Insight Across the Asian Crypto Landscape - TOKEN2049 Singapore 2022

good afternoon everyone are you having fun at uh token 2049 oh you all sound very tired let's try it again are you all having fun at token 2049 I like that uh good afternoon I'm Kelvin Koh uh co-founder of Spartan group and um and manage our asset management business uh so Spartan uh for those of you that don't know uh we've been in a space for about five years and we are one of the leading advisory firms in the space and also we have a growing Asset Management business so I run that and I'm very excited today to be on stage with some of my friends here whom I've known for a number of years and without further Ado I'm gonna sort of have each of you introduce yourselves and also your firm or your fun um so the audience can you know understand what you're doing a little bit better hello this is Ryan I'm co-founder and partner the hashed hash started from 2016 as an individual group of investor and with 2017 because of kimchi premium there are so many uh projects came to Korea we made the crypto community and connect their the project to the high profile people in Korea that's how we started now we are based in Korea but we spent to San Francisco and Singapore and Bungalow so we are taking carrying like investment in Asia Market usually but we are also close to the U.S market as well me I'm taking I'm in charge of mostly Asian investment my name's Matthew Graham CEO of Sino we're known for uh our early Investments and legendary firms such as firms and and uh projects such as FTX and Solana and wintermute and our world-class competency is we're now from Egypt to Malaysia and everywhere in between we invest all around the world but we can bring you to uh all these idiosyncratic but enormously important emerging economies such as India and Singapore and greater China etc etc from Egypt to Malaysia great to be here today yeah hi everyone I'm glad and I represent binance you know binance one of the leading Crypt exchanges in the world so I joined binance like four years ago and like right now I'm leading like this broader Asia region like included like APAC like turkey and some other countries so yeah great to be here hi I'm Jason I'm the founder of folius we are a relatively speaking younger firm we've only been around for a year uh we are dedicated to invest in APAC Founders uh both in the region as well as outside of the region uh mostly focusing on applications on the very top as well as info infra and SAS tooling at the very bottom uh for apps specifically with lead investment in stepan with Sequoia back in the days very nice to be here as well great thank you so as you can see uh in our panel our panelists have got extensive experience in crypto space um and uh we're here to talk about you know what's going on in the markets um yeah so to start to start things off um obviously we've had a very interesting year so far to say the least um you know I think the last time I had so much fun was back in 2018. um so yeah just curious to hear from all of you you know obviously markets are pretty ugly um globally not just in crypto but obviously crypto is uh had a more violent sell-off than some of the other asset classes and um you know I'm interested to understand how that's affecting your business or your investing activity and how you're planning to navigate these markets um Jason maybe start with you yeah so we we do public and private Investments I think on the private side um from the Apec founder side especially from the China region uh the macro a headwind really hasn't affected the potential large influx of potential web 2 Founders come into space uh I think for those guys they are driven out of web 2 for a whole host of factors ranging from their comp package tanking because their stocks in the gutter to uh maybe their web to Startup wouldn't be easily backed by uh the web 2 Funds in China but what three is sort of this really interesting alternative for them so the quality and number of Founders actually improved this year uh and they're on the private side I think we are going to probably keep doing those Investments even at faster clip than before um on a public side I think it's been a uh we're going to be more cautious holding a bit more cash large cap beta and in terms of the small Kathleen that we set ourselves up to do initially I think we're really going to wait until the macro environment stabilize and Glenn you run obviously um you know one of the biggest exchanges in the world and you probably see a lot of activity um how has that affected your your business and and you know what you guys are doing yeah so um right now we see different interesting Trends you know in Asia of course we're in the middle like of the bear market right and um it's a fact and um you know the industry and but overall we at binance we're okay with you know with bear Market we think that within bear Market always the strongest projects uh you know Will Survive uh we saw that during previous bear market right and uh we think that uh you know Asia will definitely be one of the key drivers of the next Bull Run when it will start right uh we see that you know there's huge population um in some countries um you know Financial traditional Financial system is not so strong so I think um you know it opens an opportunity for crypto to you know to be uh adopted there so for example like Sri Lanka right so you know Finance Financial system collapse there and right now of course there is huge instability in the world right you know with economy with the politics but actually this instability is really driving Crypt adoption yeah let's