Xiao Feng's graduation speech to entrepreneurs: Crossing the chasm and returning to the starting point

Source: ThreeDAO

Recently, at the graduation class of the S4 of the Creation Camp of All Things,Dr. Xiao Feng, founder of Wanxiang Blockchain, chairman of HashKey Group and initiator of the Island of All Thingsbrought a very powerful sharing - "Blockchain: Starting from the Origin". He talked about new trends such as RWA and PayFi, and also shared his thoughts after face-to-face communication with Vitalik. He did not sell anxiety or pile up technology, but tried to take everyone back to the original meaning of blockchain, and talk about whether this industry can still be done and how to do it?

Hello everyone, Yingmu told me that because of the market cycle and bad environment, everyone began to think: "Is it time to change careers?" She hopes to recharge your "belief". I think it's certainly possible. I have believed in this industry since 2014, and I have been obsessed with it until today.

Before I start, I want to say that I am happy - this is my second time to come to the East Silver Center. Last year, I shared with you here at the Creation Camp S3. This time I revisited the old place and saw familiar faces again. They were particularly cordial and especially welcomed the leaders of our Changning District.

I just came back from Hong Kong yesterday. This time I went to attend the four-day Blockchain Summit. The first time that the mainland organized a delegation to attend the Hong Kong Summit: the signal is of great significance. The biggest difference of this conference is that the Shanghai Municipal Government organized two official delegations, nearly 50 peopleto go to Hong Kong. This is the first time that a local government in the mainland has organized a delegationto participate in 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 it is really difficult to talk about "public chain", "Crypto" and "Token Economy" in the mainland. We were afraid that the speakers would not dare to speak, so we put the core content in Hong Kong. This year, through the statistics of scanning the QR code, the four-day summit attracted more than 8,000 independent participants, and the number of people was tens of thousands.

The application explosion period is coming

Many people ask, is it an industry crisis now? I don't think so. I think:The blockchain industry has shifted from the infrastructure stage to the second growth curve - the application stage. You can clearly feel at this year's summit: the discussion of protocols and infrastructure is decreasing, while topics related to applications such as RWA, PayFi, and USDT payment have become the focus of the whole event. I believe that this is not a crisis, but a turning point, and the accumulation period for the next outbreak. This means that the era of "building a framework" and "talking about protocols" has passed. The new opportunity lies in who can build applications that truly 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 communication outline in advance, but I wanted him to talk about decentralization, and he really said a key sentence: "The application layer cannot be completely decentralized, Layer1 must insist on decentralization."

Why?The core of decentralization is "trustlessness" and "de-intermediation", which meansreducing costs and improving efficiency.If the cost of Web3 is higher than the original and the efficiency is lower than Web2, why should we redo it? So we often say that "everything is worth reconstructing in Web3", the premise is: the trust cost is lowered, the system efficiency is higher, and the business model can be established. Don't think that blockchain is metaphysics, 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 places an order on your website to buy a $50 T-shirt and wants to receive the goods within a week. He pays and you ship, and this is how it works. The best way to pay is to scan the USDT QR code - it arrives in seconds, the goods are ready in seconds, and it is delivered by air in a week. This payment method does not require a bank or a clearing system, and it solves the problem of trust and efficiency in one second. In 2023, China will send 18 billion international parcels throughout the year. Without a blockchain settlement system based on USDT, China will be the biggest victim. So you will see, why does Hong Kong promote stablecoin legislation? Because it realizes that if it does not actively embrace the new payment system, Hong Kong will be eliminated in the competition for the settlement center of global trade. Many people are still staring at "Can I make a protocol, issue a coin, and get rich?" I tell you, this era is over. The era of public chains is over. I have always advised entrepreneurs who still want to do public chains that it is not that your technology is not good, but that the wind has passed. The next key is: Can you really use this system to make real "applications" and serve the needs of the real world. This is the original intention of the title of my speech, "Blockchain: Starting from the Origin". What is the original intention of the birth of blockchain? It is to make system trust calculable, verifiable, and low-cost. I want to talk about the source of "belief". John Hicks, a Nobel Prize winner in economics, once said: "The Industrial Revolution had to wait for a financial revolution." The evolution of human society is inseparable from the changes in three elements: matter, energy, and information. Every industrial revolution is a synchronous revolution of these three. And financial revolutions are often the forerunners.

