Original title: (Xiao Feng's Graduation Speech to Entrepreneurs: Crossing the Chasm, Returning to the Origin)
Original author: Xiao Feng, Founder of Wanxiang Blockchain
Recently, at the graduation class of Wanwu Creation Camp S4, Dr. Xiao Feng, Chairman of HashKey Group and Initiator of Wanwu Island, delivered a powerful speech—(Blockchain: Starting from the Origin). He talked about new trends like RWA and PayFi, and shared his thoughts after face-to-face communication with Vitalik. He did not peddle anxiety or engage in technical piling; rather, he tried to bring everyone back to the original meaning of blockchain and discuss whether this industry can still be pursued and how it could be done. This article has some minor edits that do not change the original meaning. If you feel confused in this circle, it is worth reading and collecting repeatedly; perhaps you will gain a new sense of direction.
Hello everyone, Yingmu told me that due to the market cycle and poor environment, everyone is starting to think, 'Should we switch careers?' She hopes to recharge everyone's 'faith.' I think that's certainly possible. Since 2014, I have believed in this industry, and I am now obsessed with it.
Before we start, I want to say I'm happy—this is my second visit to Dongyin Center; last year, the Wanwu Creation Camp S3 held a sharing session here. Returning to this familiar place and seeing familiar faces is particularly warm; a special welcome to our leaders from Changning District.
I just returned from Hong Kong yesterday after attending a four-day Blockchain summit. This was the first time a group from the mainland participated in a summit in Hong Kong: the signal significance is extraordinary. The biggest difference this time was that the Shanghai municipal government organized two official delegations, close to 50 people, to go to Hong Kong. This is the first time a local government from the mainland has organized a group to attend such a crypto summit.
We have held the blockchain summit in Shanghai for 10 consecutive years, and this is the third year in Hong Kong. Why separate? Because discussing 'public chains', 'Crypto', and 'Token Economy' in the mainland is indeed very difficult. We are afraid that speakers may not dare to talk, so we placed the core content in Hong Kong. This year, through QR code statistics, the four-day summit attracted over 8,000 independent attendees, with attendance reaching tens of thousands.
The application explosion period is coming.
Many people ask, is this an industry crisis? I don't see it that way. I believe: the blockchain industry has transitioned from the infrastructure stage to the second growth curve—application stage. At this year's summit, you can clearly feel that discussions about protocols and infrastructure are decreasing, while topics related to applications like RWA, PayFi, and USDT payments have become the focus of the entire event. I believe this is not a crisis, but a turning point, a period of accumulation before the next explosion. This means that the era belonging to 'framework building' and 'protocol discussions' has ended. The new opportunity lies in who can build practical applications that solve real problems on this distributed ledger system.
On the last day of the summit, I had a dialogue with Ethereum founder Vitalik. There was no communication outline beforehand, but I wanted him to talk about decentralization, and he indeed said a key phrase: 'The application layer cannot achieve complete decentralization; Layer 1 must insist on decentralization.'
Why? The core of decentralization is 'distrust' and 'de-intermediation', which means reducing costs and improving efficiency. If the cost of Web3 is higher than before and its efficiency lower than in Web2, why would we want to redo it? Thus, we often say 'everything is worth reconstructing in Web3'; the premise is that trust costs are lowered, and system efficiency is higher for the business model to be established.
Don't think of blockchain as a mystical concept; it has already entered the real world. Why? Because cross-border e-commerce is shifting from B2B and B2C to C2C. The customer is no longer a foreign trade company but an American consumer who orders a $50 T-shirt from your website and wants to receive it within a week. He pays, and you ship; that's how it works. The best payment method is to scan the USDT QR code—instant receipt, instant stock preparation, air freight delivered in a week. This payment method does not require banks or a settlement system; it solves trust and efficiency in a second. In 2023, China sent out 18 billion international packages.
Without a blockchain settlement system based on USDT, the biggest victim is China. So you will see why Hong Kong is pushing for stablecoin legislation? Because it realizes that if it does not actively embrace the new payment system, Hong Kong will be eliminated from the competition as a global trade settlement center.
