Crypto and everything around it has been highly volatile with the changing market and the rise and fall of the NFT market. However, the potential for the underlying technology and established currencies, are keeping the industry alive and well. But, what does the future of the industry hold for Southeast Asia?

To find out, we spoke to Dr Julian Hosp, CEO and Co-Founder of Cake DeFi. This Singapore-based company offers a fintech platform to provide access to decentralized financial services and applications by enabling users to generate returns from their crypto and digital assets.

They are in a prime position as one of the strong crypto and Web3 platforms in the region to provide insight into the evolution of the crypto space in Southeast Asia. They also recently launched their own corporate venture arm with US$100 million in earmarked capital for investments. The fund is focused on accelerating growth of tech firms, with a focus on investing in Web3, gaming and fintech startups.

The company has launched their latest hybrid investment product – EARN. The product allows users to generate returns via a single-sided liquidity mining service while protecting them against market volatility. This is on the back of good growth, despite the bear market as Cake DeFi recently crossed the 1 million customer mark and has paid out a total of US$375 million in customer rewards to date as of the end of Q2 2022.

Could you introduce Cake DeFi to our readers?

Cake DeFi is the leading and fastest-growing Singapore-based fintech firm. We are fully transparent, highly innovative and dedicated to providing access to decentralized financial (DeFi) services and applications by enabling users to generate returns from their digital assets. We offer an easy-to-use platform that allows users to earn cash flow from their cryptocurrency assets via decentralized financial applications and services. 

Cake DeFi’s EARN product screenshot

While awareness of crypto remains high, there seems to be relatively (in relation to traditional payments) low penetration amongst consumers. Why is that?

People generally have reservations over what they do not understand. We still see a low level of complete understanding of digital assets and blockchain technology, which results in low penetration amongst consumers. Especially in the current bearish market, conservative retail investors often fear that their digital assets could lose their value overnight. Therefore, at Cake DeFi, we hope to actively educate the general public to increase their level of knowledge within the digital asset space. Over the past 3 years, we have created a large library of educational resources, including blog posts and video content. We also regularly organize educational events to share about crypto and DeFi industry trends and happenings.

Amidst the recent collapse of many prominent projects and companies in the crypto space, investors have become more astute, doing more research into the platforms they are investing in. However, we believe that cryptocurrencies will always have a role to play in the new economy – as an alternative investment that allows anyone to have global access to financial services in a decentralized manner, without relying on intermediaries or third parties. Over time, blockchain will become even more mainstream and integration with traditional financial services will benefit the adoption rate of blockchain technology.

In addition, a report from Chainalysis showed that while crypto adoption has slowed worldwide, it firmly remains above its pre-bull market 2019 levels. Similarly at Cake DeFi, we are also seeing this sustained interest in crypto as we saw moderate but sustained growth in the last quarter, paying out US$58M in rewards to our users despite the crypto winter. 

With Singapore’s uncertain stance on crypto and Indonesia’s recent crackdown, how does the industry in Southeast Asia navigate around this?

Many of these restrictions and crackdowns in Southeast Asia stem from the need to protect retail investors from potential investment risks due to the lack of research and education on their end, especially since crypto is still viewed as a niche asset class. ​​At Cake DeFi, we always emphasized for retail investors to do their own research and be familiar with the potential risks of their investments, be they in digital or traditional asset classes. 

Across the board, we have seen various players tightening their belts as they navigate this crypto winter. To navigate around the situation in Southeast Asia, trust and transparency is increasingly important for regulators and investors. Education would also become increasingly necessary for platforms in the region to educate and ensure that retail investors are aware of all the risks that are involved before investing in the space. 

As we always say, trust Cake DeFi because you can verify. We operate via the agent model to provide customers with the support and convenience to make stable returns via interest-yielding products and charge them a fee on their rewards. Data on our DeFi services is available on the blockchain and also always readily available to our customers on our platform for them to conduct their own verification. Crypto education is also a priority for us and we aim to actively educate all potential and existing customers to increase the level of education within the crypto space. 

Which markets in the region show the most promise for growth in the industry?

Cryptocurrency adoption and growth in Southeast Asia is a trend that has only gotten stronger over the last few years, particularly in the lower middle nations. A few countries stand out: Philippines, Indonesia, and Vietnam. Because of COVID, we witnessed an accelerated adoption rate of crypto in these countries as people sought to find an alternative source of income amidst disruptions to their livelihoods and personal mobility. The DeFi industry is one of the largest beneficiaries of that, and we certainly also see this growth happening over here at Cake DeFi. Our users rely on cryptocurrency to preserve their savings in times of fiat currency volatility and earn cash flow from their crypto holdings. We expect growth in the region to get stronger as the DeFi space matures, and users get more value from their cryptocurrency assets.

What’s next for Cake DeFi?

On the consumer front, we’ve just launched our hybrid investment product, EARN, which allows conservative crypto investors to enjoy stable high returns on their crypto assets with low volatility. EARN is a single-sided liquidity mining service that provides daily rewards and complete transparency on the blockchain. 

We’ve also recently launched our global R&D hub, Birthday Research, which is based in Singapore and will focus on developing best-in-class blockchain and digital asset technologies. Aligning with the Monetary Authority of Singapore’s (MAS) direction to grow all aspects of the digital asset ecosystem, Birthday Research will centralize all of Cake DeFi’s product innovation and development in its technology stack for B2B solutions. We are committed to investing US$50M in Birthday Research over the next four years and look to doubling our R&D headcount to over 100 staff in Singapore. This will put us in a strong position to build the B2B digital asset infrastructure and uplift Singapore’s blockchain ecosystem to drive innovations in fintech.

Moving forward, we will continuously enhance and evolve offerings, pushing the boundaries of innovation and adding other revenue streams for our customers. In addition, the Birthday Research team will also continue to work on projects that tackle the challenges of the financial sector through research and building blockchain innovation, aiming to become a leading blockchain R&D hub in the global blockchain ecosystem.