The first industrial revolution: steam engine, with the emergence of a bank lending system;

The second: electrification, with the capital market and joint-stock company system as supporting systems;

The third: Internet revolution, with China inserted in the middle;

The fourth: AI + blockchain, this time China and the United States are jointly leading.

The blockchain you see now is the next-generation financial system that supports the Fourth Industrial Revolution.

In an interview, I once bluntly suggested to the Ethereum Foundation: "Ethereum has fallen to this point today because you have lost China." From 2014 to 2016, China was the most solid base for Ethereum developers and users. At that time, Vitalik came to Shanghai to attend the blockchain conference every year, and he never missed the first seven sessions. But since the seven Chinese ministries and commissions issued relevant regulatory documents in 2017, the lawyers of the Ethereum Foundation have formulated a rule based on "compliance risks": Foundation members are not allowed to travel to China on business trips. As a result, Vitalik has been "absent" from China since then, not even because he is unwilling to come, but because he is "dare not to come."

Until 2023, when we held the first conference in Hong Kong, he still did not attend. Last year, he finally nodded and said he was willing to participate. I have been inviting him every year. I told him: It's time to return to China. Wanxiang Blockchain Lab is also willing to accompany you to continue to promote workshops, hackathons and various technology promotion activities in China. If you lose China, you will lose a large part of global developer resources. Blockchain developers are mainly concentrated in two language groups: the English world and the Chinese world.

I asked him: How many developers does the Ethereum Foundation have in Europe? He thought about it and said, "There are a small number of people in Berlin who work on the underlying technology." But he also admitted that the underlying technology of Ethereum has matured, leaving only room for optimization and no longer has the opportunity to refactor. You expect an explosion of applications, but can you rely only on the technical strength of Berlin? Can you rely only 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 come and get arrested, I will go to jail with you." This is of course a joke - in fact, China's technical departments, government agencies, and developer groups respect Ethereum's technology. Your foundation should not stay away from China. The legal team you set up in Europe does not understand China at all, but it is making random regulations here, which will only make you go further and further astray. This is the content of my private communication with Vitalik.

Behind the industrial revolution, there is always a financial revolution

Now let's look at it from a larger perspective: the fourth industrial revolution, a supporting financial revolution is happening.

The first industrial revolution: led by banks, credit and bonds were the main axis of financing, and there was no capital market.

The second industrial revolution: led by the US capital market, investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc. rose to support the wave of electrification.

Third Industrial Revolution: In the 1960s, venture capital (VC) was born and Silicon Valley rose. As a Nobel Prize winner in economics said: "Behind every industrial revolution, there is a financial revolution."

Today,the fourth industrial revolutionIf 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 discussed the relationship between Web3 and AI with four top AI experts: Harry Shum, Kai-Fu Lee, Ming Zhou, and the Dean of the School of Artificial Intelligence at the Hong Kong Polytechnic University. Without exception, they all believe that Web3 and AI are two sides of the same coin and will eventually come together. In the United States, there are also two typical representatives: 1) Sam Altman: He leads Worldcoin, which has 10 million users worldwide and issues three coins every quarter. Even if each coin is less than one dollar, it is a huge expense. He represents the path of "AI+Crypto+Software". 2) Elon Musk: He supports Dogecoin and promotes autonomous driving and Optimus Prime robots, representing the direction of "AI+Hardware+Crypto".

These two directions are "AI on the left hand and Crypto on the right hand". This is not accidental, but an inevitable development of history. Even President Trumphas responded. He originally planned to set up 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 consultants the thinking behind this decision: AI and Crypto should not be divided and ruled, but should be linked and coordinated.

The financial revolution in the digital age is a revolution based on distributed ledgers and crypto capital. If you don't admit this, it will be difficult to keep up with the United States in the digital age. Why? Because blockchain is a new accounting system, payment and settlement system, and global ledger system. The digital world has no borders. It transcends space, time, organization, and borders. It requires a new registration, accounting, and settlement system. Traditional finance cannot meet this demand.

