*The original interview is from Around the Coin, aired on April 18, 2025!
Stephen: I think everyone is now paying attention to the concept of 'basket of assets'. Remember? At that time, everyone was debating what exactly would be in that basket. There wasn’t much discussion around the technology itself; instead, people were pondering what the underlying assets in the basket were. Does everyone have to ensure that their assets can be included in this basket? And how do they guarantee the value of these assets?
William: Exactly. And you know, the right answer is actually this. Take video games and virtual goods trading, we usually settle transactions using many different currencies. So, you can choose whichever currency you want for settlement. Although there are currency exchange costs, it can actually be done. Many people prefer to use dollars, but there are also those who like yen, renminbi, pounds, or euros and other currencies. We will meet everyone's needs. You are right; when it comes to the 'basket' thing, people will worry about whether someone will try to manipulate the currency, just like George Soros does it every day, but nobody really cares.
Stephen: Since you have explained NFTs to everyone, it’s indeed very meaningful for our audience. However, I have a question: what do you think is the reason that led the NFT market into a downward spiral? Is it because there are too many speculators? Or is greed at play? For example, a group of people made a million dollars by operating A - A - N - F - T (this might refer to some NFT-related operation) because they sold 10,000 at $100 each.
What do you think? Have you noticed any signs that make you feel, oh, this must be speculation, but there might be some unique situations behind it that not many people have noticed yet?
William: Exactly. I want to mention that before we proposed the idea of Tether, we already had the concept of tokenizing game skins. We had this idea back in 2013. We thought, if only it could be realized, but there was no consensus mechanism at that time, everything was based on proof of work.
The key is that even people in the cryptocurrency circle seem to not quite understand how to clear the transaction queue when there are a lot of transactions on-chain. After we finally found the right consensus mechanism, I always felt that delegated proof of stake was the best. By 2017, we thought, okay, let’s make WAX.
So, this might be something many people don’t know. In 2018, 2019, and 2020, our monthly NFT trading volume reached hundreds of millions, that is, tokenized game skins, but hardly anyone knew about it. You had to be someone in the gaming circle to know this. This is a different matter. Later, I thought that we might have sparked this craze, perhaps because we partnered with Tops, the trading card company that produced baseball cards.
I have always wanted to work with them. By the way, it’s really difficult to work with them because they don’t understand blockchain at all. During those 18 months, I felt like I was saying to them: 'You don’t have to do anything; I’ll just give you a share of the trading value. Just give us a simple authorization.'
As a result, it took them a long time to agree. But we thought, I told the people at Topps, we need to sell these quickly. We probably had 50,000 cards and packed them into packs, right? If anyone remembers the old baseball card packs, it was five cards per pack, with a piece of bubble gum included, and we mimicked that format. But we also wanted to innovate because we aimed to open up the mass consumer market.
Pack prices are $10, $25, and there are rare cards. For me, this is mainly an entertainment element. You open this digital card pack, we also did a 'garbage pail kids' series, which many people fondly remember.
Stephen: These are my two favorite things, baseball cards and 'garbage pail kids'. It takes me back to 1989, which was my favorite.
William: Yes, the millennials also particularly like it. But if you price the packs between $10 and $25, it’s really not a big deal. So I told them, you know, these packs will definitely sell out in 60 days. Think about it, the Ethereum crowdfunding only took 60 days, right? Anyway, it doesn’t matter. As a result, they sold out within 24 hours.
Then they said, 'Wow, this works really well.' By the way, I asked them the day before the sale if we could mention it on the official Twitter. They said absolutely not. I asked why, and they said, 'What if it doesn’t sell? We don’t want to lose face.' I thought, give me a chance, will you?
As a result, when the project succeeded, many 'fathers' suddenly emerged in this project. Oh, this became a big deal. Now let’s talk about your question. Suddenly, many people realized some things I had known for a long time because I had been in the video game trading business, but they didn’t know. Most people think that blockchain is like developers; they think they can presell these NFTs and then expect people to buy them, and later develop the game based on the presale situation. I thought, dude, traders don’t care about the game; they just want to trade, just like on eBay or other trading platforms, right? But I had that experience because we run the video game item market. So suddenly, people felt this was a great opportunity to strike gold, thinking, 'Oh, we can do these items.' Of course, everyone wanted to do it on Ethereum. I told them, 'Dude, we are doing WAX because Ethereum can’t scale; its way of clearing the transaction queue is based on that Uber-style surge pricing model where you just pay more. Do you remember that $100 gas fee?'
Stephen: That's right. Even if you didn't get the NFT, that money still has to be spent. I think that’s what catches a lot of people off guard; they think, 'Oh, I just spent $150 and still didn't get the NFT. Is this how blockchain works?'
William: The situation is indeed a bit bleak. But later it became clear that when I jumped in, it really was that way. Prices started to skyrocket, and there were some particularly absurd things, like public financing; honestly, some clueless venture capitalists valued projects at $10 billion or something. At that time, I thought, 'Dude, I've been running the video game market for 15 years. In this market, you can set up for $100,000 with no barriers. So, you wouldn't want to spend $10 billion just to buy a random project.' But clearly, I think this is the first truly mass-market in the blockchain space, something ordinary consumers can understand.
