How true is crypto’s promise in Africa of a revolution?

In 2021, as cryptocurrency fever swept the globe, Africa seemed poised for a digital revolution. Experts championed crypto as the key to unlocking the continent’s economic potential, urging Africans to dive headfirst into the Web3 world. Web3 indeed promised Africa a digital revolution. Amidst the optimism in this revolution, Mara emerged as a beacon of hope, promising to “build Africa’s crypto economy.”

The rise and fall of an African crypto dream

Founded by a dynamic team, a Pan-African crypto exchange startup, Mara, quickly became the darling of crypto investors. In May 2022, the startup secured $23 million from heavyweight backers including Alameda Research and Coinbase Ventures. With a pre-money valuation of $70 million, Mara was destined for greatness.

Mara’s ambitious plans included a crypto wallet and a layer-1 blockchain. By February 2023, the company proudly announced the launch of Mara Wallet, boasting 4 million verified users. However, this impressive figure would later come under scrutiny, with allegations that up to 75% of these accounts were fraudulent.

As the crypto winter set in and interest rates rose, Mara’s financial situation took a dire turn. The company reported a staggering loss of $15.9 million in 2022, with no revenue to show for it. Astronomical expenses, including $9.1 million on salaries for 130 employees, quickly depleted the startup’s coffers.

By early 2023, three of Mara’s co-founders had departed. This situation made it nearly impossible for Mara to secure the additional $2-5 million it desperately needed to stay afloat.

Also read: Nigerian authorities ban crypto exchanges amid Naira decline

What can Africa’s tech ecosystem learn?

As the dust settles on the Mara saga, the broader question remains: What does this mean for the future of cryptocurrency in Africa? 

Mara’s journey from a $70 million valuation to near-collapse offers valuable lessons regarding the dangers of unchecked growth, the importance of sustainable business models, and the need for transparent operations, robust governance, and regulatory compliance in the volatile world of cryptocurrency.

As the continent continues to explore the potential of digital currencies, these lessons will be crucial in shaping a more resilient and credible African crypto sector. The success of African crypto startups will depend on their ability to prioritize user trust, and build solutions that genuinely address the continent’s unique financial challenges.

The future of African crypto remains promising, but it requires a more grounded, ethical, and user-centric approach to realize its full potential.

Also read: Cryptocurrency: Ying or Yang?