Source: https://www.techflowpost.com/article/detail_12594.html

Recently, Allen, who used to conduct Worldcoin KYC by hiring locals in Kenya and then reselling the accounts to Chinese users, has returned to China. The source of the products related to Worldcoin found on Xianyu (a Chinese online marketplace) can be traced back to intermediaries like Allen operating in Africa.

However, this business has become challenging. With the official launch of Worldcoin and increased transparency in token prices, the gray area has disappeared. Moreover, due to the current political instability in Kenya, Allen has suspended the KYC business and returned to China.

This business lasted for over three months, and at its peak, they were earning up to $3,000 a day at a location where iris verification was possible. But the most profitable period only lasted for two weeks in May when Worldcoin was gaining popularity in China. The sudden surge in new local users raised suspicions among the operators, leading to further investigation.

Allen narrates his experience:

As the business progressed, it became increasingly difficult. Before I returned to China, one of our employees was caught by the local police and had to pay nearly $35 (approximately the minimum monthly wage of $125) to be released. The police detained him under a charge similar to “disturbing public order” commonly used in China.

As third-party operators, we were responsible for conducting KYC on behalf of others for about three months. I had a full-time job in Kenya, so this business was a part-time gig for me. It wasn’t too difficult; we just needed to find a location set up by the local operators, and my hired local employees would take the hired laborers to perform iris verification KYC. Initially, we paid the laborers $1 per task, but as more third-party verification teams emerged, competition grew fierce, and their wages rose to $3.

Approximately 99% of the business was initiated by Chinese operators behind the scenes. As competition increased, more Chinese residents saw the opportunity and joined in, resulting in a rise in wages for laborers and headhunting fees for local employees. In the early stages, the cost of creating an account was around $6 to $7, but it later increased to $9 to $12.

The additional costs were mainly incurred for gratuities to the store staff. They would get suspicious if they saw one person bringing several others for verification, so we had to give them tips to ensure our operations continued.

During June, when Worldcoin gained significant traction in China, Allen and his team verified around a hundred people daily at each location. However, this profitable period didn’t last long. After about a week, the local operators noticed something was amiss. Worldcoin’s promotion strategy involved having one operator manage a large region, and a country was divided into five to six major regions, each with several shops. Each of these regions would be monopolized by a Chinese third-party like Allen, with about a dozen teams competing. The operators became suspicious when some shops reported significantly higher data than others, leading to the discovery of the fraud. To rectify this “gray area,” all verification operations in Kenya were suspended for a week. There were approximately ten Chinese teams running this business, leading to thousands of false user accounts per day.

The ordinary Kenyan public’s awareness of Web3 is limited, and Worldcoin’s promotion in Kenya was also inadequate. Before doing this business, I passed by one of their verification points where they could scan irises. It looked like the makeshift tents set up for community activities in Chinese residential areas. At that time, I had no idea what they were doing until I saw related content on Twitter after returning home, realizing it was a Worldcoin promotion spot.

Without our third-party assistance, local shops would only have about ten registrations per day. This data was observed when I was present in the area; a genuine user would appear at the verification site roughly once an hour. The scarcity of genuine users can be attributed to several reasons: First, local infrastructure was poorly developed, and the phones used by locals were not as sophisticated as the smartphones we use in China. Web3 applications have high requirements for phone and internet speed. Second, the locals had limited knowledge of Web3; for instance, the laborers we hired did not understand stablecoin settlement compensation, and we paid them in local currency.

In this regard, Kenya, along with many other regions in Africa, may not be the most suitable place for conducting large-scale promotion of Web3 applications. I have previously assisted Debox in their local promotion efforts by reaching out to Chinese residents in different areas to serve as their ambassadors. However, the results were only average. Being a resident in the area, I have rarely seen other Web3 projects conducting extensive promotions.The local population tends to be cautious, and if a project gains significant traction, the local government may also want a share of the benefits.

Considering the input-output ratio and timing is crucial for this business. Worldcoin began its promotion in Africa around October of last year, but the project lacked momentum at that time. Engaging in this venture during that period wouldn’t have been profitable. It was only after OpenAI gained popularity in China this year that Worldcoin caught the attention of many. The potential of this business was entirely discovered by Chinese nationals in May and June.

Let’s do some calculations: assuming the cost is $6, an account could be sold for $40. At a single location verifying a hundred people, that would translate to $3,000 per day. We hired a supervisor responsible for leading five teams, each running at various locations, and each team could handle 80 to 100 accounts daily.

In the early stages, project initiators tolerated such third-party KYC assistance. After all, the growth in users and impressive data were essential for Web3 projects to attract investment. However, as the project matured, the project initiators would naturally distance themselves from this behavior and no longer allow such a large number of fake users.

The critical moment came when the project announced its plan to launch at the end of June. It was then that the unusual data increase in Kenya and other African countries was noticed. Worldcoin emphasizes authentic KYC, with each individual having only one iris for verification.

Some have labeled our actions and Worldcoin’s promotion in Africa as a form of Web3 neocolonialism. To this, I can only say that these critics have likely never experienced poverty. One or two dollars may be trivial for them, but for the locals, it means several meals.

However, it is true that Worldcoin’s efforts do bring financial benefits to people in these third-world countries. From this perspective, the project is quite remarkable. But to make this project a success, there is still much work to be done.

Having worked in Africa and observed the local Web3 ecosystem, I believe that a lightweight wallet would be more suitable for promotion in this region. A lightweight wallet can adapt to the local infrastructure level, which aligns with the needs of the locals. For some African countries, their local currency exchange rate is highly unstable, so holding a certain amount of mainstream cryptocurrencies can act as a hedge against risks. During the promotion of such a wallet, collaborating with the government for endorsement and offering local users certain incentives could yield positive results.

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