There have been only three major changes in the accounting methods of human society:

1) Single-entry accounting in ancient times

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

3) The distributed accounting system created by Bitcoin in 2009

This third accounting revolution has led us from bank accounts to the era of encrypted accounts. Why are small commodity merchants in Yiwu today willing to accept USDT payments? Because they do not need bank accounts, as long as they can complete payments with encrypted accounts. The total settlement amount of US dollar stablecoin in 2023 is 16 trillion US dollars, which has exceeded the sum of VISA and Mastercard. Banks will certainly be nervous, and governments will certainly pay attention. Therefore, today, CEOs and chairmen of major banks around the world have admitted that blockchain is a revolutionary system, which represents a leap in efficiency. I remember that in 2012, I argued with famous bankers at a conference on "whether blockchain can change finance." They said: "The essence of finance will not change." I was right - 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. In the early days of China, there were ticket houses and silver shops, and even earlier, there were escort agencies delivering silver. They can all change, so why can't banks?

Now you see, CeFi(centralized finance) is a traditional system, DeFi(decentralized finance) is a new system. When I talked about DeFi before, banks thought it was risky. But I asked them, "From the perspective of lending behavior, is the risk higher for banks or DeFi?" The capital adequacy ratio of banks is only 12%, which is equivalent to 7 to 8 times leverage. Relying on high leverage to maintain profits, once the model is wrong, such as the subprime mortgage crisis in 2008, the entire system collapses instantly. In contrast, the risks of DeFi are transparent, quantifiable, and traceable on the chain.

What is DeFi? DeFi (decentralized finance) does not lend by adding leverage, but realizes profits by improving the turnover efficiency of funds. For example, if you pledge a bitcoin worth $100,000 to the DeFi protocol, you can borrow up to $50,000 at the current mortgage rate of about 50%. In other words, DeFi is an over-collateralized loan, not a high leverage.

The most typical representative of the most efficient capital turnover in DeFi is the "Flash Loan", which is characterized by the completion of lending and repayment within one block, and the whole process only takes a few seconds. Although not all scenarios are suitable for flash loans, this demonstrates the efficient turnover ability of DeFi. Overall, DeFi's annual capital turnover rate is 10 times that of traditional banks, and its income comes from the accumulation of high-frequency small profits rather than through leverage. This is a more advanced financial system with strong vitality. At present, this "new financial infrastructure" has been built more than half, and it is a critical stage for accelerating the implementation of applications.

Application and impact of new financial infrastructure

With the popularization of this infrastructure, payment applications such as PayFi have been born. In 2024, the total amount of payments and clearing based on stablecoins reached 16.16 trillion US dollars, completely bypassing the traditional banking system and SWIFT network. In this regard, China is one of the biggest beneficiaries. In our cross-border trade, more and more payment settlements have turned to this new system, helping commodity sales go global.

Financial infrastructure refers to a set of institutional arrangements, including laws, accounting standards, etc., which aims to maintain financial stability and serve the public interest. Its technical level involves hardware and system security. "Financial market infrastructure" is its subset, mainly including the three major links of payment, clearing and settlementof funds.

Payment:If you swipe a bank card, first verify whether the account has a balance.

Clearing:If there is a balance, the amount to be paid is frozen.

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

A security incident on Ethereum in 2016 was caused by the failure of the smart contract to properly handle the clearing process, resulting in users repeatedly withdrawing assets and causing a loss of about 60 million US dollars. This incident highlights the importance of the clearing mechanism. China's foreign exchange trading center, clearing house, settlement center and other institutions are representatives of traditional financial market infrastructure. They guarantee the payment and settlement of different types of transactions.

Compared with the traditional financial system, the new financial infrastructure has undergone major changes in technical architecture, participants and settlement units. Its core is based on blockchain, using Bitcoin, ETH and stablecoins as transaction media, completely removing intermediaries, and realizing trustless and efficient peer-to-peer transactions.

In the old system, it may take days or even weeks to send money from Shanghai to the United States; but with blockchain stablecoins, it can be transferred in seconds. For example, the author recently sent money from Hong Kong to Shanghai, but it was not confirmed until a month later that the money failed. If stablecoins were used, it might be completed in ten seconds.

With such a gap in efficiency and cost, isn't it worth it for us to rethink the direction of change in the financial system? Although the decentralized blockchain system bypasses SWIFT, the US government still chooses to support the development of US dollar stablecoins. Trump has explicitly asked Congress to pass legislation related to US dollar stablecoins by August 2025. The bottom line of the United States is: you can bypass SWIFT, but don't bypass the US dollar. If this new system bypasses even the US dollar, the United States will completely lose its global financial dominance.

