Yat Siu has seen a lot in his decade of investing in crypto as a venture capitalist.
Animoca Brands, a Hong Kong-based venture capital studio and game developer co-founded by Siu, has become one of the most powerful names in Web3 culture, with data provider CoinGecko setting the market capitalization of tokens issued by Animoca portfolio companies to more than 45 billion dollars.
But the 2022-23 crypto winter has proven to be a tough test for Animoca, with many of its companies’ tokens down almost 90%. In the depths of these dark times, in February 2023, the Financial Times even wondered whether Animoca could survive.
Times have changed, of course. The price of bitcoin has surged more than 120% in 2024, the United States soon has a pro-crypto president taking office, and Animoca recently nearly quadrupled the size of its Hong Kong offices, even as the financial market local tradition is receding.
This series is brought to you by Consensus Hong Kong. Come experience the most influential event in Web3 and digital assets, from February 18 to 20. Sign up today and save 15% with code CoinDesk15.
Siu now sees the crypto industry as being at an inflection point similar to the one he saw for the internet in the 1990s, when he first transformed the business.
At the time, Hong Kong’s textile industry, now a relic of the city’s past, relied on physically shipping its samples to customers for inspection during the production process. There was no Slack back then, nor Dropbox or FTP, and the resolution provided by fax machines was not precise enough to be useful for this task.
“People would design their models (and send them) to America by DHL,” Siu recalled in a recent interview with CoinDesk at Animoca headquarters in Hong Kong. The process took days and cost some companies as much as $80,000 a month, according to Siu.
Siu, however, offered a solution. It operated one of the first broadband Internet service providers that allowed garment factories to make high-resolution scans – previously difficult due to limited bandwidth – and send them to Western customers.
The use of high-speed internet has made the customer review process “infinitely cheaper” and more efficient, eliminating the need for what Siu called the “insane” practice of relying on delivery physics for design approvals.
Siu likens this innovation to the advent of stablecoins and what he predicts will be their eventual mass adoption by traditional financial institutions.
“If you want to trade and trade with America, you’re going to need crypto rails,” he predicts.
“As this develops over time, it becomes a trade friction… If someone says, ‘I want to send you Tether or USDC,’ and the other party says, ‘I can’t accept than a bank transfer”, this is simply not the case. work,” Siu said.
In Asia, the use of stablecoins is already common in areas like supply chain finance. The fashion industry, among others, is seeing shrinking margins, Siu explained, and it simply doesn’t make sense to use a bank transfer to pay supply chain partners when stablecoins will suffice. .
“Stablecoins are becoming essential to make these transactions cheaper and faster,” he noted.
According to Siu, this is the first part of mass crypto adoption in 2025.
Memecoin Creation Community
The next step, in Siu’s mind, is a broader expansion of memecoins across an entire blockchain ecosystem.
“I expect memecoins to launch their own L1 or L2. They are no longer just coins, but they build communities and ecosystems,” Siu said. “Memecoins are essentially cultural symbols. They capture attention and build narratives that resonate with people beyond financial speculation.
According to Siu, NFTs are following a similar trajectory, moving from standalone assets to integral parts of larger ecosystems.
“NFT projects are no longer just about launching a token; they aim to create ecosystems of cultural and symbolic value,” Siu said, citing examples like Solana’s growing collection of memecoins, some of which are now launching NFTs, to build engagement and deepen their connection with their communities.
For memecoins and NFTs to achieve lasting success, they must evolve into platforms where communities “create games, apps, and other experiences, not just speculation,” Siu noted.
Crypto gaming is gaining momentum
Web3 gaming isn’t exactly a new phenomenon, but the efforts made so far haven’t resonated with consumers. During the 2021 bull market, major studios have decided to integrate NFTs into games like Ubisoft’s AAA Ghost Recon franchise provoked a cold reaction from the market. Likewise, Web3 native games like Decentraland have not been able to capture a player base that reflects the valuation of over a billion dollars of their tokens.
And other games like Off the Grid, which promised to bridge the gap between Web2 and Web3 games via sleek visuals and a focus on gameplay first and cryptography second, seemed to fade away after a few weeks.
Siu, however, remains optimistic about crypto gaming.
He sees gaming as a powerful entry point for Web3, where culture, community and ownership converge to create something much bigger. In this ecosystem, the exchange of in-game assets becomes an integral part of the gameplay itself, evolving naturally from concepts such as skin trade which many already know thanks to games like Counter-Strike.
“To attract the Web2 player, the focus needs to be on creating a network effect, creating a fun and engaging game, with the added benefits of ownership and exchange,” Siu said. “In 2025, we’ll see games where Web2 players won’t even distinguish whether it’s a Web3 game or not. They’ll enjoy it for what it is, and the blockchain benefits will be a bonus »
“They’ll just want to play,” he added.
Reputation as currency
No economy can function without trust between parties and counterparties. Although blockchain transparency helps create an environment of higher trust, it is also necessary to have a system in place to measure reputation, according to Siu.
“Reputation is a currency. It’s not just about rewards, but also about how the network values you and your contributions,” Siu said.
He explained that a reputation network, such as Animoca’s Moca ID, would do just that. Moca ID enables a unified, yet decentralized, identification method for all Animoca portfolio companies.
In theory, this would be similar to traditional finance’s Equifax, enabling services such as unsecured crypto loans – a big change from the current system of over-collateralized loans.
“If you don’t have a reputation, I can’t build trust with you,” Siu said. “Imagine building your reputation over the years. Would you risk losing it with one bad action?
Not just about profits
As a venture capitalist, Siu is of course looking for a return. He is also a strong advocate of capitalism and the benefits it brings, and in past interviews he has said that many people’s feelings of despair and inequality stem from a lack of financial knowledge, leading to inequalities.
Those who do not have the opportunity to own things and generate income will not be able to understand capitalism, which, although imperfect, remains the best option for society, according to Siu.
“Web3 can save the capitalist narrative by turning users into stakeholders and co-owners,” he previously said, warning that “the roots of communism came from feelings of inequality.”
For Siu, Web3 represents an opportunity to build a better form of capitalism, more inclusive and participatory. And he urges the industry to focus on blockchain’s transformative potential rather than short-term profits, warning against the “FOMO mentality.”
“Let’s remember that (cryptography) is actually helping us build something bigger,” Siu said. “It’s great that we’re all making money and the industry is wonderful, but let’s remember why we’re really here.”
