Lorien Gabel has spent many years constructing web infrastructure firms, from ISPs to cloud safety companies. In 2018, recognizing the transformative potential of proof-of-stake networks, he co-founded Figment, which has since grow to be one of many world’s largest impartial staking suppliers, providing know-how and companies that allow customers to stake their tokens with out having to make use of a centralized change or custodian.
As we speak, the corporate manages $15 billion in belongings and serves over 500 institutional shoppers.
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Right here, Gabriel, who can be a speaker at Consensus Hong Kong, discusses Figment’s growth into Asia, bitcoin staking experiments and his firm’s cautious course of for deciding which new crypto networks to help.
This interview has been condensed and flippantly edited for readability.
What led you to start out Figment?
That is the fourth firm my co-founders and I’ve constructed collectively over three many years. Our earlier ventures have been all in web infrastructure. After we began exploring blockchain in 2018, staking was barely a factor — Tezos had launched, and Ethereum was nonetheless solely discussing it. However we noticed a pure alignment between our experience in community safety, cloud infrastructure and scaling B2B options and what proof-of-stake (PoS) may grow to be. If PoS gained traction, we believed our expertise in constructing safe, institutional-grade networks could be invaluable.
We initially deliberate to start out a fund, and now we do have a VC fund. However the fund didn’t come first — the staking infrastructure firm did, after which we launched Figment Capital. We principally took a flyer on proof-of-stake, believing it had some benefits over proof-of-work, and we have been fortunate sufficient that it really labored and took off.
How massive is Figment now?
We at the moment handle $15 billion in staking belongings and serve 500 institutional shoppers. Whereas worker rely isn’t all the time a significant metric, now we have about 130 workers and anticipate to achieve 150 by year-end. Asia is our subsequent massive growth focus. We opened our Singapore workplace final 12 months, and we’re including Japan, Hong Kong and different key markets. Whereas North America stays our base, Asia’s demand for staking companies is rising quickly.
What challenges do you see to Asia’s adoption of staking in comparison with different areas?
First, Asia isn’t one market — it’s a set of vastly completely different economies and regulatory landscapes. Japan, Indonesia and Korea, for instance, have distinct enterprise cultures, adoption ranges and regulatory frameworks. We’ve all the time been compliance-focused, working solely with institutional shoppers somewhat than retail customers. However in Asia, compliance varies extensively by nation. Not like the U.S., the place you primarily navigate SEC and CFTC guidelines, every Asian market has its personal regulators and insurance policies.
Additionally, Western firms usually fail when increasing into Asia by not understanding native hiring, scaling methods or buyer conduct. I used to be born in Kuala Lumpur, and I’ve seen North American companies overinvest too shortly or misinterpret market wants. That’s why we began small in Singapore with three individuals, so we may be taught earlier than scaling.
Schooling is one other problem. In lots of Asian markets, staking shouldn’t be well-defined and is typically misconstrued as DeFi lending. We spend plenty of time at conferences, consumer conferences and media interviews explaining what staking is and why establishments ought to contemplate it over riskier yield-generating options.
What has been the largest problem in scaling what you are promoting, and the way did you overcome it?
The toughest a part of any startup is the “zero to 1” section — determining whether or not an thought will work, what prospects want and the way the enterprise mannequin will evolve.
Early on, we ran a number of experiments — we had a distant process name (RPC) infrastructure enterprise, a developer information portal and completely different income streams. However as soon as we discovered a powerful product-market slot in staking, we shut down the remaining and targeted solely on scaling one core providing.
The second main problem is crypto’s volatility. Our enterprise operates like a combination between a knowledge heart firm, a fund and a software program enterprise, however with variable pricing in dozens of unstable digital belongings. That complicates planning. I joke that my unofficial title is “Chief Stoic” — I don’t get too euphoric when markets are booming, and I don’t panic when issues go south. Whether or not it’s FTX’s collapse or bitcoin hitting $100,000, we give attention to long-term execution.
Are you seeing elevated institutional curiosity in staking in Asia?
Sure, institutional adoption is accelerating, significantly from banks and telecoms. We’ve had institutional fairness traders from Asia for some time — massive names like Monex and B Capital—however during the last 12 months, we’ve seen extra conventional monetary establishments actively coming into staking. Every market has its personal dominant exchanges and custodians, and we frequently accomplice with them somewhat than coping with finish customers. As extra banks discover staking, we anticipate adoption to snowball — just like how establishments within the U.S. began cautiously investing in staking earlier than scaling operations.
How do you determine which tokens to help for staking? Do Asian markets affect this?
We’ve an analysis framework that we’ve refined over the previous six years. Since we are able to solely help a restricted variety of new tokens every year, now we have to be selective — final 12 months, we added help for 12 or 13, which is rather a lot given the complexity of every integration. Proper now, we’re supporting round 40 networks, however each new addition requires cautious evaluation.
The method begins with the fundamentals: is that this an actual challenge or a rip-off? Does it have a powerful thesis and a workforce able to executing it? In some ways, it mirrors a VC framework. From there, we dig deeper, talking with the inspiration and founders, assessing the extent of custody help obtainable — since that’s essential for institutional adoption — and evaluating the broader ecosystem.
Sooner or later, although, when you’ve got 20 robust candidates however can solely help 10, you must make a guess. Generally we get it proper, generally we don’t. Over time, we’ve seen sufficient community launches to develop a powerful instinct about what works and what doesn’t. We attempt to provide steerage to initiatives the place we are able to, although in the end, it’s as much as them whether or not they take our enter.
Buyer demand is one other think about our decision-making, and the Asian market is a vital a part of this. Sometimes, a significant institutional consumer will request help for a challenge we’d not have in any other case thought-about — and even heard of — so we conduct an expedited analysis. In some instances, we’ve needed to inform shoppers no, both as a result of we don’t see the challenge as reliable or we suspect it is perhaps a rip-off. These are robust conversations, however they’re crucial. Finally, we additionally take a look at what number of of our shoppers are prone to maintain or stake a given token, which performs into our remaining resolution.
With many Asian traders looking for high-yield alternatives, how does Figment guarantee aggressive returns whereas staying safe and dependable?
Staking shouldn’t be the highest-yield exercise in crypto, however it’s the most secure solution to earn yield with out counterparty danger. We give attention to offering the best risk-adjusted staking rewards. Whereas some suppliers chase increased returns by slicing corners (e.g., ignoring OFAC compliance or MEV dangers), our shoppers — primarily establishments — prioritize safety and compliance.
In crypto, staking is the equal of a 10-year Treasury bond — it’s the secure, dependable possibility in comparison with high-risk DeFi methods. Some traders want liquidity pooling or lending for increased yields, however establishments usually select staking for its safety.
Are there any staking-related traits or improvements in Asia that excite you?
Among the most fun traits in staking proper now embody liquid staking and re-staking, with EigenLayer main the cost globally in these areas and having a powerful presence in Asia. Bitcoin staking is one other space of curiosity, with initiatives like Babylon exploring its potential, although demand stays unsure. Moreover, we’re seeing new chains with important Asian affect, reminiscent of BeraChain, which is quickly rising its person base within the area. We’re actively supporting BTC staking whereas carefully monitoring new staking fashions rising from Asia.