Trump's presidential adviser once said that the thing the US government most wants to promote at present is not the strategic reserve of Bitcoin, although the latter is equally important. The priority is to promote the legislation of the US dollar stablecoin. The United States must ensure that the US dollar remains the main payment and settlement tool in the new generation of financial infrastructure. If the US dollar loses this status, the United States will face fundamental risks.

Looking back at history, in order to make the world accept the US dollar, the United States linked the US dollar to gold through the Bretton Woods system after World War II, and other countries' currencies were linked to the US dollar, thus establishing the global currency status of the US dollar. With the collapse of the system, the United States promoted the formation of the European dollar market and the "petrodollar" system, unified the commodity settlement currency into the US dollar, and created a global application scenario for the US dollar. Today, the US dollar is entering the third stage of evolution: tokenization. The US government is trying to ensure that the "tokenized dollar" occupies a core position in the future global financial infrastructure, which is far more significant to national interests than Bitcoin reserves.

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

Cryptocurrencies can be divided into two categories: one is CBDC (Central Bank Digital Currency) promoted by the national central bank, which belongs to M0 (base currency); the other is market-led stablecoins, which belong to M2 (broad money), which is the currency created by institutions after credit expansion based on the central bank's base currency. The bank deposits, wealth management products, money funds, etc. that we use daily are all in the M2 category and are bank liabilities, not central bank assets. For example, in China, banks only guarantee deposits of less than 500,000 yuan; in the United States, the limit is 500,000 US dollars. If the bank goes bankrupt, the deposits exceeding the limit will not be guaranteed.

In the financial system, M0, M1, and M2 each have different functions and are not replaceable. It is difficult for central bank digital currency to replace M2-level currency and is not suitable for all consumption scenarios. The United States is well aware of this and has made it clear that it will not issue CBDC. During his campaign, Trump promised that he would not allow the Federal Reserve to issue central bank digital currency during his term. The Federal Reserve has also publicly stated that it does not consider issuing such currency.

The reason is clear: central bank digital currency may lead to the country's full control over payment data and undermine user privacy. For example, if the US dollar digital currency is used for payments in Hong Kong, Singapore or Japan, the Federal Reserve may obtain transaction data, which is difficult to accept internationally. It will be difficult to implement unless it is implemented by coercive means. The United States is aware of its limitations, so it has turned to support stablecoins issued by the market and anchored to the US dollar.

RWA (real world asset) tokenization also belongs to the M2 category, such as the US dollar money fund token issued in Hong Kong. Its essence is the credit creation based on sovereign currency, issued by banks and other financial institutions, and still belongs to bank liabilities.

The core of the new generation of payment and settlement systems is not only the innovation of currency form, but also the evolution of asset issuance mode. From the "gold dollar" to the "petrodollar" and then to the "tokenized dollar" today, each round of evolution has strengthened the global influence of the US dollar.

It is worth mentioning that China once controlled 70% of the global Bitcoin mining share, which means that Bitcoin was once a "Made in China" currency. However, due to regulatory reasons, China took the initiative to give up this strategic resource and gave way to the United States. From an industry perspective, it may not be a bad thing, but from the perspective of national interests, it is a major loss.

The development of AI also provides a clear demand for the new financial system. If tens of billions of devices in the world can create GDP without human participation in the future, the payment and settlement between them must rely on programmable currency. The traditional banking system is difficult to support automatic machine-to-machine payment, while the system based on blockchain and smart contracts has this capability, and there is no better solution at present. On this basis, a new asset issuance system is also being constructed. The new generation of industrial revolution calls for a matching financial revolution, that is, a comprehensive upgrade of the payment and settlement system and asset tokenization. The current five main types of token assets include:

Payment tokens:Such as USDT and USDC, anchored to legal currency, used for daily payment and settlement. In the future, stablecoins such as Hong Kong dollar, Japanese yen, and euro will also appear.

Reserve Tokens:Bitcoin, for example, is transforming from a risky asset to a strategic reserve asset. Several states in the United States have enacted laws to include Bitcoin in the state government's asset reserves, evolving from household assets and corporate cash management to a national strategic reserve.

