How did Binance Labs grow into a $9 billion scale and become the most resourceful crypto venture capital institution?

How did Binance Labs become a top crypto venture capital firm with $9B in assets?

After the US Securities and Exchange Commission (SEC) filed charges against Binance.US and Coinbase, the cryptocurrency industry has experienced a series of market fluctuations. As this industry is still in its very early stages, many policies and regulations have yet to be fully established. Therefore, it becomes particularly important to support industry participants, expand the ecosystem, achieve larger-scale adoption, and promote the continuous development of the early industry. Binance Labs, the risk investment and incubation department of the world’s largest trading platform Binance, is playing this critical role.

Binance Labs, a long-termist providing comprehensive resources as consultant-type investorsIntroduction to Binance Labs

Binance Labs, established in 2018, is the risk investment and incubation department of Binance. The goal of Binance Labs is to find many excellent blockchain start-up teams, companies, and entrepreneurs, and provide them with resources and guidance to promote the overall development and large-scale adoption of the blockchain ecosystem. Currently, the Binance Labs investment portfolio covers 6 continents and more than 25 countries. It has successfully invested and incubated over 200 projects, covering the entire track of Web3: public chain, protocol, infrastructure, NFT, chain game, metaverse, DeFi, and CeFi.

From the technical end of infrastructure, data analysis, security, etc., to the final user end of product applications, community and ecosystem construction, the “comprehensiveness” of Binance Labs is its greatest feature and advantage.

He Yi, who has many years of experience in the currency circle industry, serves as the head of Binance Labs in August 2022 in addition to her role as co-founder and CMO of Binance. Under her management and promotion, the overall funding scale has grown from $7.5 billion to $9 billion.

Binance Labs’ long-termism: finding potential projects that are truly willing to continue to deepen their efforts

According to official data, Binance Labs has achieved a return on investment of 10 times in the past three years. In previous media interviews, He Yi also shared many investment views of Binance Labs.

She believes that whether it is a bull market or a bear market, it is necessary to be very clear about what you really want. In a bear market, valuations are lower, and investors should be more proactive in investing, but not for the sake of investing. They are very clear that projects that deliberately follow trends and want to make quick money usually lack a solid business model and will be forced to withdraw from the industry after the topic and funding tide recedes.

Therefore, in a depressed market, it is possible to identify and screen entrepreneurs or teams who truly believe in the industry and are engaged in long-term business, making the bear market an excellent time to search for potential investment projects. This also reflects the core thinking of Binance Labs: long-termism.

Binance Labs’ Three Types of Investment in Mutual Cycles

Binance Labs envisions a future where people can easily use native blockchain products in various life situations, just as we, who live in the 21st century, are already accustomed to having convenient smartphones and various Internet services.

However, the blockchain industry is still in its early stages, with some technical bottlenecks and areas for optimization. Therefore, building sound infrastructure is an absolute priority and investment direction, such as the first layer or cross-chain protocol.

After having the underlying technology, the next step is to consider how these technologies can be applied to solve problems and needs in people’s lives. This is related to whether it can bring more user groups to the blockchain and bring more efficient and better experiences to users. They are also concerned about some typical basic questions: What is your business model? P2E, M2E, or what is your innovation? (Note: P2E – Play to Earn, M2E – Move to Earn)

The key bridge between technology and application is whether a positive mutual cycle of “security and trust” can be established. Only with a secure infrastructure can users trust it; only with enough users can resources be invested in developing basic infrastructure. Therefore, the third type they are concerned about is projects that provide blockchain services to support the overall development and progress of the industry, such as data security.

Binance Labs not only provides funding, but also serves as a guide for technology, security, and business

When Web3 startups raise funds, there is a key difference from past industry models: they may not need to raise funds through venture capital firms, but can directly issue tokens for sale to users.

Binance Labs believes that users and communities are the core of Web3 projects. Therefore, compared to simply providing funding, if venture capital firms can provide more guidance on technology, security, or token economic models, they may be able to bring greater value and role to the project. This is also the core purpose of Binance Labs’ incubation plan.

Binance Labs Incubation Program will design two courses for each project based on their needs – Web3 Knowledge Tips and Entrepreneurship Operations. During the eight-week training, project leaders can have one-on-one consultations with experts from various industries, and also have the opportunity to have direct conversations with Binance Labs Incubation Program alumni (including the founders of well-known projects such as Polygon, Injective, and Celer Network). The incubation project can gain methodology for project construction, testing, and learning, and learn from the successful experiences of other projects and gain market insights to achieve rapid iteration of project concepts.

After the training is completed, Binance Labs will invite investors, startup mentors, industry experts, and potential business partners to participate in the launch event held for them, allowing the incubation project to showcase and promote their plans to the market. After the incubation period ends, Binance Labs will also bring together all alumni and create a comprehensive alumni resource network for them.

Binance Labs investment types: Infrastructure, product application, Web3 tools

The comprehensiveness of Binance Labs’ investment map also enables vertical and horizontal integration of technology, product, and community. Below are three representative successful case studies:

Infrastructure: Polygon, Aptos, Sui

Polygon is currently the preferred Layer 2 expansion solution for Ethereum. Its goal is to solve the slow and high-cost shortcomings of Ethereum, and to put transaction and smart contract calculations on the side chain. Its native token is MATIC, and its total market value ranking was in the top 15 in June 2023. The application layer is mainly DeFi and NFT, with more than 350 DApps, the most representative of which are DeFi lending protocol Aave, decentralized trading platform SushiSwap, and automated market-making service Curve.

