Crypto is flourishing in Vietnam thanks to its bustling startup scene.
If you’ve visited Vietnam, you’ll know it’s a staggeringly beautiful country. In the northeast there’s Ha Long Bay, whose limestone islands are among the world’s most photographed natural structures. The country’s verdant, platformed rice fields have featured on travel book jackets and magazine covers for decades. At night, the locals who live in Vietnam’s ancient towns adorn their streets with vividly colourful lanterns, illuminating the waterways that wind beneath their ornate wooden bridges.
Vietnam’s two megacities — Hanoi in the north, and Ho Chi Minh in the South — boast rich and fascinating cultural histories. And both, of course, are teeming with motorbikes. There is in fact one motorbike for every two people in Vietnam today.
Should you ever visit Vietnam on some kind of spiritual journey to find yourself or to discover who you really are, you may do so by renting a scooter and navigating onto one of Hanoi’s busiest intersections during rush hour. This writer promises that should you do so, you will find out exactly who you are the moment the light turns green. You might even discover a newfound respect and admiration for the stricter traffic laws imposed in yours and other countries.
Provided you survive your spiritual scooter excursion long enough to reach a locally run Vietnamese restaurant, congratulations — you’re in for a treat. Vietnamese food is famously delicious, and the country’s culinary scene is vibrant, inventive and imitated all over the world.
But the one thing Vietnam wasn’t renowned for until quite recently was its startup sector. However, this area of Vietnam has blossomed since Bitcoin’s emergence and crypto’s migration into the media limelight.
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Vietnam: Entrepeneurs Welcome
Vietnamese entrepreneurs have capitalized on crypto’s popularity and created some remarkably valuable crypto companies, including the likes of Sky Mavis and the Kyber Network, to name a few. These and the many other crypto companies launched from Vietnam have cemented the country’s reputation as a prime location for tech firms who want to expand their operations abroad.
Case in point, Apple recently moved some of its AirPod production from China to Vietnam, and Google has shifted a portion of its Pixel phone manufacturing there as well. Similarly, both Microsoft and Amazon have started partially shipping some of their products from Vietnam as well. What’s more, the New York Times reports that Vietnamese real estate brokers are busier than ever showing commercial properties to multinational firms who, like Apple & Co, are also eager to expand their operations in Vietnam.
Of the dozens of crypto firms who have launched from Vietnam already, Sky Mavis, who developed the blockchain-based game Axie Infinity, is by far the greatest success story, although it has experienced a dip in popularity since its peak last year. The game once boasted nearly three million monthly players, and its market cap today sits at over $770 milion U.S. dollars. Of course, Axie isn’t the only successful crypto firm to have launched in Vietnam: both Coin98 and the Kyber network have already made serious waves in crypto and brought in billions of dollars to the industry as well.
These crypto companies no doubt contributed to Vietnam’s somewhat surprising status as the country with the highest rate of crypto adoption on earth. That’s right — Vietnam, a country whose economy globally ranks 39th largest by GDP, is leading the charge toward mainstream crypto adoption. In fact, one of Finder’s surveys found that 41% of Vietnamese respondents owned crypto. However, you should bear in mind that Finder’s figure doesn’t represent the true percentage of Vietnamese people who own crypto, which is closer to 20% or one in every five people, according to Chainalysis.
First Prize in Crypto Adoption Goes to...
Why do so many Vietnamese people own crypto? And how is Vietnam outpacing the U.S. and every European country in terms of crypto adoption?
One of many possible answers is that Vietnam’s government has a generally positive attitude toward crypto regulation. So far, the government hasn’t imposed many rules or regulations on cryptocurrencies, other than to clarify that you can’t pay for goods and services with crypto — for now at least. The government also recently passed an investment law that clarified crypto’s status as a legal investment vehicle, meaning Vietnamese citizens can legally invest their money in crypto. Additionally, the country’s ministry of finance is developing a digital asset framework which will set out the country’s strategy toward growing its digital economy.
Another explanation for Vietnam’s positive stance on crypto is that most Vietnamese people don’t have access to a wide range of investment vehicles from which they could earn passive revenue (or at least, they have fewer options than a typical Westerner might have). And since crypto soared to record highs in 2020 and 2021, it’s likely that lots of Vietnamese people saw crypto as an exciting new profit source and jumped on the bandwagon. One academic who supports this idea is Binh Nguyen, the senior program manager of finance at the Royal Melbourne Institute of Technology. Nguyen studies how Vietnamese people use crypto, and he’s found that the market is strongly retail driven, which means most Vietnamese crypto investors want to grow their wealth rather than hedge against inflation.
We should also consider the possibility that some Vietnamese people are simply buying crypto in order to gamble. Why would they do this? The short answer is that most forms of gambling are illegal in Vietnam, and they have been for generations. Most locals can’t visit a nearby casino because in order to do so, they first have to prove their monthly earnings exceed 10m VND ($426) per month before they can even get through the door. For context, the average wage in Vietnam is about 6.1m VD, or $260 a month. As such, it’s plausible that at least some people are buying crypto to simply satisfy their gambling urges rather than as an investment.
And let’s not forget that most Vietnamese expatriates, who live and work abroad, send money home to their families who still live in Vietnam. These remittance payments could account for as much as 6.3% of Vietnam’s GDP. As such, it isn’t surprising that so many of Vietnam’s expats could use crypto to send their money home when you consider how low the transfer fees are compared to those often charged by the banks and transfer services.
