may occupy an important position in the market as user demand for yield-generating stablecoins is rising. They discussed how to gain a user base in exchanges and custody services, and how to promote the popularity of stablecoins through cooperation.
Industry skepticism and prospects
Santi also mentioned that there are more and more doubts in the industry, especially about the new generation of blockchain. Despite this, they are optimistic about the future of the Asian market and believe that the real needs of users and the development potential of the market will drive the continued growth of the crypto industry.
Founder ceases operations
Reasons for founders to exit
Santi points out that many founders stop operating not because they run out of money, but because of a lack of clear market demand and product positioning. He has observed that many startups only recover 20 to 30 cents on the dollar after a period of trial and error. When reflecting on these situations, he found that differences of opinion between founders and a vague understanding of the problem being solved were the main reasons.
Changes in industry talent
Santi expressed concern about changes in the quality of talent in the industry. He believes that the quality of entrepreneurs has been improving over the past few years, but the recent trend seems to be declining. He is not sure whether this change is related to the collapse of FTX and Luna, or due to changes in the regulatory environment. He mentioned that many new founders entered the market in 2021, and many did not have long-term commitments.
The psychological state of entrepreneurs
In conversations with founders, Santi began to focus on their perception of their own identity. He mentioned that many successful entrepreneurs have one thing in common, which is persistence and hard work. He believes that in the absence of sufficient user demand, excellent entrepreneurs may feel frustrated. Even some top technicians may feel lost due to lack of attention.
Storytelling and market competition
Yano believes that many entrepreneurs in the current market rely too much on storytelling rather than actual products. He mentioned that many teams are still able to attract investors through storytelling without clear market demand. Santi also agrees with this view, believing that in the crypto industry, excellent storytelling skills are often more important than underlying technology.
Hope for the future
Despite the many challenges currently faced, Santi is optimistic about the future outlook. He believes that as more institutions enter the market, truly valuable technologies will be valued and high-quality entrepreneurial teams will stand out. He mentioned that projects like Helium have proven the effectiveness of their business models, which will drive the development and competition of the entire industry and encourage entrepreneurs to improve their capabilities and product quality.
Lack of L2 extension solutions
Meeting Observation
Yano noticed at the conference that discussions about large L2 solutions such as Optimism and Arbitrum were almost non-existent. He believes that this conference is not Ethereum-centric, which is different from the past. Tron's presence is very strong here, having occupied an important position as early as the 2018 and 2019 conferences.
The Rise of Bear Chain
Yano pointed out that Bear Chain has done an excellent job of marketing in the region. He found that more people participated in the development of Bear Chain than those who participated in Optimism. This shows that Bear Chain's influence in the local area is increasing.
Santi also mentioned that Bear Chain has done an excellent job in launching its MVP program and that he himself has funded three to four startups based on Bear Chain.
Participants' enthusiasm
Yano further mentioned that although he is not an investor in Bear Chain or its related companies, he was surprised by the enthusiasm of the participants. He mentioned that Bear Chain recently held an event with 10,000 registrations but only 800 were able to enter, which showed great interest and participation.
in conclusion
Overall, despite the lack of discussion of large-scale L2 solutions at this conference, the rise of Bear Chain and the enthusiasm of market participants show that the ecosystem of the blockchain industry is constantly evolving. Santi and Yano expressed their concern and look forward to more innovation and development in the future.
Singapore Market Analysis
Impressions of Singapore
Yano visited Singapore for the first time at the conference and was impressed by the efficiency of the country. He learned from his interactions with taxi drivers that they were friendly and had unique perspectives on social issues in the United States. He mentioned that the drivers were confused by the homelessness phenomenon in the United States and believed that Singapore had taken stricter measures to deal with drug problems.
Social Policy and Governance
Yano also mentioned that Singapore has very strict government policies, such as the age limit for taxi drivers and the high cost of car purchase (including application fees). These policies have effectively reduced air pollution and improved the quality of life in the city. He pointed out that Singapore's public transportation system works well, while the United States faces many challenges, including high crime rates and a dysfunctional political system.
Politics and Talent
Yano also discussed the strengths of Singapore’s political system, arguing that Singapore’s elite often choose to work in government rather than in tech companies or hedge funds. He believes that this phenomenon makes Singapore’s governance significantly better than many other countries.
Sustainability and Scalability
Santi mentioned that despite the success of Singapore’s governance model, the feasibility of replicating it elsewhere remains controversial. He believes this involves the scalability of governance, especially in the blockchain and cryptocurrency space.
Meetings & Events
During the conference, Yano and Santi discussed the level of attendee engagement and the richness of the various side events. Despite the large scale of the main conference, the side events provided a more intimate opportunity for participants to explore topics in greater depth.
Current state of the venture capital market
Yano also mentioned the current dynamics of the venture capital market, especially the difference in returns among top venture capital funds. Some funds have performed well in the past few years and are actively raising funds, while others are facing greater challenges and pressure.
Summarize
Singapore has become a unique market case with its efficient governance and strict social policies. Although the replicability of its governance model in other regions is questioned, Singapore's successful experience in improving the quality of life and social stability is worth learning from other countries. At the same time, the current blockchain and venture capital markets also show new opportunities and challenges, which deserve continued attention.
Venture Capital Trends
Current Fundraising Environment
Yano and Santi discussed the current dynamics of the venture capital market, especially the fundraising performance of some large venture capital funds. They mentioned that funds that previously raised $300 million to $500 million may now only raise $100 million to $200 million. This reflects the change in the market's expectations of venture capital returns.
Return on Investment
Santi mentioned that traditional venture capital returns are usually between 4x and 5x, which allows these funds to rank among the top. They discussed the performance of different funds and believed that if certain funds have poor returns, limited partners (LPs) may reconsider their investment relationship.
Investment strategies and success factors
Yano emphasized that in venture capital, success often relies on finding one or two very successful projects that can significantly drive the overall return of the fund. They cited Dragonfly and other top venture capital firms as examples, pointing out that these firms achieved significant returns by investing in a few successful projects such as Chainlink or Aave.
Changes in the investment environment
Santi mentioned that the current market environment is different from the past, especially in terms of interest rates and economic cycles. He stressed that investors need to constantly adjust their expectations to adapt to new market conditions. He suggested that investors should focus on capturing 50% of cyclical returns rather than pursuing higher targets, which can reduce risks and protect capital.
Personal investment experience
Santi shared his investment experience, noting that he started his career in a low interest rate environment, which affected his investment strategy. He mentioned that despite the rapid changes in the market, it is still necessary to keep a clear head and reasonably evaluate return expectations.
Summarize
The current venture capital market faces challenges, and changes in the fundraising environment and investment returns have prompted investors to re-evaluate their strategies. Successful investment still depends on identifying and supporting projects with potential while maintaining flexibility and adaptability in a changing market.
