Recently, at the graduation class of the Everything Creation Camp S4, Dr. Xiao Feng, founder of HashKey Group and initiator of Everything Island, delivered a powerful presentation - (Blockchain: Starting from the Origin). He spoke about new trends like RWA and PayFi, and shared insights from his face-to-face discussions with Vitalik. He did not sell anxiety or pile up technologies, but instead tried to bring everyone back to the original meaning of blockchain, discussing whether this industry can still be pursued and how it can be done. This article contains some minor edits that do not change the original meaning. If you feel confused about this circle, it is worth reading and saving repeatedly; perhaps you will find a new sense of direction.

Hello everyone, Yingmu told me that due to the poor market cycle and environment, everyone is starting to think: “Is it time to change careers?” She hopes to recharge everyone’s “faith.” I think, of course, it can be done. I have believed in this industry since 2014 and have become quite enchanted by it.

Before we begin, I want to express my happiness - this is my second time coming to the Dongyin Center. Last year, the Everything Creation Camp S3 was held here, where I shared with everyone. This time, returning to the same place and seeing familiar faces is particularly warm, especially welcoming our leaders from Changning District.

I just returned from Hong Kong yesterday, where I attended a four-day Blockchain Summit. This is the first time mainland China has sent a group to participate in the Hong Kong summit: a signal of great significance. The biggest difference in this conference is that the Shanghai municipal government organized two official delegations, nearly 50 people, to Hong Kong. This is the first time a local government from the mainland has sent a group to participate in such a crypto summit.

We have held blockchain summits in Shanghai for ten consecutive years, while here in Hong Kong, this is the third year. Why separate? Because discussing topics like 'public chain,' 'Crypto,' and 'Token Economy' is indeed difficult to unfold in the mainland. We fear that speakers might be reluctant to come, so we placed the core content in Hong Kong. This year, through QR code scanning statistics, the four-day summit attracted over 8,000 independent participants, with the total number of attendees reaching tens of thousands.

The application explosion period is about to arrive.
Many people ask, is this a crisis in the industry? I don't see it that way. I believe that the blockchain industry has already transitioned from the infrastructure stage to the second growth curve - the application stage. This year at the summit, you could clearly feel that discussions about protocols and infrastructure are decreasing, while application topics 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 for the next explosion. This means the era of 'building frameworks' and 'discussing protocols' has passed. The new opportunities lie in who can build real applications that solve problems on this distributed ledger system.

On the last day of the summit, I had a conversation with Vitalik, the founder of Ethereum. There was no prior communication regarding the outline, 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 'trustless' and 'intermediary-free,' which means lowering costs and improving efficiency. If the cost of Web3 is higher than before and the efficiency is lower than Web2, then why should we redo it? Therefore, when we often say, 'Everything is worth rebuilding in Web3,' the premise is that trust costs are lowered, and system efficiency is higher, so that business models can be established.

Don't think of blockchain as an esoteric concept; it has long entered the real world. Why? Because cross-border e-commerce is shifting from B2B, B2C to C2C. The customer is no longer a foreign trade company, but rather an American consumer who places an order on your website for a $50 T-shirt and wants to receive it within a week. He pays, you ship, and that’s how it operates. The best payment method is scanning the USDT QR code - instant arrival, immediate stocking, air freight delivery in a week. This payment method does not require banks or clearing systems, and it solves the issues of trust and efficiency in a second. In 2023, China sent out 18 billion international parcels.

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 of global trade settlement centers.

Many people are still fixated on 'Can I create a protocol, issue a coin, and become rich?' I tell you, that era has passed. The public chain era is over, and I have been advising entrepreneurs who are still thinking about doing public chains that it is not that your technology is inadequate, but that the opportunity has passed. The key moving forward is: can you truly use this system to create real 'applications' that meet the demands of the real world? This is the purpose of my presentation topic - (Blockchain: Starting from the Origin). What was the original intention of the birth of blockchain? It was to make system trust computable, verifiable, and achievable at low cost.

