With the increasing adoption of cryptocurrencies and non-fungible tokens (NFTs) in Singapore, more companies are coming up with their own iterations of the technology. One such company is ride-hailing company Ryde, which is pioneering the “ride to earn” model leveraging the NFT technology.
Ryde founder and CEO Terence Zou tells The Edge Singapore that the company introduced the pay-to-earn model to stand out among its competitors, as competition for ride-hailing services has stiffened in the city state. “This is one of the ways we create value for our members and it makes us more sticky,” he says.
The company is currently in the first phase of its NFT project — whitelisting and air-dropping its “RydePals” NFT collection to members who are subscribed to its Ryde+ plan. This will be the phase of introduction and education, up until the third quarter of the year, Zou explains.
In the second phase starting from 4QFY2022, Ryde will be introducing a new tier of cashback via RydeCoins (in-app currency) for its NFT-holders. “Further down the road, these members can enjoy more benefits such as free premium services and exclusive rights to purchase merchandise related to the NFT art. This is the idea that we have in mind,” says Zou, a former navy officer who embarked on a second career in finance, before donning the start-up founder hat with Ryde in 2014.
The former adjunct lecturer at the National University of Singapore Business School adds that users will also be able to “breed” new generations of RydePals by matching drivers’ and riders’ RydePals, as well as use the NFTs in mini-games to earn RydeCoins.
Ryde users can choose to either hold on to their RydePals or sell them by listing the NFTs on marketplaces such as OpenSea. With the change of ownership, the buyer can enjoy the same privileges that the seller had prior to the transaction.
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To better illustrate the concept, Zou uses golf-club memberships as an analogy. “Let’s say a club membership costs $50,000, which allows members to enjoy club amenities as well as perks such as beverage discounts. When the golf club expands, the membership value will rise. If you need to leave the country or are no longer interested in golf by then, you can sell it to someone at a higher price of $70,000, for example. This is basically how we envision it to work,” he says.
Standing out
Ryde’s new NFT-powered reward system is designed by analysing how traditional and web 3.0 game developers design incentive mechanisms. This is to make their communities a rewarding one to be a part of, says Zou.
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“Of course, there are many membership reward systems that have worked well, such as membership cards for restaurants and discotheques. But we want to evolve alongside technology and ecosystem development. We want to be first off the blocks and capitalise on these changes. This is very important for us to beat our competition,” he says.
Ryde is the fifth ride-sharing operator that has received the Land Transport Authority’s point-to-point service operator licence, aside from also receiving the carpool service operator licence back in late 2021. It joins large, listed entities such as Grab, GoTo (of which Gojek is a subsidiary) and ComfortDelGro, as well as fellow start-up Tada.
As at April 28, the market cap of Nasdaq-listed Grab sits at around US$10.7 billion ($14.8 billion), the market cap of Indonesia Stock Exchange-listed company GoTo is hovering at around INR319 trillion, while Singapore Exchange (SGX)-listed ComfortDelGro’s market cap is at around $3.2 billion. While no other public information is available, Tada’s operator MVLLABS raised US$15 million in its Series-B funding round in April last year.
Ryde, on the other hand, announced in early 2021 that it is planning an initial public offering on SGX’s Catalist board this year with a targeted valuation of $200 million. While Zou did not disclose its current market share, the firm is targeting to capture 30% of the ride-hailing market in Singapore by 2023. According to Ryde, it currently has more than 200,000 active users monthly.
“The only way for us to stay competitive is to be innovative and create a more sustainable model. As we know, most players in the ride-hailing space are bleeding cash and are investing heavily in incentives as well as subsidies. As we move forward, we need to look for better ways to retain members and create more value for them. We want to be competitive in a sustainable way,” says Zou.
That being said, Zou acknowledges that the new blockchain-based rewards system is not enough to increase its market share. This is why the company has ramped up on its efforts to better reward and support its drivers. For instance, it keeps its commission from drivers at a flat rate of 10% of each ride’s fare.
In comparison, Grab takes a maximum of 20% commission fee, Gojek has reduced its service fee to 10% from the previous 20% for all GoCar rides since June last year, while Tada claims to take zero commission fee, but imposes other fees such as payment card transaction fees.
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Doing it right
Ryde’s NFT-powered project is not its first foray into cryptocurrencies. It was also the first ride-hailing company in Singapore to accept cryptocurrency payments via bitcoin back in 2020. From the third quarter onwards, Ryde users will be able to make payments from a list of over 70 different coins and over 10 different blockchain networks, notes Zou.
Commenting on other companies’ reluctance to accept cryptocurrency payments, Zou explains that existing crypto payment gateways have limitations — its pseudonymous nature and code-heavy formats can be problematic for various bookkeeping, auditing as well as other compliance processes.
Ryde has been able to accept cryptocurrency payments as it works with Request Finance, an enterprise crypto invoicing web app that helps companies to accept cryptocurrency payments and bill its users in cryptocurrencies. Other names that have used Request Finance’s services include metaverse platform The Sandbox, open-source protocol AAVE and decentralised autonomous organisation MakerDAO.
Zou clarifies that its NFT project should not cause any regulatory concerns, as it is used purely for its membership programme. “We must be mindful not to encourage irresponsible speculation. Technologies like NFTs are neither inherently good nor bad. At Ryde, we are very deliberate about ensuring that we use NFTs in a commercially sensible and socially responsible manner,” he adds.
Moving forward, Zou thinks the technology adoption for cryptocurrencies and blockchain-related innovations would naturally become easier as digital natives form basic expectations of how financial services will be delivered through online platforms. “It all boils down to how different companies adopt blockchain technology. Of course, some will unfortunately fail, but the businesses that do it right will succeed. We hope to be one of them,” says Zou.