Many people are still focused on 'Can I create a protocol, issue a coin, and get rich?' I tell you, that era is over. The public chain era has ended. I have been advising entrepreneurs still thinking of creating public chains that it's not because your technology is lacking; the trend has passed. The key going forward is: can you truly use this system to create a real 'application' that serves the needs of the real world? This is the original intention of my speech titled—(Blockchain: Starting from the Origin). What was the original purpose of blockchain? To make trust in systems computable, verifiable, and achievable at low cost.
I want to talk about the source of 'faith.' A Nobel laureate in economics, John Hicks, once said: 'The industrial revolution had to wait for a financial revolution.' The evolution of human society relies on the transformation of three elements: material, energy, and information. Each industrial revolution is a simultaneous revolution of these three elements. The financial revolution often leads the way.
· First Industrial Revolution: The steam engine, accompanied by the emergence of the bank lending system.
· Second time: Electrification, accompanied by the capital market and joint-stock company system.
· Third time: The Internet revolution; China inserted itself in the middle.
· Fourth: AI + Blockchain, this time led jointly by China and the U.S.
What you see now in blockchain is the new generation of financial systems supporting the fourth industrial revolution.
In an interview, I bluntly suggested to the Ethereum Foundation: 'Ethereum has fallen to this point because you lost China.' From 2014 to 2016, China was the most solid foundation of Ethereum developers and users. Back then, Vitalik would come to Shanghai every year to attend the blockchain conference, never missing the first seven editions. However, after the seven ministries of China issued relevant regulatory documents in 2017, the lawyers of the Ethereum Foundation established a rule based on 'compliance risks': foundation members are not allowed to travel to China for business. Thus, Vitalik has since 'absent' from China, not because he didn't want to come but because he 'was afraid to come.'
Until 2023, when we held the first conference in Hong Kong, he still had not attended. Last year he finally nodded and expressed a willingness to participate; I invite him every year. I told him: it's time to return to China. Wanxiang Blockchain Lab is also willing to accompany you in continuing to promote workshops, hackathons, and various technical promotion activities in China. Losing China means losing a significant portion of global developer resources. Blockchain developers are mainly concentrated in two language systems: the English-speaking world and the Chinese-speaking world.
I asked him: How many developers does the Ethereum Foundation have in Europe? He thought for a moment and said, 'A small number working on underlying technology in Berlin.' However, he also acknowledged that the underlying technology of Ethereum has matured, leaving only room for optimization and no further chances for reconstruction. If you expect an application explosion, can you rely solely on the limited technological strength in Berlin? Can you rely solely on European developers? Of course not.
So I suggest that the Ethereum Foundation establish an office in Hong Kong, and I half-jokingly said: 'We will have the 11th Blockchain Conference in Shanghai in October. If you come and get arrested, I will accompany you to jail.' This is, of course, a joke— in fact, China's technical departments, government agencies, and developer community respect Ethereum's technology. Your foundation should no longer stay away from China. Your legal team in Europe does not understand China at all but is making rules in this chaos, which will only lead you further off course. This is the content of my private communication with Vitalik.
Behind every industrial revolution, there is always a financial revolution.
Now let’s look from a broader perspective: the fourth industrial revolution is accompanied by a financial revolution.
· First Industrial Revolution: Led by banks, credit and bonds were the main financing axes, and there were no capital markets yet.
· Second Industrial Revolution: Dominated by the U.S. capital market, investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc., rose to support the wave of electrification.
· Third Industrial Revolution: The 1960s saw the birth of venture capital (VC) and the rise of Silicon Valley. As a Nobel laureate in economics once said: 'Behind every industrial revolution, there is a financial revolution.'
Today, in the fourth industrial revolution, if you deny tokens and crypto, you will miss the new financial paradigm and even the opportunity for the entire revolution.
In the past year, I have discussed the relationship between Web3 and AI with four top AI experts: Shen Xiangyang, Kai-Fu Lee, Zhou Ming, and the Dean of the School of Artificial Intelligence at Hong Kong Polytechnic University. They unanimously believe that Web3 and AI are two sides of the same coin and will ultimately converge. In the U.S., there are also two typical representative figures:
1) Sam Altman: Leading Worldcoin, which already has ten million users globally, issuing three coins quarterly, even if each is less than a dollar, it still represents a significant expenditure. He represents the path of 'AI + Crypto + Software'.