You know, back then, a typical blockchain conference had only three or four hundred people attending, five or six hundred was a lot, and if there were a thousand people, that was quite impressive. Later, I started attending NFT-focused conferences, and wow, suddenly there were 10,000 people.
Stephen: Indeed.
William: So, a frenzy was sparked. All these people, I don’t know if I should call them scammers, but these opportunists started saying everywhere, 'I want to do this, and I want to do that.'
I have spoken with many intellectual property holders, like those in the entertainment and gaming industries. There’s an old tradition in the gaming industry of paying licensing fees to obtain the rights to something’s likeness, right? We obtain these licenses at reasonable copyright rates, generally 10%, 15%, or 20% of the transaction volume.
As a result, overnight, those so-called 'scammers', after seeing the situation with Topps, went to find these people and said, 'We’ll give you 80% of the cut.' In reality, you can’t give them a license or an 80% cut of trading value; that’s not a sustainable business. But they raised money from venture capital firms, so they didn’t care.
So organizations like WWE and many others, like NFL, by 2021, I saw this situation and thought, 'Okay, it's obvious this is when the cryptocurrency bull market ends, and the speculation bubble of NFTs is about to burst.' And it really did burst. So in people's minds, NFTs are just pretty pictures or video clips. But as we said, NFTs are just a wrapper that packages some digital files, making these files immutable, uneditable, and unchangeable forever. This means many things can become NFTs, like passports, any identity record certificates; most of these things should become NFTs.
However, the focus on NFTs has gradually faded, as everyone believes that NFTs are just pretty pictures, and no one wants them anymore. No matter the price, like Crypto Punks and Bored Apes, I remember someone spending over a million dollars to buy them. But now, I feel that these things have depreciated by 99%. This is why, from WAX's perspective, our philosophy is like baseball cards; you open the pack and can have some fun with it, just like scratch cards, right? It's like buying a lottery ticket, there’s an entertainment value. Spending $10 is fine, but if you have to spend hundreds of thousands of dollars to buy, the nature changes, and it feels a bit like gambling, or...
Stephen: It’s a bit like taking a gamble. Just like when I used to buy baseball cards, they used to sell in convenience stores, a pack for $2.99, $3.99, and you can’t buy them anymore now. Convenience stores don’t sell that anymore; you have to buy those special packs that come with 50 or 100 cards.
I think you feel the same about this industry; you want to involve those who just want to invest in NFTs and have fun with them. But now, they have to spend $150,000 to buy. After the hype cools down for a while, NFTs lose their appeal.
Do you think this analogy fits? Especially since WAX feels like a convenience store, where people can buy directly, rather than having to drive across the city to find a simple pack of cards for their kids.
William: You are so right. This is also why I initially said, 'Okay, we have to build our own blockchain network.' Now it seems obvious to everyone, as there are already many blockchain networks. But back then, people would ask, 'Why not use Ethereum?' I said, 'Because Ethereum has a limit; it can only process 10 transactions per second. If congestion occurs, gas fees can increase a hundredfold. If you have a $5 or $10 wallet but have to pay $25 in gas fees, it makes no sense.' Moreover, like many things, it was hard to explain this logic before people started acting in 2021.
Just like four years later when WAX was just launched, people realized, 'Oh my God, Ethereum really can’t scale.' Yes, I do think Solana seized the moment very well; timing is really important. Solana launched as the Ethereum killer, right? It claimed to have a better consensus mechanism, a whole new blockchain, even Tron, which theoretically could scale much better than Ethereum. But at that time, people didn’t realize this, right? But once they saw everything happening, they thought, 'Oh no, this method doesn’t work.'
So what’s the next choice? For Solana, that was a perfect opportunity because it was relatively new, probably only established for about a year, and could say, 'Oh, look, we can do it too.' Although initially, Solana seemed strange to me, with the website crashing every two weeks and the chain having issues.
I remember thinking, 'Wow, WAX has been running since it launched in 2018 for eight years without any downtime. Whether it’s five days, nine days, or any other time, there has never been downtime. There’s absolutely no reason for a blockchain to go down.'
The future of blockchain may have a different name or something, but basically people will use blockchain-based systems to protect and tokenize all these assets, which we now refer to as RWA (Real World Assets). However, the creators of these assets might not call them NFTs because the term NFT is now too closely associated with bored apes and speculative madness.
So, by the way, I don’t expect to return to that era; I don’t expect these NFTs to be worth $10 million either. I don’t think so. I think that was just a matter of a specific time and specific environment. Now we are facing the reality of real-world assets, which is the field we are trying to explore with WAX.
It’s based on NFTs and virtual items in video games, as well as real-world assets like cash tokenization, like Tether. I have to say that many of my views on cryptocurrencies are correct, but the realization took much longer than I expected. To be honest, I thought the mass adoption of real-world asset tokenization would happen around 2020.
