Compiled by: Jinse Finance
The crypto industry is still full of challenges and opportunities in 2024. This year, we once again focus on Singapore’s Token 2049 and select 10 “small essays” with profound insights and sharp opinions to find potential investment opportunities.
Theo (Founder of 3rd Street Capital): AI+encryption becomes a new trend, and a financing winter is coming
1. Most investors are looking for high-quality projects that combine artificial intelligence with cryptocurrency.
2. There are a large number of teams imitating projects such as "pump.fun" in the market, which lack innovation.
3. The community has higher requirements for the practicality of the project and is less interested in pure Meme projects.
4. When considering the MemeFi project, the team will give priority to the impact on the brand image.
5. The number of high-quality investment projects in the market is limited, and homogeneous competition is severe.
6. Participants evaluate the professionalism and attitude of the project through the quality of the surrounding products.
7. The quality of activities organized by many teams is not high, and some events are even empty.
8. Social activities during meetings have a great impact on the project, and some teams are left with a negative impression due to poor performance of the activities.
9. The valuation of projects at the infrastructure layer is higher, while the valuation of projects at the ecosystem layer is relatively low.
10 The current financing market is sluggish, team financing is difficult, and venture capital institutions are less willing to invest in cryptocurrency projects.
Generative Ventures: The value of industry conferences is exaggerated
As investors, what do we usually do, especially during these events:
1) Participate in the demodays of Portfolio and its ecosystem, select projects to support, and indeed see some interesting ideas in the early stages. At the same time, I also have offline discussions with Portfolio about some sensitive key transactions and listings;
2) Go to some accelerators where founders gather to talk to them about our industry observations, mainly about fundamentals. This also inspired me to do more research and explore the direction of combining tokenomics with fundamentals.
3) Meet with important LPs. If there is business cooperation, focus on matching projects. In fact, many traditional financial institutions are entering or considering entering, which I think is the real alpha in this cycle;
4) Communicate with peers with good performance, learn how they each get into good projects, understand the differences and advantages and disadvantages of everyone's working methods, mainly to review our blindness;
5) Go to a good friend’s panel to boost your popularity and meet old friends, and feel the difference between high-quality activities and filler activities. It is also a point to see whether the project owner can market;
6) Understand the studio behind the project, connect to the required portfolio, accelerate the progress and speed of the build, and make clearer decisions on related investments and budgets;
7) Attend some private dinners and get to know the leaders in the industry. Since we are a fund that came from web2, there are indeed many people we need to get to know.
8) Meet with upstream and downstream companies in the industry, such as exchanges and market makers, to discuss business matters on a public-to-public basis and ensure that the projects we invest in are seen;
9) Catch up with old friends in Singapore and find that many of them have also entered the crypto industry. Everyone is in a good mental state.
10) I had in-depth conversations with four or five founders, most of whom I knew before but had never met offline. The amount of information I learned from face-to-face conversations was still huge;
In principle, when participating in any activities, do not force yourself to chat, and do not waste energy on ineffective socializing; we have seen KTVs with big guys, nightclubs with erotica, and high-stakes card games in the web2 investment era, and they are indeed not our style; I still like to spend a few hours with product and technology veterans in the most comfortable and relaxed environment to discuss major issues, which is the most enjoyable; my colleagues come back and review with me, and many projects with good fundamentals, good development and great opportunities are actually seen by our first or second degree contacts, but we just did not choose to invest at that time, so we did not rely on these activities to source, and more effort is put into daily life. Just like Didi, ByteDance, Kuaishou and Ele.me were all projects that investors had looked at over and over again, and it was not so easy to miss them at the sourcing level.
The oversupply of hundreds of events is as much as the oversupply of junk assets on the market. Everyone has entered a copy-and-paste template mode when organizing events, so the marginal utility has long been reduced to near 0. On the contrary, I think there are a few private events that I think are quite practical: (1) Breakfast gatherings before morning events near MBS, where everyone can chat while eating; (2) Fundraising celebrations for startups, where new and old investors get together for a meal; (3) Centralized demo days for public chain ecosystem projects, where investors from all over the world are invited to come and look at the projects together. This is meaningful for the project parties to come all the way to Singapore.