2) Elon Musk: Supports Dogecoin, while promoting autonomous driving and humanoid robots, representing the direction of 'AI + hardware + Crypto'.
These two directions are both 'left hand AI, right hand Crypto'. This is not a coincidence; it is an inevitable outcome of historical development. Even President Trump has responded. He originally planned to establish an AI committee and a Crypto committee, but later, at the suggestion of his staff, he simply merged them into an 'AI + Crypto Presidential Committee'. I learned from one of his crypto advisors about the thinking behind this decision: AI and Crypto should not be treated separately but should work in concert.
The financial revolution of the digital age is based on distributed ledgers and encrypted capital. If you do not acknowledge this, it will be difficult to keep up with the pace of the U.S. in the digital age. Why? Because blockchain is a new accounting system, payment clearing system, and global ledger system. The digital world knows no borders; it transcends space, time, organization, and national boundaries. It requires a new registration, accounting, and settlement system. Traditional finance cannot meet this demand.
Human society's methods of bookkeeping have seen only three major transformations to date:
1) Ancient single-entry bookkeeping.
2) The double-entry bookkeeping after the Renaissance (still in use today)
3) The distributed ledger system created by Bitcoin in 2009.
This third bookkeeping revolution has taken us from bank accounts into the era of encrypted accounts. Look at today's small commodity merchants in Yiwu; why are they willing to accept USDT payments? Because they do not need a bank account; an encrypted account is sufficient to complete the payment. In 2023, the total settlement amount of dollar stablecoins reached $16 trillion, surpassing the combined total of VISA and Mastercard. Banks are certainly feeling anxious, and governments are paying attention. Thus, today, CEOs and chairpeople from major banks worldwide are admitting: blockchain is a revolutionary system that represents a leap in efficiency.
I remember in 2012, I had a debate with famous bankers at a conference about whether 'blockchain can change finance.' They said: 'The essence of finance will not change.' I agreed— the essence of finance has always been: wanting to borrow money and wanting to receive money quickly. This has been an unchanging demand for three thousand years. Do you think banks are the ultimate model of finance? The banking system has only a hundred years of history, and the central bank has only 400 years. Early China had ticket houses and silver banks, and even earlier, there were escort agencies transporting silver. All of these can change; why can't banks?
Today, you see, CeFi (centralized finance) is the traditional system, while DeFi (decentralized finance) is the new system. In the past, when I mentioned DeFi, banks considered it high risk. But I asked them: 'From the perspective of lending behavior, which is riskier, banks or DeFi?' The capital adequacy ratio of banks is merely 12%, equivalent to a leverage ratio of 7 to 8 times. Relying on high leverage to maintain profits, once the model fails, as in the 2008 subprime mortgage crisis, the entire system collapses instantly. In contrast, DeFi's risks are transparent, quantifiable, and traceable on-chain.
What is DeFi? DeFi (decentralized finance) does not lend by leveraging but achieves returns by enhancing the efficiency of fund turnover. For instance, if you collateralize a Bitcoin worth $100,000 in a DeFi protocol, with the current collateralization rate of about 50%, you can borrow up to $50,000. That is to say, DeFi is over-collateralized lending, not high leverage.
A typical representative of the highest fund turnover efficiency in DeFi is 'Flash Loans', characterized by completing borrowing and repayment within a single block, taking only seconds for the entire process. Although not all scenarios apply to flash loans, this demonstrates the high turnover capacity of DeFi. Overall, the annual fund turnover speed of DeFi is ten times that of traditional banks, with returns coming from the high frequency of small profit accumulation rather than leveraged amplification. This is a more advanced financial system with strong vitality. The current 'new financial infrastructure' has been over half constructed and is at a critical stage for accelerating application.
The application and impact of the new financial infrastructure.
With the popularization of this infrastructure, payment applications like PayFi have emerged. In 2024, the total amount of payments and settlements based on stablecoins reached $16.16 trillion, completely bypassing traditional banking systems and the SWIFT network. In this regard, China is one of the biggest beneficiaries. In our cross-border trade, an increasing number of payments and settlements have shifted to this new system, helping products reach a global market.
