OKX University Interview | Feng Yu: Lack of users is the biggest bottleneck of the industry in this cycle

Feng Yu is an assistant professor at the University of California, Santa Barbara. He received his Ph.D. in Computer Science from the University of Texas at Austin (UT Austin) in 2018. His research areas include blockchain security, programming languages, and formal verification. He is currently the founder and CEO of Nubit.

Since 2011, I have been engaged in formal verification research, focusing on the security of various software systems, from browsers to mobile applications. During my doctoral studies, I conducted in-depth research on distributed systems and security protocols, and gradually realized the great potential of blockchain technology in building secure and decentralized systems. Because virtual currency asset management has also made it a frequent target of hackers, I decided to devote myself to the Web3 field and strive to promote the security and efficient development of the blockchain ecosystem through academic research and practical applications.

We hope to observe the development of the Web3 industry through interviews with entrepreneurs with university backgrounds around the world, and explore their development experiences in the Web3 industry to provide references for college students to enter Web3 employment and entrepreneurship. In this issue, we specially invited Professor Feng Yu to be the guest speaker of "OKX University Interview".

The "OKX University Interview" series is a special column produced by OKX and hosted by OKX official community ambassador Mercy (@Mercy_okx). It aims to explore the industry perspectives of people from universities around the world and provide reference for friends who are starting businesses in Web3 and looking for jobs.

I am Feng Yu, an assistant professor at the University of California, Santa Barbara, and received my PhD in Computer Science from the University of Texas at Austin (UT Austin) in 2018. My research areas include blockchain security, programming languages, and formal verification. I am also the founder and CEO of Nubit.

Since 2011, I have been engaged in formal verification research, focusing on the security of various software systems, from browsers to mobile applications. During my doctoral studies, I studied distributed systems and security protocols in depth, and gradually realized the great potential of blockchain technology in building secure and decentralized systems. However, with the booming development of the blockchain field, virtual currency asset management has also made it a frequent target of hackers. For this reason, I am determined to devote myself to the Web3 field and strive to promote the security and efficient development of the blockchain ecosystem through academic research and practical applications.

I clearly remember that when I first joined UCSB in 2018, the price of Ethereum was only $80. The dean of the department once kindly reminded me: "Xiao Feng, Ethereum is going to go to zero, why are you still studying it?" One thing I really like about the American academic community is that you can maintain your own judgment on the suggestions of the dean and the dean (of course, stubbornness is not recommended). At that time, I was passionate about technology, but I had no idea about the price of coins, and I didn't even have an exchange account.

In the next three years, my doctoral students and I made some achievements in the fields of blockchain smart contracts and zero-knowledge proof security. In 2022, I met Luke from Polychain through the introduction of my former colleague Shumo (co-founder of Manta). At that time, Luke mentioned: "DeFi Summer is indeed exciting, but the frequent hacking incidents that followed gave investors a headache. Why don't you start a startup?" I replied at the time: "I don't understand the process of starting a company, and I don't have the funds..." But he said: "We support you!" In this way, I founded Veridise and officially embarked on the entrepreneurial journey of Web3.

In the early days of my business, I received great support from friends in the crypto community, which enabled me to move forward despite my initial setbacks. At the same time, with the support of the Ethereum Foundation and 0xparc, we conducted a number of zero-knowledge circuit security research and product development projects, and audited several leading ZK projects. However, things did not go as planned. Due to inconsistent management concepts, I decided to withdraw from Veridise at the beginning of this year. At that moment, I felt complicated, as if I had given up on my child and failed to protect him. It was particularly regrettable that I watched the company miss opportunities, failed to realize my ideal vision, and failed the investors who trusted me unconditionally.

After a few weeks of adjustment, I co-founded Nubit with my doctoral students, with the goal of developing data layer and execution layer infrastructure for the Bitcoin ecosystem, combining our expertise in the security field. What surprised and touched me was that almost all of the investors in Veridise took the initiative to support my newly founded Nubit project after learning about it. Although I failed to fulfill my original promise at Veridise, they still trusted my character, and this trust became an important driving force for Nubit's rapid growth. With the full support of old friends such as Tekin of dao5 and Luke of Polychain, Nubit developed rapidly in just five months, completed three rounds of financing, and became a new force in the Bitcoin ecosystem.

