Author: YBB Capital Researcher Zeke
Preface
This article is my reflection after watching the speech video of Chris Dixon, partner of a16z. The theme of his speech is "Is Web 3.0 Dead?" As an idealistic technology investor, Chris analyzed the development of the Internet from the 1990s to the present. Looking back, I think the future of Crypto is still full of potential. But from the current situation, I think the inside of Web3 is in chaos. This article is a summary of my recent thoughts on Crypto, and it is also an extension of the previous articles.
1. Gamblers’ needs and geeks’ vision
Chris Dixon mentioned in his speech that there are two mainstream cultures in crypto: one is the speculative "casino culture" and the other is the "computer culture" that focuses more on technological development. I will refer to them as "casino culture" here. In the process of promoting Web3, the two cultures that should have been mutually exclusive were connected by something called “vision” and eventually pushed Crypto into the mainstream. Since the beginning of the Bitcoin era, the vision has been very grand, from a decentralized P2P payment system that is not controlled by individuals, institutions or countries, to Vitalik's world computer, decentralized permanent storage, and the reshaping of the Internet of Things... On a smaller scale, there is also the 10k PFP that I like very much. Yes, it is the IP that is jointly promoted to the world by thousands of community members. But unfortunately, these visions are only visions in the end, and "Cash" has become Digital gold, the ideal of "world computer" and reality are full of contradictions, and my favorite narrative has become a joke in the circle. The needs of gamblers and the vision of geeks will not always intersect. When the gap appears, go to Centralization, vision, and mission no longer matter. Just like Maslow's hierarchy of needs, human needs are in order from the most basic physiological needs to transcendent needs. The basic need of mainstream crypto users is to make money. When the technical narrative no longer works, where is the loudest user? Just go wherever you want, play PVP in MEME; go to Ton to tap to earn; if you can’t afford it, you can go to A-shares and US stocks to find liquidity. What is reflected in reality is that our focus is gradually shifting from technical narratives to Powell and ETFs. , Trump, and what other memes can be used as MEMEs in the West today. Sometimes I feel as if these blond and blue-eyed people are the long-lost Satoshi Nakamoto. However, it is indeed necessary to talk about ideals after a full meal. It's human nature.
At present, the industry often talks about putting aside the technical narrative, looking for growth, creating experience, and developing consumer-level applications, and focusing on high-performance heterogeneous chains. This consensus is actually to allow "gamblers" and "geeks" to intersect again. If successful, we will enter a new era of diversity, and "gamblers" and "geeks" will become contributors to reshaping the Internet. If unsuccessful, we will regain the P2P vision and return to the essence of finance (which I don't think can support The future growth of blockchain). But no matter where this road leads to, I think it is more important to meet the value needs of ordinary users and have driving force. We often hear the word "falsification", which supports this word. Most of the reasons are that the token price has returned to zero, the threshold is too high, etc. But let's think about it in other directions. What is its driving force? I wrote an article last year, which roughly talked about the decentralization of AI computing power. At that time, there was very little relevant information available, but I was confident in this direction and even wrote two chapters to describe its future. With the continuous updates of GPT and the surge in Nvidia’s stock price this year, the topic of AI has been repeatedly mentioned. Hype. Computing power projects are not new today, but unfortunately most of them have no motivation to drive users to use them. When giving up high efficiency, it is difficult to even have one of the three: stability, low loss, and affordability. Compared with most TG games, there is basically no essential difference except for the appearance. They are all waiting to be listed on the exchange to find exit liquidity. The only thing that can be discussed is still the vision.
Today, when generative AI is being implemented in every industry, Web3, which lacks driving force, can hardly move "gamblers". The driving force of Ponzi schemes is human greed, while the driving force of consumer applications is value. Whether it is value or practical value, you must at least provide value. A qualified APP can be any evergreen protocol in DeFi, which can meet users' various financial needs such as trading, arbitrage, and gaming. There are many rumors outside the circle. Let's take the early ChatGPT as an example. There are complicated payment steps, long queues, various IP blocking, and account blocking, but people still flocked to it. In the period of liquidity flooding in 2021, the twelve Even a seed phrase cannot stop the elderly from rushing to on-chain meme. The two are the same, but the driving force is different. The entry threshold and experience are indeed important for ordinary users, but they are inferior to dopamine and practicality. After solving various abstract problems and lowering the threshold, what is the driving force that can drive non-Web3 users to visit? For a non-speculative Web2 user, Web3 currently provides basically no practicality other than transfers and payments, so where will the incremental growth we imagine come from?
2. Why don’t we talk about decentralization anymore?
I know that the current popularity of heterogeneous chains does not mean that centralized heterogeneous chains will be right in the future, but judging from the popularity of the altcoin market this time, the momentum of heterogeneous chains is about to overwhelm Ethereum. There are so many criticisms that even Vitalik is calling for the fragmented Ethereum ecosystem to be aligned again. Looking at it from multiple dimensions, Ethereum is indeed still the Apple of Web3, with the largest ecosystem, the highest TVL, and second only to Bitcoin is decentralized and secure. But today it is more like the "Apple" that Cook took over from Jobs. It is no longer so cool, and no one cheers for its innovation. At least, it seems decentralized today. The public blockchain is no longer directly equated with success.
