Computer Scientist: China's Crypto Crackdown Spurred Decentralization of Asia's Web3 Infrastructure

Web3 Startups Partner With Established Corporations

In written responses to questions from Bitcoin.com News, Seo, a computer scientist, explained that many countries benefiting from China’s crackdown were able to attract displaced talent due to their “more welcoming stances towards blockchain.” Seo, chair of the Kaia DLT Foundation, added that countries such as Japan, Singapore, South Korea, and Vietnam also improved their regulatory frameworks. This in turn made the countries attractive destinations for departing Chinese talent.

Meanwhile, when asked about the factors driving Asian countries as key destinations for Web3 entrepreneurs, Seo pointed to the “growing trend” of collaboration between Web3 entities and established corporations and brands. He argues that such collaborations drive adoption by bringing popular services and intellectual property (IP) on-chain.

Shifting focus to the role of gaming in propelling new technology adoption, the Kaia DLT Foundation chairman said he expects this trend to continue with Web3. He expresses hope that the region’s massive 1.43 billion gamer population will play a crucial role in driving adoption. He further asserts that once Web3 games develop sustainable play-to-earn (P2E) models, “we will see a resurgence in P2E games,” which will ultimately drive Web3 adoption.

Seo also shared insights on the advantages and disadvantages of using Web2 solutions to drive Web3 adoption, as well as his predictions for the future of Web3. Below are Seo’s responses to all the questions sent.

Bitcoin.com News (BCN): Before its clampdown on the crypto industry, China was undoubtedly a dominant player in Asia in the blockchain and cryptocurrency space. In your opinion, how has China’s clampdown on the crypto industry affected the blockchain industry in other parts of Asia?

Sangmin Seo (SS): China’s crypto clampdown led to an exodus of blockchain talent to other countries across Asia such as Vietnam, Singapore, South Korea and Japan. These countries have adopted more welcoming stances towards blockchain, cautiously balancing between enabling blockchain innovation and managing the risks associated with cryptocurrencies.

Countries across Asia have also enhanced their regulatory frameworks, in hopes of attracting blockchain talent and businesses to compete with China’s former dominance.

Overall, this has led to the decentralization of Asia’s crypto infrastructure, as well as rapid maturity of the market where Asia, outside of China, is increasingly seen as a hub for blockchain innovation, driven by more favorable regulatory environments and a growing tech-savvy population.

BCN: From mobile gaming to esports, Asia’s gaming landscape is quite diverse, catering to a wide range of preferences and interests. It is therefore no surprise that Asia-Pacific has become the largest gaming market in the world, generating over $84 billion in revenue in 2023 alone and housing over 1.48 billion gamers. As a significant player in the Web3 ecosystem across Asia, can you tell us how crucial the role of gaming is in accelerating Web3 adoption in the region?

SS: Games have always been a driver for early adoption of technology, and we believe that this too will be the case for Web3. As you mentioned, Asia is home to over 1.48 billion gamers, many of whom are already familiar with virtual economies where players buy, sell, and trade in-game items – sometimes even in black markets against the games’ terms of service.

The existence of official and unofficial P2P markets is a surefire sign of demand, giving us confidence that Web3 games, which allow players to truly own their game assets and trade them on open marketplaces, will find their product-market fit in Asia.

In addition to this, the Play-to-Earn model has already proven popular in developing economies across Asia such as the Philippines, Vietnam and Indonesia. While P2E is currently in a bit of a lull due to reduced earn rates from token price action, I firmly believe that once Web3 games crack the formula for sustainable P2E economies we will see a resurgence in P2E games.

BCN: Asia has emerged as a major global Web3 hub, where users as well as developers have demonstrated, to some extent, an inclination to embrace Web3. What do you think are some of the key unique insights that the Western world can learn from Asia?

SS: The diversity across Asia’s cultures, economies, and languages has led to the rise of localized Web3 solutions tailored specifically to address regional needs and preferences. At the end of the day, all products exist to solve a problem or fill a need. Focusing on the specific needs of specific communities and crafting bespoke Web3 services for them is one of the reasons why users across Asia have embraced Web3 to a higher degree.