The book "The Pyramid of Money" once predicted that Bitcoin would become a reserve asset for central banks in various countries in the future. The reason is simple: for the digital native generation under the age of 30, Bitcoin's appeal has surpassed that of gold. This book tells the central bank governors and finance ministers who are now in their 70s and 80s that you will eventually exit the stage of history, and those young people who have been exposed to the digital world since childhood will eventually take over your position, and they are more likely to include Bitcoin in the national reserve. The trend is irreversible, and personal will cannot resist 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 people". It was originally thought that only young people would promote change, but it turned out that an old man took the lead in practice.

At present, the trend of Bitcoin as a reserve asset has begun to emerge. In the recent market fluctuations, most crypto assets have fallen sharply, but Bitcoin has fallen relatively less. The reason is that most cryptocurrencies are still regarded as "risk assets", while Bitcoin is gradually transforming from risk assets to "credit assets".

The core role of credit assets is to hedge against the excessive issuance of legal currency. For example, gold has long been regarded as a means of storing value worldwide, and its price has risen against the trend in recent years. US stocks and US bonds have fallen, while gold and Bitcoin have performed strongly, indicating that Bitcoin is gradually possessing the characteristics of a credit asset. It is expected that within the next year, Bitcoin will complete the comprehensive transformation from a risky asset to a credit asset.

Currently, the market value of Bitcoin is less than 2 trillion US dollars, while gold is more than 20 trillion US dollars. If Bitcoin eventually reaches the market value level of gold, whether it is five years or ten years, it will be a huge opportunity for investors.

As for Ethereum (ETH), it is still a functional token. Its value depends on the actual application in its ecosystem. Only when the application explodes on a large scale can ETH have significant room for growth. Unlike Bitcoin, which is expected to become "digital gold", ETH cannot become a credit asset, but as a functional asset, its prospects are still broad.

For the growth path of functional assets, you can refer to the classic book "Crossing the Chasm" written by Silicon Valley 30 years ago. The book points out that the user growth path of all high-tech products can be divided into five stages:

Technology geek stage: Products are created by technology geeks. Take Satoshi Nakamoto and Vitalik as examples. Bitcoin and Ethereum were originally created by them from scratch.

Technology enthusiast stage:Early users do not pursue immediate practical applications, but only love new technologies. For example, in 2015, when Vitalik came to Shanghai, Wanxiang Blockchain still invested $500,000 in Ethereum even though the mainnet had not yet been launched.

Pragmatist stage:Mass users begin to pay attention to whether the technology can really bring value and solve practical problems. This is the "chasm" period that determines the life and death of the product, and 80% of projects will fail at this stage.

Latecomers stage:They follow up and use the technology only after seeing others benefit from it, and they account for the majority of the user group. The threshold for this stage is relatively low, but the prerequisite is that you must cross the "pragmatist chasm".

Rejecter stage:"Traditionalists" who always reject new technologies. They prefer a stable and nostalgic lifestyle, do not accept new things, and do not need to be forced to transform.

Projects that can acquire users and realize them in the third and fourth stages have the foundation for sustainable development. In addition, there are two types of assets worth paying attention to:

Securities Token：For example, RWA (real world asset tokenization) is essentially the digitization of securities investment tools and must comply with securities regulatory rules. Ignoring supervision will eventually face legal risks.

Meme Coin：For example, the Meme Coin launched by Trump is aimed at speculators for entertainment purposes, similar to Las Vegas casinos. Although it is mainly for "fun", there are also real users and market demand, and it belongs to an independent asset category.

In summary, in the new generation of asset systems, tokens are mainly divided into five categories: reserve type, functional type, credit type, securities type, and entertainment type. Finding out which category your own project belongs to will help to more accurately judge its development path and regulatory requirements.

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

The essence of finance is the cross-period mismatch of time and space value. For example, a startup company borrows money from a bank due to expansion needs, and the bank lends money based on its growth potential in the next two years. This is actually using current funds to realize future value in advance, which is a typical time value mismatch. Being able to achieve this value transfer in a more efficient and low-cost way is the core mission of "good finance", and other superficial behaviors are secondary.

DeFi (decentralized finance) and CeFi (centralized finance) are not opposites, they can be used in combination to jointly optimize the risk-return structure. The new generation of asset trading markets has global and all-weather characteristics - assets issued based on public chains are naturally globally accessible, and anyone can participate in transactions at any time and place.