I want to talk about the source of 'faith.' A Nobel Prize-winning economist, John Hicks, once said: 'The industrial revolution had to wait for a financial revolution.' The evolution of human society is inseparable from the transformation of three elements: material, energy, and information. Every industrial revolution is a synchronized revolution of these three. The financial revolution is often the precursor.

The first industrial revolution: the steam engine, accompanied by the emergence of the banking lending system.

The second: electrification, accompanied by the capital market and joint-stock company system.

The third: the internet revolution, with China inserting itself in the mid-stage.

The fourth: AI + blockchain, which is currently being jointly led by China and the United States.

What you see now in blockchain is a new generation of financial systems designed to support the fourth industrial revolution.

In an interview, I candidly advised the Ethereum Foundation: 'Ethereum has fallen to this point because you lost China.' From 2014 to 2016, China was the strongest foundation of Ethereum developers and users. At that time, Vitalik would come to Shanghai every year to attend the blockchain conference, never missing the first seven sessions. However, since 2017, when seven ministries in China issued relevant regulatory documents, the lawyers of the Ethereum Foundation, based on 'compliance risks,' formulated a rule: Foundation members are not allowed to travel to China on business. Thus, Vitalik has since been '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 did not attend. Last year, he finally nodded and expressed his willingness to participate; I invite him every year. I told him: it is time to return to China. The Wanxiang Blockchain Lab is also willing to accompany you in continuing to promote workshops, hackathons, and various technical promotion activities in China. Losing China is equivalent to losing a significant portion of global developer resources. Blockchain developers are mainly concentrated in two language spheres: 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, 'There are a small number working on underlying technology in Berlin.' But he also admitted that Ethereum's underlying technology has matured, and there is only room for optimization left; there is no longer an opportunity for reconstruction. If you expect an application explosion, can you rely solely on that little technical power in Berlin? Can you rely solely on European developers? Of course not.

So I suggested that the Ethereum Foundation set up an office in Hong Kong and half-jokingly said: 'We have the 11th Blockchain Conference in Shanghai in October; if you get caught, I will accompany you to jail.' This was of course a joke - in fact, China's technical departments, government institutions, and developer communities respect Ethereum's technology. Your foundation should no longer distance itself from China. The legal team you set up in Europe completely does not understand China and is creating regulations that will only lead you further astray. This is the content of my private exchange with Vitalik.

Behind every industrial revolution, there is always a financial revolution.
Now let us look from a larger perspective: the fourth industrial revolution, accompanied by a financial revolution, is occurring.

The first industrial revolution: led by banks, credit and bonds are the main financing axes, with no capital markets yet.

The second industrial revolution: led by the American capital market, investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc., rose up and supported the wave of electrification.

The third industrial revolution: the birth of venture capital (VC) in the 1960s, the rise of Silicon Valley. As a Nobel Prize-winning economist 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 miss the opportunity for the entire revolution.

In the past year, I discussed the relationship between Web3 and AI with four top AI experts: Shen Xiangyang, Li Kaifu, Zhou Ming, and the dean of the School of Artificial Intelligence at the Hong Kong Polytechnic University. They unanimously believe that Web3 and AI are two sides of the same coin and will ultimately come together. In the United States, there are also two typical representative figures:

1) Sam Altman: leading Worldcoin, with ten million users globally, issuing three coins every quarter, even if each is less than a dollar, it is still a huge expenditure. He represents the path of 'AI + Crypto + Software.'

2) Elon Musk: supporting 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 coincidental; 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, on the advice of his staff, simply merged them into one 'AI + Crypto Presidential Committee.' I learned from one of his crypto advisors the thinking behind this decision: AI and Crypto should not be governed separately but should work together collaboratively.

The financial revolution of the digital age is a revolution based on distributed ledgers and encrypted capital. If you do not recognize this, it will be difficult to keep pace with the United States in the digital era. 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 has only seen three major changes in accounting methods:

1) Ancient single-entry bookkeeping.

2) Double-entry bookkeeping after the Renaissance (still in use today).

3) The distributed ledger system created by Bitcoin in 2009.