Financial infrastructure refers to a complete set of institutional arrangements, including laws, accounting standards, etc., aimed at maintaining financial stability and serving the public interest. Its technical aspects involve hardware and system security. The 'financial market infrastructure' is a subset of this, mainly covering the three main processes of payment, clearing, and settlement.
· Payment: For example, swiping a bank card requires first verifying if there are sufficient funds in the account.
· Clearing: If there are sufficient funds, the pending payment amount will be frozen.
· Settlement: The actual transfer of funds between different banks or accounts is completed.
A security incident involving Ethereum in 2016 occurred because the smart contract did not properly handle the clearing process, leading to users repeatedly withdrawing assets, resulting in a loss of about $60 million. This incident highlighted the importance of the clearing mechanism. China's foreign exchange trading center, clearing houses, and settlement centers are representative of traditional financial market infrastructure. They ensure the payment and settlement of different types of transactions.
Compared to traditional financial systems, the new financial infrastructure has undergone significant changes in technical architecture, participants, and settlement units. Its core is based on blockchain, using Bitcoin, ETH, and stablecoins as transaction media, completely removing intermediary institutions, achieving distrust and highly efficient peer-to-peer transactions.
In the old system, remitting money from Shanghai to the U.S. could take days or even weeks; however, through blockchain stablecoins, it can arrive in seconds. For example, I recently remitted money from Hong Kong to Shanghai and it was confirmed failed a month later; whereas using stablecoins, it might have completed in ten seconds.
Such efficiency and cost differences surely warrant rethinking the direction of financial system reform, right? Although decentralized blockchain systems bypass SWIFT, the U.S. government still chooses to support the development of dollar stablecoins. Trump has made it clear that Congress must pass stablecoin legislation related to the dollar before August 2025. The bottom line for the United States is: it can bypass SWIFT but must not bypass the dollar. If this new system bypasses the dollar, the U.S. will completely lose its global financial dominance.
Trump's presidential advisor once stated that the U.S. government currently prioritizes advancing legislation for dollar stablecoins, rather than Bitcoin strategic reserves, even though the latter is also important. The priority is to ensure that the U.S. dollar remains the main payment and settlement tool in the new generation of financial infrastructure. If the dollar loses this status, the U.S. will face fundamental risks.
Looking back at history, to ensure the world accepted the dollar, the U.S. linked the dollar to gold through the Bretton Woods system after World War II, and other countries' currencies were then linked to the dollar, establishing the dollar's global currency status. With the collapse of this system, the U.S. promoted the formation of the Eurodollar market and the 'petrodollar' system, unifying the settlement currency for commodities as the dollar, creating global application scenarios for the dollar. Now, the dollar is entering the third stage of evolution: tokenization. The U.S. government is trying to ensure that 'tokenized dollars' occupy a central position in the future global financial infrastructure, which is far more significant for national interests than Bitcoin reserves.
Currently, the digital currency system is rapidly developing, including native cryptocurrencies (like Bitcoin) and digital twin stablecoins (like USDT, USDC), representing the evolution of currency forms from precious metals, paper money, and electronic currency to encrypted assets.
Cryptocurrencies can be divided into two categories: those promoted by central banks, CBDCs (central bank digital currencies), which belong to M0 (base money); and market-driven stablecoins, which belong to M2 (broad money) and are created by institutions based on central bank base money after credit expansion. The bank deposits, wealth management products, and money market funds we use daily fall within the M2 category, which are liabilities of banks, not assets of the central bank. For instance, in China, banks only guarantee deposits up to 500,000 yuan; in the U.S., the limit is $500,000. Deposits exceeding this amount will not be guaranteed if the bank goes bankrupt.
In the financial system, M0, M1, and M2 each serve different functions and are not interchangeable. It is difficult for central bank digital currencies to replace M2-level currencies, as they are not suitable for all consumption scenarios. The United States is well aware of this, which is why it has clearly stated it will not issue CBDCs. During his campaign, Trump promised that under his administration, the Federal Reserve would not issue central bank digital currencies. The Federal Reserve has also publicly stated that it does not consider issuing such currencies. The reason is clear: central bank digital currencies could lead to comprehensive control of payment data by the state, harming user privacy. For example, if a digital dollar is used for payments in Hong Kong, Singapore, or Japan, the Federal Reserve may obtain transaction data, which is difficult to accept internationally. Unless enforced through coercive means, it is hard to implement. The U.S. understands its limitations and thus turns to support market-issued, dollar-pegged stablecoins.