I think the current Web3 industry faces both challenges and opportunities. Although the market has experienced multiple rounds of cyclical fluctuations, the infrastructure and ecosystem continue to mature. However, there has been an increase in criticism of infrastructure projects, especially the Ethereum ecosystem, recently. To some extent, it is true that the entire Web3 industry has invested a lot of manpower and financial resources in infrastructure construction in the past few years. In this cycle, from infrastructure projects to the entire industry, they have encountered a bottleneck for large-scale applications - insufficient users. However, public opinion seems to have gone to the other extreme, questioning the role of technology and turning to hype meme culture and other phenomena. Of course, some project parties did hold high the banner of technology, but failed to implement substantive results, which led investors and users to stay away from highly valued infrastructure projects.

At this point, I think we need to maintain a clear understanding. There is an old saying: "Learn from history and you can know the rise and fall." I remember more than 20 years ago, when my small bungalow was connected to the Internet for the first time through a dial-up phone, I opened the browser and saw a small window full of advertisements. After clicking, countless windows popped up, and I had to shut down the browser. The Internet infrastructure already existed at that time, but no one was sure what changes it could bring to the lives of ordinary people. Today, the traditional Internet has profoundly changed our lives. What I want to express is that we need to look at the development of this industry with an open, inclusive and dialectical attitude, give entrepreneurs more time, and perhaps in a few years, Web3's Google, Facebook, and Twitter will appear.

Of course, I am not trying to shirk the current problems in the industry. The Web3 industry does face some challenges that need to be addressed, such as security, scalability, and user experience. Security is particularly critical, and vulnerabilities in blockchain systems and smart contracts can cause serious economic losses. Some OGs believe that the current reduction in hacking incidents is due to the work of auditing companies, but in fact, the frequent hacking incidents in the last cycle are precisely because of the flourishing of DeFi Summer, with innovation and vulnerabilities coexisting. In this cycle, many projects are only doing simple businesses such as staking, and hackers have no way to start (although there are still incidents like the bedrock hack). This is why I continue to focus on the field of blockchain security and formal verification, and am committed to improving the security and reliability of the entire ecosystem.

Looking ahead, I believe that the driving forces for the development of the industry are mainly reflected in the following aspects:

1. Technological innovation: In academia, AI technology has penetrated into many fields in just a few years, and AI+blockchain has become a hot topic in this cycle. However, there has not yet been a killer application of AI and blockchain, and some projects are using the name of AI to create memes. But I believe that the application of AI+blockchain will eventually land.

2. Security assurance: Improve the security and reliability of the system through smart contract auditing and formal verification.

3. User experience: By simplifying the architecture of blockchain applications, lowering the usage threshold for users and developers, and promoting real large-scale applications.

4. Regulatory compliance: A clear regulatory framework will help enhance trust in the industry and promote its healthy development.

5. Cross-chain interoperability: Enable interoperability between different blockchains, break data silos, and enhance the synergy of the entire ecosystem.

I dare not judge the overall trend of universities around the world or even in North America (it is likely to be an upward trend). But from my observation at the University of California, Santa Barbara (UCSB), the number of students choosing to enter the Web3 industry is gradually increasing. Although I don't have specific statistics, it is clear that students' interest in blockchain technology and decentralized applications is increasing, and this trend echoes the rise in Bitcoin prices.

To give a few simple examples, the UCSB Department of Computer Science has one of the top security laboratories in the United States. The Shellphish team, led by two hall-of-fame figures in the security field, Chris and Giovanni, has been among the top in major CTF competitions around the world and the US military for many years. Interestingly, when I first joined the company, these two professors were not optimistic about blockchain, believing that it was an infrastructure serving money laundering and drug trafficking, and there was no need to pay attention to its security issues. At that time, I quoted an old Chinese saying: "Water can carry a boat, but it can also overturn it." Today, more than 50% of the doctoral students in the laboratories of these two professors are engaged in blockchain security research. I believe that in the face of emerging things and technologies, we must maintain an open and inclusive academic attitude. Technology itself is a double-edged sword, and there is no such thing as good or evil.

Regarding the current talent situation in the Web3 industry, I believe that this field is in a stage of rapid development, and the demand for professional talents is very strong. However, as blockchain and Web3 technologies are relatively new, talents with deep knowledge and practical experience are still relatively scarce, resulting in a shortage of talents in the industry. In response to this situation, we are working hard to provide relevant courses and research opportunities to meet the needs of students. For example, in 2019, I taught my first blockchain course at UCSB, with only 15 students. After several years of research and teaching investment in blockchain and Web3 technologies by the school and department, the number of students in each course is basically stable at more than 100. Although this growth rate is not as fast as the rise and fall of virtual currencies, it is a good start.