Meng Yan: Blockchain payment has reached a stage where it can be implemented on a large scale
1. Blockchain payment has been talked about for so many years, and it has really reached the stage where it can be implemented on a large scale . The only obstacle is privacy. Technically speaking, local ZKP generation will clear this last obstacle, making the Internet, with the support of blockchain and ZK technology, the most advanced value transmission network that far exceeds traditional banking financial networks and centralized technology solutions such as WeChat Alipay. When I tell people this truth in the real world, many people still come to refute, or want to defend the bank network, or want to defend WeChat Alipay. I have a pleasing personality in my bones. I don’t want to be too arrogant in front of people, but to be honest, it’s a waste of time for me to explain the advancement of blockchain payment. It’s something that shouldn’t be compared together. My current view is that blockchain payment has passed the stage where it needs to tell stories to gather consensus. It can be a little domineering. If you don’t understand, forget it. The development of technology will convince you within a few years.
2. In terms of payment, supporting supervision is now the key. Anti-money laundering, anti-terrorist financing, and anti-corruption are indeed what a payment product should support. This is not surrender, nor is it a compromise made out of interests. It should be like this.
3. It is said that SWIFT is building its own chain. Those who are still defending traditional payment technology should learn from their mistakes.
4. Social Pay is both a payment and a Web3 Social, which may be a key breakthrough point to kill two birds with one stone. I have already analyzed this in an article I wrote not long ago about the Web3 track.
5. A breakthrough inspiration: the core issue of token economy may not be how to design a perfect economic model, but how to develop an AI to measure user contributions and distribute incentives.
6. Solana has launched a religious reform in the blockchain field , which is equivalent to a thought liberation movement in a sense. But this does not mean that application innovation can only happen on Solana, and Solana is not necessarily the final winner in the Web3 application innovation wave.
w3tester: The crypto industry is on the eve of mass adoption
1. ZK and privacy, the biggest gain from this conference
At the Network State conference, I met Zooko Wilcox, the founder of Zcash. He is a veteran cypherpunk. His understanding and promotion of privacy made the whole audience cheer. This shows the public's support for privacy. Currently, stablecoin payment is the general trend, but payment privacy is a stumbling block. It can be foreseen that after stablecoin payment is rolled out, privacy payment solutions will not be an option, but a rigid demand. The demand parties that have been contacted include e-commerce platforms, stablecoin issuers, banks, etc. The product experience here is the key point. It is definitely not okay to let users wait foolishly for a few minutes. One or two seconds of local ZKP generation is the killer in product experience.
2. Offline is king
Most of the current stablecoin payment products only focus on online payments, but in fact, more than 70% of the payment industry is offline, and few project parties can currently access it. In this field, Visa and Master's U cards are just appetizers, and the POS network that natively supports crypto is the blue ocean feast.
3. SWIFT is dead. Long live SWIFT
Recently, I have come into contact with commercial banks, central banks, and international banking organizations, and the use of blockchain technology is increasing rapidly. The market opportunities in this area are very large, and at the same time, high requirements are placed on the qualifications and experience of the project parties. A little common sense is that the SWIFT protocol is the foundation of the banking system and it is basically impossible to shake it. One possible direction is to be compatible with the SWIFT protocol, but replace the SWIFT message service. From this perspective, there is hope to share the SWIFT cake.
4. SocialFi’s new ideas
During the conference, I learned about the latest developments of several leading SocialFi projects. I felt that the possibility of building a new Web3 social garden and expecting users to migrate over was too small. In this regard, Solana Blink and Ton Wallet have opened up a good idea: meet users where they are. Is it possible to put crypto wallets on Twitter, Instagram, TikTok, Discord, etc. without the need for platform permission... Let the crypto infrastructure flourish on existing platforms that already have hundreds of millions of users? There is no doubt that hard-core original innovation in technology is needed here, but once it is done, it will be extremely powerful. The good news is that the dawn has already appeared.
5. New track
Social payment. Specifically, use AI big models, combined with the existing massive social network data, formulate payment/value distribution rules, and use new social payment infrastructure to complete the distribution of tokens/NFTs. Simply put, it is to superimpose a value distribution layer on the basis of Google ads to achieve AI-powered digital value distribution on social network.
6. zk-DePIN
DePIN will continue to exist and will continue to grow. The local ZK computing in the DePIN device can solve many rigid needs in terms of data privacy. This may not be noticeable to ordinary users, but it will become a decisive factor in whether a project can be established and whether it can be expanded. After all, the supervision and laws on privacy data protection and data transfer abroad are no joke.
7. Solana Vibe
Break Point Conference makes people feel that there are experts in communication, marketing, and community behind the conference. The overall atmosphere, setting, agenda, booths, and even DJ and music arrangements of the venue are all great. In terms of attracting the attention of young people, Solana is worthy of reference for other public chains.
