Animoca and Coin68 release Vietnam's cryptocurrency market report: Nearly 60% of respondents hold stablecoins, investor confidence returns

Original Title: Vietnam Cryptocurrency Market Report H1/2023

Authors: Kyros Ventures & Coin68 & Animoca Brands

Compiled by: Qianwen, bayemon.eth, ChainCatcher

The teams from Kyros Ventures, Coin68, and Animoca Brands continue the tradition of the longest-running series by launching the Vietnam Cryptocurrency Market Report for the first half of 2023. We sincerely thank all participants in the survey and readers who have followed us since the first issue. On behalf of the team, I would also like to thank all partners who support this report; you are a powerful driving force behind the continued prosperity of the Vietnamese cryptocurrency community.

Table of Contents

1. Key Insights

2. Vietnam Market Landscape

3. Investor Profile

3.1 User Insights

3.2 Individual Investor Perspectives and Behaviors

3.3 CeFi and DeFi

3.4 Airdrops

3.5 NFTs and the Web3 Space

4. Summary

1. Key Insights

The market is maturing, with numerous infrastructure projects emerging, while many experienced investors remain steadfast during market downturns.

Investor confidence has returned, with 70% believing that the bear market cycle has ended or is about to end, and investment enthusiasm is reflected in increased participation across various sectors compared to the previous year.

However, nearly 60% of respondents still hold stablecoins, accounting for more than half of their portfolios, while 75% expect regulatory governance or intervention.

In Vietnam, investment decisions influenced by friends are a popular trend, with this proportion being 2.5 times higher than in the United States.

2. Vietnam Market Landscape

Overview of Vietnam's Economy and Market

The global economic landscape remains uncertain due to ongoing challenges such as inflationary pressures and supply chain disruptions. Central banks are cautiously monitoring these factors and adjusting monetary policies.

The data in the chart summarizes the annual GDP growth percentages of several countries. Vietnam ranked among the fastest-growing countries in 2022 with a growth rate of 8%. Meanwhile, developed economies like Japan and the United States showed relatively low growth rates of 1% and 2.1%, respectively, highlighting a diverse economic landscape.

Macroeconomic Situation

Regulatory Friendly: Vietnam has not yet incorporated cryptocurrencies into its fiat currency system, thus no cryptocurrency tax is levied. Although discussions regarding cryptocurrency regulation are ongoing, changes to the regulatory framework have been limited. Notably, peer-to-peer lending and virtual asset service providers were excluded from the new anti-money laundering law enacted in March this year. (Baker & McKenzie, 2023)

Risk Hedging: The value of the Vietnamese Dong has recently fluctuated due to central bank actions, attracting more users who use Bitcoin as a risk hedging tool. As a result, the application model of using Bitcoin as a currency risk hedging tool showed a significant upward trend in 2022. (Statista)

Vietnam Cryptocurrency Market

• As of December 2022, Vietnam had over 200 active blockchain projects covering various sectors.
• According to Statista, the revenue of cryptocurrency exchanges in the Vietnamese market is expected to reach $109.4 million in 2023, while the number of cryptocurrency users is projected to reach 12.37 million by 2027.
• Additionally, a recent report from The Wall Street Journal indicated that Vietnam ranks among the top five in trading volume of cryptocurrencies.

Vietnam Blockchain and Cryptocurrency Project Landscape

Blockchain Institutions Certified by the Vietnamese Government

• For the first time in the history of Vietnam's blockchain industry, two legally recognized entities have emerged.
• The first is the Vietnam Blockchain Union (VBU), established by the Vietnam Digital Communication Association (VDCA), officially launched on April 21, 2022.
• The other is the Vietnam Blockchain Association (VBA), founded a day later based on the decision 343/QD-BNV issued by the Ministry of Home Affairs.

