Attaining and losing a billion-dollar market cap

This article is an excerpt from an episode of Startup Snapshot, a Tech in Asia podcast that features the leaders and innovators in the Asian startup scene, and discusses the highs and lows of their founder journeys. It is heavily revised from the original transcript. Listen to the full episode on Spotify, Apple Podcasts, or Google Podcasts.

Blockchain technology today is comparable to the internet in the ‘90s – it’s growing in adoption, but most people still don’t understand how it works.

This lack of understanding leads to volatility in digital coins’ market capitalization, as users buy and sell based on news of exchange hacks, initial coin offering scams, and regulators clamping down on cryptocurrencies.

Public blockchain platform Zilliqa experienced this firsthand. Its ZIL coin surpassed US$1 billion in market cap in 2018, effectively becoming the equivalent of a startup unicorn. A little over a year later, however, that value plunged to US$50 million (At the time of recording, Zilliqa’s market cap was US$62 million).

On this episode of Startup Snapshot, Zilliqa co-founder Amrit Kumar discusses the chain of events that led to its billion-dollar market cap, and how some missteps and market fluctuations led to a drop in its coin’s ranking.

How did you feel when Zilliqa attained a billion-dollar coin market cap less than a year after releasing its whitepaper?

This is my personal perspective: I personally feel that coin market cap is probably not the right metric to measure things. Having said that, it’s always nice to see yourself being placed on unicorn level. It was a really good feeling, honestly, and it also meant for us that the community was buying into our vision. They believed in what we’re doing – not just on the tech side, but also on the business side. The community felt that this platform is not just about technology but also about the use cases that we’re chasing.

That was the best feeling because you work hard for people to buy your vision. There are many different ways that you can see whether people are trying to get into your vision. One is, of course, when you have a conversation with people on your channels and they ask you questions, they give you feedback on what you’re doing. In fact, many of the design decisions that we made later on in our technology stack came from some of the feedback that we got. It also showed that the community was engaged with us, and that was also a good feeling.

At the same time, when you look at the market and it shows trends like coin market cap or ranking, it also gives you a good feeling that even the market believes in your tech and vision.

Did this spur any developments at Zilliqa at the time?

There’s this tradition of doing Ask Me Anything sessions (AMAs) in the blockchain industry. I still remember the first time we did an AMA, some of our community members asked why we were doing AMAs when we’re always here to answer every single question every minute. AMAs generally are done when the core team is not available on a regular basis. What generally happens is the core team is busy with many different things, like business and writing code, but we always felt that community is important, and I was always there to answer every single question that they had [about Zilliqa].

Co-founder Amrit Kumar (seated) with members of the Zilliqa team / Photo credit: Zilliqa

It was very very productive. We saw very interesting questions coming up, and at the same time, I also got to learn about other projects. People were asking us how we compare ourselves with other projects, but it’s not about just saying that we’re doing different things. For me, it was a question where I also wanted to understand what exactly my competitors were doing. So I literally read at least 40 whitepapers in around six months.

Some people may say it’s a waste of time, but it gave me a good idea of what other people were doing and we borrowed ideas from other projects. There were some projects that were implementing certain things and I personally felt that they were good ideas, and there’s no shame in implementing some of those things as long as you acknowledge them.

Now, Zilliqa’s market cap has dropped to US$62 million. How did this happen?

As I said, I personally don’t believe in market cap, but I do believe in ranking. Numbers go up and down because it all depends on the market – you can’t do much [about it]. In fact, this market to some extent is also immature. There’s a lot to be learned, people still don’t understand the technology. It’s always very hard to understand the technology as well.