Tiger Research Outlook on the Asian Web3 Market

Daniel Kim, 2023 Reviews & 2024 Outlooks

2023 was arguably the lowest point of the so-called “third crypto winter”. There was high volatility in crypto prices, reduced VC funding into the industry, and an exodus of ambitious talent. The uncertain global macro situation and the Russia-Ukraine and Israel-Hamas wars further exacerbated the market conditions. Nevertheless, the continued development and hard work of excellent projects and several real-world use cases have created a group of winners or survivors, reminding us that there is still hope for the blockchain industry.

The US, Europe, and major Asian countries are moving to overhaul their incomplete regulations for the blockchain industry, and the “rules of the game” are being established in each country. No one in the Web3 industry has passed 2023 unscathed. For the few who still have confidence and determination in the industry, 2024 will be a year to look forward to.

With the US Federal Reserve (Fed) expected to hold and cut interest rates in 2024, major economies emerging from a two-year “global macro tightening tunnel,” and Web3 policy-leading countries such as Singapore, Japan, and Abu Dhabi removing the “regulatory uncertainty” that has held back blockchain market development, we believe 2024 will mark the end of the long “crypto winter” and the beginning of a new cycle.

In particular, three main factors will likely drive the market this year.

1. A steady influx of global institutional investment funds through Bitcoin ETFs and the adoption of major protocol tokens as ETFs
2. The launch and success of user-friendly and exciting AAA Web3 games and metaverses.
3. The expansion of legalized blockchain financial services within regulated jurisdictions, such as STOs and RWAs.

These factors are expected to provide new growth drivers for the blockchain market, which has yet to gain a significant user base, and build public trust in the blockchain industry.

Nevertheless, we believe this cycle will be different from the past. We will no longer see a market where a “rising tide lifts all boats” with all projects and protocols benefiting from an upward curve rally as new liquidity flows in. Educated investors and users will discern more proven and useful services, leading to a stronger trend toward a market with “few proven winners”.

Ryan Yoon, Asian markets on the rise

In researching the Asian blockchain market throughout 2023, there has never been more excitement about the region than today. There have been many changes both internally and externally in Asia.

For internal changes, the opening of Japan’s government-led Web3 market, Singapore’s regulatory overhaul, Indonesia’s establishment of a state-owned exchange, and India’s proliferation of CBDCs indicate that blockchain markets across Asia have been recognized as having clear utility, rather than being illegal. This regulatory clarity is important not only for users in Asian countries, but also for the rest of the world as it sets a precedent for other countries to reference.

It is also noteworthy that Asia-based companies are starting to lead the industry. Big investments that used to happen mainly in North America can now be found in Asia. The recent $140M investment from Line Next, the developer of the Finschia platform, is one such case.

Externally, as regulatory uncertainty in the U.S. and Europe has increased, major global projects began to turn their attention to Asia. Hong Kong and Singapore in particular are becoming more open to blockchain companies, Unstoppable Domains is moving to Japan, and global exchanges such as Binance, OKX, and others are entering Taiwan.

This shift in focus was also felt in the increase in inquiries to Tiger Research. Most of them were focused on the potential that comes from the high technology adoption and large population of Asian countries, indicating that the potential of the Asian market is just beginning to be realized.

In addition, the overall market recovery is bringing even more excitement. The Kimchi Premium phenomenon is showing a resurgence in South Korea, which coincides with many projects finishing their preparations to enter the Asian market. Looking back, 2023 was the year that Asia stepped into the spotlight and gained traction amid a market downturn. There is no doubt that the region will play a key role on the global stage, and now is the time for making real use cases.

Jay Jo, Web3 gaming market in 2024

The most exciting sector for 2024 looks to be ‘Web3 games’. Although many P2E and NFT games have failed, it is still a dynamic market where creative and innovative attempts continue to be made. In particular, the continued development of Web3 games means that we can expect the emergence of AAA-quality games from 2024. There is also a growing interest in genre diversification and new narratives such as user-generated content games (UGCG) and fully on-chain games (FOCG). According to data from blockchain data analytics platform Footprint Analytics, the number of Web3 games is growing at a rate similar to past bull markets.