From the perspective of the development of the technology path, decentralization and security are rare things that require a lot of time to settle down. They should be like gold and cannot be artificially recreated. But this method of recreating was thought out by Vitalik and Mustafa Albasan Today, decentralization is more like the artificial diamonds in Zhecheng. From the best quality Ethereum to the most cost-effective Near DA, there are dozens of sellers. So, what will Ton or Solana become in the future? Layer2? I think the answer is yes. Of course, due to factional reasons, these two cannot be used as Layer2 on Ethereum. However, Ethereum is not the only one with extreme decentralization and security in Web3. The security of BTC is also very important. The degree of decentralization, social recognition, and consensus mechanism recognition are all better than Ethereum, and BTC does not have factions. Even if it is a 1:1 Fork, as long as enough can be achieved in the future If the original DA solution is adopted, will the decentralization and security that Ethereum is most proud of turn into bullets shooting at itself at that time? How will Ethereum defenders attack the heterogeneous chains built on BTC?
From the perspective of the development of ZK technology, since there can be ZK Rollup upward, there can also be coprocessors, ZKML, etc. downward. As the off-chain computing technology of high-performance applications matures, scalability can be achieved on Layer1. It is not impossible to strike a balance between decentralization and security. So from this perspective, it is not a bad idea to put ecology and experience first, without mentioning the triangular paradox that is often mentioned.
3. Is Web3 following the old path of Web2?
Tokenomics is always an interesting topic. We have seen countless complex economic designs, but in the end, only service-oriented tokens can achieve long-term success through Tokenomics. For example, from Cex, Layer1 to various DeFi, first of all, the simplest The reason is still a demand issue. Basically, only these blockchain projects have real demand and benefits. From the embryonic stage to the mainstream era today, Token has played a key intermediate role in the road for these projects and their communities to become giants. The virtuous cycle makes them The moat is getting deeper and deeper. The negative example is that many 10k PFPs in 22 years also tried to save the project by staking and burning when they were on the verge of death, but there was no strong demand, and the small number was meaningless.
Another problem is the long-standing problem of token incentives, witches. Witches are the biggest headache for Tokens, and many projects that are eager to complete bottom-up incentive models have become a bubble. Only Kyc, centralized platforms and some compliant projects can rely on Kyc to avoid witches. But this problem is very complicated for pure on-chain projects. Although Vitalik has also proposed SBT similar to the soul binding in World of Warcraft, there are obviously many logical loopholes. . Using Worldcoin's iris is even more impractical. Nowadays, the more effective way to prevent witches has turned to Point. Witches can create a large number of addresses and make a large number of transactions. But money cannot be faked, just like the computing power of the PoW mechanism. If there is no fraud, it doesn’t matter how many addresses there are, as long as the deposit is set to the maximum or unique in the Point weight. This method has many advantages for the project party. Point is just a soft promise, and the final right of interpretation is still in the hands of the project party. But for the development of Web3, it is heading in a worse direction. Only whale can benefit from this activity, not real users, and it will not attract users outside of Web3. After the Token was listed, all that was left was a mess.
It is not uncommon to see one thing being suppressed but another one popped up in this circle, so why not just not have a token? I have praised the token-free projects many times this year for their performance far outperforming most of their competitors in many aspects. You will not be trapped by the Ponzi scheme, nor do you have to worry about witches, coin prices, empowerment, etc. Focusing your energy and resources on publicity and ecology can accurately acquire valuable users, thereby expanding the ecology.
What makes me think deeply is whether this has become a kind of Web2ization? Web3 oligarchs like Base provide users with high-quality services and continue to make profits from them, but the community cannot share. What is the difference between this and today's Web2? Coinbase is in charge of everything from construction to implementation. It also handles the Farcaster protocol in the ecosystem, and even excludes Friend.tech for this. Is this a manifestation of the spirit of decentralization? We have to admit that our development path is increasingly different from Web2. The more similar, the vision of the Internet in the 1990s was to return power and wealth to users. In the Web 1.0 era, it was television and radio that controlled the media, and in the Web 2.0 era, it was the seven giants of NASDAQ that controlled the Internet. Now, Web 3. The oligarchs at $0 are testing the bottom line. Is this the end of the bottom-up saga? I don’t know, but I’m sure we’re at a crossroads.
