Dialogue with Polygon Ventures Sachi: The market is too focused on infrastructure and overlooks consumer adoption.

深潮TechFlow

特邀专栏作者

2023-07-24 20:00 (UTC+8)

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Cryptocurrency is a global asset, and Sachi is a true global citizen.

AI Summary

Cryptocurrency is a global asset, and Sachi is a true global citizen.

Original author: Marco Manoppo

Original translation: Deep Tide TechFlow

Sachi has a highly diverse background.

She graduated from the California Institute of Technology with a degree in electrical engineering and began her career at Mitsubishi in Japan before transitioning to more finance-centered roles. Shortly after, Sachi worked as an economic analyst at the International Monetary Fund and as an assistant at Bank of America.

Cryptocurrency is a global asset, and Sachi is a true global citizen. She has lived in four different countries across four different regions. Currently, Sachi is a member of the Polygon Ventures team, leading a $100 million ecosystem fund dedicated to driving the development of the Polygon blockchain.

Key takeaways:

American entrepreneurs need to have a flexible attitude towards relocation, considering the ever-evolving regulatory environment. Dubai is a good choice.
Teams and investors in the Asian region are seeing more active trading volume.
Real-World Assets (RWA) is an exciting area but requires finding a "crypto-native" way to address KYC issues.
Currently, there is too much focus on infrastructure in the cryptocurrency space and not enough on consumer adoption.
Tether and Binance's dominant market position in the cryptocurrency field are the biggest risks.

What was the defining moment that made you decide to get into the crypto industry?

Sachi met Sandeep through a mutual friend who was already working in the cryptocurrency field. At that time, Polygon was still known as Matic and hadn't even been listed on Coinbase.

Her early conversations with Sandeep made her decide to enter this field. Sandeep used an analogy to explain the potential of crypto technology. For example, Ethereum is like a replacement for central banks and other centralized institutions, while Bitcoin would become a value layer similar to digital gold.

Seeing the growth of this industry, Sachi realized the opportunities that cryptocurrencies offer, both in terms of technological potential and career development. In traditional banking jobs, age often becomes a limitation regardless of how hard one works.

Finally, Sachi decided to join Polygon. Initially, her role was not clearly defined, but Polygon is improving its investment approach to drive the development of its ecosystem. Sachi later joined to help build a due diligence framework, evaluate potential investment projects, and create an Investment Committee (IC) for the ecosystem fund.

How does your international background help in the cryptocurrency industry?

Having a diverse background does help.

As a truly global asset class, you will be working with people from around the world. Naturally, you need to understand how different cultures operate. In terms of closing deals, this also means having a good understanding of the etiquette and styles of various cultures. For example, Sachi's background helped her close deals in cryptocurrency projects in Japan.

You used to be a credit trader. How does that experience affect your prospects in the cryptocurrency industry?

In simple terms, Sachi used to research large bank bonds and determine their appropriate yields. This experience helped her gain a good understanding of how traditional finance works, which is very helpful in understanding the DeFi mechanisms in cryptocurrency.

A lot of what is done in DeFi is simply borrowed from concepts in traditional finance (TradFi). However, many DeFi players are often not familiar with the system, especially in terms of risk management. Pricing options, creating proper exchange markets, and other financial technicalities are sometimes not done well enough.

How do you view the role of emerging markets (EMs) in the cryptocurrency industry?

Cryptocurrency is particularly important for emerging markets with inflation issues, such as Venezuela or Argentina. These countries truly understand the value of cryptocurrency and have more potential in driving widespread adoption of cryptocurrency compared to developed markets, where obtaining USD is easier.

Which regions do you think have the most active trading activity?

Currently, there are still some trades happening in the US, but Sachi sees much more activity in Asia. Recently, there has been a more widespread presence of Asian projects and funds. One reason is that US funds have overinvested during the bullish market, so there is currently no available capital to allocate. Asian investors are more opportunistic and usually do not like to invest when valuations are high. With valuations being lower now, they are more willing to allocate funds.

Due to the small political risks, there are also many projects from Asia.

What strategies can founders take to deal with the current regulatory system?

Founders should remain flexible and open-minded. Given the current regulatory developments in the United States, founders may have to consider the possibility of migration (at least in the short term).

Many countries are beginning to be more open to cryptocurrencies. Dubai is a potential choice. In an interview with CZ, he stated that the region does want to welcome cryptocurrency companies and entrepreneurs and provide appropriate regulation. Founders may consider relocating their business to such areas.

How was Polygon able to raise $450 million in funding?

An investor (Redacted) advised/suggested to Sandeep that he should raise funds for Polygon. One of the main reasons is that other L1 competitors have just completed massive fundings.

Initially, Sandeep was not enthusiastic about raising funds as Polygon still had a significant amount of capital, but later realized the value of having well-known institutional investors for strategic purposes.

An important lesson is to complete the transaction as soon as commitments from investors are obtained. Especially in a volatile field like cryptocurrencies, where the technology development cycle is related to actual USD value. When the market starts to decline, investors' sentiment may change significantly, and there is no guarantee that commitments will always be fulfilled. Timing is also crucial. Polygon raised funds at the right time (end of 2021 to early 2022).

What are the current investment themes for Polygon Ventures?

The current investment themes for Polygon Ventures are infrastructure projects such as staking, zero-knowledge technology (ZK-tech), and real-world assets (RWAs). Assessing the next emerging cryptocurrency trends can be challenging at the moment, but with changes in macro conditions, the potential for the recovery of consumer-facing applications (such as gaming) will significantly increase.

How to address RWA compliance?

Although RWAs are exciting, it remains to be seen how much compromise will be needed in the decentralized space to gain traction with institutions.

In traditional finance (TradFi), Know Your Customer (KYC) is very important. In the cryptocurrency field, there is currently no good way to perform KYC locally. Perhaps Coinbase's Base can be an attempt to perform KYC on individual users at the chain level.

Polygon is also developing Polygon ID, a system that uses zero-knowledge technology to verify identity without fully disclosing your real identity.

What are your thoughts on Binance crackdown?

In the long run, the crackdown on Binance is beneficial to the cryptocurrency industry. In recent years, Binance's power has become overly dominant. Every project that wants to succeed must be listed on Binance. Other exchanges need to catch up in market share to prevent excessive monopoly and liquidity concentration.