Education

• The number of educational institutions offering courses in the blockchain field has increased to 9 compared to last year.
• FuniX offers a 10-month in-depth IT training course for students aspiring to become blockchain developers.
• Additionally, RMIT has introduced a specialized course titled "Blockchain-Driven Business" and has partnered with Binance to establish a fintech and cryptocurrency center.
• Furthermore, students can explore the blockchain field through formal courses offered by Ho Chi Minh City University of Technology (HCMUT) and various blockchain-related workshops and projects provided by other educational institutions.

Blockchain Infrastructure

• The number of blockchain infrastructure projects has increased to 8.
• The most notable project is Aura Network, which has raised a total of $9 million from investment firms such as Republic Crypto, Hashed, and Coin98 Ventures.
• TomoChain has been acquired by Coin98 Finance.
• The infrastructure network Remitano Network, backed by the Vietnamese P2P exchange Remitano, launched its mainnet in October 2022.
• Firebird (formerly PolkaFoundry) is currently a Web3 gaming platform focused on chain games.
• Verichains discovered a private key extraction vulnerability with a risk exposure of up to $8 billion.

Decentralized Finance (DeFi)

• Despite the market being in a prolonged bear phase, the momentum for project development this year has surpassed that of the same period last year.
• This includes successful projects such as Fewcha, Octan Network, Orochi, and Cavies, which emerged after the Web3 Matching event hosted by Kyros Ventures in December 2022.

Web3

• Although there have been no significant breakthroughs in the GameFi sector in the first half of 2023, according to data from Finder and Bloomberg, Vietnam remains a global gaming powerhouse, ranking in the top five for both GameFi participation and mobile game production. Vietnam is poised for a strong return in the GameFi sector.
• Meanwhile, infrastructure projects such as Space3, SeekHype, W3W, and Oxalus have gained visibility following events like Web3 Matching and GM Vietnam 2023.

3. Investor Profile

3.1 User Insights

Demographic Insights

Individuals aged 25 to 34 remain the primary demographic. Compared to 2022, the proportion of participants aged 18 to 24 has decreased from 38% to 26%.

Yearly Comparison of Investor Proportions

• Over 90% of respondents have more than 1 year of market experience. The proportion of new users in 2022 was 11%, while in 2023 it dropped to only 6.5%.
• 2021 remains the year with the highest proportion of new users, indicating that regardless of market conditions, new users in Vietnam were optimistic about the market at that time.

3.2 Individual Investor Perspectives and Behaviors

Perspectives

• Consensus on Bitcoin (BTC) prices generally centers around a range of $30,000 to $50,000 by the end of 2023.
• Only about 20% of investors believe Bitcoin will drop below $20,000.

• Nearly 70% of respondents indicated that the cryptocurrency winter will last less than a year or has already ended.

Information Acquisition Channels

Vietnamese investors primarily rely on social media, news, and community groups for information. Additionally, project websites are a means for them to gain deeper insights into projects.

Recommendation-Driven Investment Decisions

• 75% of respondents believe that friend recommendations have some influence on their investment decisions.
• However, when asked whether they rely on the opinions of trusted individuals for investments, most respondents still prefer comprehensive project research. This indicates that investors are very cautious before making investment decisions.

Recommendation-Driven Investment Decisions

• For user groups with varying levels of market participation, novice investors tend to be skeptical during project research.
• There is a paradox here: the remaining groups tend to base their investment decisions on friend recommendations.

Participation in Segmented Tracks

• Compared to 2022, participation in tracks such as DeFi, GameFi, and NFTs has increased, with significant growth trends in NFTs and GameFi.
• Although airdrops were the most popular community participation method in 2021, this track has fallen to second to last in 2023.

3.3 CeFi and DeFi

Stablecoin Holding Rankings

• Compared to last year, the top four stablecoins by adoption have not changed: USDT remains in the lead, while USDC and DAI have the highest growth rates. TUSD and Coin98 Dollar (CUSD) are two new stablecoins that have replaced UST and MIM from the previous year.
• 75.8% of investments hold more than two types of stablecoins to diversify their portfolios and reduce risk.

Stablecoin Allocation Proportions

• Although most market participants are optimistic about Bitcoin prices, the majority of users hold assets in stablecoins, accounting for 25%-50%. This phenomenon reflects a preference for lower-risk investment methods during market downturns.
• Notably, new users have the lowest proportion of stablecoin holdings.

