Crypto Assets行业的转折点

In the past year, the Crypto Assets industry has engaged in two-way interactions with traditional financial enterprises, internet giants, and global politicians. The token issued by a certain well-known political figure marks the end of Crypto liquidity, while the compromises among various parties are just beginning.

Consultants, crypto mining farms, and large financing from different countries and regions ultimately became the last straw that broke the camel's back for retail investors. In this situation, it might be better to go to the wishing pool and be a salted fish, perhaps gaining some consolation.

The Stagnation Period of the Crypto Industry

Humans seem to always pursue things that are contrary to the status quo. When tradition prevails, people yearn for freedom; and when freedom becomes the norm, they begin to miss tradition.

History always repeats itself. Looking back at the approval of a certain Bitcoin-related ETF, many believed that Bitcoin would change the world. However, the prevailing view now is that Bitcoin is merely a mapping asset of M2, unable to effectively combat inflation and difficult to serve as a booster for a bull market.

After a certain political figure entered the coin circle with a new token, the market experienced a brief surge before falling into silence. The self-rescue actions of certain platforms, new measures from a certain wallet, and speculations about the identity of a certain project founder all became a farce that failed to bring any actual benefits.

The Crypto Assets industry is currently in a state of stagnation. Ethereum, which was once hailed as a "civilization-level innovation," has also failed to withstand significant price fluctuations and has to rely on new technologies to regroup. If even the Ethereum Virtual Machine can undergo a makeover, why not simply revert the consensus mechanism from PoS back to PoW? Can Ethereum's bet on L1 and the introduction of new technologies really save itself?

A certain public chain has been betting on the L1 track before and after the crisis. Essentially, its expansion layer is also a kind of parasitic behavior on this public chain, while Ethereum's L2 is something it actively introduced.

The market model we are familiar with is gone forever. Stablecoins, rather than Ethereum, are the real currency.

Invalid information is eroding the entire market. The KOL craze will soon evolve into a KOL institutional craze, followed by the dominance of exchanges. Just look at the recent music festival's grandeur; the project parties, KOLs, and exchanges are ultimately all transaction-oriented, and the exchanges themselves are the central hub of trading activities, which creates an inextricable knot.

This is not a criticism of KOLs, but an acknowledgment of market laws. From the early community AMAs and community-based platforms to the later media wars, the peak of KOL influence also marks the beginning of its decline. The shift to trading signifies the complete depletion of trust and influence.

In this round of cycles, invalid information has shown a new differentiation trend, mainly divided into two categories: one is garbage information in the low-end market; the other is celebrity endorsements in the high-end market.

Investment institutions are also facing the dilemma of collapse and persistence. Relying on US dollar capital, VCs in various regions are laying out the next stage. Meanwhile, the solitary Chinese VCs, under the dual pressures of LP and ROI, have become irrelevant to innovation and are quickly transforming into market makers. Since the ultimate goal is trading, it might be better to eliminate the intermediary steps.

Real innovation may emerge in the new technology parks. Chinese founders need to seek funding support in Silicon Valley and Wall Street, but projects that can truly meet the market's next phase of demand may not be recognized by existing investment frameworks.

The cryptocurrency market no longer needs FA, and Meme coins are also hard to short. The reason is simple: the trading pathways are too short, and exchanges are keenly watching any traffic. They would rather waste resources casting a wide net than miss out on potential opportunities. The only beneficiaries have become the talents who have escaped from big internet companies to cryptocurrency exchanges. They brought professional skills and impressive resumes, along with deeper operational standards and a decrease in capital efficiency due to increased intermediary costs.

The vibrant era of the Crypto Assets industry, where everything flourished and everyone wanted to make big money, is gone forever. The ongoing institutionalization has become a shackle on the development of the industry, making the encryption sector increasingly resemble the traditional internet industry.

Innovation Comes from Demand

We should maintain confidence in the Crypto Assets industry, but we may need to be cautious about individual prospects. This is no longer a niche industry full of opportunities for rapid wealth. Practitioners are being largely replaced by talent from the internet and finance sectors. The older generation of practitioners either faces legal risks or becomes a supporting role.

In every crisis of the crypto industry, new asset issuance methods emerge. For example, ERC-20 supported the development of DeFi, NFTs supported the rise of BAYC, and now we have arrived at the stablecoin stage.

It is worth noting that the core of the previous round of on-chain activities was Ethereum and lending, which improved capital efficiency through "Lego-style" combinations. However, this round of Ethereum and staking models did not replicate the previous miracles.

Yield-bearing stablecoins (YBS) have emerged as a new innovation that will create new demand. This is not because existing stablecoins cannot meet demand, but because YBS itself has been invented as a new possibility.

YBS may become a new form of asset issuance. I have three predictions for the future:

1. YBS has become a new asset issuance method, and Ethereum has successfully upgraded. ETH has replaced BTC as the new Crypto Assets engine, with the re-staking of ETH becoming true currency.

2. YBS has become a new asset issuance method, but Ethereum is gradually falling silent. YBS is absorbed by dollar assets, Financial Technology 2.0 becomes a reality, and Web 3.0 descends into fantasy;

3. YBS failed to become a new asset issuance method, and Ethereum quietly declined. Blockchain technology has reached a "de-coinization" level of at most financial technology 1.5.

In short, FinTech 2.0 is financial blockchain, while FinTech 1.5 is non-coin blockchain technology.

Stablecoins are becoming a new asset issuance model, a development that many research reports failed to foresee. If we believe that the market itself is the optimal solution, then the biggest problem for investment institutions and exchanges is not being overly focused on the technical narrative, but rather not respecting market laws.

In the current landscape of Crypto Assets, exchanges, stablecoins, and public chains coexist in a tripartite structure. A major exchange, USDT, and Ethereum form the primary forces, while other participants are suppliers and distribution channels revolving around these three. Exchanges and public chains are relatively stable, and the current focus is on the stablecoin sector. Not only are there new entrants like USDC and a certain asset management company, but the answer given on-chain is YBS, which is related to the development of the entire industry.

From the perspective of the actual asset issuance volume, ETH combined with USDT based on Ethereum still holds a dominant position. This is also the main reason why I believe there are no fundamental issues with Ethereum. The market's price expectation for ETH is 10,000, while the expectation for a certain competing public chain is 1,000, which is a completely different baseline.

Comparing the growth rates of various chains, we can find that they are basically synchronized, except for a certain public chain that almost collapsed in 2022; during the rest of the time, everyone has remained consistent with Ethereum. This indicates that in terms of correlation, the stablecoins of various chains have not formed independent markets and still reflect Ethereum's spillover effect.

This highlights the importance of Ethereum and stablecoin pairs. The significance of YBS lies in changing the pegged asset. Among the 230 billion market cap of stablecoins, USDe and other YBS still only account for a small portion.

YBS must become a new asset issuance method to transmit the asset attributes of ETH to the currency level; otherwise, the spring of physical asset tokenization will be the winter of Crypto Assets.

Conclusion

Ethereum has only a technical narrative, while users only care about stablecoins.

We hope that users prefer YBS over USDT. This is the current situation and also the divergence we have with the market.

Pursuing niche markets is often a very mainstream thing. There is no problem with blockchain payments themselves, but pushing for blockchain payments before Crypto Assets supported by YBS become mainstream is putting the cart before the horse. Payments should be one application direction of YBS.

Crypto Assets should not become Financial Technology 2.0, our path cannot become narrower.