Crypto Veteran. Tokenization, DeFi and Security Tokens - Blockchain.
Ishan Pandey: Hi Duc, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind Spores Network?
Duc Luu: Duc comes from an ed-tech, prop-tech, and marketplace POV: Duc built and sold an Edtech startup in Hong Kong, sold it to Bain Capital Private Equity China, and then took the parent company public on Nasdaq in 2017 for a valuation of over $1 billion. He spent the next two years as Chief Strategy Officer looking at Edtech M&A and incubation opportunities worldwide. For the last two years, he’s moved back to his homeland of Vietnam to build the country. He served as COO of Propzy, a prop-tech play, where he helped raise $25 million from Softbank Ventures Asia, Gaw Capital, and Insignia Ventures. The company currently has over 20 stores in Vietnam. Soon he was poached by One Mount Group’s venture, OneHousing, to lead strategy and operations as COO, looking to scale another prop-tech play with backing by Vietnam’s top two billionaires of Real Estate and Banking. He’s a contributor writer for Vietcetera, TechinAsia, and keynote speaker in Edtech, Proptech, and now Crypto.
My co-founder Eric Hung Nguyen and I were working together at a top Vietnamese prop-tech startup backed by Vietnam’s top two billionaires in Hanoi and over the course of over half a year, decided that the startup wasn’t going anywhere for us and that crypto, particularly NFTs and DeFi were pushing the envelope of technology, finance, and e-commerce. We then felt that building the Alibaba of NFT Marketplaces makes the most sense to best take advantage of the rise of digital assets.
Ishan Pandey: The rise in popularity of non-fungible tokens, or NFTs, has significantly impacted the esports and gaming sectors, leading to professional sportsmen and sports franchises making millions of dollars by launching their own NFTs. In your opinion, what has led to this shift in the industry from the traditional ecosystem towards a more DeFi approach?
Duc Luu: Creators want to take back creative and financial control. Simple as that. If you’re a celebrity or influencer, why do you have to pay traditional media to launch your product and receive far less of the returns? NFTs offer a solution for athletes, as an example, to connect directly and reward their fanbase and, in turn, boost their career trajectory. It’s a win-win situation for all.
Ishan Pandey: Valuing NFT art is a difficult task for investors. According to you, how should NFT Art be valued from an investment perspective?
Duc Luu: As an avid traditional art collector myself and having run around the ultra-high net worth art circles, I have to remind all art collectors/investors that you should buy the art first and foremost because you love it. Buying it for pure financial gain is miserable and, at best, a very volatile alternative investment asset class. That said, NFT art will and should be valued higher than traditional art for the following reason:
1) Digital art collectors skew younger and cooler and therefore will increase the artist’s collector base on the scale, whereas high-end traditional art is trading among only a couple hundred high net worth individuals and their representative galleries;
2) NFTs have a gamification and trading element inherent to them and the crypto community as a whole. So while you see a work of art sell for $100,000, it's actually been traded 10 times within the last two months versus that same traditional art piece at that price trades once every 5-10 years. More trading volume means more transparency and better pricing, something wholly missing in the traditional art market;
3) Provenance is currently determined and tracked by the galleries themselves in the traditional art world. While some internet galleries or aggregators are working on getting galleries to reveal their sales history, it's still too opaque. Whereas blockchain solves that completely. Every trade is recorded. Provenance is clearly visible on the blockchain;
4) Royalties to artists for secondary sales are now possible on blockchain and clearly not implemented in traditional art.
Ishan Pandey: Besides Elon Musk, Dogecoin now has another person backing them - Charles Hoskinson, the co-founder of Ethereum. What does the roadmap ahead look like for meme cryptos like Dogecoin and Shiba Inu?
Duc Luu: There is a subculture of a pump and dump in crypto, often influencer or celebrity-driven. I think this will always exist since anyone can mint a token, and Discounted Cash Flow (DCF) valuations are yet the norm for the industry.