RWA (real-world asset) tokenization also falls within the M2 category, such as the dollar money market fund tokens issued in Hong Kong. Its essence is based on the credit creation of sovereign currency, issued by banks and other financial institutions, still belonging to bank liabilities. The core of the new generation of payment and settlement systems is not only the innovation of currency forms but also the evolution of asset issuance models. From 'golden dollars' to 'petrodollars' to today's 'tokenized dollars', each round of evolution has strengthened the global influence of the dollar.
It is worth mentioning that China once held 70% of the global Bitcoin mining share, meaning Bitcoin was once the currency 'Made in China.' However, due to regulatory reasons, China voluntarily gave up this strategic resource to the U.S. From an industry perspective, it may not be a bad thing, but from a national interest standpoint, it represents a significant loss.
The development of AI also provides a clear demand for new financial systems. If in the future hundreds of billions of devices globally can generate GDP without human participation, their payments and settlements will rely on programmable currency. Traditional banking systems struggle to support automated payments between machines, while blockchain and smart contract-based systems possess this capability, with no better alternatives currently available. Building on this, a new asset issuance system is also under construction. A new industrial revolution calls for a corresponding financial revolution, meaning a comprehensive upgrade of payment settlement systems and asset tokenization. The five main categories of tokenized assets currently include:
· Payment-type tokens: Such as USDT, USDC, pegged to fiat currency for daily payment settlements. In the future, stablecoins like Hong Kong dollars, Japanese yen, and euros will also emerge.
· Reserve-type tokens: Such as Bitcoin, which is transitioning from a risk asset to a strategic reserve asset. Several U.S. states have already legislated to include Bitcoin in state government asset reserves, evolving from household assets and corporate cash management to national strategic reserves.
(The Monetary Pyramid) predicted that Bitcoin would eventually become a reserve asset for central banks. The reason is simple: for the digital native generation under 30, Bitcoin's appeal has already surpassed that of gold. This book tells the current central bankers and finance ministers in their seventies and eighties— you will eventually exit the historical stage, and those who have been exposed to the digital world from a young age will take over your positions; they are more likely to incorporate Bitcoin into national reserves. This trend is irreversible, and individual will cannot counteract the tide of the times.
Surprisingly, the initiator of this trend is not the digital native generation but an 80-year-old man—Trump. This reality confirms the judgment that 'the situation is stronger than the individual'. It was originally thought that only the young would drive change, but it turned out to be an elder who took the lead.
Currently, the trend of Bitcoin as a reserve-type asset is becoming apparent. Recently, during market volatility, the vast majority of crypto assets have significantly declined, but Bitcoin's drop has been relatively small. The reason is that most cryptocurrencies are still viewed as 'risk assets', while Bitcoin is gradually transitioning from a risk asset to a 'credit asset'.
The core function of credit assets is to hedge against the excessive issuance of fiat currency. For example, gold has long been viewed globally as a means of value storage, with its price rising against the trend in recent years. While U.S. stocks and bonds have declined, gold and Bitcoin have remained strong, indicating that Bitcoin is gradually acquiring credit asset characteristics. It is expected that within the next year, Bitcoin will complete its transition from a risk asset to a credit asset.
Currently, Bitcoin's market value is less than $2 trillion, while gold exceeds $20 trillion. If Bitcoin eventually reaches the market value level of gold, whether in five years or ten years, it represents a huge opportunity for investors. As for Ethereum (ETH), it still belongs to functional tokens. Its value depends on its actual applications within its ecosystem, and only when applications explode on a large scale can ETH have significant room for appreciation. Unlike Bitcoin, which is expected to become 'digital gold', ETH cannot become a credit asset, but as a functional asset, its prospects remain broad.
