1. NEO

NEO, formerly known as Antshares, is a Layer 1 blockchain that aims to create a "smart economy" by digitizing assets and automating the management of digital assets using smart contracts. It was launched in 2014 and is often referred to as the "Chinese Ethereum" due to its similar architecture and focus on decentralized applications (dApps).

NEO has become popular in China for several reasons. Firstly, it is a Chinese project that has received support from the Chinese government through their Blockchain Services Network (BCN), which has promoted smart-contract technology as a strategic priority for the country's development. Additionally, NEO has a strong focus on compliance and regulation, which has helped it to gain trust and legitimacy in China's highly regulated business environment.

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2. Vechain

VeChain is another Layer 1 blockchain that focuses on supply chain management and aims to improve the efficiency and transparency of supply chain processes. VeChain has strong connections to China, as it was founded in 2015 by Sunny Lu, who is a former CIO of Louis Vuitton China. The company has since established partnerships with several major Chinese companies, including China Tobacco, a state-owned enterprise, and Haier, one of China's largest home appliance manufacturers.

In addition, VeChain has also worked with the Chinese government on several initiatives, including a pilot project with the government of Gui'an New Area to develop a blockchain-based carbon credit trading platform. The company has also been recognized by the National Internet Information Office of China as a "National High-tech Enterprise," which has helped to boost its reputation and credibility in China.

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3. Conflux

Conflux is a public blockchain that boasts high performance and scalability, making it a promising platform for enterprise-level applications. Conflux's unique design, which features a novel consensus protocol, authenticated storage, and transaction relay protocol, allows it to achieve the same level of decentralization and security as Bitcoin and Ethereum while delivering faster transaction throughput and finality latency.

Conflux is connected to China in several ways. The project was founded by a team of Chinese blockchain experts, including Turing Award laureate Andrew Yao, and has received support from the Shanghai government, which has recognized Conflux as a "key innovative blockchain platform" and provided funding for its development. In addition, Conflux has established partnerships with several major Chinese companies, including Baidu, the leading Chinese search engine, and the Shanghai Wine and Liquor Blockchain Alliance, which uses Conflux to track the provenance and authenticity of wine and liquor products.

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4. Huobi

Huobi is a leading global cryptocurrency exchange that is currently run by Tron-founder Justin Sun. The company is currently transitioning their headquarters from Malta to Hong Kong as they believe that China will continue to warm toward digital assets. This move will put them in the best position to be the first to wina n official license to operate in China, which could make them capture the most market share as a centralized exchange in the country.

Huobi has already gained a reputation in China for their innovative products and services. They were one of the first exchanges to offer margin trading, and they have also launched several initiatives to facilitate its users' onboarding process, such as Huobi Wallet, which allows users to store and manage digital assets safely. In addition, Huobi has established partnerships with several major Chinese companies, including JD.com and CITIC Group, which further reinforces its legitimacy in the country.

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5. Filecoin

Filecoin is a decentralized storage network that combines the benefits of content-addressed data with blockchain-powered storage guarantees. The network offers robust and resilient distributed storage at massively lower cost compared to current centralized alternatives. Developers can add Filecoin storage to software applications, smart contracts, and workflows, to securely store their data on-chain.

Filecoin is connected to China in several ways. The project was founded by Juan Benet, a Mexican-American entrepreneur, and has received significant investment from Chinese companies, including Sequoia China and Fenbushi Capital. Additionally, several Chinese blockchain startups have chosen to build on the Filecoin network, including IPFSMain, which provides decentralized data storage and transmission services to the Chinese market.

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Why is the Chinese Crypto Narrative Gaining Traction?

The Chinese crypto narrative has been gaining traction from investors and analysts on Crypto Twitter like Andrew Kang due to two key factors, including China's loosening regulatory grip on the industry and increased fiscal stimulus and monetary easing in the country. This has led to massive tailwinds for the sector, and prominent Chinese projects like the ones listed above have seen significant growth in both price and adoption.

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Final Thoughts

Overall, the China narrative has seen huge growth in 2023 with major projects increasing in value by up to 500% within the first two months of the year. Based on our analysis, the top 5 crypto projects that should continue to show strength through the year are NEO, Vechain, Conflux, Huobi, and Filecoin - which are all leading the way in their respective sectors.

With the combination of loosening regulatory constraints & increased fiscal stimulus coming out of the extensive lockdowns in China, we expect this is the beginning of a longer-term secular trend where projects based in the region will continue to grow.