Author: Tiger Research Reports
Compiled by: Shenchao TechFlow
Key takeaways:
The Asian market is complex and diverse, with varying regulations and cultures. Understanding the characteristics of each country is key to participating in the Web3 industry.
Asia has a large population of young digital natives, giving it significant leading potential in the Web3 market, especially in super applications and consumer applications.
On-chain data indicates that the Web3 market in Asia is growing, with related indicators including stablecoin usage, developer activity, trading volume on decentralized exchanges, and participation in Web3 social media.
1. Diversity and complexity of the Asian market
To understand the Asian market, it is essential to recognize its diversity and complexity. Asia has over 2,300 languages, divided into different regions such as Northeast Asia, Southeast Asia, Southwest Asia, and South Asia, with more than 48 different regulatory frameworks. Cultural differences within Asia often exceed those between Western countries.
This diversity also affects the Web3 industry in Asia. In Northeast Asia, each country has its unique approach: China implements strict regulations, South Korea combines regulation with incubation, and Japan supports Web3 through government policies. This unique combination in Asia requires specific strategies and in-depth understanding of the market to achieve success.
2. Strong growth foundation in Asia
Despite the challenges posed by Asia's diversity, its importance cannot be overlooked. Asia is home to over 60% of the world's population and contributes 34% of global GDP, with a growth rate of 3.6% that outpaces that of North America and Europe.
Asia is at the forefront of the Web3 industry for three main reasons. First, Asia has a large cryptocurrency user base, with 60% of global crypto users, or 320 million people, coming from this region, largely due to a significant number of young digital natives (Triple-A). Second, trading activity in Asia is very active: at the beginning of 2024, trading volume in the South Korean won surpassed that of the US dollar, and furthermore, recently, over half of Binance's network traffic came from Asia. Lastly, Asia has a strong pool of technical talent, with 50 million GitHub developers and 40% of global Web3 game developers.
3. Advantages of the Asian Web3 market: consumer orientation and super applications
To popularize the Web3 industry, consumer applications that are easy for the general public to use must be developed. Simply building technical infrastructure is not enough. This is similar to the early development of the internet, where 'killer applications' like email drove rapid internet adoption. Likewise, Web3 is expected to gain widespread popularity through consumer applications that seamlessly integrate into people's daily lives.
Asia stands out in two aspects. First, it leads in consumer-oriented innovation. As of October 2024, 42% of unicorn companies in Asia are B2C firms, surpassing North America and Europe. This advantage stems from Asia's large population of digital natives and advanced mobile payment systems. The consumer-centric approach positions Asia as a potential hub for emerging Web3 applications.
Asia's second advantage lies in its unique super application ecosystem. Leading platforms such as WeChat, Alipay, Kakao, Line, and Grab, which initially offered single service applications, have now developed into comprehensive digital ecosystems. These super applications have become an integral part of millions of users' daily lives, providing services across payments, commerce, entertainment, and more.
The TON blockchain demonstrates the potential of combining Web3 with super applications. By adding Web3 functionalities to the popular messaging app Telegram, user numbers have surged due to its convenience. These examples illustrate how super applications can effectively lower the barriers to entering Web3. This combination will introduce new services in familiar environments for users, driving the popularity of Web3.
4. Data-driven analysis of the Asian Web3 market
The Asian market demonstrates strong potential. However, relying solely on expectations and indicators may be superficial. Analyzing on-chain data to understand real user activity is key to obtaining profound insights.
Japan's stablecoin policy is constantly evolving, indicating the need for deeper analysis. Although stablecoin guidelines were released in June 2022, and legal amendments in 2023 allowed for the issuance of stablecoins, these policies have not significantly impacted the blockchain. This is mainly due to the limited applications for issuing trust-type stablecoins on public blockchains and existing regulatory hurdles. To bridge the gap between policy and practical application, further detailed on-chain analysis is needed.
Next, we will evaluate whether the expected growth in the Asian market is being realized by analyzing on-chain data.
4.1. Stablecoins in Asia
The use of stablecoins in the Asian market is steadily increasing. This trend is very important as stablecoins are one of the products that best meet market demand in Web3. On-chain data shows that the trading volume of stablecoins in Asia has surged to nearly $8 billion, and it is expected to continue growing from 2022 to 2024.
Stablecoins pegged to national fiat currencies are bringing more real-world application scenarios. For instance, locally supported stablecoins like XSGD in Singapore and XIDR in Indonesia are on the rise. The combination of XSGD with services like Grab is driving its practical application. This localized approach and integration with actual services are promoting an increase in stablecoin trading. Ongoing growth indicates that structural changes are occurring in the Asian market, not just a short-term phenomenon.
