In early 2021, in Manila, a social media app called Lyka seemed to appear out of nowhere. Lyka promised the impossible: earn money just for being online.
On the app, there was a reward for every interaction. A basic task like uploading a photo earned users GEMs, the in-app currency. Liking a photo: yet more GEMs. Even more interestingly, the coins were redeemable in real life, for anything from a luxury spa treatment to paying a telecomm or water bill. In one viral video, a celebrated actress tearfully gifted her mother a nearly $70,000 Ford SUV — all paid for upfront, she claimed, with the Lyka currency.
Manilans loved it. By January of 2021, Lyka had soared to become the third most-downloaded app in the Philippines, beaten only by TikTok and Facebook.
But Lyka’s miraculous economy came to a screeching halt in July, 2021, just seven months after its popularity took off. That month, the central bank of the Philippines ordered Lyka to suspend all transactions, saying the company wasn’t properly licensed as a payment service. The result: Active users were left with stores of worthless in-app currency. Over 4.5 million people had downloaded Lyka, according to figures shared by Data.ai, and tens of thousands of merchants — including international brands like Ford and Guess — were accepting Lyka tokens when the app stopped operations.
Speaking to Rest of World, Lyka’s CEO and founder Ryan Baird described Lyka’s run in the Philippines as a success. He said that Lyka was looking to relaunch there as a priority, and had been canvassing investors for an expansion into Indonesia and Malaysia in 2023, following a strategy to target low-income earners. He blamed the app’s misfires on regulatory red tape and even the company’s refusal to pay necessary bribes, a comment he would later ask to retract. “Working in third-world countries, we deal with a lot more corruption,” said Baird over the phone from his offices in Silicon Valley, in an interview last October.
Baird’s customers tell a different story. In these people’s experiences, what began as a cutting-edge monetization model now looks more like a misleading fantasy. Rest of World spoke with five early Lyka adopters, along with experts, to gauge the damage that the app left behind.
Gladys Regalado, an acting member of the Computer Professionals’ Union (CPU), a Philippine technology accountability organization, told Rest of World that she was deeply concerned at the prospect of Lyka spreading to other countries. “If I was Lyka, I would really see [the Philippines] as a successful beta test. I've seen how people sign up in thousands, and actually use Lyka for transactions,” she said. “It’s a win for Lyka, another story for the local merchants and the users.”
A former venture capitalist focused on emerging markets, Ryan Baird launched Lyka in 2019. Despite no direct experience with social media companies, he was able to raise roughly $20 million over three funding rounds before the app took off in 2021 in the Philippines, according to Crunchbase. Investors included major retailers who’d partnered with the app in the country, Baird told Rest of World.
Lyka was an early entrant into the “play-to-earn” scene, a craze that gripped users in emerging economies. But unlike crypto-oriented Axie Infinity or the Decentraland metaverse, Lyka’s game was social media itself.
Uploading a photo to the app’s Instagram-style photo feed gave users 0.05 GEMs, and the same for receiving a “like.” One GEM corresponded to one Philippine peso, which a user could spend at the Lyka Mall or at tens of thousands of brick-and-mortar stores. Well-known partner stores lent Lyka legitimacy: Brands like Fila, Adidas, and Victoria’s Secret all began to accept Lyka GEMs in 2021, as did gas stations and state water utilities. At its peak during the summer of that year, Baird claimed, the platform had 28,000 registered merchants and saw 1.2 million transactions per month.
Several users told Rest of World that they first heard about Lyka through flashy influencer promotions, like actress Ivana Alawi’s Ford SUV stunt. One influencer, Donna Rose, said she and other influencers received free GEMs to promote new merchants who joined the app. (She requested to use a pseudonym, as her boss was affiliated with Lyka.)
The gifted GEMs, and reliance on influencer buzz, raised questions about the sustainability of Lyka’s business model. In response to follow-up questions, Baird said that Lyka has over 25 revenue-generating features, though did not cite them in detail, and was operating at a loss to grow its audience in the style of Silicon Valley’s tech giants. The free GEMs were a marketing strategy, he added.
Merchants who had signed up to accept GEMs could use them to make purchases within the Lyka network, or exchange them for cash. Lyka took a 5% cut of each merchant transaction, and wired the remaining peso value to merchants’ bank accounts when they cashed out.
“The biggest red flag was: It’s not transparent how the company generates income,” said Regalado from the CPU. In February 2021, the organization audited Lyka’s data-collection methods, after the company declined to answer questions about its revenue sources or how it was subsidizing giveaway costs.
