How a blockchain ‘unicorn’ turns Vietnam into a hot spot for crypto startups

In 2018, Norwegian game developer Aleksander Larsen had to search the internet to see where Vietnam was on the world map when coder Nguyen Thanh Trung asked Larsen to join the startup. its headquarters in Ho Chi Minh City. Trung wants Larsen to start working on his new project, a blockchain game called Axie Infinity. Larsen liked Trung’s idea but it wasn’t attractive enough for him to move to Vietnam.

“It is too far”Larsen said, after consulting the map.

But Trung continued to persuade, and during a brief visit to Ho Chi Minh City, he defeated Larsen. Instead of moving back to Norway, Larsen joined the startup’s cramped office on the outskirts of the city and decided where Trung’s vision and rich programming skills could take the company. Three years later, Larsen’s bet paid off in two ways: Axie Infinity has become extremely popular, becoming the “hottest” blockchain game in the world. And Vietnam, which generates most of its GDP from agriculture and exports such as textiles, has suddenly become a hotbed for crypto startups, new ones eager to see. want to go on the successful and lucrative road of Axie Infinity.

“Axie Infinity Became the First Crypto Game That Was Really Successful”Larsen said. “We basically shaped the entire industry in our image.”

Last year, the number of players Axie Infinity – a Pokémon-like game in which non-fungible avatars (NFTs) battle each other – has reached 2.5 million. Silicon Valley celebrities like Mark Cuban and Andreessen Horowitz have poured millions of dollars into the game’s parent company, Sky Mavis, giving the developer a $3 billion valuation. It also leaves other blockchain companies intent on replicating the success of Axie Infinity .

“Before the rise of Axie Infinity, the startup ecosystem in Vietnam was still quite small and limited.” Le Thanh, founder of Vietnamese cryptocurrency startup and wallet Coin98, commented. “But Axie Infinity really inspired a lot of people to figure out how to build blockchain companies.”

Since Axie Infinity Launched, at least 10 Vietnamese blockchain startups have surpassed the $100 million valuation.

Luu The Loi, founder of Kyber Network, a Vietnamese decentralized finance startup, said: “Sky Mavis has created more confidence and momentum that crypto companies can really do something.”

It seems that Vietnam has emerged as a hub for crypto startups, but insiders say the country is poised for a boom. The country consistently ranks in the top three in the world in terms of crypto adoption and boasts a large pool of young, talented developers who are willing to work for a fraction of the money that developers have. Engineers can be earned in other markets. With those factors in mind, the rise of Axie Infinity sparked a cryptocurrency market that is currently on fire.

Corey Wilton, co-founder of the horse racing blockchain game named Pegasy in Vietnam said: “It was a gold rush.”

Bitcoin in Vietnam

In 2013, the founders of several cryptocurrency exchanges such as Bitcoin Vietnam established their platforms in the country, marking the first introduction of cryptocurrency in Vietnam. In 2017, cryptocurrency became mainstream globally as the value of Bitcoin increased from $1,000 to $20,000. In Vietnam, Bitcoin is also becoming increasingly prominent. Suddenly, Bitcoin ATMs popped up on street corners and crypto enthusiasts formed online communities to exchange tips and discuss the coins.

At that time, there was a Vietnamese coder that was barely noticed by anyone.

“Everybody is talking about the price of Bitcoin. But as an engineer, I don’t care.” Nguyen Thanh Trung, then only 26 years old, said. The focus on making money from Bitcoin has almost made him lose interest in the technology altogether. But until I found out CryptoKitties, an early blockchain-based game in which players trade NFTs – works of art stored on the blockchain – about cartoon cats. Trung thought he could make NFT characters do more than look cute, and he created Axie Infinity.

The founding of Axie Infinity

As soon as Trung debuted Axie Infinity At the beginning of 2018, the cryptocurrency market… crashed.

Between 2017 and 2018, the Bitcoin price dropped 85% to $3,000, leaving crypto startups globally struggling to survive. Mr. Loi from Kyber Network said being present in Vietnam is the only reason why his startup and colleagues like Axie Infinity can exist.

Market downturn “kills you because you have no way to survive”Mr. Loi said. “But the cost to maintain a team in Vietnam is significantly lower than if you wanted to run the same team in Singapore, Europe or Silicon Valley.” In the US, blockchain developers earn an average annual salary of $136,000. Meanwhile, in Vietnam, even experienced software engineers earn at least $30,000 per year.
Fortune: How a blockchain 'unicorn' turned Vietnam into a hot spot for crypto startups - Photo 1.

Sky Mavis CEO Nguyen Thanh Trung.

Axie Infinity not just survive.

By 2021, the game’s user base has grown from a few thousand to over 2.5 million as players in countries like the Philippines find that profits from Axie Infinity can compete at or above local income. When the popularity of Axie Infinity skyrocketed, the valuation of parent company Sky Mavis hit $3 billion in October 2021, just three years after its launch. It is the most valuable company among Vietnam’s four “unicorns” and is valued at $1 billion more than mobile wallet company Momo.