see just have a look at Turkey right huge inflation and everyone is encrypted there right right um Matt you um I'm based in China um and uh you know I guess the world's sort of you know watching China right and um uh yeah tell us a little bit about you know what your you know Outlook is and and what you guys are doing sure so I'm we're Based On A Plane these days to be honest the last three places that I was I was New York and before that Dubai and Cairo but but at any rate I mean look number one crypto we should all know by now that it's fundamentally a risk on asset and we have an inflationary environment we have things going on with the pound etc etc so look it's a risk on asset number two um we're starting to mature as an asset class so early on in our journey 2012 Etc crypto was mostly about endogenous factors that is to say what happened with crypto Pro well Bitcoin prices at that time was mostly about Bitcoin itself but we're maturing as an asset class it's about an exogenous factors now so crypto is increasingly correlated to macro events this is just kind of a natural progression that will continue to be more and more true and it's about maturation um but I look at it like this my I fundamentally believe that bear markets are where you make your money and bull markets are where you find out how much money you make so I tend to be very uh counter-cyclical uh and I get really tight when I see people you know buying yachts and they're very happy and and I get very cranky and and stingy and then in Bear markets that's where we get much more aggressive so to me this is like a perfect time the larpers are gone and the True Builders are here and valuations are reasonable and so we are just absolutely open for business yeah can't agree more and what about uh at hash Ryan um you know you're one of the key players in Asia right and you guys have been in a space for a long long time you've seen many cycles um albeit not every cycle is the same and particularly this one I guess we have a bit of sort of this inflation issue um yeah what are you guys doing so uh from last year we are no we're not just only uh the crypto investor but also uh now we are we set up the trading team inside and also uh Venture Builder subsidiary and recently we built a her which is a hash the open research we hired the secretary minister of Korean government treasury so we are talking with uh various like a player in government and FSC which is a CCO career so this bear Market is a perfect timing to uh prepare the next Trend so and also uh from government perspective they have to find make a foundation for uh next crypto ecosystem so we are closely talking with uh with them to make a right uh policy and regulation I think this bear Market is perfect timing and um Korea as well like I think a the web 2 investment is quite flourish but this bear Market is not like a large bear Market in 2018 because whole macro is like crafting now that means I think a huge opportunity to a web stream because uh even web 2 founder has a motivation to move from a traditional Market to Webster and find out the new opportunity so I think uh just for for hashed we will utilize the opportunity to make a more like a bringing like a web to Smart Founders to come here and if already like last year from last year like the difference from 2018 was like not not many scam projects came out like last year I saw so many good qualified Founders came in especially like uh many game Publishers gave Triple A Studio Tech Giants they're all coming into trip to and making a very lizard project so I think we'll we'll see more opportunity opportunity from this year next year great that's interesting the point that you brought about these Tech Giants coming into the space you know obviously we're seeing I mean Korea has a lot of Ip right and I can't remember a time when Korean IP has sort of proliferated so globally right um so I think we can sort of maybe spend a few minutes sort of talking about what's going on in the world of you know gaming and metabus and and and you know music and so on right because that's obviously been a huge area um where Venture Capital has gone into um and I'll be curious to hear maybe this time we start from Ryan in terms of yeah what are you seeing you know out of Korea and and you know how you guys are supporting the growth of the ecosystem yeah so um in Korea especially you know in our uh Venture Builder we are only mostly focusing on the gaming and metaverse and uh K-Pop group the funny thing is like we are making a decentralized Kpop group among our project inventor if we introduced our project most of the foreign investors are like extremely interested in TR K-pop group because like this is a New Concept like you got every many guys like the BTS but nobody so see the decentralized BTS what the digital size BTS mean so so many uh so many uh decision making is happening on the to make the great great uh K-Pop group but fans cannot participate into that uh that Journey so uh now we are like uh we already made a application and selling the nft photocard to you to fans and fans can spend the fans can get a points whenever they bought a photo card then uh they have to spend the points to vote every single uh very important decision making so this kind of experiment is like interesting into from the traditional entertainment company as well like a high overseas the entertainment entertainment company from of pts and SM and other any other Entertainment Company want to copy and learn about how we can go through this this business so I think uh discount this will be uh uh just starting point and any other like entertainment