Yat Siu has seen a lot in his decade of cryptocurrency investing as a venture capitalist.
The Hong Kong-based venture studio and game developer Siu co-founded, Animoca Brands, has grown to become one of the most powerful names in Web3 culture, with data provider CoinGecko pegging the tokens’ market cap issued by Animoca portfolio companies in more than 45 billion dollars.
But the crypto winter of 2022-23 proved to be a tough test for Animoca, as many of its companies’ tokens fell by almost 90%. In the depths of these dark times in February 2023, the Financial Times even wondered if Animoca could survive.
Times have changed, of course. The price of bitcoin is up more than 120% in 2024, the United States has a pro-crypto president soon to take office, and Animoca recently nearly quadrupled the size of its Hong Kong office space, even as the traditional local financial market retreats.
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Siu now sees the crypto industry as at an inflection point similar to the one he saw on the Internet in the 1990s, when it first transformed business.
Back then, 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. Back then there was no Slack, no Dropbox, and no FTP, and the resolution fax machines provided wasn’t sharp enough to be useful for this task.
“People used to design their patterns [and send them] to the United States by DHL,” Siu recalled in a recent interview with CoinDesk at Animoca’s headquarters in Hong Kong. The process took days to complete and cost some companies up to $80,000 a month, according to Siu.
Siu, however, offered a solution. He ran one of the first broadband Internet service providers that allowed garment factories to take high-resolution scans (previously difficult due to limited bandwidth) and send them to customers in the West.
The use of broadband Internet made the client review process “infinitely cheaper” and more efficient, eliminating the need for what Siu called the “crazy” practice of relying on physical delivery for design approvals.
Siu equates this innovation with the arrival of stablecoins and what he predicts will be their eventual mass adoption by traditional financial institutions.
“If you want to trade and commerce with the United States, you will need to have crypto rails,” he predicts.
“As this develops over time, it becomes a commercial friction… If someone says, ‘I want to send you some Tether or USDC,’ and the other party says, ‘I can only accept a bank transfer,’ you simply “It’s not like that,” Siu said.
In Asia, the use of stablecoins is already common in areas such as supply chain finance. The fashion industry, among others, is seeing margins shrink, Siu explained, and it simply doesn’t make sense to use a bank transfer to pay supply chain partners when stablecoins are sufficient.
“Stablecoins are becoming indispensable to make these transactions cheaper and faster,” he noted.
This, as Siu sees it, is the first part of the mass adoption of cryptocurrencies in 2025.
Memecoins making community
The next part, in Siu’s view, is a broader expansion of memecoins into an entire blockchain ecosystem.
“I hope memecoins launch their own L1 or L2. They are no longer just currencies and are building communities and ecosystems,” Siu said. “Memecoins are essentially cultural symbols. “They are capturing attention and building 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 broader ecosystems.
“NFT projects are no longer just about launching a token; it’s about creating ecosystems of cultural and symbolic value,” Siu said, pointing to examples like Solana’s growing collection of memecoins, some of which are now launching NFTs, to improve engagement and deepen their connection with their communities.
For memecoins and NFTs to achieve sustained success, they must evolve into platforms where communities “are creating games, apps and other experiences, not just speculation,” Siu said.
Crypto Games Gain Momentum
Web3 games aren’t exactly a new phenomenon, but efforts so far haven’t resonated with consumers. During the 2021 bull market, moves by major studios to incorporate NFTs into games like Ubisoft’s AAA franchise Ghost Recon were met with a cold reaction from the market. Likewise, native Web3 games like Decentraland have failed to capture a player base that reflects the billion-dollar-plus valuation of their tokens.
And other games like Off the Grid, which promised to bridge the gap between Web2 and Web3 games through sleek visuals and a focus on gaming first and cryptocurrencies second, seemed to fizzle out after a few weeks.
Siu, however, remains bullish on crypto gaming.
He sees games as a powerful entry point for Web3, where culture, community and ownership converge to create something much bigger. In this ecosystem, in-game asset trading becomes an integral part of the game itself, evolving naturally from concepts like skin trading that many are already familiar with in games like Counter-Strike.
“To attract the Web2 player, the focus should be on creating a network effect, creating a game that is fun and engaging, with the added benefits of ownership and trading,” Siu said. “In 2025, we will see games where Web2 players will not even distinguish if it is a Web3 game or not. They will enjoy it for what it is and the benefits of blockchain will be an advantage.”
“They’ll just want to play,” he added.
Reputation as currency
No economy is capable of functioning without trust between parties and counterparties. While blockchain transparency helps create an environment of greater trust, there also needs to be a system to measure reputation, according to Siu.
“Reputation is a currency. It’s not just about rewards but about how the network values you and your contributions,” Siu said.
He explained that a reputation network, like Animoca’s Moca ID, would do just that. Moca ID enables a unified, yet decentralized, identification method across all Animoca portfolio companies.
In theory, this would be similar to the Equifax of traditional finance, allowing services like unsecured crypto loans, a big change from the current system of overcollateralized 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 in a bad action?
Not everything is profit
As a venture capitalist, Siu seeks a return, of course. He is also a strong advocate of capitalism and the benefits it brings and, in previous interviews, has said that many people’s feelings of despair and inequality come from a lack of financial education, resulting in inequality.
Those who do not have the opportunity to own things and generate returns will not be able to understand capitalism, which, although imperfect, is still the best option for society, according to Siu.
“Web3 can save the capitalist narrative by turning users into stakeholders and co-owners,” he said earlier, warning that “the roots of communism come from feelings of inequality.”
For Siu, Web3 represents an opportunity to build a better, more inclusive and participatory form of capitalism. And he urges the industry to focus on blockchain’s transformative potential rather than short-term gains, warning against the “FOMO mentality.”
“Let us remember that [crypto] it’s 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.”