One final consideration is Vietnam’s bankless population, those who live and work without bank accounts. Research suggests that just thirty million Vietnamese people (from a total of ninety million) have a bank account, or about 30% of the population. Other studies show that Vietnamese people collectively have at least seventy million smartphones, or more than twice their number of bank accounts. Together, these two statistics indicate that Vietnamese people urgently need somewhere to store their cash, and crypto platforms can provide a convenient solution.
There doesn’t need to be just one reason to explain why crypto’s so popular in Vietnam. In all likelihood, all of the foregoing explanations together explain why Vietnam has adopted crypto faster than any other country. In addition to these explanations, however, we should also consider the fact that several Vietnamese crypto companies have enjoyed extraordinary success over the past few years, which will have boosted the popularity of digital assets within Vietnam.
Who's Building in Vietnam?
Take Coin98, for instance, which was founded by Thanh Lee and Vinh The Nguyen in the city of Ho Chi Minh in 2017. The company has enjoyed remarkable success in its relatively short history, and is very popular across Asia. In case you aren’t familiar, Coin98 is a DeFi platform through which you can move and swap tokens across different blockchains and earn interest from staking and yield farming. Most of its services revolve around its multi-chain compatible wallet which lets you interact with all your crypto wallets on different blockchains like Ethereum, BSC and Solana by using just one password. At the time of writing, the platform’s token — C98 — had a market cap of over $50 million, although it was floating around $1 billion in August 2021.
Crypto firms like Coin98 draw the attention of foreign investors and the global crypto community to Vietnam, which is great for Vietnam’s economy — especially its startup sector. Of course, Coin98 isn’t the only well-known crypto platform to have launched from Vietnam.
Another platform which has enjoyed similar success (and raised Vietnam’s profile within the crypto space) is the Kyber Network: a decentralized exchange (DEX) aggregator and liquidity platform. In layman’s terms, Kyber provides liquidity for various DeFi applications, including its own DEX, and it lets you exchange various tokens and coins without an intermediary. During its initial funding round in 2017, the Kyber team raised $52 million, which at the time made it the most successful startup in Vietnam’s history. And in April 2022, the Kyber network became the third Vietnamese crypto firm to reach a $1 billion market cap.
Both Coin98 and Kyber achieved success remarkably quickly, and both helped solidify Vietnam’s reputation as a hub for crypto investment. However, neither comes close to matching the success of Vietnam’s runaway crypto success story: Axie Infinity.
Axie Infinity is an NFT-based game developed by Sky Mavis, which launched in Vietnam. In case you haven’t played Axie before, the game involves creating adorable little monsters and battling them against other equally adorable little monsters who belong to other players. Unlike other turn-based games, your whole team battles another team at once, as opposed to one character battling another character each turn. If you win your battles, you can gather up Smooth Love Potions (SLP), which essentially work like experience points, except that you can sell them for profit or consume them to breed more Axies (which you can also sell for profit).
Axie was partly inspired by CryptoKitties — a blockchain game that momentarily took over the world in December 2017 — and by Pokémon, which needs no introduction, and which uses a similar turn-based fighting system to that which Axie uses today.
Unlike most of the video games that came before it, you actually own your in-game items in Axie, including your creations — called Axies. This is because each Axie is an NFT, which means you can sell your Axies and SLP. This NFT-based functionality remedied what Web3 gamers see as a fundamental flaw in Web2’s gaming model — that you don’t actually own your in-game items and can therefore lose access to them arbitrarily.
Axie runs on the Ethereum blockchain, which is the most used blockchain for NFTs, and has a dedicated sidechain called Ronin, which reduces the fees for trading Axies and other in-game items like SLP. This Ronin sidechain was considered a huge success by the Axie community right up until it was hacked in March 2022.
North Korean hackers fooled a Ronin engineer into downloading a document riddled with malware that let the hackers control Ronin’s validator nodes. This let them drain $600 million from the sidechain’s funds, most of which belonged to the Axie player community.
In the months leading up to the Ronin hack, 2.5 million people were playing Axie every month and it was trading at a $10 billion market cap, which made it one of the most popular and valuable games on earth. But how did this plucky startup in Ho Chi Minh achieve such enormous success in such a short timespan?
The answer it seems is that Axie’s play-to-earn (P2E) model hit the markets at the perfect time; when much of the world was locked down and unable to work. In countries where most people can’t work from home, like the Philippines and Vietnam, Axie provided something of a lifeline as it gave them a way to earn some much-needed cash during the lockdown.
When word got out about how much money you could make from playing a video game, Axie’s popularity exploded overnight. The game’s monthly player count soared from 28,000 in July 2020 to nearly 3 million in December 2021. This was great news for Axie’s community, and even better news for Vietnam. Axie’s success led to many discussions in the media about the country’s new status as a fast-growing startup hub. Since then we’ve seen hundreds of other P2E games try to follow in Axie’s footsteps, although none have yet been anywhere near as successful.
Unfortunately, Axie’s runaway success eventually led to an inflationary problem caused by too much SLP farming and not enough Axies being created (the only way to destroy SLP is by creating Axies). Despite Sky Mavis’ efforts to intervene, this inflation caused SLP’s price to crash, at which point millions of players sold their Axies and abandoned the game. At the time of writing, Axie’s monthly player count was hovering at around 470,000 players.
Regardless of Axie’s currently diminished player count, or whether its popularity will ever recover, most will agree that Axie served as a huge on-ramp for thousands of new crypto users, especially in Vietnam. This, and Vietnam’s bustling crypto startup scene, undoubtedly contributed toward the crypto’s growth throughout 2020 & 2021, and will certainly continue to do so in the future.
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