Regaldo said a cybercrime agency in the Philippines dismissed CPU’s concerns in 2021, telling researchers the company could be trusted because of its affiliation with accredited banks and financial institutions. “For Lyka, it was really a mystery, you know: How is this company creating wealth?”
When the Philippine central bank blocked activity on the app, merchant cash-out came to a halt, and Lyka’s fragile model began to cave in. Baird said that after keeping the social feed portion of the app running through most of 2022, the company ran out of money and simply couldn’t justify the maintenance costs anymore, even after a round of layoffs.
Opening the Lyka app, these days, users are met with a spinning loading icon. Since its suspension, Baird told Rest of World, Lyka has been working doggedly to resume business, submitting all relevant paperwork — including paying its licensing fees and sending a personal letter to the newly elected president Bongbong Marcos in July 2022.
Speaking last October, Baird claimed that a refusal to participate in bribery had contributed to Lyka’s failure to gain a license so far. “We're like, ‘We'll give you a million Lyka GEMs so that, if you fail, you don't get the money. You can't use the money.’ ‘No, no, no, no, only cash.’ All right. Well, that doesn't sound like a very good deal,” he said, recounting the incident.
But when asked to provide documentation to substantiate the claim, or specify the entities he’d been approached by, Baird asked to retract the allegation, saying he was now working with the new Marcos government to relaunch in the Philippines. Lyka was “determined” to have licensing there, he said, "to validate any legal issues that might come up once we operate in the other regions."
Edward Casanova, a professor of media at Indiana University Bloomington, who researches virtual economies, noted that Lyka’s trajectory in the Philippines mapped onto similar boom-and-bust cycles for play-to-earn businesses. “In any new [technology] space, it is sadly quite easy to make false promises, take money, and lose money,” he said. New entrants usually follow a pattern of market introduction, then government resistance, then paying respect to regulators, then government acceptance.
“Lyka must have made a mistake at step three” — appeasing regulators — he said.
A comeback is clearly front-of-mind for Baird. He says he has traveled to São Paulo and Bangalore to scope them out for expansion, but at the top of the list are neighboring Indonesia and Malaysia. Last year, Lyka began hiring in Indonesia, with as many as 12 people on staff in the country, according to Rest of World analysis of LinkedIn employee profiles.
Baird said the Indonesian office is working on clearing regulatory hurdles and signing up partner merchants in anticipation of a launch; he claimed to have over 6,000 merchants signed up already. According to LinkedIn, the company currently has some 60 employees, including in Singapore, Mumbai, and Hong Kong.
One of the main drivers for Lyka’s growth, according to Baird, has been reaching low-income users, a tactic it is looking to continue in its next markets. “We can launch right here in Silicon Valley, but, if someone's only going to make three to five bucks a month, it’s not that enticing,” he said. “[And] once people realize that they can pay their bills using Lyka, then we get them really addicted.”
"We are in pain. We are angry. That’s hard-earned money."
Despite Baird’s prior assurances that the company was working on expansion, there is no Lyka product accessible in the Philippines, or anywhere at all.
“We were left hanging. That is how I feel,” said Stephen Ignacio, the owner of a chain of clothing stores in Metro Manila. He lost 24,000 pesos ($432) in forsaken GEM payments from customers whom he has not been able to cash out. In the Philippines, where more than half of the population lives below the poverty line, that amount is substantial.
“We are in pain. We are angry. That’s hard-earned money,” said his wife and business partner Angelita. Ignacio said the money could have been used to replenish inventory or pay the rent, the staff, or utility bills. Intermittently throughout the interview, the couple tried to open the Lyka app. A spinning gray-white icon appeared, with no end in sight.
Donna Rose, the influencer, made the most of panic sales of Lyka GEMs by sweeping up the equivalent of 1 million pesos ($18,000) — but she lost all of that, too. She used her GEMs to pay for a sporty SUV and was told to wait two weeks. The car never materialized. The bills she paid and items she bought with the free GEMs she received as an influencer, however, have cushioned her losses, she said.
Baird places responsibility for unsettled payouts on the Philippine government’s intervention. “Although we want to settle our merchants, we are prohibited by the BSP [Philippine central bank] circular,” he said. “How can we settle if BSP ordered all banks and financial institutions in the Philippines to prohibit us from encashment?”
It’s not clear yet how much total value was lost in Lyka’s collapse. But news that Lyka was ramping up to launch in other countries in Southeast Asia appalled users who spoke to Rest of World, especially considering the many merchants still waiting on their cash-outs in the Philippines. Ignacio said he would like to see someone held accountable. “If there is anyone who is brave enough to initiate a class [action],” said Ignacio, “I will definitely sign up.”