company and contents will join to this kind of uh experiment got it got it and Mary you guys have got um you know people in all the local markets um are you guys sort of seeing the same level of interest and engagement in those places and how are you guys attacking the space so I I mean I I think it really is something that um is very nuanced on a Market to Market basis and so we talked about K-pop and South Korea and you know for example nfts are huge in Thailand I think you really have to look at at each separate Market you can't really although we're here to talk about the Asian crypto landscape today I think it's enormously important to understand that there's massive variation from one country to the other the regulatory challenges are different the adoption uh speed is different the very specific types of things that people are interested in are different so I think it's really important to always keep that in mind it's something I would definitely want to emphasize right hmm I'm glad you have anything to add to that I mean you run sort of uh binance Azure um and you guys also have a pretty live lease at nft Market um yeah I completely agree I think that you know markets within Asia are very very different like you you can't really really like compare like India like with South Korea right and like the Philippines so in some markets you know as in the Philippines you know game five is huge in other markets so they can be like other Trends overall in terms of nft um I think there is some kind of like huge misconception about nft right people think that it's some kind of like picture on the blockchain right but nft overall has like great technology behind it so you can do a lot of things with nft and this is what we're also developing in binance right we have this um you know some kind of Soul bound token so if you like pass devices so you can like mint it uh and I think that this uh kind of um you know of application of nfts has a huge uh you know huge potential and overall yeah in Asia I think the major challenge is of course regulation in some countries such as India Indonesia we see like tax per transaction and it is affecting the industry locally in a bad way in some other countries you know they have you know Regulators have other concerns so I think that it's our like job as you know industry players to educate Regulators more and you know to help them to understand you know how it's better to shape um you know crypto regulation in order to protect users but at the same time in order to give an opportunity to industry to grow yeah Jason um you know you were one of the earliest investors and to step it you know which uh you know obviously has um you know generated a lot of interest earlier this year and um you know brought a lot of uh new people into web3 and and the world of sort of play to earn a move to earn right um what is your perspective on that you know is is uh is play to earn or move to earn Alive and Kicking or you know yeah I think you work very closely with the founders so it would be curious to get a perspective I thought you would never bring it up because uh I was I get nervous sometimes when people bring it up um some of them bought shoes very expensively at the top and some of my friends included so uh usually I apologize profusely um and try to divert the conversation away um I think something we've learned is that the user profile when you introduce a earning Mac mechanics gets altered meaningfully um and to the extent that uh whether it's an entertainment product or a just a usual application uses an inflation token as a user acquisition mechanism uh the ultimate question becomes you know where is that cash flow on the other hand that balances out the inflation and there are certain mechanics that can be implemented to create long-term short-term maturity mismatches that you're printing a token to sort of artificially inflate the value But ultimately the cash flow has to match you know what goes out so we just we sort of put ourselves on an S curve of growth and I think we reached the ceiling of the industry of Dau very very quickly and then we're sort of trying to drive industry growth in terms of okay well we need to onboard more users and how do they actually get fion and off ramp uh and the industry is still a little too early for us to sort of really take it take it away like we would potentially in web 2 and I think going forward uh in terms of the play to earn our move to earn or even using token as incentives what I see is potentially more um careful and constraint attempt and maybe you're not you're not earning but you're like trying to make your initial investment back such that the user profile isn't as altered as much um I think there will be a lot more experimentation in token mechanics to uh force or compel continuous contribution to the ecosystem or I think there's going to be a lot more experimentation on game types that it won't be as one-dimensional or won't be as straightforward Grand grindy and all of those things we see experiments from all the other game studios in the region uh hopefully we'll push the industry forward in the next six to 12 months yeah I mean whatever people's views on step and uh you know I think it's um you know obviously been an interesting sort of evolution right to what we saw with x infinity last year and I think sort of statist Team introduced a lot of interesting sort of token syncs token economics and took that experiment the next stage further you know I think we're all still trying to figure out you know how to make the model more sustainable and um yeah but but I think all of these experiments