4.2. On-chain activity of Asian developers
The participation of Asian developers in smart contract development is continuously increasing. This trend can be observed from on-chain data from the Ethereum mainnet and testnets (Goerli and Sepolia).
By 2024, Asian developers have created approximately 1.7 million contracts on these testnets, far exceeding the activity levels in North America and Europe. Since 2022, growth has been rapid, with similar trends on the Ethereum mainnet. Asia's share in contract creation has increased from 4% in 2020 to 40% in 2024.
This change highlights two trends: first, Asian developers are becoming the driving force of blockchain innovation; second, blockchain development is transcending its Western origins. High levels of testnet activity reflect positive experimentation, indicating that Asian developers are important contributors to the future of Web3.
4.3. Participation of Asian retail investors in decentralized exchange (DEX) trading
Uniswap trading data shows strong participation from Asia. From 2021 to 2024, Asia has consistently held a significant share of total trading volume. During this period, trading activity has steadily increased.
In the Asian market, the participation rate of different types of investors is particularly noteworthy. We found significant changes when categorizing trading scales into large investors (over $100,000), medium investors ($10,000 to $100,000), and small investors (less than $10,000). In 2021, shrimp-type investors accounted for a small share of trading volume. However, by 2024, their proportion in both trading count and volume has steadily increased. This change is a positive signal, indicating that users in the Asian market are increasingly using Web3 services, being active not only in centralized exchanges (CEX) but also in decentralized exchanges (DEX).
4.4. Activity of Asian users on the Web3 social network Farcaster
In the Web3 ecosystem, the activity of Asian users on Farcaster has drawn attention. Daily Active User (DAU) analysis shows that Asian users are more active than users in North America and Europe. Although English is the primary language of Web3, posts in local languages such as Vietnamese, Chinese, Japanese, and Korean are steadily increasing. This indicates that the growth of Web3 in Asia has already begun, rather than being merely a prediction. Asia is leading in the use of Web3.
5. Conclusion
The Asian market is diverse, featuring unique regulations, cultural differences, and varying approaches by different countries. This complexity is both a challenge and an opportunity for Web3. Understanding the unique roles of each country is crucial. On-chain data reveals the potential of the Asian Web3 market by showcasing real user behavior.
Regional analysis based on on-chain data is crucial for the growth of the ecosystem. Advances in digital credentials and regional analysis will enhance the accuracy of insights into user behavior. These tools help provide a clearer understanding of the regional context and preferences of the Asian Web3 market.
Appendix: Research methodology
Time-based analysis of blockchain transactions is a simple method that allows for clear categorization of data by the time of day. However, short-term data such as one-off transactions or irregular activities may not accurately reflect overall behavioral patterns. To address this, we focus on long-term trading patterns of wallets rather than the timing of individual transactions. Additionally, to ensure the reliability of the data, we need to exclude wallet addresses associated with automated bots, project teams, exchanges, and other sources that may affect data accuracy. We used identification methods such as Crypto Name Service (CNS) and credentials to distinguish real users from bots. Meanwhile, we also utilized labeled data from platforms like Dune Analytics to exclude project-related addresses. Work and sleep times are defined as follows:
United States: Working hours are 8 AM to 8 PM ET (1:00 PM - 1:00 AM UTC), sleep hours are midnight to 6 AM ET (5:00 AM - 11:00 AM UTC)
Europe: Working hours are 8 AM to 8 PM CET (7:00 AM - 7:00 PM UTC), sleep hours are midnight to 6 AM CET (11:00 PM - 5:00 AM UTC)
Asia: Working hours are 8 AM to 8 PM CST (12:00 AM - 12:00 PM UTC), sleep hours are midnight to 6 AM CST (4:00 PM - 10:00 PM UTC)
In our geographical analysis, we focus on activity patterns during active hours (8 AM to 8 PM) and sleep hours (midnight to 6 AM), not just the time of day. If users show less activity in a region during late night, they are more likely to be from that region. We assign a weight of 0.3 to active hours and 0.7 to sleep hours. Verified by partner network traffic data, this method has a five-fold lower error rate than simple transaction time analysis, with an average error of less than 2%. As certification and digital credential services continue to evolve, we will be able to conduct more accurate regional analyses. This will become a key tool for analyzing the Web3 ecosystem, as understanding the local context and user behavior patterns is essential.
