In a sign of Web3’s promise as well as its unending quest for relevance, a venture capital firm and a layer-1 blockchain network are teaming up to help enterprises come up with use cases.
Plug and Play, a venture-capital firm that focuses on supporting early-stage startups, is partnering with a Singapore-based blockchain team, aelf, which is promoting its own layer-1 (ie, settlement layer) blockchain.
Jupe Tan, managing partner at Plug and Play in Singapore, says the firm is not an investor in aelf. But it does count about two dozen startups worldwide in its network of more than 2,000 startups, be they directly in its portfolios or participating in its accelerator programs.
“The early hype for blockchain startups is over,” Tan said. “It’s now about what you can really do, for financial services and other enterprises.”
From Layer-1 to DeFi
Linda Ang, head of strategy at aelf, says the blockchain company is going after ‘Web2’ companies (traditional tech companies and platforms) to help them develop businesses in the blockchain milieu.
Aelf was founded in 2017. Like its bigger rival, Polygon, aelf operates a mainnet based on proof-of-stake but supporting sidechains for its clients that can be tailored around other consensus mechanisms.
Ang says a selling point for aelf is that its programming language is C# (C-sharp), a popular language among gamers, and therefore easy for other developers to use. This contrasts with, say, Ethereum, which is coded in Solidity, a niche language developed specifically for smart contracts.
Aelf has already developed projects with companies in the gaming space. “We will launch our DeFi offering in the second or third quarter,” she said, noting that aelf has its own $50 million venture and incubation fund.
The partnership with Plug and Play isn’t about backing startups, but helping enterprises with adoption.
Consulting big business
Tan says Plug and Play has relationships with hundreds of enterprises across more than 20 industry verticals, which the firm uses to help create markets for its portfolio startups, or strategic exit opportunities.
He says enterprises from many industries are now eager to explore Web3 business models, particularly in Singapore and Hong Kong. “But demand-related opportunities aren’t obvious,” he said. “What company can afford to behave like Meta and spend billions of dollars on adopting this sort of thing? We can help them explore what makes sense.”
The relationship with aelf is not exclusive, and Tan said Plug and Play would be interested in similar tie-ups for other geographics, including Japan, Korea and mainland China.
One place to begin is real-world asset tokenization.
“Everything can be tokenized,” Ang said. “We’re looking beyond normal financial instruments, to things like bills of lading, buildings, stadiums. It’s not about financial assets, but how companies can get into the minds of their consumers, to offer things like NFTs for loyalty programs.”
Aelf would help companies by providing them with crypto wallets and consulting on go-to-market strategies, including building a userbase that companies can monetize.
Tan says Plug and Play isn’t doing this to push particular fintechs in its portfolios, but says these discussions with enterprises should help some startups gain exposure. But the point of the tie-up with aelf is to have conversations with enterprises about what’s possible for them, rather than pitching specific solutions.
“Many enterprises are interested,” Ang said. “We don’t have all the answers, but this partnership will help.”
Tan adds that regulators in Singapore and Hong Kong are the most open to such ideas, even if the legal framework isn’t quite ready. “These are the places to start,” he said. “If we can turn Singapore into a Web3 hub, then we would try to duplicate this model. Maybe we’re building a new venture model.”
The progressive thinking in East Asia’s financial hubs is breathing new life into Web3 projects. But it’s notable that, seventeen years after the publication of the Bitcoin white paper, industry veterans still need to join forces to consult real-world companies on what to build with crypto-based infrastructure.