Traditional exchanges such as Nasdaq and NYSE have also begun to try to extend trading hours, from the original 5 days a week and 5 hours a day, to a "5×23 hours" near-all-weather trading system. In fact, new technologies can already support "7×24 hours" trading, which can completely cover global time zones and break the previous "anti-human" trading time settings. Now that the technology is available, embracing change is a natural choice.

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

Blockchain is not only a financial infrastructure, but also a new business governance tool. The data on the chain has the characteristics of real-time disclosure (once per block), non-tamperability, traceability and auditability, so that enterprises can achieve efficient and transparent information disclosure without relying on the traditional semi-annual and annual report systems. Compared with the traditional accounting system, the blockchain-based information disclosure mechanism is more efficient and credible. New organizational forms such as DAO (decentralized autonomous organization) are based on transparent data on the chain, which is a new governance model that allows strangers around the world to collaborate and complete complex tasks.

The AI ​​era is an era of large-scale collaboration among strangers around the world. Traditional methods such as company contracts and bank transfers can no longer support the demand for efficient 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 tokenization process of assets, which is to convert off-chain assets into standardized, share-based, and securitized forms on the chain. As early as ten years ago, stablecoins such as USDT and USDC have achieved the tokenization of legal tender, which can be regarded as the starting point of RWA.

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

The first phase (2015): Tokenization of legal tender represented by USDT. Since sovereign currencies have strong credit endorsement and are less dependent on oracles, the market can trust them as long as the custodian bank issues a receipt certificate.

Phase II (2024): Represented by BlackRock's Build, promote the on-chainization of financial assets such as short-term treasury bond funds. Such assets are provided with credit guarantees through licensed financial institutions, securities supervision, custodian banks, and law firm audits.

Phase III (Future): Tokenization of physical assets. This stage is the most difficult, and the core difficulty lies in the authenticity verification and ownership proof of off-chain assets, and the oracle becomes the key bottleneck.

There are currently three main types of oracle solutions:

1) Crypto-native oracles such as Chainlink

: Crypto market prices and data have been put on the chain.

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

3) Financial institution oracle

The on-chain mapping of physical assets still faces huge challenges. There is currently no mature and reliable credit guarantee mechanism, but the continued development of the oracle system in the future is expected to solve this problem.

When discussing RWA (real world assets), if you think that "everything can be RWA", it must be too idealistic. To do RWA, you first need to solve two core problems:

First, how to put it on the chain. That is, how to ensure that the data is authentic, unalterable and traceable. This usually relies on the oracle system, but the oracle itself also faces problems of trust and accuracy.

Second, compliance issues. Some financial products need to be approved by securities regulators before tokenization. For example, the tokenization of money market funds must be approved by the Securities and Futures Commission before it can be implemented in Hong Kong.

In addition, tokenization cannot be just for tokenization. For ordinary investors, the returns from buying a US dollar money market fund are no different from those from buying its tokenized version. Instead, it increases the complexity of operations such as wallet management and private key security. In reality, money market funds can be bought everywhere, and there is no threshold at all.

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

A typical scenario is to combine DeFi. For example, the annualized rate of return of the current US dollar money fund is between 4.5% and 4.9%. If you continue to enjoy this return after tokenization, and you can also get an additional return of about 5% through DeFi lending, this is a way of adding value "without increasing risk". This kind of income comes from the improvement of capital efficiency, not leverage, and is an innovation worthy of recognition. We are currently communicating with regulators, but have not yet obtained approval, and cannot officially use tokenized money funds for DeFi lending.

Take another example of gold RWA: People often think that gold is naturally suitable for ETFs or RWAs, but this depends on the specific implementation entity. If a gold miner or smelter claims that it produces gold every day and wants to tokenize it, it is not feasible. The outside world cannot verify the ownership, purity or security of gold. However, if a gold ETF is issued by a licensed financial institution, approved by securities regulators, and custodial by a bank, such as a Hong Kong issuer storing gold in the vault of HSBC Bank, with HSBC as the custodian, then this gold ETF is converted into RWA Token, which is credible. In other words, the market trusts HSBC Bank, not the mine owner.

