Asia 2023
A few weeks, I spent a week traveling through Seoul for Korea Blockchain Week and Singapore for Token2049.
During my time in Korea, I learned that gaming, NFTs, and IP are pretty big areas of focus for the ecosystem there. One example is WEMADE, creator of the extremely popular video games series, Legend of Mir, which has sold over 500 million copies to date, has developed WEMIX, which is their web3 gaming platform. Another example is Story Protocol which is building an open IP infrastructure to grow the creativity of the internet era. Lastly, listing on Korea crypto exchanges continues to be an early go-to-market strategy for token distribution, Upbit, Bithumb, and Coinone.
In Singapore, regulations has been a bit more positive than in the past. Crypto licenses exist. Areas of interest include tokenization of real world assets, financial infrastructure/asset wealth management for crypto, and payments. In addition to Singapore being a fintech hub, there is co-working space exclusive for crypto startups. The ecosystem that has been fostered makes Singapore attractive as a center for an Asian hub for crypto startups looking to scale and execute on business development with developers, trading firms, and institutions.
Check out my panel at Token2049 (video and transcript below)
My responses from TOKEN 2049 Singapore Panel – Identifying the Next Wave of Generational Crypto Projects
Moderator: Jason Choi, Co-founder of Tangent
Panel guests include Paul Veradittakit, Joey Krug, Alex Pack, and Min Teo
Jason: Let's begin with introductions, shall we?
Paul: I'm Paul Veradittakit, a managing partner at Pantera Capital. We've been involved in the cryptocurrency and blockchain space for a decade, covering infrastructure, equity, tokens, and applications. Our investments range from seed to series B, with a strong focus on Asia and APAC. About 40% of our investments are outside the U.S., and we're excited to expand our presence in this region.
Jason: One notable development in the crypto world is the emergence of Friend.tech, a social media app. This is somewhat unique as social apps in crypto have been scarce. What's your perspective on integrating social applications with blockchain technology?
Paul: I believe Alex is also exploring this space. We invested early in Deso, a project that originated from Big Cloud. The appeal of integrating social and crypto lies in two factors. Firstly, it attracts individuals who want to speculate and engage in novel activities within the crypto world. Secondly, simplifying the onboarding process, reducing the upfront crypto complexities, is a fascinating approach.
Friend.tech has successfully attracted early adopters, and I see immense potential for disruption in the social sphere. Blockchain offers permanent storage and censorship resistance, creating an economic layer where content monetization and user incentives can thrive. Furthermore, the introduction of NFTs can enhance loyalty and offer opportunities for data accumulation, leading to unique identity solutions. These innovations, in the hands of the right entrepreneurs, can redefine the landscape, making crypto an enabler rather than the focal point.
Jason: In this vast crypto landscape, which investment avenues are you particularly enthusiastic about?
Paul: We've transitioned from merely investing in cryptocurrencies to investing in companies that leverage crypto as a foundational technology. This expanded scope encompasses various industries. At Pantera, we've assembled a sizable team to manage both investments and portfolio services. We've developed specialization in different areas, reflecting our evolving interests and expertise.
I started my crypto journey in 2014, focusing on retail and institutional crypto adoption, security, and early crypto applications. As we expanded globally, we emphasized establishing liquidity across regions to facilitate on-ramps, cross-border payments, and decentralized finance. My expertise centers on local brokerages, financial infrastructure, and developer tools, with a recent foray into consumer-oriented applications and gaming. We adapt our focus based on jurisdictions, catering to regulatory differences across regions like the U.S., Europe, Korea, Hong Kong, Singapore, and Japan.
Jason: De-Fi has been a common theme among all of you, and it's an area of significant investment. What are the next frontiers for De-Fi? It seems that recent projects have offered incremental improvements rather than groundbreaking innovations.
Paul: Both Joey and I are enthusiastic about Uniswap. We've made investments in decentralized derivatives because we anticipate institutional participation in the space. Collaborative investment in a company that focuses on decentralized derivatives is an example of this approach. Another significant development is the tokenization of the dollar, which is pivotal in De-Fi. Companies like Bitso are facilitating cross-border payments and crypto adoption in Latin America through the tokenized dollar.
