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What is really going on in the Chinese community these days?

Abundant Web2 talent available

I just got a call from a friend from business school. He started an Invisline-esque direct-to-consumer company in Shanghai in 2019. The team raised a bunch of VC money, but couldn’t achieve adoption. As a result, he inspired oral health—a hot industry back in the day—to crypto.

My friend is far from alone. Web2 talent has been severely crippled by the Chinese government’s “zero COVID” policy and technical action. Shares of major tech giants have halved, if not damaged. Many talented engineers have seen neither a salary increase nor a jump in equity. Worse yet, many companies have started laying off engineers in anticipation of a global economic slowdown.

Tech giants have become tech dwarfs.

Meanwhile, these brilliant engineers are watching their non-talented friends get rich by buying profile pictures, participating in algo-stable Ponzi schemes, or even walking on StepN.

Many of them said that they feel bitter, yet they want to join the Web3 Ponzi revolution.

Three types of home projects

Now comes the tricky part. To join the revolution, these engineers must always be responsible for regulation, as the Chinese government is not expected to roll back its crypto ban anytime soon.

Three creative strategies have emerged as Chinese founders move into the space:

1. Anonymity: Never mention his Chinese background.
2. Academia: Push the boundaries in name if it is research.
3. Also: different founders and technical teams across borders.

Anonymity:

Most projects choose the anonymous route because it is safer to stay under the radar. The issue, however, remains the type of projects Chinese founders undertake. During the DeFi summer, many abandoned existing Western projects and launched produce farms. During the NFT summer, several people contracted Fiverr designers and launched 10,000 monkey PFP projects with fake roadmaps.

Of course, not all Chinese projects are ragpul. But anyone who wants to build a serious business will have to stay low-key, which means they have to avoid public marketing, shillings, or narrative creation. Without marketing, projects struggle to get started.

Academics:

The second route allows you to be public about being a blockchain startup by waving the academic flag. Many of China’s Layer-1 protocols such as Conflux used this strategy. They collaborate openly with university professors, research laboratories and innovation centers. Many also have an active student community that helps organize meetups, hackathons, even mini-conferences.

Western Web2 companies want to collaborate with these “deep tech” companies as well, to keep up with the innovation curve.

These projects are in the safe zone, at least temporarily, as China seeks to develop capabilities in the areas of distributed systems, cryptography, privacy and blockchain.

The main challenge these projects may face is whether they eventually launch a token, and that token becomes volatile. The Chinese government does not like instability, and may extend sanctions to block these projects.

different:

The last option, and an increasingly popular one, is a combination of having founders and marketers living abroad while the tech and distribution team live quietly in China. This model allows teams to raise VC money from international funds, run campaigns targeting global audiences, and build strong communities, enjoying China’s low-cost technical labor without the worry of being censored by the Chinese government. Used to be.

Surprisingly, most projects that follow this model claim that “we are not a project of China,” as if being linked to China is bad.

This brings me to my next observation: China is not a place, it is its people.

As Chinese projects expand overseas in a time of increased decentralization, China has become less of a space and more about its people. People can live in Singapore, Australia, America or Europe. Location does not prevent them from organizing, supporting and participating in ETH Shanghai.

We are already seeing the Chinese diaspora making its mark in the crypto space. Remember earlier that year when I predicted that China would produce a hit crypto game? Well, it’s already happened with the rise of StepN, a move-to-earn game that ignited an Axie Infinity-like frenzy.

The project, which stands at a market cap of $680M, has been set up by the Chinese diaspora in Australia, supported by VCs in India, China, the US and practically everywhere.

Even as the world sharply falls apart in the times of COVID, the boundaries of what it means to be Chinese are indeed blurry. What unites us all is not so much nationality, but the spirit of crypto.

Granted, that sentiment is influenced by a wide range of factors, given how many of my friends fled China in recent months to start nomadic, crypto-centric lives.

Still I am optimistic.

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