In general, as mentioned above, the entire Web3 industry is developing rapidly, but the infrastructure and talent pool (both management and technology research and development) are still weak compared to the traditional Web2 industry. This has brought huge challenges to Web3 project parties. For example, at Nubit, we prefer to recruit some engineers and managers with high professionalism but lacking blockchain background from traditional Web2 giants (such as Google, ByteDance, Alibaba, and Tencent), rather than short-term Web3 practitioners. After all, no matter how the industry changes, it remains the same.

In order to solve this problem, we need to continue to start with education and training. On the one hand, colleges and research institutions should increase investment in research and teaching of blockchain and Web3 technologies to cultivate more professional talents; on the other hand, companies can also help newcomers adapt to industry needs more quickly through internship programs and training programs. Overall, as the Web3 industry continues to mature, the demand for talent will continue to grow. I am full of confidence in the future and firmly believe that through the joint efforts of all parties, the problem of talent shortage will gradually be alleviated, thereby promoting the healthy development of the entire industry.

Based on my multiple experiences in scientific research and entrepreneurship over the years, I would like to offer a few suggestions for your reference:

a. Strengthen your technical foundation: Although the pleasure of making profits through cryptocurrency speculation in the short term is very exciting, it is crucial for young entrepreneurs, especially technical R&D personnel, to have a solid grasp of the core knowledge of computer science, especially an in-depth understanding of blockchain technology, distributed systems, and cryptography. Stay sensitive to the latest developments in the industry, regularly read relevant academic papers, technical blogs, and news reports, and participate in industry conferences, seminars, and hackathons, which can help you keep up with cutting-edge technologies and trends. Emphasize practice: Theory is important, but practical experience is equally indispensable. Participating in open source projects, developing decentralized applications (DApps), or deploying smart contracts on test networks are all effective ways to improve practical skills.

b. Strengthen security awareness: Security issues in the Web3 field are particularly prominent. Learning secure coding practices and understanding common vulnerabilities and preventive measures can help you avoid major mistakes during the development process. As someone who has been engaged in security research for more than a decade and founded a Web3 audit company, I know that most hackers are not smarter than ordinary people, but more than 80% of the vulnerabilities in many security incidents are caused by practitioners' negligence of basic security mechanisms. Therefore, improving the security level of Web3 not only depends on the development of more powerful security tools, but also requires the popularization of security awareness among personnel across the industry.

c. Startups are like people: Web3 startups generally face higher risks than traditional fields, and many investments eventually come to naught. Therefore, as a young founder, when you get venture capital, you must stay sober, because what you overdraw is actually the trust of investors in you. When you are in power, don't be complacent, the industry changes so fast and the risks are often just a thought away; when you lose power, don't belittle yourself. Many of those hot projects two years ago were also unknown like you, looking for investment everywhere. Respect your peers, partners and every employee who works hard for you, and don't sacrifice the long-term blueprint for short-term benefits.

d. Keep hungry and innovative: Web3 technology is changing with each passing day, and it is particularly important to keep the enthusiasm and ability to learn. It is not to encourage blind pursuit of new technologies, but to always be hungry for any new things and technologies, which can help you respond quickly when the project is in trouble. What I like most about Web3 is that it is a field full of opportunities that encourages innovation and entrepreneurship. No matter how unorthodox the technology you hear is, you can find its application scenarios in this industry. If you have unique ideas, try to put them into practice, which may bring unexpected gains.

e. Focus on user experience: Compared with Web2, Web3 projects still have a big gap in user experience and stickiness. After turning off the phone or computer, people can completely avoid Web3, but leaving traditional Web2 services such as Uber, WeChat or Amazon will affect their lives. When young entrepreneurs develop technical solutions, they must not ignore user experience for the sake of showing off technology. Successful products not only require strong technical support, but also need to be easy to use and meet user needs. Get out of the office, communicate more with potential customers, accelerate product iteration, and find the product's PMF (product market fit) in a timely manner.

f. Comply with ethics and regulations: Understand and comply with relevant laws, regulations and ethical standards to ensure that your work promotes the healthy development of the industry.