sort of you know eventually Drive progress right let's take a step back and switch gear somewhat uh and talk about defy um which uh you know I think has also sort of struggled somewhat over the last uh the last year or two um Matt you're pretty prolific defy investor and I just wanted to get your perspective in terms of you know what you're seeing whether you're seeing any new innovation in D5 that that is interesting and and that you guys are spending time on sure so putting aside macro factors I think the primary issue with D5 over the course of the last your plus is that um we've gotten a little bit ahead of our skis in terms of having functionality relative to liquidity so basically what I mean is we have a lot of increasingly specific very highly engineered functionality that has been been built out and it very much outstrips the retail and institutional liquidity that is available to support that functionality especially if we take away the short-term yield farming etc etc so I think really we need uh really the number one thing we need in D5 is onboarding liquidity to support all of that functionality uh institutional and again retail retail of course continues to be an issue because fundamentally we have to be more mainstream friendly I frequently like to think of my mom and my sisters as an example because they're very smart people that are not highly technical they're never gonna like if I have to explain okay so you have the private key and then you gotta potentially protect against hackers and things like that they're never going to use this stuff so we really need to start thinking about what does realistic mainstream adoption actually look like and we need to start thinking about in a regular regulated compliant context how are we going to onboard institutional liquidity because we've already built out functionality that far outstrips all of that liquidity so I think that's the the primary thing that uh I would keep in mind in assessing the defy landscape all right any thoughts on on defy and how do you see the defy uh you know vertical sort of shaping out over the next year or two yeah so um I think uh D5 was a very interesting experiment but at the same time there were so many exploit and love pool happened so I think first of all I think Anonymous characteristic uh is quite tricky point because um I think a regulator think uh this is kind of so many so much black money or or like money laundering is happening on D5 so now after this corruption the the huge difference between before and after is regulator is seriously thinking of this industry especially uh D5 is one of the key industry they have to touch on so uh maybe next era I think uh D5 have to be uh I think they working with the regulator first and like like I said I think that for math setup technical points should be a very easy like normal user cannot use it without any wallet so maybe like centralized entity should be needed to figure out uh provide a better better user experience and also if that accident happened they have to figure out who will recover the the user's money right so I think the kind of things have to be uh complemented right and speaking of regulations obviously uh the U.S treasury um early on this year or a few months ago um also went off the tornado cash right and I know the industry has had pretty polarized view about about that and whether there was regulatory over Rich overreach and a part of the U.S treasury um we'll be curious to get your views um on that um maybe we'll start off with uh Matt since uh you know you're American and you've you've sure so I I think first and foremost with respect to tornado cash I mean I really feel like this is like a rehash of stuff that we did a generation ago which maybe is just dating myself a little bit probably is the number one thing I'm doing right now but look we went through this whole discussion uh a generation ago about encryption and at that time certain types of encryption even the code was illegal and we we had big Court fights about that and eventually it was ruled that um that you couldn't just say that the the algorithm for the encryption was the illegal this is we already did this a generation ago so this is really reminiscent of that to me and I I guess my starting point and you'd probably have a pretty time pretty hard time convincing me to move off this starting point my starting point is that um the code should be okay I don't think you should be able to say get that code off GitHub or whatever um and then you know the Apple location of tornado cash code that's where it definitely gets much more complicated but I'm um I'm not super sympathetic to the idea that you can uh Outlaw something um that you could that you should be able to Outlaw tornado cash because it's uh it does have a higher percentage of non-compliant uses I'm not super sympathetic to that I guess in in general either is the additional thing that I would say yeah yeah obviously you guys have a pretty Global business right and you talk to a lot of regulators in the different parts of the world and you try to you know shape regulations as well I guess um yeah what is your perspective in terms of you know where The Regulators are who's most Progressive and um and and what are some of the policies that you're seeing coming out of place like Dubai for instance where you know binance has also started to build a presence so um yeah we we we see Brittany uh you know loyal crypto framework in like in Dubai so we have like pretty big Hub there uh we also see that uh your you know European Regulators they quite proactive in terms of uh regulation right so there will be