Ishan Pandey: Non-fungible tokens (NFTs), which are individual pieces of crypto art, are at least partly to blame for the enormous amounts of planet-warming carbon pollution emitted by the cryptocurrencies used to buy and trade them. What are your views on NFTs and environmental concerns regarding cryptocurrencies?
Duc Luu: Our company is going to use carbon offsets to be 100% carbon neutral. We hope everyone in our community does the same. At the same time, oil and gas and a few other industries take the lion’s share of such emissions and should be the focus. Crypto and particularly NFTs still use very little in the larger scheme of things.
Ishan Pandey: Cryptocurrencies and non-fungible tokens (NFTs) are reshaping the art landscape in Asia, from artists to galleries, art exhibitions, and auction houses. How are NFTs resolving difficulties in the digital and non-digital world for which we previously lacked solutions?
Duc Luu: As I mentioned in your prior investment question, gamified trading volume and provenance through blockchain will revolutionize the entire rather opaque art market. Having built marketplaces in ed-tech and prop-tech myself, I find that marketplaces must provide transparency, efficiency, and therefore trust to facilitate the fairest price and the greatest transaction volume.
Ishan Pandey: As more innovative apps continue to push the boundaries of users’ utility from their digital assets, DeFi is swiftly expanding in scale. However, there are a few barriers along the way, such as volatility, which has been holding DeFi back. What can be done to alleviate these problems?
Duc Luu: Firstly, as listed crypto companies mature into real businesses with real revenues, traditional valuation metrics such as DCF will receive greater prominence. The problem or unique nature of crypto is that you sell the hype first, build massive communities to support you financially and holistically, then you have to build a winning product. The last part in the VC world is the hardest part and doesn’t appear in the tokenized world until a couple of years into the business.
Ishan Pandey: The source code for the World Wide Web will be auctioned as a non-fungible token (NFT) at Sotheby’s, according to an announcement by the New York-based auction house. What are your views on the future of NFT art, and what are the current impediments to its growth?
Duc Luu: We at Spores love upmarket to ultra-high-end NFTs as decentralized pop culture. We think that market has exploded and will continue to grow as mainstream arrives through NFTs rather than crypto liquidity pool trading. We think each vertical that we’re building out: digital fine art, games, esports, animation/anime, a celebrity will all have their unique NFT interactions, and marketplaces like ourselves are exploring as many use cases and innovations as possible. The current boom and bust nature of crypto will hurt the building of sustainable fanbases and communities in the short run. But in the long run, NFT value will be very clear of all digital assets and be priced dynamically by the market.
Ishan Pandey: Chinese officials recently declared that they would be enacting harsher cryptocurrency laws, causing bitcoin values to plummet. What impact will Chinese laws have on the global cryptocurrency market?
Duc Luu: The most important development is the redistribution of mining to the world rather than concentrated in China. This will force other countries and communities to interact with crypto and likely adopt crypto as official and mainstream. Clearly, China wants to use crypto, but on their own terms, such as the ECNY. Interestingly, a digital yuan would be a powerful destabilizer of the U.S. dollar as a world currency. If China continues down that route, the U.S. and Euro would have to respond to negate capital outflows, affecting their inflationary monetary policy.
Ishan Pandey: According to you, what other significant trends are we going to witness in the blockchain industry in the year 2021?
Duc Luu: NFTs are definitely back again even if the broad market is treading water and looking for a bottom. NFT tokens, companies, marketplaces are hot and should be because they will produce real revenues. Like the broader Dow and S&P Indexes, there will be a flight to quality tokens rather than a simple index or buy BTC and hold strategy. I suggest you invest in companies with a clear path to revenue and not just tech innovation as we’re in the crypto area of the rise of layer 3 apps like marketplaces, social networks, media sites that will drive investment and revenue into the crypto ecosystem.
Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Ishan Pandey.
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