Number of Monthly Cumulative Web3 Games

Source: Footprint Analytics

As expectations rise for the Web3 gaming market, much of the attention is focused on Asia, where large game companies in South Korea and Japan are leading the way in Web3 gaming, a trend that is expected to continue in 2024. Both large game companies and small and medium-sized game studios are actively participating in the Web3 game market in these regions, and 2024 is expected to be a year of high expectations with the launch of Nexon’s MapleStory Universe, WeMade’s Legend of Ymir, Sega’s Three Kingdoms War, and Krafton’s Overdare.

There are many reasons to be excited about the Asian Web3 gaming market, not the least of which is that the region is home to several gaming-specific mainnets. Vietnam’s Ronin, Australia’s Immutable, South Korea’s Klaytn and Finschia, and Japan’s Oasys and Astar have all been making efforts to expand their respective ecosystems. In addition, the Asian market is well-positioned for the development of the Web3 gaming market due to its large number of global content IPs and vast pool of game developers. The number of game developers in Asia accounts for about 40% of the world’s total, which is higher than the United States.

Maplestory x Las Vegas Sphere, Source: MapleStory, Nexon

The global strategy of Asian Web3 game projects is also noteworthy. This is influenced by the regulatory environment, especially in South Korea and Vietnam, where P2E gaming is not legally allowed. As a result, Web3 game projects are adopting a strategy of establishing overseas entities and targeting international users. This approach contrasts sharply with other Asia-based Web3 projects that struggle with globalization, raising expectations for the development of an Asia-focused global Web3 gaming market. The Web3 games market in 2024 is expected to be more dynamic, driven by the number of upcoming Asian Web3 games.

Yoon, between technological advancement and mass adoption

In 2023, the use cases for blockchain technology continued to expand. Still, we have yet to see significant real-life adoption or proliferation of the technology, especially in areas like STOs, RWAs, and NFTs, where regulatory and environmental challenges persist.

While 2023 was a year of significant advancements in blockchain technology, this does not equate to mass adoption. Considering the recent Inscription craze, technological and cultural trends are moving fast in the Web3 ecosystem, but this serves to illustrate the gap between Web3-native trends and public application.

By 2024, we expect to see a significant gap in performance between projects with strong technological foundations and those that are only good at business development and marketing. To date, the message of innovation for the sake of technology alone regardless of mass adoption and the occasional META (Most Effective Tactic Available) product such as memecoins, has had a significant impact on the market. This looks to change. Projects will need to be able to bridge the gap with the public and provide a clear utility. Chasing short-term trends, such as Bitcoin halving, will likely no longer be well received by the Web3 ecosystem or the public.

What makes 2024 so exciting is the number of partnerships between Web3 and traditional companies. For example, the collaborations between MapleStory and Polygon, SK and Avalanche, and Sony and Astar Network are expected to be the beginning of bridging the gap between technological advancement and mass adoption. These collaborations are expected to evolve in a way that provides tangible benefits to the masses.

2023 Tiger Research, a look back

In 2023, Tiger Research published more than 90 reports on the Asian Web3 market, including three special reports based on our on-field research and interviews. Firsthand experience of the unique and dynamic nature of each region has allowed us to draw a realistic, multi-faceted analysis. Based on our findings, we identified the top seven Asian Web3 markets to look forward to in the coming years.

Top 7 Asian markets by Tiger Research

1. Singapore

• Singapore, the Leader of the Global Blockchain Industry
• Comparative Guide of Hong Kong, Singapore, and Dubai
• Singapore: (Re)making of a Crypto Paradise

Singapore is cementing its position as an Asian financial hub thanks to the government’s ongoing efforts, led by the Monetary Authority of Singapore (MAS). In addition, Singapore is positioning itself as a model country for the global blockchain market, with experimental sandbox projects in ICOs, STOs, RWA, and payments. Its policies are also worth noting, as they seek to harness the benefits of blockchain technology while reducing risks for investors and the ecosystem as a whole. Low taxes and a business-friendly environment make Singapore even more attractive. Even in 2024, Singapore is expected to be a Web3 hub for founders in the Asian market, including Greater China.