Jinse Finance Yueer: There is a kind of vengeful madness and hysterical powerlessness
1. There are more than 300 booths for sponsors at the main venue of Token2049, and more than 700 peripheral activities, which is large in scale and intensive in activities.
2. Explain why it is called "retaliatory madness and hysterical powerlessness"
Everyone expects this year to be a bull market, but the bull market has not been fully realized. It is now in an awkward stage of being neither up nor down. It is like everyone is expecting a hilarious joke, but the performer does not perform well. At this time, everyone's eyes are on me, so I can only bite the bullet and laugh awkwardly to show my support;
Every year I think it can’t get any crazier, but the next year always brings me new shocks, and this craziness doesn’t even distinguish between bull and bear markets;
The main venue is a hodgepodge. No matter what type of exhibition, no matter where they come from or where they go, all the booths are piled together. Every industry has several benchmark summits, but when I attended other industry summits, I have never seen such a chaotic scene. Are the organizers really considering promoting the development of the industry through this summit?
I talked to many booths, and the exhibitors could not explain the purpose of participating in this exhibition. If the decision makers did not synchronize this matter with the executives, how good results could be expected? Or perhaps most people just thought that they had to occupy a position in this top summit in the industry, even if they did nothing.
I admit that I attended too many conferences this year, and my cognition has changed from quantitative change to qualitative change. I have become a bit harsh in my view of Token2049.
3. Current status of the track
NFT is dying, GameFi is struggling, DeFi is as stable as an old dog, AI is striving to be the first, exchanges are big and powerful, public chains are trying to make trouble, Depin is not interested... In a word, if the traffic from outside the circle cannot come in, the ecological construction is useless. The Federal Reserve has cut interest rates, let us look forward to the arrival of new leeks.
K-line guru: Everyone knows that fresh blood is needed, but no one is willing to actually invest money to do this
1. Lack of investment breakthrough actions
Although everyone knows that Web3 needs fresh blood, most are still in a prisoner's dilemma, waiting for others to invest resources. I hope more people can follow the example of micro-film investors and contribute to Web3 breaking the circle.
2. Separation of Chinese and Western Circles
The activities of the Chinese circle are independent of those of the European and American circles. Some participants who have just joined the circle cannot even find Chinese activities, which seems a bit embarrassing.
3. The importance of niche and labeling
In the circle, you must choose a clear representative label. If you do everything, unless you are a real boss, you may give people an unprofessional impression. People in the circle appear to be more mature and emotionally stable than their peers outside the circle, and those born after 2000 are particularly outstanding. However, many people have hair loss problems, so it is recommended that everyone pay attention to health, such as calcium supplements and rubbing the scalp with ginger. The relationship in the crypto is simple and deep, and the feelings cultivated through common business and cooperation are stronger than expected. The cost of trust between people is high, and the priority of meeting is reflected.
Jewish Director Zhao: Cycles, Dawn and Liquidity Impotence
1. Unprecedented efforts by European and American project parties : The era in which European and American project parties could easily raise funds in previous years has ended. This year, they have held grand side events and personally participated in attracting business, showing unprecedented enthusiasm.
2. Funds in the Asian market are drying up: European and American project owners still believe that there is capital in the Asian market, but the fact is that liquidity in Asia has been exhausted, and the exchange’s contract products and Bitcoin narratives have almost sucked away all liquidity.
3. The participants are generally "calm" : This year's participants, whether they are investors, project parties or retail investors, have already exhausted their funds, resulting in low enthusiasm for participating in the activities. Some even began to become indifferent and no longer have a strong desire to make money.
4. People who make money become "leeks": In the crypto, people who pursue making money have become the targets of being cut, and those who really make money are often those who "want to make money".
5. Solana Breakpoint becomes a highlight : In comparison, Solana's Breakpoint was the focus of this year's Side Event, while Ethereum's activities seemed overshadowed and Layer 2 did not perform well.
6. Aftermath of the cycle: The current market rise is not a new bull market, but the remnant of the 2021-2022 cycle, similar to the scenario in 2019. It may not be far from a new cycle, but it is also close to the risk of a correction.
7. The tragic feeling in the primary market : The primary market is full of helplessness and tragedy of “investing means death, not investing means waiting for death”. This emotion is a dangerous signal.
8. Promising future directions : Future opportunities may appear in the DePIN project, the issuance of CeDeFi RWA stablecoins, and innovations in on-chain transactions and leverage tools.
9. The darkness before dawn : Although the new cycle is not far away, we are still in the most difficult moment. In the future, the combination of Crypto and traditional finance will exceed expectations, and the industry faces huge opportunities.
