Recently, the cryptocurrency scene in Singapore has been pretty quiet, a real difference from what the CEO of the Monetary Authority of Singapore (MAS) Ravi Menon called a “bloodbath” several months ago. However, the sector is still alive, even if it remains low for the moment.
Of course, many are still keeping an eye on the industry and waiting to see what new developments could arise in the cryptocurrency space.
At the Tech in Asia Conference 2022 held yesterday (September 21), executives of successful crypto companies were invited to share insights into the future of the cryptocurrency space and, in particular, how to build lasting companies in the Web3 space.
Navigate between bearish and bullish markets
One thing all panel members agreed on was that navigating the boom and bust cycles that cryptocurrencies are prone to is key to ensuring the company is able to stay afloat for the long term.
In fact, Alex Svanevik, CEO and founder of Nansen, revealed that part of how Nansen manages to stay afloat is that he manages his own treasury to make sure he doesn’t have a crisis when the bear market approaches.
The thinking is that we want to cover our position. We hired a trader with a different mindset so that he could strategize and manage our treasury to cover the rest of the business. We make sure we are able to think countercyclically in how we get our income, and that’s how we ensure our treasury can last a long time.
– Alex Svanevik, CEO and founder of Nansen
Svanevik attributes this thinking to traditional economics, in which countercyclical fiscal policy is applied by governments to save during good times and spent to stimulate the economy during a recession.
To illustrate his point, Svanevik cited the Norwegian oil fund, where profits from oil extraction and exports are invested in explicitly non-Norwegian assets and non-oil assets to ensure the company has a diversified portfolio.
As such, the bear market that hit crypto companies like Three Arrows Capital and Terraform Labs isn’t as big a concern as it could be.
Leon Foong, head of Binance’s Asia Pacific market, agrees. He suggests that companies at the end of the day are run by people and that people are susceptible to market psychology. It is therefore important to be careful before embarking on a hiring run during bull markets.
Instead, Foong advises companies that bear markets are a good time to hire the right talent for the company, with funds that have been accumulated during bull markets.
Conversely, it may be best to focus on raising funds and managing the company’s cash during a bull market.
The future is practical, not ideological
The speakers also pointed out that the investment landscape for cryptocurrency companies is changing and that investors are looking for better companies after the cryptocurrency market crash.
In particular, Akshay BD, Solana’s Head of International Expansion, noted that “teams in cryptocurrency startups are now held to a higher standard. Investors have become much more sober in recent months and there is now more attention. to the final results “.
As such, Akshay advises entrepreneurs that, as they build their teams, they should focus more on being practical, rather than ideological in their products, especially given the cryptocurrency community’s ethics on decentralization.
When teams look at what they are building through a product lens rather than an ideological lens, they will come to the conclusion that they want to have the minimum data needed on the chain to help achieve interoperability and composability.
– Akshay BD, International Expansion Manager, Solana
Therefore, Akshay suggests that for crypto companies to be durable, they need to provide consumers with a product they can actually use: cryptocurrency applications and the like, as “meaningful adoption only happens when we lead users to use these applications.”
The Web2 world is still relevant today
But how exactly can companies reach such a scale? For speakers, the answer is simple: position applications and products as a bridge between the world of Web2 and Web3.
While businesses can rely on ideology to get consumers, this is likely not a long-term solution, according to panelists. On the contrary, they suggest that entrepreneurs should partner with Web2 companies to create something new.
Indeed, Foong suggests that such a partnership could be beneficial to all parties involved. Web2 companies can provide the user base for new Web3 applications, while Web3 companies can create these applications for consumers to use through Web2 products.
There have been many projects attempting to launch a token for the sake of launching a token, but during the bear market, these projects tend to fade away quickly. How many users would actually use their products if the tokens were taken away?
But for community-fi projects, if they manage to overlap the right tokenomics, they present a lot of interesting opportunities. Community-fi projects really tap into Web2 companies with a real user base and this gives us a real use case for these projects.
– Leon Foong, Head of APAC market, Binance
Additionally, Foong also identified NFTs as one of the new technologies within the Web3 world that can solve real-world problems. Referring to soulbound tokens, Foong said that tokens can solve real-world problems for companies that need to fulfill customer knowledge obligations or to resolve intellectual property disputes.
This encouragement for the Web3 world to cooperate with the Web2 world was also shared by Svanevik, who pointed out that “chain NFTs can be placeholders for real world NFTs” and that chain NFTs could eventually be used for represent off-chain assets, such as property or infrastructure, and that other use cases such as lending could be made much easier through the use of smart contracts.
The Web3 world has seen an ups and downs in recent years, and the industry has gained some reputation as well. However, this sector remains at the forefront of technological advancement.
While only time will tell if the industry can reinvent itself and serve the world, these panel members have given us a glimpse into what it takes to make their companies success stories rather than embarrassing failures.
And a surprising amount of their success is not explained by the capabilities of the Web3 world, but rather by what they fit into the Web2 world and other non-cryptographic institutions. Best practices, it seems, exist for a reason.
Featured image credit: TIA 2022 conference screenshot