Stablecoins

Most users choose to store stablecoins in CEX.

• Most respondents indicated that ongoing stability is the basis for their choice of commonly used stablecoins.
• The remaining bases for selection are generally consistent with this.

Cryptocurrency Governance Expectations

• Over 70% of survey respondents hope for regulatory control over cryptocurrencies by relevant authorities.
• More than one-third of investors wish to improve comprehensive regulation across exchanges, crypto enterprises, and individual investors.
• Users expecting a fully decentralized cryptocurrency market account for only a quarter of the total.

DEX Trends

• Recent FUD (Fear, Uncertainty, Doubt) surrounding CEX has prompted users to migrate to decentralized trading platforms (DEX).
• Meanwhile, the DEX/CEX adoption ratio has increased from 10% to 22% in the first half of the year (The Block).

Selection Criteria

• DEX has no bankruptcy risk, allowing users to manage their assets independently.
• Users can easily purchase DeFi products through simple operations.
• In the trend of transitioning from CEX to DEX, purchasing stablecoins has become more convenient and faster.
• Short-term adoption of DEX is expected, but long-term users will return to CEX.

• CEX has higher liquidity.
• CEX is more convenient and has customer service.
• CEX is easier to operate compared to DEX.
• CEX is considered more trustworthy due to its transparent organizational structure.

DeFi vs. Non-DeFi

• Investors in the DeFi space are more open: the vast majority of DeFi participants do not reject investments in other sectors.
• DeFi also serves as a gateway for investors to enter different areas of the cryptocurrency market.

Most Popular DeFi Ecosystems

Notable changes:

• In 2023, the top three platforms have changed, with Ethereum surpassing BNB Chain.
• Solana is no longer a standout platform; in contrast, new Layer 2 solutions such as Arbitrum, Optimism, and zkSync Era have attracted more users in the first half of the year.

3.4 Airdrops

Airdrops

• The vast majority of wallet addresses have received airdrops between 1-5 times, with a median of 2, and the highest number of airdrops reaching 3000.

• In 2021, airdrops were rated as the most popular community activity, with over half of users participating in airdrops that year.

Mainstream Project Airdrop Expectations

• zkSync and LayerZero are the two projects most favored by Vietnamese users during this airdrop period.
• Although Venom is still in the testnet phase, it remains appealing to the community.

User Behavior After Airdrops

Investors' actions after receiving airdrops predominantly involve selling, with this group accounting for 91.8%.

3.5 NFTs and Web3

NFT Ecosystem

• Although BNB Chain and Solana were the two most anticipated NFT ecosystems in 2022, Ethereum has also performed strongly this year.
• In 2023, emerging ecosystems are rising, with Arbitrum, Aptos, and especially Bitcoin capturing market share from Solana.

NFT Holders

• The most common NFT holding period is between 1 to 6 months, accounting for more than two-thirds of respondents.

• Compared to other groups, NFT newcomers tend to sell their assets earlier.

GameFi

• Compared to 2022, GameFi players' preferences have shifted, with casual games replacing FPS/TPS as the top choice.
• There are no significant differences among these sub-markets.

Summary

• Cryptocurrency is receiving increasing attention in Vietnam, and this interest is not limited to retailers. Many new projects are under development, focusing not only on previous application layers but also on infrastructure platforms, further deepening research and development.
• At the same time, local technological development and trends are evolving with changes in the global industry landscape. You may know that Vietnam previously had over a hundred GameFi projects, and now the "Web3 Builder" wave is sweeping in, especially after GM Vietnam 2023.
• The high adoption rate of cryptocurrencies and the quality of a skilled workforce are the two main reasons attracting foreign projects to develop new business potential in Vietnam.
• Since the bull market in 2021, most existing investors have continued to invest, leading to a decrease in the proportion of new participants. Overall, investors hold a positive outlook on the future of cryptocurrencies, hoping that the market can gradually receive appropriate management to some extent.