Regarding the growth path of functional assets, you can refer to the classic work from Silicon Valley 30 years ago (Crossing the Chasm). The book states that the user growth path for all high-tech products can be divided into five stages:
1) The tech geek stage: Products are created by tech geeks. Take Satoshi Nakamoto and Vitalik as examples; Bitcoin and Ethereum were initially created by them from scratch.
2) The tech enthusiasts stage: Early users do not pursue immediate practical applications, simply due to their love for new technologies. For example, in 2015, when Vitalik came to Shanghai, the Ethereum mainnet had not yet launched, but Wanxiang Blockchain still invested $500,000 in it.
3) The pragmatist stage: General users begin to care about whether technology can truly bring value and solve real problems. This is the critical 'chasm' period for product survival, where 80% of projects will fail.
4. The latecomer stage: the majority of users follow suit only after seeing others benefit. This stage has a lower threshold, but the prerequisite is to cross the 'pragmatist chasm.'
5. The rejecters phase: the 'traditionalists' who always reject new technology. They prefer a stable, nostalgic lifestyle and do not accept new things and do not need to be forcibly converted.
Projects that can acquire users and monetize from the third and fourth stages have the foundation for sustainable development. Additionally, there are two asset types worth noting:
· Security tokens: For example, RWA (real-world asset tokenization), which is essentially the digitization of securities investment tools and must comply with securities regulatory rules. Ignoring regulation will ultimately face legal risks.
· Meme coins: Such as the meme coin launched by Trump, targeting users who are speculators for entertainment, similar to the casinos in Las Vegas. Although it is primarily about 'fun', there are also real users and market demands, thus forming an independent asset class.
In summary, in the new generation of asset systems, tokens can be mainly divided into five categories: reserve-type, functional, credit-type, security-type, and entertainment-type. Understanding which category your project belongs to will help better assess its development path and regulatory requirements.
The essence and development direction of the new generation of financial market systems.
The essence of finance is the cross-period mismatch of value across time and space. For instance, a startup company borrows from a bank to meet expansion needs, and the bank lends based on its growth potential over the next two years; this is essentially an early realization of future value using current capital, a typical example of time value mismatch. Achieving this value transfer in a more efficient and lower-cost manner is the core mission of 'good finance'; other superficial behaviors are secondary.
DeFi (decentralized finance) and CeFi (centralized finance) are not opposing forces; they can be combined to optimize the risk-return structure. The new generation of asset trading markets is characterized by global accessibility and around-the-clock trading—assets issued on public chains inherently have global accessibility, allowing anyone to participate in trading anytime, anywhere.
Traditional trading platforms like NASDAQ and the New York Stock Exchange are also beginning to extend trading hours, evolving from the original five days a week, five hours a day, towards a '5×23 hours' approach, nearing an all-day trading system. In fact, new technology can already support '7×24 hours' trading, fully covering global time zones and breaking the previously 'anti-human' trading hour settings. Since technology is already available, embracing change is the logical choice.
AI and blockchain together constitute the infrastructure for a new generation of wealth distribution systems. In the AGI era, the new financial system based on blockchain will become the optimal global wealth distribution mechanism.
Blockchain is not only financial infrastructure but also a new business governance tool. On-chain data has characteristics of real-time disclosure (once per block), immutability, traceability, and auditability, allowing enterprises to achieve efficient and transparent information disclosure without relying on traditional semi-annual or annual report systems. Compared with traditional accounting systems, the blockchain-based information disclosure mechanism is more efficient and credible. New organizational forms like DAOs (decentralized autonomous organizations) are based on transparent on-chain data, enabling global strangers to collaborate and complete complex tasks through a new governance model.
The AI era is an age of large-scale collaboration among global strangers. Traditional methods like company contracts and bank transfers can no longer support the efficiency required for collaboration. On-chain protocols, smart contracts, and token incentive mechanisms will become the infrastructure for new business activities.
RWA: The tokenization process of real-world assets.
RWA (Real World Assets) is essentially the process of asset tokenization, which involves converting off-chain assets into standardized, fractionalized, and securitized forms on-chain. As early as ten years ago, stablecoins like USDT and USDC had already realized the tokenization of fiat currency, which can be seen as the starting point for RWA.
