Chinese Tech Giants Enter the Web3 Space, But Growth Remains Limited

At the Staking Summit in Istanbul, attended by numerous individuals involved in the staking practice of the crypto ecosystem, the exhibition booths of Tencent and Huawei were noteworthy. Surrounded by young professionals in corporate hoodies distributing well-designed merchandise, these Chinese tech giants stood out with their more formal corporate banners.

They were situated alongside engineers, marketers, and business developers deeply involved in staking, a process where individuals pledge their crypto assets, such as Ethereum, to protocols in exchange for returns. The borrowed assets are then used to validate transactions in blockchains implementing the “proof-of-stake” method.

Over the past year, several Chinese tech giants, including Alibaba, Tencent, and Huawei, have made appearances at crypto events worldwide. In an effort to gain a market share in the emerging web3 space, they participate in these events as official sponsors or simply as attendees.

The participation of Chinese tech giants in the crypto space straddles the line between web2 and web3 due to China’s widespread ban on cryptocurrency trading and initial coin offerings. Typically, these tech firms offer their computing resources to web3 startups, similar to how they have been providing cloud services to companies in more established tech sectors.

Despite the relatively low cloud expenses for companies building or utilizing decentralized networks, Chinese cloud providers are venturing into crypto. As underdogs in the global cloud market, Chinese firms are more proactive and accommodating with customers, competing by offering cheaper or better services due to their lack of brand recognition, especially in the West.

In addition to providing cloud infrastructure, Chinese firms are also involved in areas beyond their core products, putting them in competition with crypto-native firms. This includes building blockchains for enterprise use and offering node-as-a-service business, making it easier for enterprises to build decentralized applications without the technical expertise.

Tencent and Alibaba, as the pioneering Chinese tech giants in the web3 space, have established partnerships with reputable projects to elevate their reputation in the industry.

For instance, Tencent has partnered with public blockchains like Sui and Avalanche, as well as the Ethereum-scaling solution Scroll. On the other hand, Alibaba has teamed up with Aptos, a blockchain developed by former Meta employees, to enhance its presence in the web3 world, with plans to co-host hackathons in the Asia Pacific region.

Currently, web3 has yet to significantly impact the top line of Chinese tech giants, but these firms recognize the potential of the burgeoning industry and understand the importance of not overlooking the opportunity, despite market volatility and the collapse of major players like FTX.

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