10. Persevere to the end : Facing the harsh market environment, everyone is the last line of defense of the industry and must hold on because "there is no one behind".
"People who come out of a storm never rely on an umbrella."
Phyrex: Interlinked and mutually restricted, this is the truth behind Token2049
This time, Token2049 has finally come to an end in stages. The reason why it is a stage-by-stage process is that only the "social" part has been completed, and with social networking come even more arduous long-tail tasks.
1. Nature and participants of Token2049:
This time, Token2049 is different from the past. In the past, I was just a spectator, judging everything that happened in the event from a high and mighty perspective. But this time, I became a part of the matrix. If Token2049 is a matrix, then the project side, capital, KOL, exchange, and spectators are all interlocking parts. Many friends may not know that there are almost no "leeks" participating in Token2049. Tickets over a thousand dollars are not for ordinary users. Those who pay for the ticket price are often those unwilling industry insiders. This also means that Token2049 itself is a large social stage, a stage for project side to show capital, exchange, and KOL, but not directly to users.
2. The project's dilemma:
- Requires a large investment in exhibition booths, publicity and hospitality.
- Face tremendous pressure to participate in order to gain funding opportunities, partnership opportunities and user attention.
- Most project parties are just trying to survive rather than pursuing rapid development.
- Top projects have more resources and opportunities, while small projects are often at a disadvantage.
The glamour of the exhibitors is actually a whip on the project owners, while the investors, exchanges and KOLs are the carrots hanging in front of the mule. They look very close and you want to take a bite, but no matter how hard you try, you can only get closer, but there is almost no possibility of taking a bite, because Token2049 is not a place where transactions can be made directly, and further blending is still required in the end. But is it okay without Token2049?
3. Challenges of VC (venture capital) and market makers:
- VCs generally feel enormous pressure, and some even call themselves "real leeks".
- Faced with the pressure of "paper profit", it is difficult to make actual profit.
- Some VCs are forced to consider unconventional means to survive.
- Market makers are in a slightly better situation, but they also face fierce competition.
- Small market makers have difficulty surviving and have to take more risks.
The more you spend, the more you lose, which is a consensus among VCs. The two- and three-year lock-up forces some VCs to think of some crooked ways. It’s not that there are no real VCs doing things. On the contrary, I think several acceleration camps and incubators are doing a good job. This has been proven to be useful in Web2 and will not be wrong in Web3. Therefore, acceleration camps between VCs and project parties have a strong voice, especially acceleration camps backed by leading public chains or ecosystems. They often go smoothly. Therefore, in the future, high-quality acceleration camps will give birth to a batch of projects that can stand out even in the shortage of liquidity.
4. Dilemma of the Exchange:
Some friends may think that the exchange is indeed at the top of the food chain. Projects and VCs have to look at the face of the exchange. It seems that the exchange is in the limelight, but in fact, the exchange also has its own suffering. "Consumption" is the pain point that the exchange is currently facing and cannot get rid of. This consumption is the consumption of users, internal consumption, and loss between industries. User consumption may be the most troublesome problem for exchanges. If you list a high-quality project, users may not thank you, thinking that it is the result of the efforts of the project party and the market maker. If you list a project that obviously has a good reputation but a very low price, not only the project party will be scolded, but the exchange itself will also be scolded constantly, not to mention listing a project with a bad reputation and price. That is a nightmare, so the exchange is also a headache. After all, users are the real core, and the most terrible thing is that this core is constantly consumed, but the experience and time spent to make up for user consumption is often higher than the cost of attracting new users.
5. The situation of KOL:
KOL is the top building in the industry. Project parties need KOL's publicity, VC is willing to organize KOL, and exchanges hope to use KOL for input and output. They are definitely winners in life. But in fact, "not making money" is the voice of most people among KOLs. There are always friends who say that you see that so-and-so makes a lot of money by posting an advertisement, that so-and-so makes a lot of money every day by bringing orders, and that so-and-so makes a lot of money from rebates. It is true that some "KOLs" make money, but these people who make money are often not needed in all links. Some friends may not understand this. To put it more bluntly, KOLs who make money are not what Token2049 needs, because Token2049 needs people who speak out for the market, for the industry, and more to spread the "spirit of the conference". Of course, the so-called not making money is different from what everyone imagines. What I mean by not making money is that I don't make money in the side business of KOL, and the side business is the most profitable link. It's a pity that "being cut" is the mainstream of current KOLs.