like Mika um in Asia I would say that you know regulation is very like uh fragmented right each regulator in like uh in APAC they they have their own views like how to like protect users and what should be you know done and this is what you know I told before um I think we need to do more like uh indication so for example right now we you know we also collaborate with a number of regulators like for example in Philippines in order to you know we were making workshops we uh we're explaining how Crypt is working um and you know provide some insights into the industry yeah in terms of like um they're not the cash and you know those privacy coins I think there will be always be some kind of Demand on privacy right uh and I think there will be like more regulation in the industry and the more regulation there will be the more Demand on privacy will be but again we need to like explain Regulators how this is working right it's like oh you know open source that like anyone actually can like make like a fork or like try to make some kind of like privacy coin right and that's like yeah a broader question whether like it should be banned and you know if if people have you know have rights to you know to be private you know in web 3 space but yeah great um yeah so we've talked a little bit about sort of gaming right we've talked a little bit about defy um and you guys are sort of all sort of um actively investing out of your out of your funds on on very early stage opportunities as well right so I'll be curious to also pick your brain in terms of understanding what are some of the areas the newer areas right that new use cases that you're excited about for me personally you know I think one of the areas that I've been keeping very close steps on is the you know the entire Sports space um because you know there's obviously a massive fan base out there and um and the industry has obviously been around for a long time but hasn't really evolved um and and become digitalized right and um we're starting to see some excitement there over what uh Chili's is doing for instance and so rare and one of the interesting projects that we have personally invested in is is this project called fan control Sports which is building this whole alternative you know Sports League I mean one of the um the the first places they're tackling is American football um so they're playing this um they have physical players that are playing this fantasy alternative fantasy sports league in a real life stadium but um everything about it is different from you know the the NFL right and uh and they give troll to their users the users decide you know which players to to pick you know who goes on the lineup they decide on on the strategy on Game Day itself right so really engaging users and um and uh yeah and I'm pretty excited about sports space in general but would be uh Keen to hear what other areas you guys are excited about um Jason or Ryan anybody wants to take the advice you want to go so um I think a fashion industry is quite interesting because uh like I think a PRP is also just a fashion no if you think about fashion too no the reason why they are caring about fashion is like they want to um Express I'm not like you or I'm flexing something like that and pfp is is actually same as the fashion characteristic so the reason why people are buying like blyc and crypto fungus one of the reasons they want to involve into a community but at the same time they want to show off and show offline flexing I have tons of tons of money stuff like that but if you if you come across to the fashion I think people the demand of the buying the pfp can move to Fashion industry if metaverse is flourished so far the most of the metaverse don't have a traffic much yet but the fashion can draw right the the traffic of the metal verse and if that converge with a game characteristic then the market will be huge so we are like looking for the good fashion um first of all um not just technology but also if they can make a new trend or like with a very prominent art art director you know we are very interested in yeah yeah absolutely I mean obviously we're seeing the luxury Brands coming into the space right Tiffany with their um uh you know crypto puns kind of necklace and Gucci with the nfts and and Dolce Gabbana with the same thing um yeah so certainly an area to uh keep an eye on um what about you Matt anything interesting you see so first of all I love Brian's comment about nfts as flexing here's how I think about metaverse and a lot of related Concepts number one we are spending more and more of our time in the digital realm every day number two human behavior is fundamentally not going to change so what that means is that the full range of human behaviors that we see in the analog world are going to are going to manifest themselves in the digital world now you can't drive a Lamborghini well I mean you could have your your digital Lamborghini but the point is we we have all kinds of ways that we're very familiar with of flexing in meat space and in the analog world those are going to be replicated in the digital world in one way that we're already seeing that is through different types of nft pfps of course there are related issues of identity and and there are a lot of nuances but I just wanted to say that I really like uh what you said there um so what are we excited about um I think we really want to see products and features that have real utility in and of itself and then crypto takes a supporting role uh whether it be for uh accelerating user adoption or bootstrapping Community or enhancing functionality we want to see things that