From the development stage, RWA is mainly divided into three phases:
· First stage (2015): The tokenization of fiat currency represented by USDT. Since sovereign currency itself has strong credit backing, it relies less on oracle systems; a proof of receipt from a custodial bank is sufficient for the market to trust.
· Second stage (2024): Represented by BlackRock's Build, promoting the on-chainization of financial assets like short-term government bond funds. Such assets provide credit guarantees through licensed financial institutions, securities regulations, custodial banks, and law firms' audits.
· Third stage (future): The tokenization of physical assets. This stage presents the highest difficulty, with the core challenge being the verification of the authenticity and ownership of off-chain assets, making oracles the critical bottleneck.
Currently, there are three main types of oracle solutions:
1) Crypto-native oracles like Chainlink: have achieved the on-chain integration of cryptocurrency market prices and data.
2) DePIN (Decentralized Physical Infrastructure Network): This is the key oracle for getting machine data on-chain, such as real-world data generated by autonomous driving and humanoid robots. With the development of AI and hardware, its importance will significantly increase.
3) Financial institution oracles: Provided by regulated financial institutions through custodianship and other means to offer on-chain data endorsement. For example, banks confirm token quantity change instructions as custodians to ensure the trustworthiness of on-chain assets.
The mapping of physical assets onto the blockchain still faces significant challenges; currently, there is no mature and reliable credit guarantee mechanism, but the ongoing development of oracle systems is expected to address this issue. When discussing RWA (real-world assets), if one believes that 'everything can be RWA', it is certainly overly idealistic. To create RWA, two core issues must be solved first:
First, how to get on-chain. That is, how to ensure that the data is real, immutable, and traceable. This usually relies on oracle systems, but oracles themselves also face issues of trust and accuracy.
Second, compliance issues. Certain financial products need approval from securities regulators before being tokenized. For instance, tokenizing money market funds in Hong Kong must be approved by the Securities and Futures Commission before implementation.
In addition, tokenization cannot be just for the sake of tokenization. For ordinary investors, the returns from purchasing a dollar money market fund are not fundamentally different from purchasing its tokenized version; rather, it increases the complexity of wallet management and private key security. Moreover, money market funds are readily available for purchase, with no thresholds at all.
Therefore, for RWA to be established, it must have its unique uses and added value. Otherwise, the securitization of real-world assets is already mature enough, and there is no need for an additional layer of tokenization. In other words, tokenization must resolve issues that traditional finance cannot satisfy.
A typical scenario is combined with DeFi. For example, the annualized return of dollar money market funds is currently between 4.5%-4.9%. If tokenized while continuing to enjoy that yield and also able to obtain an additional around 5% return through DeFi lending, this represents a way of appreciation 'without increasing risk'. Such returns come from the improvement in fund efficiency rather than from leverage, which is an innovation worth recognizing. Currently, we are also communicating with regulatory authorities, but have yet to receive approval to officially use tokenized money market funds for DeFi lending.
To give another example about gold RWA: Many people believe that gold is naturally suitable for forming ETFs or RWAs, but this depends on the specific executing entity. If a gold mining or smelting company claims it produces gold every day and wants to tokenize it, it is unfeasible. The outside world cannot verify the ownership, purity, or safety of the gold. However, if a licensed financial institution issues a gold ETF, approved by securities regulators, and has a bank custodial arrangement, such as a Hong Kong issuer storing gold in a HSBC vault with HSBC as the custodian, then this gold ETF can be transformed into RWA Token and is credible. In other words, the market trusts HSBC, not the miner.
In general, not all assets are suitable for direct conversion to RWA. Usually, they need to be first converted into compliant financial products before tokenization. This is a reality the industry must face at this stage.
The combination of AGI (Artificial General Intelligence) and blockchain.
When discussing the combination of AGI (Artificial General Intelligence) and blockchain, I want to share a small anecdote. Three weeks ago, I met with Shen Xiangyang in Hong Kong, who also indicated that AI and crypto are naturally compatible fields, and we are exploring ways to combine the two.
For the past year, I have been searching for truly valuable AI+Crypto projects. It's not about creating a blockchain, launching a token, and slapping an AI label on it, but about solving real problems and doing real engineering. For example, distributed inference networks are the direction we have been investing in for a long time. We hope to build a system that can support 200, 2000, or even 20,000 devices to complete AI inference tasks together. This is not just a slogan; it's a deep engineering challenge at the hardware and network levels. Our system is expected to initiate a Token Generation Event (TGE) within two months.