4. Scarcity is a double-edged sword
Before the Bretton Woods system broke down, gold played a key role in human currency. It has a good advantage: scarcity, but it also has a bad disadvantage: scarcity. From shells to gold, decentralized currencies have been around since ancient times. Yes. Before humans entered the steam age, scarcity ensured that dictators could not arbitrarily plunder people's wealth, so that society could function normally. When technology exploded, scarcity hindered humans from reaching the stars and the sea. Former US President George W. Bush said in 2002 In a speech in 1997, he said: "In the history of mankind for tens of millions of years, the most valuable thing is not the dazzling technology, not the vast classic works of masters, not the politicians' grand speeches, but the domestication of the rulers. , realizing the dream of putting them in cages. I am standing in the cage and speaking to you now. "Putting power in a cage is the only way for mankind to compromise with credit currency. Currency that is not based on any precious metal, of course, It is the largest Ponzi scheme in human history, but it has made great contributions to the development of modern society.
Scarcity is one of the characteristics of blockchain and its value. We emphasize the importance of scarcity all the time. However, sometimes I wonder if excessive scarcity is also hindering our progress. For example, if Bitcoin was born in A country isolated from the world, will its vision be realized soon? 10k PFP is a better microcosm. BAYC, Azuki, Pudgy are all very successful NFT projects. , at least the first two were in the past. At the crossroads of development, they chose three different directions: games, animations, and peripherals. The latter's practical approach allowed it to go against the tide and achieve a turnaround, but making games or animations Even developing an IP universe is very cool in my eyes, but scarcity dooms them to fail. As I mentioned when discussing GameFi, the cost of a 3A game is unimaginable, and the limited number of NFTs isolates participants. The disguised issuance of NFTs will exploit the community. This is like a microcosm of a dictator's economic regulation, and the community's voice is far smaller than imagined. BAYC and Azuki both eventually fell on the road of the Crazy Hair Growth sub-series. Thinking about it now, I feel relieved.
Of course, the other side of this sharp edge is also reflected in Ethereum. We have discussed this issue in the previous article, so I will not elaborate on it here. Back to the point, when a decentralized project becomes extremely large and When entering the mainstream, what should we do about deflation and inflation? Should we rely on simple rules of code, or listen to the project team with only a few or dozens of people? Or those key figures? Oh, yes, we also have Governance tokens. However, governance tokens are meaningless before the Sybil problem is solved. Democratic voting can never be reflected in governance proposals. After all, a16z can veto the approval vote of a large community with just a few wallets, so what is the point of voting? Woolen cloth?
5. Business logic cannot be closed loop
When writing the Babylon research report, I once thought about a question: How many projects in Web3 can complete the closed loop of business logic? I think at least 95% of the projects cannot. In most cases, this closed loop is only It can be realized in the white paper. People always build the sink to be perfect when designing it, but they are very idealistic when talking about where the water comes from. In an ideal state, Babylon and Eigenlayer can mobilize the dormant Bitcoin wallet and Ethereum’s staking tokens, thereby eliminating the LST bubble and bringing security to various long-tail chains, protocols and emerging projects. At that time, I thought this was also a grand vision. But a doubt pierced my mind. How much interest should be paid to pledgers every year to attract BTC whale to flock to the security of trillion-dollar assets? How much share of the trillion-dollar assets can long-tail projects rent? Where should we look for the gap again? I think it might be Token again.
This problem is reflected in every corner of Web3, including the popular Ton ecological games. After the airdrop, the leading projects such as Catizen will soon be able to prove whether they have real consumer users. The game will die out quickly, it is inevitable. In many Asian, African and Latin American countries, Crypto has begun to shine in payment and transfer. A large part of the user groups covered by Ton also come from these countries. It is based on the user needs of these countries that the next giant will eventually emerge in Mini App.
6. The story should not end on Wall Street
Nietzsche once said: "There is no truth in this world, only perspective." My point of view is from the perspective of pragmatism, and the idealist's point of view may contradict me. But I think we are both right. After all, there is no truth in this world. We must learn to see new perspectives from different viewpoints. Tolerating "opposition" will be closer to the truth itself than a single belief. Every project I match is also what I love. There will be at least one common point between them. That is, I hope Web3 can be on par with the current generative AI and play a role in promoting human progress. The story of Crypto should not stop on Wall Street.
7. Sisyphus
When I was thinking of a very appropriate title for this article, I thought of a Greek mythological figure, Sisyphean. In Homer's epic poems, Sisyphus is famous for his cunning wit, which allowed him to hoard a large amount of Every time he felt that death was approaching, he would trick the god of death into putting on handcuffs, and as a result, no one on earth could enter the underworld. As punishment from the gods, he was sentenced to push a boulder up a steep mountain, and every time he used up all his strength, Even when the boulder is about to reach the top, it will slip out of their hands and they will have to push it back again, doing endless labor. In the Western world, the word Sisyphus can also be used to describe "a never-ending and futile task." But in Camus’ philosophical essay “The Myth of Sisyphus”, Sisyphus’s efforts to climb to the top of the mountain are a symbol of human optimism and fighting spirit. The positive and negative sides of this story are very similar to the current situation of Web3. The night is always the darkest.