This third revolution in accounting has taken us from bank accounts to the era of crypto accounts. Look at today's small commodity merchants in Yiwu; why are they willing to accept USDT payments? Because they do not need bank accounts; they can complete payments with just a crypto account. In 2023, the total settlement amount for dollar stablecoins reached $16 trillion, exceeding the sum of VISA and Mastercard. Banks will certainly feel anxious, and governments will certainly take notice. Therefore, today, CEOs and chairmen of major global banks are all acknowledging: 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 on 'Can blockchain change finance?' They said: 'The essence of finance will not change.' I agreed - the essence of finance has always been: wanting to borrow money, 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 is only a hundred years old, and the central bank is only 400 years old. In early China, there were ticket houses and silver banks, and earlier still, there were escort agencies delivering silver. They can all change; why can't banks?

Now you see, CeFi (centralized finance) is the traditional system, and DeFi (decentralized finance) is the new system. In the past, when I mentioned DeFi, banks thought the risks were high. But I asked them, 'From the perspective of lending behavior, which is riskier, the bank or DeFi?' Banks have a capital adequacy ratio of only 12%, equivalent to a leverage of 7 to 8 times. Relying on high leverage to maintain profits, once the model goes wrong, such as during the 2008 subprime mortgage crisis, the entire system collapses in an instant. 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 improving the efficiency of capital turnover. For example, if you mortgage a Bitcoin worth $100,000 into a DeFi protocol, at the current collateralization rate of about 50%, you can borrow a maximum of $50,000. In other words, DeFi is over-collateralized lending, not high leverage.

The highest efficiency of capital turnover in DeFi is exemplified by 'Flash Loans,' which are characterized by borrowing and repaying within one block, with the entire process only taking a few seconds. While not all scenarios are suitable for flash loans, it demonstrates DeFi's high turnover capability. Overall, the annual capital turnover speed of DeFi is ten times that of traditional banks, with its returns coming from the accumulation of frequent small profits rather than from leveraged amplification. This is a more advanced financial system with a strong vitality. The current set of 'new financial infrastructure' is more than halfway built and is at a key stage for accelerating application landing.

The application and impact of new financial infrastructure.

With the popularization of this infrastructure, payment applications like PayFi have emerged. In 2024, the total payment and settlement amount based on stablecoins is expected to reach $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, more and more payment settlements have shifted to this new system, helping to sell products globally.

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 aspect involves hardware and system security. 'Financial market infrastructure' is a subset of this, primarily involving the three major links of payment, clearing, and settlement of funds.

Payment: like swiping a bank card, first verifying whether the account has a balance.

Clearing: if there is a balance, freeze the amount to be paid.

Settlement: complete the actual transfer of funds between different banks or accounts.

The security incident involving Ethereum in 2016 was due to improper handling of the clearing process in smart contracts, 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, clearinghouses, and settlement centers are representatives of traditional financial market infrastructure. They ensure the payment and settlement of different types of transactions.

Compared to traditional financial systems, 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, realizing trustlessness and point-to-point efficient transactions.

In the old system, remitting money from Shanghai to the United States could take several days or even weeks; however, with blockchain stablecoins, it can arrive in seconds. For example, I recently remitted money from Hong Kong to Shanghai, which was only confirmed as failed a month later. If I had used stablecoins, it might have been completed in ten seconds.

Such efficiency and cost differences are worth rethinking the direction of financial system transformation, right? Although the decentralized blockchain system bypasses SWIFT, the U.S. government still chooses to support the development of dollar stablecoins. Trump has explicitly asked Congress to pass legislation related to dollar stablecoins before August 2025. The bottom line for the U.S. is: it can bypass SWIFT, but not the dollar. If this new system even bypasses the dollar, the U.S. will completely lose its global financial dominance.

Trump's presidential advisor once stated that the current thing the U.S. government most wants to promote is not a Bitcoin strategic reserve, although the latter is equally important. The priority is to promote legislation for dollar stablecoins. The U.S. must ensure that in the new generation of financial infrastructure, the dollar remains the main payment and settlement tool. If the dollar loses this position, the U.S. will face fundamental risks.