Asia’s Web3 space also has a growing trend of collaboration between established corporations and brands, driving adoption by bringing widely-used and beloved services and IP on-chain, instead of attempting to create a whole new brand or same-same-but- Web3 service that then has to compete with the established incumbents.

Last but not least is the relationship between regulators and the Web3 industry. While the relationship is oftentimes adversarial in the Western world – and understandably so given the origins of Bitcoin and the ideals associated with it – in Asia, the population generally has a high degree of trust in both governments and institutions, and Asian Web3 projects welcome collaboration with governments and regulatory authorities, which in turn encourages the creation of progressive regulatory frameworks instead of restrictive ones.

BCN: Your Layer-1 project Kaia recently launched its mainnet. Can you briefly tell our readers what you expect to achieve with Kaia, especially with the newly launched mainnet?

SS: While Asia is leading in Web3 acceptance and adoption, the current adoption rate is still sitting around 7%. And given how much media coverage and marketing activities Web3 has had over the past few years, it is pretty safe to assume that the other 93% have already heard about Web3 and have chosen not to onboard for various reasons – most chiefly the complex onboarding and usage experience.

With Kaia, our aim is to bring about mass consumer adoption of Web3 across Asia, by providing builders with everything they need to deliver a seamless UX for their users, while also solving the distribution challenges through integration with Kakaotalk and Line, two of Asia’s most popular messaging superapps. For those who haven’t heard of either, Kakaotalk is used by over 97% of South Korean residents, and Line is the dominant messenger in Japan, Taiwan, Thailand, and Indonesia.

Asia is predominantly mobile-first, and both Kakaotalk and Line Messenger are superapps that have evolved beyond just messaging to hosting entire ecosystems of services, making them the perfect platforms to kickstart consumer Web3 adoption across Asia.

BCN: What are the core benefits that your platform brings to the Web3 space and how will the protocol improve Web3 adoption in Asia and other regions of the world, especially considering it has the support of two of the largest messaging apps (Kakao and Line) in Asia?

SS: As briefly mentioned in my previous answer, Kaia is designed to deliver an end-to-end seamless Web3 user experience, supporting the full suite of UX enhancing features including account abstraction, gas fee delegation, and immediate finality with 1-second block time. What all these mean is that users will be able to easily create keyless wallets, perform on-chain transactions that complete instantly, and without having to deal with gas – a UX that’s as close to Web2 as it gets. It also helps that Kaia’s gas is extremely low, making it financially plausible for Web3 service providers on Kaia to delegate their users’ gas to themselves as part of their business model.

The second half of the equation is Kaia’s integration with Kakaotalk via the built-in Klip wallet, and with Line Messenger via the Next Web SDK. By giving Web3 builders an easy way to tap into the messengers’ existing user base, along with the tools they need to provide these users with the frictionless UX they are accustomed to, within a superapp that they are familiar with, Kaia has removed all the adoption roadblocks that we can as a Layer 1 protocol – the rest is up to builders.

BCN: The TON blockchain has access to Telegram’s massive user base and it enables developers to build dApps for Telegram users. Kaia, too, allows developers to build applications that run inside the Line messenger. Can you talk about the benefits and challenges of leveraging the distribution of Web2 solutions to drive Web3 adoption?

SS: As you highlighted, the clearest immediate benefit is the ability to leverage the massive existing user base. However, this isn’t just a one-sided win – for example, Kaia’s integration with Line creates a win-win-win scenario, where Web3 builders can accelerate user acquisition through Line’s distribution network, Line Messenger gets to enter the Web3 space one step ahead and with less risk, and Line’s users get a whole new ecosystem of services within their favourite super app that they already use every day.

The challenges of doing so largely revolve around the building of a collaborative and synergistic business relationship such that both can move forward with a common vision and goal, and thankfully that’s what we have been able to accomplish with Line Next.

BCN: What are your predictions for the future of the Web3 sector and blockchain industry in Asia?

SS: As Asia’s regulatory landscape continues to mature and get more defined, I’d expect more traditional and Web2 corporations to jump on board, integrating Web3 elements into their core product offerings or creating whole new Web3-native products, whether it be games to RWAs, loyalty programs, event passes and ticketing, or other forms of everyday services.

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