We firmly believe that the deep integration of AI and blockchain will definitely happen, and we are actively looking for entrepreneurial projects that have practical capabilities. I know many entrepreneurs in the Wanwu Creation Camp S5 are making similar attempts, and everyone is welcome to discuss together.
Actually, as early as February last year, I approached the CSDN team, hoping they could mobilize developers to run large models in a distributed manner. This project has been advancing for over a year, and because everyone has been serious and grounded in their work, we think it's worthwhile. We are also collaborating with Shen Xiangyang's team, Hong Kong University of Science and Technology, and Hong Kong Polytechnic University. For example, they have already compressed AI models to run on mobile phones. We are discussing whether, if models cannot be pre-installed, we could collaborate with mobile distribution channels to pre-install models during the sales process and activate them after user authorization. Our tests show that 90% of users are not inclined to uninstall them but are willing to keep them.
This decentralized edge computing node network may allow users to earn tokens for sharing computing power, thus activating the entire ecosystem. This is not an easy task, but precisely because it is challenging, it also signifies opportunity. Truly valuable innovations are never things that 'everyone is doing'.
Regarding AGI, OpenAI proposed five stages: chatter, reasoner, agent, innovator, and organizer.
Currently, ChatGPT has achieved the first stage; reasoners (such as DeepMind's Alpha series or OpenAI's O1) are also gradually taking shape. The third stage—agents— is in the process of advancement. Elon Musk's autonomous driving system and humanoid robots fall into this stage. It is expected that autonomous driving will mature within two years, and the application of humanoid robots in factories is also accelerating. As for the comprehensive application in home scenarios, it may take another 5 years or even longer. The more complex two stages are innovators and organizers. Innovators create from 0 to 1, while organizers need to standardize, systematize, and scale the innovative results, which is more challenging. Once all five stages are fully connected, AGI will be achieved. An optimistic estimate is that AGI will arrive by 2027, while a conservative prediction is 2030.
After AGI, the era of ASI (Superintelligent AI) will follow. The key question at this stage is: how will the immense social wealth created by AI be distributed?
This raises an old but important proposition: Universal Basic Income (UBI). Economists have long proposed UBI models to ensure that people can still receive fair distribution in the age of AI. I saw a news piece where someone asked a tech mogul what the ultimate destination of AGI is, and he answered: socialism. In a sense, this is correct—AI does not consume or waste; the wealth it creates needs to be redistributed. The idea of UBI is not to distribute based on labor but rather based on 'people'.
The next phase is UHI (Universal High Income), matching the exponential wealth created by ASI. In the future, perhaps you plan to travel to Antarctica, the North Pole, or even space; the systems in the age of AI may support you, no longer a fantasy.
Do you remember Andrew Yang, who ran for president in the United States in 2020? His core campaign promise was UBI, giving every American $2,000 a month. He spoke too early about the inevitable trend in the age of AI. Why is Sam Altman from OpenAI creating Worldcoin? To establish a global identity verification system (World ID) and a supranational currency system, laying the foundation for future UBI. Because the wealth of the AGI era no longer belongs to a single country; it must be fairly distributed through supranational currencies and multinational platforms.
Musk is also exploring similar avenues. The identity verification and economic behavior of AI machines must be based on blockchain. Otherwise, we cannot verify the interaction relationships between devices. Moreover, payments and settlements between machines naturally require smart contracts, thus must rely on programmable currency and decentralized ledgers.
Therefore, the combination of AGI and blockchain will be reflected on two levels:
1) Decentralized collaborative networks at the computational and task levels, such as distributed inference.
2) The global identity and settlement system regarding wealth distribution, such as the UBI framework built by Worldcoin.
This is a question that must be thought of in a forward-looking manner—when the means of production in human society are completely taken over by intelligent agents, our values, distribution mechanisms, and incentive systems must also be reconstructed. And blockchain may be the infrastructure closest to this answer.
Alright, that's all for my sharing today, thank you everyone!
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