Looking back in history, to make the world accept 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, thus establishing the global currency status of the dollar. With the collapse of the 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 evolution of its third stage: tokenization. The U.S. government is trying to ensure that 'tokenized dollars' occupy a core position in future global financial infrastructure, which is far more significant for national interests than Bitcoin reserves.

Currently, the digital currency system is developing rapidly, including native cryptocurrencies (like Bitcoin), digital twin stablecoins (like USDT, USDC), etc., representing the evolution of currency forms from precious metals, paper currencies, and electronic money to encrypted assets.

Cryptocurrencies can be divided into two categories: one is CBDC (central bank digital currency) promoted by central banks, belonging to M0 (base money); the other is market-driven stablecoins, belonging to M2 (broad money), which are created by institutions based on central bank base money through credit expansion. The bank deposits, wealth management products, and money market funds we use daily all fall under the M2 category, representing bank liabilities rather than central bank assets. For example, in China, banks only guarantee deposits within 500,000 yuan; in the U.S., the limit is 500,000 dollars. Any deposits exceeding this amount will not be protected if the bank fails.

In the financial system, M0, M1, and M2 each serve different functions and are irreplaceable. Central bank digital currencies are unlikely to replace M2-level currencies and are not suitable for all consumption scenarios. The U.S. is well aware of this, thus explicitly stating that it will not issue CBDCs. During his campaign, Trump promised that during his tenure, he would not allow the Federal Reserve to issue a central bank digital currency. The Federal Reserve has also publicly stated that it does not consider issuing such currencies.

The reason is clear: central bank digital currencies may lead to the state having comprehensive control over payment data, harming user privacy. For example, if the dollar digital currency is used for payments in Hong Kong, Singapore, or Japan, the Federal Reserve may acquire transaction data, which is difficult to accept internationally. Unless implemented through coercive means, it is hard to take off. The U.S. understands its limitations, thus shifting towards supporting stablecoins issued by the market and pegged to the dollar.

Tokenization of RWA (Real World Assets) also belongs to the M2 category, for example, dollar money fund tokens issued in Hong Kong. Its essence is based on the credit creation of sovereign currencies, issued by banks and other financial institutions, still representing 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 'gold dollar' to 'petrodollar,' and now to 'tokenized dollar,' 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 a currency 'Made in China.' However, due to regulatory reasons, China voluntarily gave up this strategic resource to the U.S. From an industry perspective, this may not be a bad thing, but from a national interest standpoint, it is a significant loss.

The development of AI has also provided a clear demand for the new financial system. If in the future, hundreds of billions of devices globally can create GDP without human participation, their payments and settlements will need to rely on programmable money. Traditional banking systems struggle to support automatic payments between machines, whereas systems based on blockchain and smart contracts possess this capability, and no better solutions currently exist. On this basis, a new asset issuance system is also being constructed. The new generation of industrial revolution calls for a matching financial revolution, namely a comprehensive upgrade of payment settlement systems and asset tokenization. Currently, there are five main categories of tokenized assets:

Payment tokens: like USDT, USDC, pegged to fiat currency, used for daily payment settlements. In the future, stablecoins such as Hong Kong dollars, yen, and euros will also emerge.

Reserve tokens: like Bitcoin, transitioning from a risk asset to a strategic reserve asset. Several states in the U.S. have legislated to include Bitcoin as part of state government asset reserves, evolving from household assets and corporate cash management to national strategic reserves.

(The Currency Pyramid) predicts that Bitcoin will eventually become a reserve asset for central banks. The reason is simple: for the digital native generation under 30, Bitcoin's attractiveness has surpassed that of gold. This book tells the current central bank governors 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 since childhood will take your place; they are more likely to incorporate Bitcoin into national reserves. The trend is irreversible, and individual will cannot counter the tide of the times.

Interestingly, this trend's initiator is not the digital native generation but an 80-year-old man - Trump. This reality confirms the judgment that 'circumstances are stronger than individuals.' It was originally thought that only young people would drive change, but in fact, it was an old man who took the lead.

