In a decade of investing in the crypto space as a venture capitalist, Yat Siu has witnessed profound transformations within the industry. As co-founder of the Hong Kong-based venture studio and game developer Animoca Brands, Siu has positioned his company as a formidable force within Web3 culture, with CoinGecko estimating the market cap of tokens from Animoca’s portfolio at over $45 billion.
However, the crypto winter of 2022-23 presented substantial challenges for Animoca, resulting in many tokens from its portfolio plummeting nearly 90%. During this tumultuous period, there were credible concerns regarding Animoca’s survival, as highlighted by the Financial Times in February 2023.
Fast-forward to 2024, and the landscape has evolved significantly. Bitcoin’s price surged over 120%, a pro-crypto administration is set to take office in the U.S., and Animoca has nearly quadrupled its office space in Hong Kong, even as traditional finance in the region remains in contraction.
Siu now perceives the crypto industry as standing at an inflection point reminiscent of the 1990s internet revolution, a time when business processes were fundamentally transformed. Back then, Hong Kong’s garment industry heavily relied on physically shipping samples for client approvals, a situation that was both costly and inefficient.
Reflecting on that era, Siu recalls, “People used to design their patterns [and send them] to America by DHL.” This painstaking process could cost firms up to $80,000 a month. However, Siu facilitated a groundbreaking transition by establishing one of the first broadband internet service providers, enabling garment factories to send high-resolution scans to clients efficiently.
This streaming of information vastly improved the review process, illustrating how technological advancements can redefine business operations. Siu likens this innovation to the rising prominence of stablecoins, predicting their eventual widespread adoption within traditional finance.
“If you want to do commerce and trade with America, you will need to have crypto rails,” Siu asserts, highlighting the need for a seamless integration of crypto in everyday transactions, particularly in supply chain finance across Asia, where stablecoins are increasingly viewed as indispensable for lowering transaction costs.
Memecoins Creating New Communities
Adequately, Siu anticipates a significant expansion of memecoins, envisaging developments such as their creation of their own Layer 1 (L1) or Layer 2 (L2) blockchains. “Memecoins are not just coins anymore; they’re building communities and ecosystems,” Siu explains, drawing parallels between the rise of memecoins and the cultural narratives they represent, which resonate beyond mere financial speculation.
Similarly, he observes a shift in the landscape of non-fungible tokens (NFTs), emphasizing their transformation from standalone assets to integral components of broader ecosystems. “NFT projects must create ecosystems of cultural and symbolic value,” he notes, pointing to successful instances that enhance community engagement.
The Momentum of Crypto Gaming
Siu maintains an optimistic outlook on the potential of crypto gaming to serve as a bridge between traditional and decentralized gaming. While past attempts have faced challenges, he envisions a future where Web2 gamers will seamlessly engage with Web3 experiences.
“To appeal to Web2 gamers, the focus must be on creating fun and engaging games that naturally integrate ownership and trading,” he asserts. As blockchain technology advances, Siu sees vast opportunities for enriching gaming experiences, ultimately changing how players perceive and interact with their in-game assets.
Reputation as a Currency
Trust remains a pivotal element in any economy, and Siu stresses the importance of building a reputation within decentralized systems. He advocates for frameworks such as Animoca’s Moca ID, which would facilitate a cohesive but decentralized identification system across its portfolio.
This innovative approach could disrupt traditional finance practices, allowing for more equitable economic systems based on reputation rather than mere collateral.
Beyond Profits: A Vision for Inclusive Capitalism
In the midst of his venture capital ambitions, Siu remains a staunch advocate for a more inclusive form of capitalism. He believes that the transformative potential of Web3 should not be overshadowed by short-term profit motives.
“Web3 can save the capitalist narrative by turning users into stakeholders and co-owners,” Siu argues, underlining the necessity of focusing on long-term societal benefits over fleeting financial gains.
In summary, Siu’s insights provide a glimpse into a future where crypto technology not only empowers individual stakeholders but also fosters a collaborative and inclusive environment rooted in community, culture, and trust. As the industry navigates its next steps, the lessons drawn from the past and the transformative potential of Web3 remain at the forefront of the conversation.