Finally, the most important thing is to maintain your passion and curiosity about this field.

I think the Web3 field may undergo the following major changes in the next five to ten years:

First, large-scale application and mainstreaming: With the gradual maturity of technology and the improvement of user experience, Web3 applications are expected to be accepted by a wider user group. Decentralized finance (DeFi), stablecoins and other fields will move from niche to mainstream, and their influence will extend to more industries. At the same time, traditional Web2 applications will gradually expand in the direction of decentralization, and the boundaries between Web2 and Web3 will become increasingly blurred and eventually converge.

The second is cross-chain interoperability and chain abstraction: the interconnection between different blockchains will be gradually realized, and the development of cross-chain technology will break the isolation of each chain, allowing assets and data to flow freely in different networks and enhance the synergy of the entire ecosystem. Just like the platform ecology of WeChat applet, the abstraction layer of blockchain infrastructure will be further improved, allowing traditional Web2 developers to develop complex decentralized applications faster.

Third, AI penetration and security standardization: AI will gradually penetrate the technical field of the blockchain industry, improving system performance, security, and diversity at the application layer. At the same time, Web3 security will gradually move from the current "shooting at random" stage to standardization, standardizing the security mechanisms of various segments, thereby enhancing users' trust in Web3 applications and promoting their wider adoption.

Fourth, the establishment of a regulatory and compliance framework: Governments and international organizations may introduce clearer regulatory policies to provide legal protection for the Web3 industry. This will help eliminate uncertainty and attract more institutional investors and traditional companies to enter the field. Looking back at the history of the development of the Internet, 20 years ago, people did not dare to easily hand over bank card information to online services; today, even the older generation cannot do without online payment methods such as WeChat Pay.

Fifth, the key role of university talents and entrepreneurial teams: Just as Harvard gave birth to Facebook, Stanford gave birth to Google, and Berkeley incubated OpenAI, North American universities have played an important role in the field of Web2. Looking forward to the future, university talents and entrepreneurial teams in the field of blockchain will also play a vital role in the transformation of Web3. Looking back on the development history of blockchain over the past decade, I divide it into three stages:

• From the birth of Bitcoin in 2009 to 2021: This stage is the "grassroots era" of blockchain startup teams. Whether they are those who cut leeks or teams that are serious about projects, they are racing against time to gain a foothold, and the infrastructure is relatively weak. When I first started to study smart contract security in 2017, I talked to the head of Solidity development, mentioned the problems with the language design, and suggested that they introduce an intermediate language (IR) layer during compilation to optimize the generated EVM bytecode. His response at the time was: "That's a genius idea! We will do that in the next version" (today's YUL). This made me feel that the negligence of the basic design was so significant.

• DeFi Summer 2021 to 2023: This phase is a period of flourishing, with all kinds of innovations emerging one after another. At the same time, professors and research teams from North American universities gradually entered the market, and most of my peers in the field of programming languages ​​and formal verification founded their own blockchain companies.

•2023 to present: The industry has gradually stabilized. Among the blockchain startups emerging in North America, founders or consultants without university backgrounds can hardly attract the attention of investors.

Although entrepreneurial teams with university backgrounds sometimes face problems such as insufficient market adaptability and poor execution, just as integrity is the foundation of Western countries, entrepreneurial teams with university backgrounds can often provide the two most scarce elements in the Web3 field: bottom line and innovation. The bottom line is not difficult to understand. Such teams are strictly supervised by schools and governments, and any violations may face severe investigation; while innovation is the strength of North American universities. This is not because the professors and students are more skilled, but because the university environment is relatively pure, without complex leadership relationships or external interference, and can focus on scientific research and innovation, creating a scientific research atmosphere that works all night and is fearless.

In general, university talents and entrepreneurial teams will play the role of innovation engines and practice promoters in the future Web3 transformation. Their research and practice will help overcome current technical and application barriers, accelerate the popularization and maturity of Web3, and promote the entire industry towards a more open, decentralized and trustworthy future.

This article is for reference only. This article only represents the author's views and does not represent the position of OKX. This article is not intended to provide (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; (iii) financial, accounting, legal or tax advice. We do not guarantee the accuracy, completeness or usefulness of such information. Holding digital assets (including stablecoins and NFTs) involves high risks and may fluctuate significantly. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals for your specific situation. Please be responsible for understanding and complying with local applicable laws and regulations.