6. Complexity of the industry ecosystem:
Interlocking and mutually restricted, this is the truth behind Token2049. On the contrary, what you are doing and how well you are doing it are not that important, because the hot spots of the track are not determined by the project, but by capital, and the money piled up by capital needs to have enough users to pay for it, and the user's terminal is the exchange. The exchange's customer acquisition is inseparable from one KOL after another, but KOL and the project party love and hate each other. I can say a lot of serious content, such as track analysis, project analysis, and industry analysis, but all of this is just superficial. Back to the basics, you and me in the industry are just drifting with the tide. We don't have much choice, whether it is for our own pockets or our own dreams, we can only break our heads and rush forward, even if we all know that the road ahead may be rugged, but don't say retreat, as long as you stop, you may be trampled under the torrent.
Captain Jack: The industry outlook is bright, don't leave the table
1. Most panelists are pessimistic about market expectations, and even worry that if there is no new innovation or growth by May next year, the market ecology may be completely reshuffled;
2. Lack of innovation, the stock is concentrated in the top, the top 15 coins weighted by the number of users and market value, such as doge and shib, have fallen 70-80% from their peak, and others are even worse. (Based on the data I have seen, I guess the exchange trading volume may decrease by 80% from this year);
3. Decentralized stablecoins and payment applications are two infrastructure projects that are obvious growth tracks;
4. The faith in the primary market has collapsed. Only a few of the primary market projects invested in the past two years have made money;
5. It is difficult to make money in the first level, professional financial institutions are involved in the second level, Li Lin took out 500 million US dollars to play the second level quantitative mother fund, and quantitative entered the market;
6. We feel that there are no more than 10 institutions with stable secondary quantitative capabilities at present;
7. Leeks fight against quantitative, the strategy is to buy the top 5 big coins and hold them, reduce transactions, and hold on;
8. Leeks, buy & hold, the exchange trading volume will decrease, AUM will also decrease, and the exchange will be uncomfortable;
9. Second-tier exchanges began to invest heavily in marketing, participated in Bitget and XT activities, went overseas with Gate friends, and saw BingX and Weex marketing... So, the marketing costs of exchanges will increase;
10. The Ton ecosystem is listed on the exchange, and the Solana ecosystem seems to have some structural trading opportunities;
11. As a veteran who entered the Internet industry in 2003, although I see problems, compared with the Internet in 2000, there is still a lot of room for growth in the number of practitioners, skills, infrastructure, number of users, industry volume and sub-sectors. So, don't leave the table.
Ruby: The industry is reshuffling, and small and medium-sized VCs are clearing out
The industry is reshuffling, small and medium VCs are being cleared out, and many dpis cannot reach 1. On the contrary, the top VCs continue to grow and quickly close new rounds within 5 months. Only investing in early-stage tasteful incubators or vertical VCs that focus on the ecosystem can leverage super high odds/vertical competitive advantages to find survival space.
2. Regulation is the elephant in the room, but Americans are more optimistic about U.S. regulation than China. Compared with fearing risks, it is more important to accurately assess risks and understand the risks you are facing.
3. MM is still the most core player. With many new MMs emerging, the founding team’s ability to select and pua MMs has also become one of the core capabilities. They need to judge the bear and bull market environment and formulate a suitable MM deal structure.
4. The most discussed applications are SocialFi and Ai crypto. Ai has hard barriers to implementation and needs to wait for the turning point of technological breakthrough. PumpFun is the most successful socialFi. The socialFi that is truly suitable for web3 is not Web3 twitter, but socialized casinos.
5. Quantitative returns are further compressed, and many quantitative teams that left the A-share market are entering crypto.
6. BTC, stablecoins/payments, and casinos are the only proven effective biz models in the industry. Stablecoins have become the new king of volume in the primary market, but no one can explain how to break the network effect of Tethe. Everyone should be prepared. If there is no new innovation in the future, and all incremental purchases are only BTC, what should we do?
7. Ecological perspective: Solana Breakpoint was more lively than the main venue, and developers were optimistic that the Firedance update would break the Solana "downtime chain" curse. "Pay now buy never" tried to add Ponzi to the payment track.
8. The traffic effect of Ton ecosystem has begun to ferment, and the ecosystem has been flooded with small applications. Several VCs focusing on games have moved in with web2 game teams. It is unclear whether they are going to tear off the fig leaf of fake traffic, or use VC and gamefi ponzi subsidies to convert tg wool parties into effective retained users.
9. The AI ecosystem is a bit awkward. After decentralized AI and Agentfi were falsified, AI projects that received a lot of money began to roll themselves up into the new Alt layer 1.
10. Listing Don’t be superstitious about authority and agents. What the exchange looks at is how many new users the project can bring. Good products, branding and communication are more important than anything else.