In general, not all assets are suitable for direct RWA. Usually it is necessary tofirst convert it into a compliant financial product, and then tokenize. This is the reality that the industry must face at this stage.The combination of AGI (general artificial intelligence) and blockchain

When discussing the combination of AGI (general artificial intelligence) and blockchain, I would like to share a small episode first. Three weeks ago, I met with Shen Xiangyang in Hong Kong. He also said that AI and encryption are naturally compatible fields, and we are jointly exploring ways to combine the two.

In the past year, I have been looking for truly valuable AI+Crypto projects. It is not about building a chain, issuing a coin, and putting an AI label on it, but about solving practical problems and doing real engineering. For example, distributed reasoning networkis the direction of our long-term investment. We hope to build a system that can support 200, 2,000, or even 20,000 devices to complete AI reasoning tasks together. This is not a slogan, but a deep engineering at the hardware and network levels. At present, our system is expected to launch TGE (Token Generation Event) 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 with landing capabilities. I know that many entrepreneurs in the Wanwu Creation Camp S5 are also making similar attempts. Welcome everyone to discuss.

In fact, as early as February last year, I found the CSDN team and hoped that they could mobilize developers to run large models in a distributed manner. This project has been promoted for more than a year, because everyone is working very seriously and down-to-earth, we think it is worth it.

We are also working with Shen Xiangyang's team, the Hong Kong University of Science and Technology, and the Hong Kong Polytechnic University. For example, they have compressed the AI ​​model to run on mobile phones. We are discussing: If it is not possible to pre-install the model, can we cooperate with mobile phone distribution channels to pre-install the model during the sales process and activate it after user authorization. According to our test, 90% of users will not uninstall it actively, but are willing to keep it.

AndThis decentralized edge computing node networkin the future, users can get token rewards for sharing computing power, thereby activating the entire ecosystem. This is not an easy task, but because it is difficult, it means there is an opportunity. Truly valuable innovation is never something that is "done everywhere".

Regarding AGI, OpenAI has proposed five stages:Chatter, Reasoner, Intelligent Agent, Innovator, 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 - the agent (Agent) is in the process of advancement. Musk's autonomous driving system, humanoid robots, etc., all belong to 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 full application of home scenes, it may take another 5 years or even longer. The two more complex stages are InnovatorsandOrganizers. Innovators create from 0 to 1, while organizers need to standardize, systematize and scale the innovation results, which is more difficult. Once all five stages are completed, AGI will be realized. Optimistic estimates show that AGI will arrive in 2027, and conservative estimates show that it will arrive in 2030.

After AGI, we will enter the era of ASI (super artificial intelligence). The key issue at this stage is: How to distribute the huge social wealth created by AI?

This leads to an old but important proposition: National Basic Income (UBI) . Economists have long proposed the UBI model to ensure that humans can still get a reasonable distribution in the AI ​​era. I saw a news report that someone asked a tech tycoon what the final destination of AGI is, and he answered: socialism. In a sense, it is right - AI does not consume or waste, and the wealth it creates needs to be redistributed. The concept of UBI is not to distribute according to work, but to distribute according to "people".

The next stage is UHI (high national income), matching the exponentially growing wealth created by ASI. In the future, perhaps you plan to travel to the South Pole, the North Pole, or space, and the system in the AI ​​era may be able to support you. This is no longer a fantasy.

Do we still remember Andrew Yang, who ran for the US presidency in 2020? His core political platform is UBI, where every American receives $2,000 per month. He spoke too early about the inevitable trend of the AI ​​era. Why did OpenAI's Sam Altman want to make Worldcoin? It is to build a global identity authentication system (World ID) and a supranational currency system to lay the foundation for future UBI. Because wealth in the AGI era no longer belongs to a certain country, it must be fairly distributed through supranational currencies and transnational platforms.

Musk is also exploring similar things. The identity authentication and economic behavior of AI machines must be based on blockchain. Otherwise, we cannot verify the interactive relationship between devices. Payment and settlement between machines naturally require smart contracts, and therefore must be based on programmable currency and decentralized ledgers.

Therefore,the combination of AGI and blockchain will be reflected in two levels:

1) Decentralized collaborative network at the computing power and task level

, such as distributed reasoning;

2) Global identity and settlement system at the wealth distribution level

This is a question that must be considered in the future -When the means of production of human society are completely taken over by intelligent entities, our value system, distribution mechanism, and incentive system must also be reconstructed. Blockchain may be the infrastructure closest to this answer.

Okay, that's all for my sharing today, thank you everyone!