Currently, the trend of Bitcoin becoming a reserve asset is already emerging. Recently, during market fluctuations, the vast majority of crypto assets fell sharply, but Bitcoin's decline was relatively small. The reason is that most cryptocurrencies are still viewed as 'risk assets,' while Bitcoin is gradually transforming from a risk asset into a 'credit asset.'

The core role of credit assets is to hedge against the excessive issuance of fiat currency. For example, gold has long been regarded globally as a means of value storage, and its price has risen 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 transformation from risk assets to credit assets.

Currently, Bitcoin's market value is less than $2 trillion, while gold exceeds $20 trillion. If Bitcoin eventually reaches gold's market value level, whether in five years or ten years, it presents a huge opportunity for investors.

As for Ethereum (ETH), it still belongs to functional tokens. Its value depends on the actual applications within its ecosystem, and only when the applications explode at scale can ETH have significant upside potential. 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, we can refer to the classic work from Silicon Valley thirty years ago (Crossing the Chasm). The book points out that the user growth path of all high-tech products can be divided into five stages:

1) The technical geek stage: products created by technical geeks. Take Satoshi Nakamoto and Vitalik as examples; Bitcoin and Ethereum were initially created by them from scratch.

2) The technology enthusiast stage: early users do not pursue immediate practical applications but love new technologies. For instance, in 2015, when Vitalik came to Shanghai, although Ethereum's mainnet had not yet launched, Wanxiang Blockchain still invested $500,000 in it.

3) The pragmatist stage: the general public begins to care whether technology can genuinely bring value and solve practical problems. This is the critical 'chasm' period for product survival, where 80% of projects fail at this stage.

4) The latecomer stage: most 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 rejector stage: traditionalists who always reject new technology. They prefer stability and nostalgic lifestyles and do not accept new things; there is no need for forced conversion.

Projects that can acquire users and monetize from the third and fourth stages have the foundation for sustainable development. Additionally, two types of assets are worth noting:

Security tokens: for example, RWA (tokenization of real-world assets), which is essentially the digitalization of securities investment tools and must comply with securities regulatory rules. Ignoring regulation will ultimately face legal risks.

Meme coins: like the Meme coin launched by Trump, targeting users who are speculators for entertainment purposes, similar to a Las Vegas casino. Although primarily focused on 'fun,' there are also real users and market demand, representing an independent asset class.

In summary, in the new generation of asset systems, tokens are mainly divided into five categories: reserve type, functional type, credit type, security type, and entertainment type. Understanding what category your project belongs to helps in more accurately judging its development path and regulatory requirements.

The essence and development direction of the new generation financial market system.

The essence of finance is the mismatching of value over time and space. For example, a startup needs to borrow from a bank for expansion, and the bank lends based on its growth potential over the next two years, which is essentially an advance realization of future value using current funds - a typical 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 used together to jointly optimize the risk-return structure. The new generation of asset trading markets has global and around-the-clock characteristics - assets issued based on public chains inherently have global accessibility, allowing anyone to participate in trading at any time and place.

Traditional exchanges like Nasdaq and the New York Stock Exchange are also beginning to extend trading hours, moving from the previous five days a week, five hours a day, towards an almost 24-hour trading system. In fact, new technologies can already support '7×24 hours' trading, which can fully cover global time zones and break away from the previously 'inhuman' trading time settings. Since technology is already available, embracing change is a logical choice.

AI and blockchain together form the infrastructure for the new generation of wealth distribution systems. In the AGI era, the blockchain-based new financial system will become the optimal global wealth distribution mechanism.

Blockchain is not only financial infrastructure but also a new business governance tool. Data on the chain features 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 to traditional accounting systems, blockchain-based information disclosure mechanisms are more efficient and credible. New organizational forms such as DAOs (Decentralized Autonomous Organizations) are based on transparent chain data, enabling global strangers to collaborate on complex tasks - a new governance model.