Stephen: I think we had a secure cryptocurrency issuance back then, which felt like a harbinger. I remember it was around 2018 and 2019, but I didn’t see it take off for real. I think it was actually a variant of ICO. But I want to ask you, William, tell me directly, you are an entrepreneur who has been building these things and studying consensus mechanisms.
On WAX, everything seems to be going smoothly? But then, projects like Dapper Labs, Open Sea, and Solana emerged, and it felt like they were just doing promotions, you know what I mean? It’s like that pretty girl in a shiny dress suddenly attracting everyone’s attention. You think, 'Hey, we’ve been studying this technology for years, and it works well.'
You are a trusted person in this field, and your achievements are well recognized. I remember in the early days of NFTs, especially on those two projects, did you feel your efforts were recognized? Or did you gain new insights into some projects?
William: Yes, I think you might remember this, after all, you have been in 'this field for a while'. We talked about the word 'utility' before, right? It’s about whether this thing is practical. Just to mention, our WAX team comes from the video game and virtual goods trading field, so we've always wanted to create a complete system.
It’s like the difference between Apple and Microsoft systems. Before WAX came along, almost all blockchains were general-purpose. What does that mean? It’s like someone built a blockchain without any idea of what others would use it for.
It’s like... I can’t quite describe it; it’s just a matter of trying it out first. So we are particularly focused on industry demand. We thought, we need to get game skins and other various NFT game items; this is what we wanted. We successfully tokenized these assets, and we truly did it. We tokenized assets worth hundreds of millions, like sneakers and other real-world collectibles.
Then you can trade the cryptocurrency versions of these assets. In the WAX wallet, just click exchange, and it can be sent to the real you. We have basically minimized the cost of using WAX, or at least it's very cheap, just like that trivial handling fee. Because we want an open platform where anyone can trade freely.
WAX has always been a consumer-oriented project, at least until I checked last week. Throughout most of its development, it has consistently ranked first in trading volume. Later, it was surpassed by Solana, but if we look at it from the perspective of average coin value... let’s not talk about Bitcoin blockchain; I didn’t take a close look at Ethereum, after all, it has always been like that.
Bitcoin's daily trading volume is around one million, always at that level. Meanwhile, WAX had daily trading volumes of 250,000 to 300,000 during the NFT boom, nearly 25 times that of Ethereum or Bitcoin. Ethereum miners can earn $600 million a month, while the people running our chain, which we call block producers, are compensated around $1 million a month. So from an economic perspective, running our chain is a very efficient capital operation, right?
But now, let’s talk about it from the perspective of 'utility'. Utility, in simple terms, is being able to do many things at a very attractive price. However, the industry has increasingly leaned towards cryptocurrency speculation. Many companies you mentioned first absorb venture capital and then use that investment to inflate cryptocurrency prices.
You might remember, in 2020 and 2021, the blockchain industry raised a lot of funds. The characteristic of blockchain is that capital efficiency is particularly high, so it can raise hundreds of millions of dollars. For most blockchains, this money is used to buy cryptocurrencies to keep the prices high, right?
So I think, if you look at the top 100 cryptocurrencies by market cap now, there’s a pretty interesting phenomenon where about 10 of them are bankrupt companies. Like FTX cryptocurrency, it’s still in the top 75 by market cap. But the employees of this company have all gone to jail, and the company is bankrupt.
But these cryptocurrencies are still hanging around. And those meme coins, as the name suggests, have little practicality. So this industry has completely turned to speculation. For example, if you chat with many people who invest heavily in the blockchain field and ask them what indicators are important, they will definitely say important. Then you ask them about trading volume as an indicator? They will also say important. But can you name the top five cryptocurrencies and blockchains by trading volume? I dare say almost no one can answer because no one really pays attention to that. So when looking at blockchain, it’s either from the perspective of utility or its speculative nature. This industry has really shifted towards speculation now. By the way, I am a capitalist; I understand this. But the downside of this is that it doesn’t compensate developers who have truly made achievements in practicality and actual capabilities.
Stephen: In the end, the ones who get hurt are just the customers who buy these products. They are the ones who pay the ultimate price, right?
William: Yes, that’s also the case for blockchain-building teams. You often hear Ethereum people say they release new features on a large scale, and what happens? The cryptocurrency prices drop. You think, wait, why did the cryptocurrency prices drop? We clearly created so many features.
But the reality is that most people won’t use those features at all. The most active part of the cryptocurrency industry is actually the exchanges. The ones really using the blockchain are neither enterprises nor individual entrepreneurs, right? It’s like having a memo, trading coins; the trading itself is not interesting, right?
Stephen: Right, just like us, we all love those flashy things. We don’t like practicality; we prefer the kind of things that, how should I put it, reflect the state of society, right? Just like we all know how to live better, eat well, sleep eight hours, and exercise. But everyone is into saunas, cold baths, and taking Ozempic, those flashy things; no one wants to do those simple but effective things. What we want to do are things that can be flaunted to others. This is particularly evident in the cryptocurrency industry.
William: You are right.
*Disclaimer: This article is for informational purposes only and does not constitute any investment advice!