already kind of make sense and then crypto supports and I think we talked a little bit about gaming already but I I think gaming is such an instructive example there are two issues in my view with many web3 gaming projects thus far number one frankly a lot of the games aren't super fun so that's like a big problem and then number two the token economies are extremely reflexive so what that means is that if you don't have a constant influx of new players there's a boom and bust phenomenon both of these fundamentally are related to the fact that these are crypto first projects and what we need to do is we need to reverse that we need to have professional game developers that know how to make something you actually want to play and then we enhance the game through uh through crypto in fact ultimately what mainstream adoption would look like in a gaming context this will take time but ultimately what it will look like is you'll be engaging in a fun game and you'll be doing things with crypto and you won't even not realize or be thinking about the fact that you just that you're currently using an nft or that you did something with crypto just now you won't even think about it like that you'll just think well I'm playing this really fun game so gaming is such an instructive example uh in in these ways and what we really want to see again is we want to see products and features and functionality that makes sense in and of themselves and then crypto supports and enhances things like that yeah yeah speaking of sort of fun games um you know I see a number of these Korean games that have had you know you know relative success you know big audiences that are now sort of starting to inject some crypto elements into the games so I'm hopeful that that's coming um the two games as well that I'm personally sort of I mean we're invested in obviously but you know that I'm excited about that's also going to come uh one of them is called metal core um it's kind of like uh you know shoot a game with Max and all that sort of stuff and the other one is called shrapnel that's a first person shooter so I can't wait for those to come um Jason what about yourself are you seeing any new verticals that are that are interesting to you yeah I think echoing uh Ryan's point and and Matthew's Point um I I really look forward to like consumer brands or consumer experiences that you use what three as like an enhancing module to do better so like the girl band example really hot girls dancing on stage but you have this app that is sort of developed by the girl band and you can really sort of Live sign transactions to satisfy some purposes or if it's a really strong luxury consumer company with this like it's like flexing a status but it's like a membership token and then you get access to all these hot parties really exclusive events and at the sign in your sign of transaction to prove that you have access and what three is there to support you know these ownership of access effectively I think um there's scope to for a lot of uh commoditized web to applications to uh you know really add uh what three uh user acquisition features to accelerate their own growth as well as get a leg up versus competition for example you know why can't somebody Fork Chrome or Brave and built a browser and type feature where if you're just browsing with a really good browser actually get paid to you know browse a website with a you know mobile native wallet as well as nft Marketplace built in somebody's already building that and we funded that unannounced yet um and then lastly I think to support all of it there probably needs to be a mobile native two-factor security module that makes this sort of mobile experience way more seamless and we are actively searching for a business to invest in in that area great thanks for sharing that um we have about one minute left um in the audience I think we have a bunch of entrepreneurs would be entrepreneurs that are here to sort of listen to you guys um and obviously we're living through crypto winter at the moment um and who knows you know how long it takes before things start to bottom out if you had to give one piece of advice you know to an entrepreneur today that's you know coming into web three looking a bill looking to raise Capital um what would that be maybe Ryan you want to start okay yeah it would be a very tough time but um I think uh no people know people here people know people's intention actually so I think you know we made we met so many people at the same time but uh if you're real no we can find you so please keep developing and please uh contrast I like that the advice is called Maddie find super fans most projects will never have even two or three people that absolutely love and need the product if you can make a product that two or three even two or three people absolutely love excuse my language and need then you can get from two or three to ten to fifty to a thousand most projects fail because they never even get to two or three that's the number one thing that I would say yeah my advice would be to focus on you user growth because a lot of projects in web3 they think about like token uh how to get to get listed on violence or other exchanges but I think first of all you guys need to focus on how to get users how to increase your user base so that should be like key priority if you're iterating and growing your kpi get yourself the 30 month Runway um I think the macro could be pretty vicious the next 24 months right well thank you all um I've had a lot of fun and I'm sure the audience has as well and uh really appreciate your insights and views thank you thank you thank you