Some crypto companies in S’pore welcome the crypto winter, see it as weeding out the weak

Two months ago, Singapore-based Terraform Labs experienced an ugly fall from grace when both its Terra UST and Luna tokens collapsed almost overnight. While Terraform Labs has since launched a new token, the fallout from this collapse is still rippling through the crypto ecosystem, and not just in Singapore.

US-based crypto lending protocol Celsius was forced to halt withdrawals, and Singapore-based Three Arrows Capital was ordered into liquidation last week. 

Amidst all this, even companies that survived have had to lay off employees. Crypto.com announced plans to cut their headcount, as did Bybit.

But are these moves reflective of the wider industry as a whole? And what changes are businesses expecting to see when the crypto winter blows over?

To hire or to fire?

For one, many crypto companies do not seem too keen on cutting headcounts. Talos, a crypto infrastructure provider for crypto platforms, has not seen any layoffs, according to Samar Sen, head of Talos’ APAC operations. 

Talos is not alone on this front. Fasset, an internationally regulated digital asset gateway is apparently “hiring aggressively in all the regions [they] operate in,” according to CEO and co-founder Mohammad Raafi Hossain. Matrixport, a digital assets trading platform, is also looking to continue hiring despite market sentiment, according to their LinkedIn page.

What can explain this jarring difference in sentiment? For one, many of these companies cite sound financial management business propositions that actually provide value for consumers and customers.

At Lemniscap, we remain intently focused on our strategy and our foundational market thesis. Nothing has changed for us. In fact, we are actively hiring and focusing on expanding our team at the moment. Unfortunately, given the ongoing uncertainty around the potential duration of this market downturn, a sense of trepidation has gripped many market players.

Some projects are re-evaluating budgets and looking at cost-saving measures — including layoffs — while kicking operational prudence into high gear. However, projects with proper treasury management in place remain in strong operational health with considerable financial runway.

Samar agrees, and credits the continued demand for their products to their sustainable business model and strong product-market fit. 

Another company that is also still looking to expand their team is Singapore-based Digital Treasures Center, which provides crypto payments infrastructure to businesses, and allows them to receive and manage payments in cryptocurrency.

DTC founder and COO El Lee pointed out that “we look at crypto not from an investment or speculative asset perspective, but for its utility value to solve real-world problems. We see value in crypto in solving the pain points in the payment space.” 

Clearly, many of these crypto companies seem to be confident in their own futures, as long as their business models are sound and cash burn can be dealt with. 

How are businesses reacting to MAS’ policy?

Another common sentiment that many crypto companies seem to have is that this crypto winter is not completely unwelcome.

Among other reasons, many crypto company founders seem to agree with MAS’ view that the crypto winter will weed out the weak and leave the crypto industry leaner and tougher than before.

For instance, Lemniscap founder Roderik van der Graaf argued that “Market downturns can often serve as a long-term cleansing force for the sector, ensuring the future path is paved with fundamentals rather than widespread herd mentality.”

Head of APAC for Talos Samar Sen has expressed similar sentiments, though he has also found sympathy for investors who have lost their fortunes over the past few weeks. 

No one at our firm wants to see the large-scale destruction of value or massive investor losses that we have witnessed over the last weeks. At the same time, we want the digital asset ecosystem to be rid of ‘scam’ coins, market manipulation, and irresponsible behaviour. As an exciting new frontier industry, there will be such failures along the path to maturity.

Given this sentiment, many of these companies are also using this time to introspect, and double down on their core competencies and value propositions to clients.

RockX CEO and founder Chen Zhuling, for instance, is adamant that “what has not changed is that building a strong team and staying focused on the long-term vision will be critical in a bear environment, and those who keep innovating and polishing their products will be well-placed to stay on top of the competitive landscape in the next cycle.”

DTC founder El Lee also expects that investors will become more cautious, and encourages companies to focus on their business fundamentals.

“Previously, companies are given free rein to run crypto investment, but this is likely to change. This will in turn change how crypto companies operate and the level of controls and risk management that they need to instil to bring back the level of confidence from investors.”.

Focusing on the long run

That being said, several companies expect the situation to get worse before it gets better. Fasset CEO and co-founder Mohammad Raafi Hossain, for one, suggested that he “expects the prevailing market conditions to persist until it becomes more evident that the global economy has pivoted back towards recovery and growth”

Chen is also confident that the crypto winter will eventually blow over, when investors begin to see the value of the next wave of decentralised applications — DAOs, SocialFi, NFTs, and the likes.

“When these technologies prove how they value-add to society and consumers through real-ife applications, the next bull run will come. Many of these cases will come from the infrastructure layers of crypto, which is why it’s key that we don’t stop building and innovating.”

Ross Gan, Head of Public Relations at Matrixport, also argued that the company’s confidence in blockchain technology has not wavered, and that “blockchain will redefine what’s possible in the financial network of tomorrow”.

Lemniscap founder Roderik van der Graaf however, is confident that the crypto winter will not continue indefinitely.

Quality projects will always attract funding, but in the current environment we can expect more grounded valuations. But speaking from experience, some of the most promising builders and projects tend to emerge during periods of market flux, and we are always on the lookout for ambitious founders with bold visions.

As companies crumble and investors divest, crypto winter seems to be taking a heavy toll on many different stakeholders. But apparently, all is not lost. Crypto companies are still confident in the long-term proposition of their products, and Venture Capital firms like Lemniscap are still willing to back founders when there is a real value proposition on the table.

Liu Yusho, co-founder and CEO of Coinhako, probably summed it up the best: “Though this period is tough for both key players and investors, especially so in the crypto space, we believe that projects and companies with strong use cases will be able to persevere and tide through it.”

“Perhaps a silver lining from the market fallout is that companies are compelled to examine their fundamentals and strengthen the real-world uses of their offerings.”

Featured Image Credit: Coinhako, RockX, Digital Treasures Center