During the Staking Summit in Istanbul, a conference attended by hundreds of people involved in the practice of staking the crypto ecosystem, two booths stood out. They were owned by Tencent and Huawei. Amidst a scene dominated by twenty-somethings dressed in the company’s trendy sweatshirts and handing out well-designed merchandise, the two Chinese tech giants looked somewhat out of step with their more official corporate banners.
He was alongside engineers, traders and business developers deeply entrenched in staking, where individuals pledge their crypto assets, such as Ethereum, to protocols in exchange for returns. The borrowed assets are then used to validate blockchain transactions by applying the “proof of stake” method.
In the past year, several Chinese tech giants, including Alibaba, Tencent and Huawei, have appeared at crypto events in various corners of the world. Hoping to gain a market share in the nascent web3 space, they appear at these events either as official sponsors or take on a more discreet presence simply as attendees.
The Chinese tech giants’ involvement in cryptocurrencies is somewhere at the crossroads of web2 and web3 thanks to their home country’s extensive ban on cryptocurrency trading and initial coin offerings. In the most common case, these tech companies advertise their computing resources to web3 startups in a way not so different from how they used to sell cloud services to companies in more established tech industries.
Cloud spending by companies building or leveraging decentralized networks is still considered to be fairly insignificant. It’s not unusual for a “mid-sized” web2 business to spend over $1 million on cloud computing, but a company considered mid-sized in web3 might only spend in the low hundreds of thousands of dollars, several attendees at the event said.
However, the limited ticket size hasn’t stopped Chinese cloud providers from getting involved in crypto. As outsiders in the global cloud market, Chinese companies are much more proactive and serve customers because they lack brand recognition, especially in the West. Therefore, they must compete by offering cheaper — or better — services.
Beyond providing cloud infrastructure, Chinese companies have also dabbled in areas further removed from their core products, putting them in competition with crypto companies. This includes building blockchains for business use – most tech companies in China have moved away from the public blockchain sphere in which tokens play a critical role due to the country’s crackdown on crypto.
Some players also offer hub business as a service. Blockchains, which are decentralized databases that store and encrypt transaction data, run on distributed nodes. These hubs, however, can be expensive and complex to maintain, so companies like Huawei offers a hub hosting service for developersan attractive solution for businesses that want to build decentralized applications but lack the technical sophistication to do it themselves.
Tencent and Alibaba, being the first Chinese tech giants in the web3 space, have also introduced notable projects to enhance their reputation in the industry.
Tencent, for example, has partnered with public blockchains such as Sui and Avalanche as well as its Ethereum scaling solution Scroll.
Alibaba, on the other hand, partnered with Aptos, a blockchain developed by ex-Meta employees, to boost its name in the web3 world. In a joint announcement today, Alibaba Cloud and the Aptos Foundation said they will jointly host hackathons using the Move programming language in the Asia-Pacific region.
For now, web3 is barely making a dent in the top line of the Chinese tech giants, but these companies recognize the potential of the growing industry and understand that they cannot afford to ignore the opportunity, even in the face of its significant volatility. market and the collapse of major players such as FTX.
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