Aptos and Sui are both Layer 1 public blockchain networks originating from the Meta team, developed using Rust-based Move programming language, and using PoS consensus mechanism similar to Ethereum. Aptos achieves high throughput parallel processing based on MOVE and MOVE virtual machine (MoveVM). Aptos uses an improved software transactional memory (Software Transactional Memory, STM) called Block-STM for processing, which does not require transactions to explicitly declare which part of the state they use. Sui’s parallel processing is different, requiring transactions to explicitly declare which part of the blockchain state they modify. Solana and Sui use this method, and Sui uses a different version of the MOVE language. The Sui Move language changes the storage module and asset license, which is different from Aptos.

Aptos and Sui both aim to enable developers to create better user experiences in Web3 and to welcome the next billion users. Their main features include: powerful scalability, a safer smart contract language, the ability to define complex on-chain assets, and an SDK that can be built without restrictions.

Product Applications: SBlockingce ID, GOMBLE

SBlockingce ID is a decentralized domain name protocol based on the BNB Chain and Arbitrum One. Starting in 2022, it provides a one-stop platform for Web3 domain names and identities. Users can easily search, trade, register, and manage Web3 domains on it. The domain name service can turn a long and complex wallet address (e.g., 0x69…) into a simple and understandable personalized name (e.g., Jack), and now, users can also choose top-level domains such as .bnb and .arb through SBlockingce ID, in addition to the only .eth option available in the past. According to official information, the number of .bnb domains provided has exceeded 450,000.

GOMBLE is a blockchain-based casual game development team, and its parent company is a well-known game developer, 111 Percent, located in Korea. Its representative games include Random Dice: GO, RandomDice: Defense, BBtan, etc. The games under 111 Percent have accumulated more than 200 million global downloads. Rumby Stars, the 3A-level social game launched by GOMBLE, breaks the high threshold problem of Web3 games requiring NFT assets as a mandatory condition. It aims to create a casual game suitable for all age groups and skill levels and bring players a higher quality gaming experience.

Web3 Tools: SafeBlockingl, Trust Wallet

SafeBlockingl was established in 2018 and is a comprehensive decentralized encrypted wallet supported by industry leaders such as Binance Labs. SafeBlockingl aims to enable users to securely manage and increase the value of their assets in the decentralized world through its hardware wallet, mobile app, and browser plugin wallet solutions.

The SafeBlockingl platform currently serves over 10 million users in more than 200 regions and countries worldwide, supporting 15 languages, over 100 blockchains and their tokens and NFTs. It also has easy-to-use cross-chain Swap, cross-chain bridge, DeFi wealth management, and other tools.

Trust Wallet is a secure open-source decentralized cryptocurrency wallet. Users can manage over 9 million types of tokens and 1 million series of NFTs on 73 blockchains. Trust Wallet does not store users’ wallets, hold private keys, or request personal information, so users can fully control their mnemonic words. Another key feature is the built-in DApp (decentralized application) browser, which allows users to interact and trade without adding detailed information about the blockchain. It can also store NFTs on different blockchains such as Ethereum and BNB Smart Chain for easy collection and appreciation of digital artworks.

Binance Labs has invested in and incubated over 200 projects.

The future of cryptocurrency venture capital: incubating more high-quality startups to promote widespread blockchain applications Discussion: The boundary between venture capital firms and project teams

From the three case projects mentioned above, we can see the comprehensive investment of Binance Labs, covering the technical end of blockchain and infrastructure, to the user end of product applications and communities, in order to help the balanced development of the entire industry chain, and achieved excellent results of over 10 times the return rate in just three years.

Venture capital firms have brought many opportunities and resources to the blockchain, but on the other hand, we can also discuss and reflect on several issues:

Should venture capital firms also fulfill the management and supervision responsibilities of project parties?

Do venture capital firms have the power and obligation to avoid the occurrence of controversial issues?

When the project party develops to threaten the venture capital firm, there are conflicts of interest, or they become competitors, will it have a negative impact on the industry?

Binance Labs: The most comprehensive resource integration platform and the most powerful venture capital incubator

Whenever a dispute occurs, the above issues will always be put on the table for debate, and the topic will gradually fade away after the heat subsides. However, true developers need to solve various new problems for a long time and continuously to prevent problems completely.

This is also why, regardless of the bull or bear market, Binance Labs still steadily invests resources, and even after the downturn at the end of 2022, it continues to grow its fund size, from its original $7.5 billion to $9 billion, and invests in more innovative and experimental projects. The goal is to provide a more comprehensive resource integration platform for industry builders, so that funds, technology, and knowledge can play their value more effectively.

We also look forward to the future of the blockchain industry, which can attract more users, technical talents, resources, and funds, develop a richer ecological system, promote positive competition and growth, and give birth to more diverse and explosive innovative products and applications.

Why is Binance willing to invest so many resources?

The biggest difference between Binance Labs and general venture capital companies is that they do not need to rush to recover profits, but focus on the overall development of the industry. Binance’s core business is a trading platform, and they invest a lot of resources in other public chains, protocols, infrastructure, NFTs, chain games, metaverse, DeFi, and CeFi, etc., in order to allow us all to enjoy blockchain technology safely, simply, and conveniently. The more people use cryptocurrencies, the more users will be attracted to the trading platform, and more revenue will be generated; and these revenue can be invested in incubating more projects, thus establishing a benign industrial chain economic cycle.

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