The AI era is a time of large-scale collaboration among global strangers. Traditional company contracts, bank transfers, and other methods can no longer support high-efficiency collaboration needs. On-chain agreements, 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 means converting off-chain assets into standardized, shareable, and securitized forms on-chain. As early as ten years ago, stablecoins like USDT and USDC had realized the tokenization of fiat currencies, which can be seen as the starting point of RWA.

From the development stage, RWA is mainly divided into three phases:

Phase 1 (2015): Tokenization of fiat currencies represented by USDT. Because sovereign currencies inherently have strong credit backing and rely less on oracles, it only requires a bank custodian to issue a payment receipt for the market to trust.

Phase 2 (2024): Represented by BlackRock's Build, promoting the on-chain of financial assets like short-term treasury bond funds. These assets are provided with credit guarantees through licensed financial institutions, securities regulation, custodian banks, and law firm audits.

Phase 3 (Future): Tokenization of physical assets. This stage is the most challenging, with the core difficulty lying in verifying the authenticity of off-chain assets and proving ownership, making oracles a key bottleneck.

Currently, there are three main types of oracle solutions:

1) Crypto-native oracles like Chainlink: have realized the on-chain of crypto market prices and data.

2) DePIN (Decentralized Physical Infrastructure Network): is a key oracle for the future machine data on-chain, such as real-world data generated by autonomous driving, humanoid robots, etc. Its importance will significantly increase with the development of AI and hardware.

3) Financial institution oracles: provide on-chain data endorsement through custodianship by regulated financial institutions. For example, banks as custodians confirm token quantity change instructions to ensure the trustworthiness of on-chain assets.

The mapping of physical assets on-chain still faces immense challenges; currently, there is no mature and reliable credit guarantee mechanism. However, the continuous development of the oracle system in the future is expected to solve this problem.

When discussing RWA (Real World Assets), if one thinks 'everything can be RWA,' that is certainly overly idealistic. To do RWA, two core issues must first be resolved:

First, how to get on-chain. That is, how to ensure that data is authentic, immutable, and traceable. This usually relies on the oracle system, but oracles themselves also face trust and accuracy issues.

Second, compliance issues. Some financial products need to obtain approval from securities regulators before tokenization. For example, to tokenize a money market fund, approval from the Securities and Futures Commission must be obtained in Hong Kong before implementation.

Moreover, tokenization cannot be done just for the sake of tokenization. For ordinary investors, the benefits obtained from purchasing a dollar money market fund are fundamentally no different from purchasing its tokenized version, but they increase the complexity of wallet management and private key security. In reality, money market funds are available everywhere and have no threshold.

Therefore, for RWA to be established, it must have its unique purposes and added value. Otherwise, the securitization of real-world assets is already mature enough, and there is no need to add another layer of tokenization. In other words, tokenization must solve problems that traditional finance cannot meet.

A typical scenario is the combination with DeFi. For instance, the annualized yield of dollar money market funds is currently between 4.5%-4.9%. If tokenized while continuing to enjoy that yield, and also obtaining an additional return of about 5% through DeFi lending, that would be a way of value-added 'without increasing risk.' Such returns come from improved capital efficiency rather than leveraged amplification, which is a recognized innovation. We are currently communicating with regulatory authorities, but have not yet been approved to officially use tokenized money market funds for DeFi lending.

Another example of gold RWA: it is commonly believed that gold is naturally suitable for being turned into ETFs or RWAs, but this depends on the specific executing body. If a gold mining or smelting company claims to produce gold daily and wishes to tokenize it, this is not feasible. External parties cannot verify the ownership, purity, or security of the gold. However, if it is issued as a gold ETF by a licensed financial institution, approved by securities regulation, and has a bank custodian, such as a certain issuer in Hong Kong storing gold in HSBC's vault, with HSBC as the custodian, then this gold ETF converted into RWA token would be credible. In other words, the market does not trust the miner but trusts HSBC.

In summary, not all assets are suitable for direct RWA conversion. Typically, they need to be transformed into compliant financial products before being tokenized. 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 would like to share a little anecdote. Three weeks ago, I met with Shen Xiangyang in Hong Kong, who also stated that AI and crypto are naturally compatible fields, and we are exploring ways to combine the two.