2. South Korea

• [Special Report] 2023 G-STAR Recap: State of the South Korean blockchain gaming market
• 2023 Korea’s Web3 Gaming Landscape
• Blockchain Mainnet Projects focused on Korea
• How Cryptocurrency Regulation evolved in South Korea
• Korean Cryptocurrency Exchange Listing Support Guidelines

South Korea is a country notable for its enterprise companies entering the Web3 market, especially in the field of blockchain game development. Despite the fact that the Game Industry Development Act restricts the release and distribution of blockchain games in Korea, the industry continues to thrive. Many large game companies and small and medium-sized game studios are preparing to launch blockchain games utilizing major content IPs for international audiences. By 2024, South Korea is expected to introduce high-quality games that incorporate blockchain technology with fun new gaming elements to meet gamers’ expectations.

Meanwhile, South Korea has recently emerged as one of the leading countries in the bull market for cryptocurrencies, with the country’s enthusiasm for crypto even coining the term “Kimchi Premium”. With such high liquidity in South Korea, various global Web3 projects are expected to enter the country, and their participation is expected to make the South Korean Web3 market even hotter in 2024.

3. Japan

• Blockchain Games in Japan
• Deep Dive into Japanese Blockchain Games
• All eyes on Web3 Japan

Japan is a country where the government is actively promoting the Web3 industry. The regulatory requirements for virtual assets are gradually being relaxed, and Japanese local governments are actively adopting Web3 technologies such as NFTs and DAOs. The participation of enterprise companies in the Web3 ecosystem is also noteworthy. Large companies in the gaming, finance, and telecommunications sectors are accelerating their entry into Web3. Especially, we expect to see more participation from large game companies with global content IP such as Sony, Bandai Namco, Sega, and Square Enix in 2024. In addition, local mainnets such as Astar and Oasys led the Web3 market in Japan in 2023, and their active partnerships with enterprise companies are worth noting. Many of their initiatives are expected to come to fruition in 2024, and we expect to see more opportunities for the Japanese Web3 market in the future.

4. India

• Indian Web3 Market Overview

India’s young age, large population, and high development capabilities make it a country with high potential for the Web3 market. In particular, it has the largest pool of developers after the U.S., with approximately 13.2 million developers, which gives it an advantage in the Web3 market. India also has a thriving startup ecosystem and an English-speaking population, which makes it easy to enter global markets.

India has successfully launched global Web3 infrastructure projects such as Polygon, which is accelerating the influx of diverse talent into the Web3 market. In addition, the government’s stance of banning all crypto assets in 2021 has changed to fostering innovation in 2023, further raising expectations.

5. Thailand

• Thailand Web3 Market Overview

Thailand is an exciting country to watch as the government, traditional finance sector, and the public are all taking a keen interest in the cryptocurrency market. In particular, traditional finance-led Web3 initiatives have been prominent, with participation from commercial banks such as Siam Commercial Bank and Kasikorn Bank. Recently, a pro-crypto personality was elected as the prime minister, and the Thai government has since announced plans to provide basic income by distributing cryptocurrency to all citizens, raising even greater expectations.

6. Vietnam

• [Special Report] APAC Web 3 Powerhouse : Inside Vietnam’s Blockchain Market
• Revisiting the Vietnamese Web3 Market

Vietnam is a country with impressive youth-oriented adoption of blockchain technology. In addition to high technological acceptance, it is expected to serve as a Web3 powerhouse in Asia, where it can hire competitive blockchain developers based on relatively low labor costs. It is also expected to have a positive impact on the development of the global blockchain ecosystem by gaining successful experience in global Web3 projects such as Sky Mavis and Kyber Network. However, one of the limitations is that regulatory uncertainty remains a major challenge within Vietnam.

7. Indonesia

• [Special Report] The Giant of Southeast Asia, Indonesia Web3 Market Report
• Overview of SEA giant Indonesia’s crypto market
• Awakening of a South East Asian Giant

A giant in Southeast Asia, Indonesia’s Web3 market has literally huge potential. Macro indicators such as the world’s fourth-largest population, a vast market, a young and active population, and Web3-friendly policies are fueling the growth of the Indonesian market, especially with the launch of a state-owned cryptocurrency exchange in 2023.

Indonesia is also a country where blockchain technology is expected to provide a variety of opportunities due to the limitations of the existing financial system, and where the Web3 ecosystem is expected to grow in the long term. However, the insufficient size of the Web3 ecosystem, lack of public awareness, and a market system centered on major political and economic stakeholders remain major challenges.

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