Stablecoins have captured our attention, particularly in Japan, where they hold immense potential. Companies like Ondo and M^Zero are offering infrastructure for tokenized treasuries and yields, which is an exciting trend we're monitoring. Bringing assets onto the blockchain, including stocks, provides enhanced security, transparency, 24-hour trading, and interoperability within an open financial network, making it an area of interest for us.
Jason: Your investment mandate includes finding projects that can onboard the next billion users. What challenges are preventing Web3 apps from achieving the widespread adoption seen by Web2 applications like WeChat?
Paul: There are three primary obstacles to Web3 app adoption. First, security remains a concern, especially with the increasing frequency of hacks. Enhancing security and building trust are essential. Audits, both centralized and decentralized, as well as insurance products, will play a role in addressing this issue.
Second, accessibility is crucial, especially on mobile devices. Ensuring that Web3 apps are available on popular app stores, such as Android, is vital. Strategies like creating alternative access methods, as seen with Solana's own phone, are emerging.
Lastly, there is a need for infrastructure that enables the seamless onboarding of users into decentralized applications in a regulated manner. Addressing these challenges will be pivotal in driving Web3 app adoption.
Jason: Founders are facing a unique challenge as they build products in a shrinking market. NFT and De-Fi volumes have seen declines. What advice do you have for founders in this situation?
Paul: Two effective approaches are to focus on product-market fit and geographic expansion. Begin in a niche that makes sense and gradually expand your product offerings. For instance, Alchemy initially concentrated on nodes and later expanded to developer APIs and infrastructure. Stake, another early investment of ours, started in the staking niche and eventually broadened its horizons.
Moreover, exploring new geographical markets that align with your initial success is a viable strategy. Consider regions with similar dynamics where your product can find a foothold. Finally, embrace a go-to-market strategy that leverages channel partners. Collaborate with companies like Coinbase that have existing distribution networks to test product-market fit and subsequently target end consumers.
- Paul Veradittakit
DIGESTS
Why Intel Exchanges Raise a Dilemma for Compliance
Arkham’s “DOX-to-Earn” program encouraging users to reveal IRL identities of blockchain users raises the prospect of digital witchhunts with uncertain consequences, says Marina Khaustova, CEO of Crystal.
JP Morgan Crypto Lead: ‘99.9% of Conversations Are About Tokenized Assets, Not Crypto’
JP Morgan’s blockchain and crypto lead also went in-depth into the banking giant’s private on-chain activity.
BUSINESS
Friend.Tech Users Targeted by SIM Swap Attack, Several Ether Drained
Users tie Friend.Tech accounts to real-world X profiles and phone numbers - which increases security risks.
SEC Claims Coinbase ‘Cries Foul’ in Court Filing to Oppose Case Dismissal
The U.S. securities regulator argued that the age-old Howey Test applies to certain crypto assets, giving it full authority.
REGULATION
Lack of U.S. Crypto Laws Irrelevant to Bankman-Fried Allegations, DOJ Says
The FTX founder’s fraud trial began selecting a jury Tuesday as lawyers spar about what evidence its members can see.
SEC’s Motion to Appeal Loss in Ripple Case Is Denied
XRP rallied about 5% following the decision.
NEW PRODUCTS AND HOT DEALS
Fashion Designer Christian Louboutin and Marvel Turn Superhero Shoes Into NFTs
Comic giant Marvel's new capsule collection with luxury designer Christian Louboutin includes free NFTs for buyers via VeVe.
Ledger and Sotheby's Team Up for Digital Art Exclusives
Sotheby’s collectors will be provided with exclusive hardware wallets from Ledger as part of this collaboration.
LETS MEET UP
Las Vegas, November 16-17
New York City, December 8
Walks and coffee meetings in San Francisco throughout the year!
ABOUT ME
Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.