In the past year, I have been looking for genuinely valuable AI + Crypto projects. It is not enough to just create a chain, issue a coin, and put an AI label on it; instead, it’s 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, 2,000, or even 20,000 devices to collectively complete AI inference tasks. This is not just a slogan; it is deep engineering at the hardware and network levels. Currently, our system is expected to initiate TGE (Token Generation Event) within two months.

We firmly believe that the deep integration of AI and blockchain will happen, and we are actively looking for entrepreneurial projects with practical implementation capabilities. I know there are also many entrepreneurs in Everything Creation Camp S5 making similar attempts; everyone is welcome to discuss together.

In fact, as early as February last year, I found the CSDN team, hoping they could mobilize developers to run large models in a distributed manner. This project has been progressing for over a year. Because everyone is serious and down-to-earth in their work, we feel it is worthwhile.

We are also collaborating with Shen Xiangyang's team, Hong Kong University of Science and Technology, and Hong Kong Polytechnic University. For instance, they have already compressed AI models to run on mobile devices. We are discussing: if models cannot be pre-installed, can we cooperate with mobile distribution channels to pre-install models during the sales process and activate them after user authorization? In our tests, 90% of users do not actively uninstall them but are willing to keep them.

This decentralized edge computing node network could allow users to earn token rewards by sharing computing power, thereby activating the entire ecosystem. This is not an easy task, but precisely because it is difficult, it signifies opportunity. Truly valuable innovations are never those that 'everyone is doing.'

Regarding AGI, OpenAI proposed five stages: Chatters, Reasoners, Agents, Innovators, and Organizers.

Currently, ChatGPT has achieved the first stage; Reasoners (like DeepMind's Alpha series or OpenAI's O1) are gradually taking shape. The third stage - Agents - is in progress. Musk's autonomous driving systems 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 comprehensive applications in household scenarios, it may still take five years or even longer. The two more complex stages, Innovators and Organizers, require standardization, systematization, and scaling of innovative achievements, which are more challenging. Once all five stages are unlocked, AGI will be realized. Optimistically, AGI may arrive by 2027, while conservatively predicting it may be by 2030.

After AGI, the era of ASI (Artificial Superintelligence) will follow. The key issue in this stage is: how to distribute the massive social wealth created by AI?

This raises an old but important proposition: Universal Basic Income (UBI). Economists have long proposed UBI models to ensure that humans still receive reasonable distribution in the AI era. I saw a news piece where someone asked a tech tycoon 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 concept of UBI is about distributing according to 'people' rather than according to labor.

The next stage is UHI (Universal Higher Income), matching the exponential growth of wealth created by ASI. In the future, perhaps you plan to travel to Antarctica, the Arctic, or even space; the systems in the AI era may support you, and this is no longer a fantasy.

Do you remember Andrew Yang, who ran for U.S. President in 2020? His core platform was UBI, providing every American with $2,000 a month. He spoke too early about the inevitable trends of the AI era. Why is Sam Altman of OpenAI working on Worldcoin? It is to build a global identity verification system (World ID) and a supersovereign currency system, laying the foundation for future UBI. Because in the AGI era, wealth will no longer belong to any single country; it must be distributed fairly through supersovereign currencies and multinational platforms.

Musk is also exploring similar avenues. The identity verification and economic behaviors of AI machines must be based on blockchain. Otherwise, we cannot verify the interactions between devices. The payments and settlements between machines naturally require smart contracts and must therefore be based on programmable money and decentralized ledgers.

Thus, the integration of AGI and blockchain will manifest on two levels:

1) Decentralized collaborative networks at the level of computing power and tasks, like distributed inference;

2) Global identity and settlement systems at the level of wealth distribution, such as the UBI framework constructed by Worldcoin.

This is a question that must be thought of from a future-oriented perspective - when the means of production in human society are completely taken over by intelligent agents, our value system, distribution mechanism, and incentive systems must also be restructured. And blockchain may be the infrastructure closest to this answer.

Alright, my sharing ends here today; thank you all!