Axie Infinity Inspiring a generation of startups

Since Axie Infinity became one of the world’s most valuable crypto projects last year, at least seven blockchain games launched in Vietnam, attracting millions of dollars from foreign investors. Some new games, such as My Defi Pet and MeebMasterthere are almost copycat content Axie Infinity. Daniel Nguyen, CEO of the game HeroVerse based in Vietnam, told page BSC that he wanted to imitate ‘s approach Axie Infinity “correctly” when building your game.

“I draw a lot of inspiration from the success of Axie Infinity,” Steve Nguyen, co-founder Pegasysaid. “Axie’s success is like the beginning of something very big.”

New Vietnamese blockchain startups are recruiting developers from the mobile gaming industry. This is a field that is developing very strongly in Vietnam, since the success of mobile games Flappy Bird. Coder Nguyen Ha Dong, launched this simple but blockbuster game in 2013. It was a huge success, with over 50 million downloads globally. The Vietnamese government considers Flappy Bird is one of the country’s most important technological innovations, and the game has inspired a generation of Vietnamese game startups, transforming the country into one of the fastest-growing mobile game markets in the region. area. Five of Southeast Asia’s top 10 game publishers are currently based in Vietnam, and tens of thousands of young programmers in Vietnam are eager to create the “next big thing”.

“90% of Pegaxy’s development staff work in Vietnam, although work may be done from other countries,” Wilton, the co-founder of the game Pegaxy, said.

Arianna Simpson, general partner and top crypto investor at Andreessen Horowitz said: “Cryptocurrency founders tend to be more spread all over the world… Web3 makes it easy for anyone to build anywhere.”

Entrepreneurs are also creating entirely new companies, but Le Thanh of Coin98 attributes at least part of the crypto gaming boom to the shift away from online gaming companies. Amanotes, a Vietnamese game publisher that launched in 2014 and is known for its music games, recently announced its foray into the crypto space with its “music distribution system and platform.” game” in the metaverse.

“Vietnam is ready to become the next crypto hub”Pham Huy, lecturer in economics at RMIT University, Ho Chi Minh City. “There are a lot of crypto companies starting in Vietnam right now. Everyone here is ready to take on something new.”

Vietnam welcomes cryptocurrencies

Vietnam’s entrepreneurs are optimistic about cryptocurrencies, and so are Vietnamese, surveys show.

Brian Lu, founding partner at Infinity Ventures Crypto in Taiwan, said investors noticed a ConsenSys report last August that showed countries in Asia downloading MetaMask, a wallet the world’s most popular cryptocurrency, more so in Europe or the US.

In the report, Vietnam is the third most popular destination in the world for MetaMask, behind only the US and the Philippines in first and second place. The popularity of crypto wallets in Vietnam shows that people are not only buying crypto, but they are actively participating in crypto games and other platforms, Lu said.

But the reason behind the popularity of cryptocurrencies in Vietnam is not entirely clear. Some speculate that it could be due to Vietnam’s large remittance market, the ninth largest globally. Cryptocurrencies make it easier for overseas workers to send money to Vietnam. Others suggest that the public’s lack of trust in the local currency, may be pushing people to digital currency.

Pham Huy said that Vietnam’s high internet penetration rate – 70% of Vietnam’s population is online and the country leads Asia in smartphone usage – could also drive crypto adoption. become more accessible.

Vietnam’s high crypto adoption rate allows startups to connect with local customers and test products in the country before a global launch. For example, Coin98, a competitor of MetaMask, built a user community in Vietnam before trying to attract users from other markets. Le Thanh said the company now has 2 million global users, including 500,000 in Vietnam.

Challenges for startups in Vietnam

Pham Huy acknowledged that Vietnam still has a long way to go to become a leading blockchain destination. According to the World Bank, Vietnam remains a “low-middle-income country”, equal to half of the GDP per capita of neighboring Thailand.

“It is really difficult for a developing country to lead in technology, and being based in Vietnam can make it more difficult for startups to find capital and talent.” he said. “Vietnam’s crypto market lacks protection and investors fear Vietnamese blockchain startups could be scams. Vietnam also lacks leading universities with formal training in the technology sector compared to rival economies such as Singapore and South Korea.

For its part, the Vietnamese government is still inconsistent in its stance on cryptocurrencies. Since 2017, Vietnam has banned the use of cryptocurrencies as a form of payment. At the same time, the government has not taxed or regulated the buying and selling of cryptocurrencies as property.

“If there’s one thing that worries me a bit, it’s the rules,” he said. Mr. Huy said. “But I don’t think the government will lose this opportunity. This is perhaps the only chance for Vietnam to truly lead the world in blockchain or cryptocurrency. I don’t think there will be another chance.”

Refer to Fortune

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