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Sandeep Nailwal, CEO, Polygon Foundation
Global blockchain firm Polygon’s co-founder Sandeep Nailwal said that major blockchain companies are increasingly eyeing India in the recent years for “daily active user (DAU) farming”.
This helps them inflate their user base numbers, as the country accounts for one of the largest Web3 developer bases globally.
This tactic was deployed by Polygon too during its early days in 2017-2018, to get more developers to build on their chain, Nailwal told Moneycontrol.
“Quite frankly, a lot of projects that come to India stay for a year or two. What they do is very similar to what we call DAU farming in the Web2 world farming,” Nailwal said.
“Many companies come to India, get 10–20 million users, and then claim they have 50 million users globally. But out of that, 30–40 million are low-paying or even free Indian users, and only 10 million are actual paying users elsewhere,” he said.
According to a recent report by Web3 venture capital firm Hashed Emergent, India accounted for nearly 17 percent of new developers entering the Web3 space in 2024. It is expected to go past the US to emerge as the world’s largest developer community by 2028.
India is also home to the world’s second-largest crypto developer base, with 11.8 percent of the developers based in the country, despite the government’s cautious approach towards the sector.
Nailwal said that crypto firms do “daily active developer farming. They would give small grants and ask you to build something on their node and all that.”
In the past few years, several global blockchain projects — be it Layer 1, Layer 2 or multi-chain — have expanded to India. Some of the prominent long-term names include Solana, Polygon, Algorand, Polkadot, Aptos, Avalanche. There are smaller projects, too.
Layer 1 refers to a base blockchain protocol, (e.g., Bitcoin or Ethereum) while Layer 2 is a third-party protocol built to have integrated functionality and use cases over the base blockchain.
How Polygon did it
Nailwal said that Polygon was one of the earliest blockchain companies to organise hackathons in India in 2017. The firm had given out massive amount of grants and investments back then, he said.
“I personally must have invested around $15 million, probably close to Rs 100 crore, into various projects. I had an open-door policy for anyone doing anything in crypto in India. If a founder reached out and didn’t seem like a shaky character, I would do an angel investment of Rs 10-20 lakh,” he said.
Nailwal added, “Do something, use my name, go out, raise more money and all that. A lot of Indian founders could not go global and do that global storytelling. You need to go global because the local market is off limits for you because of the regulations.”
Polygon’s investment rationale
Over the years, Polygon has shifted its strategy to invest in very select and “focused founders.”
“We are not looking at a huge number of hackathons, college kids trying their hands on,” Nailwal said, adding that Polygon relied on hackathons when EVM (Ethereum Virtual Machine) was new – the firm’s foundational technology.
Back then, Polygon needed to build things from a grassroot level to create awareness among developers, but now there are enough number of developers on EVM, he shared.
Sharing his investment strategy, Nailwal said: “We now look for founders we think can do really, really good. Then we do bigger investments in them. Instead of spraying and paying like $100,000 or Rs 1-2 crore, and spending it on hackathons, we would actually take Rs 50 lakh or Rs 1 crore and give it to two or three founders who have the mettle in them.”
“We still invest in India; in fact, invest more than before, but we do very selective, pinpointed and more thesis-based deals,” he added.
On the business front, Nailwal recently joined back Polygon Foundation as the CEO after a two-year hiatus. The company is in the midst of an internal restructuring and revamping of the business model and offerings.
