Original title: It is not the appearance that traps you, but your attachment to the appearance that traps you
Original author: Jack Lu, founder of BounceBit
BounceBit has been around for more than half a year since its founding, and it is considered a relatively fast-growing project in the industry. The market has been sluggish recently, and most people are very confused, so I would like to take this opportunity to share some of my thoughts on the project front. Many previous articles analyzed from an economic perspective, directly linked to money. But in fact, analyzing the market from a sociological and psychological perspective is also very interesting. This article will analyze from a very direct perspective, so please forgive me if it offends you.
See the essence of things
In the crypto circle, it is easy for people to be misled or confused. Because they are too close to money, many people will do things that are contrary to their inner hearts. For example, when you invest in a project, you know that the project is unreliable, but because too many people are advocating it, you still invest. Or like a startup team, the team members know that the idea will not work, but because the concept is very popular recently, everyone decides to give it a try. Almost every participant in the industry has had such an experience. When the market is good, people are happy to be led by this confusion, but when the market turns bad, they will complain about this confusion. In fact, seeing the essence of things can help us not be misled. Therefore, it is crucial for every role in the industry to have insight into the essence of things.
Taking the BTC ecosystem as an example, its essence is everyone's demand for the appreciation of BTC as an asset. This demand may be reflected in financial management, mining or arbitrage, and the driving force behind this demand is everyone's expectation for the next bull market and the desire to earn more BTC. The essence of this matter is not to develop an application chain based on the BTC chain. The BTC ecosystem and application are just a kind of "confusion", because if there is no demand for an ecosystem like ETH that is born as an application chain, how can we talk about BTC? When we see the essence of things, we will develop products around BTC CeDeFi, because BTC's interest cannot be separated from CeFi, rather than developing some games, social and other products based on the BTC chain. I think the essence of crypto and blockchain is finance, so when making products and projects, we must hit the theme directly, that is, financial products. Focusing on the theme can make products and entrepreneurial ideas clearer. The so-called SocialFi and GameFi are "confusing behaviors" that do not see the essence clearly. These categories may succeed, but their logical chain is too long and there are too many luck factors. You may ask: If the essence is finance, why didn't this round of DeFi take off? We will talk about it later.
The clash of Asian and European cultures
There are a lot of discussions on Twitter about Asian and American projects, which brings me to the second point I want to discuss: cultural conflict. Since the Crypto community is so close to money, we tend to look at the differences between Asian and European and American cultures from an economic perspective. I think the key lies in the mentality of "paying for dreams". Most European and American projects seem ridiculous and unrealistic. In Asia, what can be done in a week may take hundreds of millions of dollars to develop in European and American projects. As a result, people complain about European and American projects endlessly on Twitter, but after the projects are launched, they will still buy them obediently.
From a cultural perspective, European and American culture advocates heroism. Most Hollywood movies are about heroes defeating all enemies and ultimately winning. Therefore, since childhood, Europeans and Americans have been thinking "I am a hero (such as Spider-Man, Iron Man), and I believe I can create and realize my dreams." This cultural difference is reflected in the crypto circle as a series of high-end projects, where the founders are very social, eloquent, confident, and feel that what they are doing is right. We can see from Twitter what the founders of those big projects are posting every day. Because they have a dream to change the world, European and American projects are almost all infrastructure-related, because a DApp is too small a story for these heroes. This phenomenon has made a lot of technology and innovation, such as Elon Musk. However, in crypto, many heroes have failed because they did not see the essence of things.
In contrast, Asian culture is relatively conservative. Our culture emphasizes "less talk and more action". Therefore, Asian projects are usually more introverted, and the applications they develop are directly usable, but without any heroic color. Take the development path of Bitcoin as an example. From a cultural perspective, Asians paved the way (mining) first, and then Europeans and Americans were responsible for promotion and storytelling. Bitcoin is the only product that perfectly combines Asian and European and American cultures. Other projects, including Ethereum, can only choose between Europe and America or Asia.
The Misconception of Upward Socialization
When you are too close to money and lack of substance, social networking becomes particularly important. This circle attaches great importance to social networking, which is why many people build their personalities on Twitter and conferences. Why do we still go to so many conferences in this circle, and why are there always familiar faces at each conference? Because everyone is afraid in their hearts, afraid of absence. When everyone is doing something and you are not doing it, you will feel uneasy in your heart. Therefore, the project party invests a lot in social networking, organizing activities, etc. Everyone is used to upward social networking: knowing big guys, whales, miners, KOLs, so they will seize every opportunity to get to know these people.
But the problem is that the so-called crypto upper class was not formed after decades of competition and struggle. Many people climbed to the upper class by luck. Therefore, after many people reach a certain level of upward socialization, they will be slapped in the face by reality and start to think about life. Because the real upper class is not as "upper" as they imagined. Recently, the problem of upward socialization has been fully exposed: everyone is against VC. In fact, VC is a sign of upward socialization: project parties need to find VC, and retail investors will judge the quality of a project based on VC's investment. But because VC-invested projects are all falling this year, everyone intuitively feels the emptiness at the top of the crypto food chain. Another phenomenon is pushing up TVL: TVL is a very "upward social" thing because it is linked to money. A project with a high TVL makes everyone feel that it is at the top of the industry, but it will also be hit quickly and pay the price.
I think these recent phenomena are positive, because everyone has discovered that "upward social interaction" is not as magical and beneficial as imagined. On the contrary, sometimes a reminder from a group member or some social interaction in life may bring you more inspiration. For example, many ideas are obtained when chatting with brothers, not at the conference dinner. The reminder from a group member may be more useful than a VC's research report. A project that never attends a conference may be the best.
CeDeFi’s Surrender Experiment
CeDeFi is the track we are working on at BounceBit. Today we will not talk about CeDeFi products, but only analyze this track from the perspective of society, economy and psychology. First of all, CeFi and DeFi have existed for many years, and everyone is clear about the advantages and disadvantages of both. DeFi projects dominated by Europe and the United States shined in the last cycle, dreaming of realizing the financial decentralization of all mankind (this is the heroic phenomenon I talked about before). However, in the past few years, we have clearly realized that pure DeFi is impossible. CEX in the crypto circle is mainly controlled by Asians, so everything from products to execution is done well, and the competition is fierce. CEX and CeFi dominated by Asia began to be sucked by DeFi in the last cycle and faced regulatory pressure.
From a sociological perspective, CeDeFi is a combination of European, American and Asian products. An obvious example is that the last round of DeFi almost ignored the power of Asian CeFi, and CEX had to beg to be listed. This round of Ethena, a purely European and American team, needs to cooperate deeply with Bybit. Therefore, CeDeFi is a good phenomenon. European and American teams should be less heroic, and Asian teams should be more innovative.
Another angle is "where is the money in the industry". I think the biggest change in this round is the location of funds: on-chain funds are not active, and DeFi projects are sluggish. When writing this article, ETH's Gas is already below 1 Gwei. And the reserve proofs of CEXs, led by Binance, continue to rise, with the latest reserve reaching 100 billion US dollars. Using the logic mentioned above: the essence of crypto is finance, and the essence of finance is to make money with funds. When most of the funds are in CEX, entrepreneurs need to invent and design products that can utilize this part of the funds, which is the essence of CeDeFi. Of course, Bouncebit and Ethena have only done a small part of CeDeFi, and there is still a lot to do in the entire CeDeFi track. Back to Binance, Binance's reserve proof is 100 billion, which I think is a good size. CeDeFi entrepreneurs should find a way to use CeDeFi to "roll up" this 100 billion funds. Only when the funds flow, the bull market will come.
