• OP Crypto has an investment mandate that sits at the intersection of DeFi, Web 3.0, the metaverse and China
  • Despite China’s harsh regulatory approach to crypto, Gan is still bullish on the prospects the market holds for investing in digital assets and DeFi

Gaming and the metaverse will drive “Apple-level user adoption” of crypto. China’s market can be tapped by digital assets companies, as long as you communicate things “in a way that the central government is able to approve”.  These are bold words from OP Crypto’s David Gan, the ex-Huobi executive that recently launched a $25 million fund backed by some of the biggest names in the blockchain industry both in North America and Asia, including the Digital Currency Group, Galaxy Digital, Huobi Ventures and the Brooker Group. 

However, while it might have been possible at one time to dismiss blockchain gaming as a nothing burger — and certainly it was a ghost town for years — the blockchain powered play-to-earn game Axie Infinity recently crossed the 1 million mark in active users and hit a trading volume of just over $1.92 billion.

Gaming and the metaverse

“Gaming and the metaverse is going to drive the next hundred million users into the space,” Gan told Blockworks in an interview. “Then, I think the next billion level — the ‘Apple level’ — adoption will come from the resulting social networks.”

Axie Infinity is big, but it’s not yet ‘billion level’ big. So how do we get from here to there?

Gan thinks that the value creation in gaming comes from the capital contribution and subsequent earnings from gaming. And certainly that’s been seen in the Philippines, one of the hottest markets for the game, where it’s been reported that office workers make much more gaming than they do in their day jobs.  

“[When gaming] you’re not just contributing capital, you’re contributing, and playing and getting involved in the platform itself,” Gan said. You’re able to have an alternative means to make additional income. I think, with the rise of crypto and the blockchain space, that really unlocked that value in a meaningful way to a very global audience.”

With the interoperability of the metaverse, the success on one gaming platform is portable to another, and thus creates a social network effect. 

“The Web3 space allows users to create content and monetize it in different niches where you wouldn’t have that ability in the past,” Gan said. “I think as the metaverse evolves you’ll have one big decentralized sandbox. This will then lead to laser-focused sandboxes that evolve from it — where you’ll be able to do things that align with your interests. Ultimately, people are looking for more niche and focused experiences and they’ll want in-game items to be transferred across these sandboxes”    

Bridging the East to West gap

Aside from gaming, Gan said that he’s going to be working to bridge the gap between East and West — US-founders and a market in Asia, and Asia-based founders and a market in the US.

Ultimately, China will play a big role in his gap-bridging efforts. Even though regulators in the country have been less and less tolerant of crypto, Gan still believes there’s a market, and points out as a reminder that while China has been critical of crypto it has embraced blockchain technology as a key component of technology infrastructure.  

“You have to communicate it in a way that the central government is able to approve. That starts with the technology, pointing out some of the technical benefits, and also the ability to communicate that into a developer focused community,” Gan said. 

Even though there’s not much of an onshore decentralized finance (DeFi) market to speak of in China, Gan thinks that it could develop in parallel with China’s CBDC the eCNY — a currency that eventually everyone in China will be forced to use.

Things in China move quickly, so Gan believes that overnight China could have such a market as long as regulators approve.

“That’s why it’s so important having a team half in China and half in the US, and be very flexible on how we operate on both ends,” Gan said.  

But all this depends on regulators being cooperative. And so far there’s not much evidence this will happen anytime soon. After all, Axie Infinity, which kicked off the blockchain gaming boom has attracted interest from regulators in the Philippines about its in-game token with the dreaded question for crypto: is it a security?

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  • Blockworks
    Reporter
    Sam Reynolds is a Taipei-based reporter, covering digital assets and regulation throughout Asia. Before joining Blockworks he was an editor at Forkast News and an analyst with IDC.