What are the potential big opportunities in this cycle from the perspectives of 'small players', 'big players', and the crypto credit cycle?

A recent conversation seemed to reveal the issue of the crypto credit cycle, along with some thoughts and musings to share with everyone.

I won't name names to avoid disrupting anyone's financial path, and besides, compared to a bunch of rotten peaches, it is not bad. After all, I am quite familiar with their founders, so the conversation was very candid.

The so-called major public chains valued at tens of billions of dollars have very few real active users, relying entirely on self-generated data to support the empty framework. The primary means of maintaining team expenses is to pull up the market to construct financial chip value, turning oneself into a gambling hall. I will generously speculate that they are not trying to cut leeks, but merely trying to survive, or to put it nicely, waiting for opportunities, or slowly dying.

The threshold for gaining trust in the crypto circle is rising. Although the mechanisms on the chain have always been trustworthy, the construction of the crypto ecosystem has become increasingly untrustworthy due to the lack of fulfillment capability of the main bodies.

To solve this problem, there may be a trend towards higher-level credit entities, which are those companies, institutions, or even countries with high credit ratings in the traditional world, to lead the construction of the ecosystem. The chain, as a transparent and trustworthy mechanism, in turn constrains these credit entities, opposes opacity, and prevents wrongdoing.

Some may question whether this seems a bit like 'state-owned enterprises advancing while private enterprises retreat'? It appears that decentralization is regressing while centralization is strengthening. However, I don't think that's the case; the two are not in a binary opposition.

The advantage of super credit entities lies in their ability to be responsible for the ecological construction they promise based on their own centralized credit, as this part cannot be decentralized unless it can be done without human intervention. Once mechanisms and rules are established, they should simultaneously be implemented on the chain, imposing constraints on themselves; this process guarantees overall consensus through decentralization.

Power is ultimately conferred by a decentralized overall consensus mechanism, and the process of conferring requires a reasonable consensus process. It's similar to congressional authorization and supervision, with the government executing it; only this congress is a chain mechanism, which is more reliable than congressional members. It essentially incorporates high-credit central entities into a decentralized mechanism network.

Will ordinary individuals be squeezed in this situation? At this stage, I don't think so; in fact, they may even benefit from it. At the very least, it should be better than the current situation, achieving higher overall welfare in web3, more Pareto optimal. The current situation is that, in reality, low-credit entities have falsely obtained high credit ratings through high-level authorization (the immutable decentralized consensus mechanism on the chain), but fundamentally cannot fulfill their ecological construction commitments (PPT cutting leeks and leaving).

It has turned into a case of mutual pecking among low-level entities, credit inflation, mutual suppression, and draining the leeks, leading to the collapse of the web3 credit system, forming what is called 'mutual non-acceptance'. This, in turn, constitutes an obstacle to the further expansion of global crypto credit.

So why was it possible before, and now this superstructure has problems? In the early days, the technical threshold was relatively high, and the resulting technical barriers could capture enough profits and broad consensus, which in turn formed a strong credit level and default cost constraints. Once they made a lot of money, everyone became cautious about their lives and reputations.

However, with the diffusion of technology, on the positive side, the barriers to entrepreneurship have lowered, the industry has flourished, and the number of entities entering has rapidly expanded, leading to a prosperous and active market. However, from the perspective of credit entities in the financial market that can issue currency, this is not necessarily a good thing; the lowered threshold makes it harder for crypto projects to achieve broad consensus and high profits, and default costs have also significantly decreased, leading to a general decline in credit.

In the next phase, it may require so-called true 'big players' to use their high-level credit to reshape the currently 'disordered' market, reassemble the fragmented consensus, and deliver real ecology, re-establishing the thresholds and standards for obtaining high credit, creating a multi-layered credit and pricing system, and reshaping broad consensus.

This seems to be a spiraling upward process, and an inappropriate analogy might be:

In times of recession, relative centralization is needed to concentrate efforts on major tasks, restore social credit, somewhat Keynesian, like Roosevelt. In periods of prosperity and technological diffusion, it will be more liberal, influenced by the Austrian school, akin to Reaganism, during credit expansion periods, individual prosperity, and then overreaching, leading to subprime crises and credit system collapse. This cycle continues, spiraling forward.

The history of the crypto circle is still short, but the history of human economic finance is long. The consensus mechanism on the chain overcomes some weaknesses of human nature, but the remaining aspects of human nature off-chain still need to be addressed. We are confident about the future of crypto, but we must also face the reality of the development cycles of crypto. Especially in a market without so-called macro-control, the cyclical operations of overheating and recession beneath human nature are very pure and smooth.

Such cyclical movements are common in traditional macroeconomics; correctly judging and finding ways to participate can yield huge profits. For example, Soros and other hedge funds are outstanding players. Particularly, if high-credit entities gradually lead the process of re-establishing broad consensus, it will bring about huge wealth effects. It may once again be a huge opportunity at the level of significant cyclical movements in the early years of the crypto circle; this could be the potential big opportunity of this cycle.

Of course, the cycle rotates, while BTC moves forward. BTC cannot return to that price; Bitcoin is the trend line of the industry's cyclical upward development and significant fluctuations. In this small universe of crypto—transcending the six paths, not caught in the cycle.