Hello everyone , Yingmu told me that due to the bad market cycle and environment, everyone has begun to think: "Is it time to change careers?" She hopes to recharge everyone's "faith". I think so of course. I have believed in this industry since 2014, and I am obsessed with it today.
Before I start, I would like to say that I am happy - this is my second time to come to the Dongyin Center. Last year, I gave a sharing session here during the S3 of the Creation Camp. This time I revisited the old place and saw familiar faces, they were particularly cordial and especially welcomed the leaders of our Changning District.
I just came back from Hong Kong yesterday. This time I attended the four-day Blockchain Summit. This is the first time that a delegation from the mainland has attended the Hong Kong Summit: a signal of great significance. The biggest difference of this meeting is that the Shanghai Municipal Government organized two official delegations of nearly 50 people to visit Hong Kong. This is the first time that a local government in the Mainland has organized a delegation to attend such an encryption 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 indeed difficult to expand the content of "public chain", "Crypto" and "Token Economy" in the mainland. We were afraid that the speakers would not dare to speak, so we placed the core content in Hong Kong. This year, according to statistics from scanning QR codes, the four-day summit attracted more than 8,000 independent participants, and the number of visitors reached tens of thousands.
The application explosion period is coming
Many people ask, is this an industry crisis? I don't see it that way. I believe that 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: discussions on protocols and infrastructure are decreasing, while application-oriented topics such as RWA, PayFi, and USDT payment have become the focus of the entire event. I believe that this is not a crisis, but a turning point, a period of accumulation for the next outbreak. This means that the era of "building frameworks" and "negotiating agreements" is over. 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, Layer 1 must insist on decentralization."
Why? The core of decentralization is "trustlessness" and "disintermediation", which means reducing costs and improving efficiency. If Web3 costs more than before and is less efficient than Web2, why should we redo it all over again? So when we often say "everything is worth reconstructing in Web3", the premise is: the cost of trust 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 for a $50 T-shirt and wants to receive the goods within a week. He pays and you ship the goods, and then things can start to work. The best way to pay is to scan the USDT QR code — the funds are deposited in seconds, the goods are prepared in seconds, and the goods are delivered by air in a week. This payment method does not require a bank or a clearing system, and solves the problems of trust and efficiency in just one second. In 2023, China will send 18 billion international parcels throughout the year.
Without a USDT-based blockchain settlement system, China will be the biggest victim. So you see, why is Hong Kong pushing for stablecoin legislation? Because it realizes that if it does not actively embrace the new payment system, Hong Kong will be eliminated from 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 overnight?" I tell you, that era is over. The era of public chains has ended. I have always advised entrepreneurs who still want to do public chains that it is not that your technology is not good enough, but that the trend has passed. The next key is: Can you really use this system to create real "applications" to 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 blockchain? It makes system trust computable, verifiable, and achievable at low cost.
I would like to talk about the source of "faith". 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 revolution is often the forerunner.
The first industrial revolution: the steam engine, and the emergence of a bank lending system;
The second: electrification, with supporting capital markets and joint-stock company systems;
The third: the Internet revolution, with China intervening in the middle;
The fourth time: AI + blockchain, this time China and the United States are jointly leading the way.
The blockchain you see now is the next-generation financial system that supports the Fourth Industrial Revolution.
In an interview, I once gave blunt advice to the Ethereum Foundation: "Ethereum has fallen to its current state because you lost China." From 2014 to 2016, China was the most solid base for Ethereum developers and users. At that time, Vitalik would come to Shanghai to attend the blockchain conference every year, and he had never missed the previous seven sessions. However, since seven Chinese ministries issued relevant regulatory files in 2017, lawyers at 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. It's not that he doesn't want to come, but that he "dare not come".
He still didn't attend until 2023, when we held our first conference in Hong Kong. Last year he finally agreed and expressed his willingness to participate. I have been inviting him every year. I told him: It's time to go back to China. Wanxiang Blockchain Lab is also willing to accompany you to continue promoting 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 is a small group of people working on the underlying technology in Berlin." But he also admitted that Ethereum's underlying technology has matured and there is only room for optimization, and there is no chance of reconstruction. You are expecting an explosion of applications, but can you rely solely on Berlin's technical strength? Can we rely only on European developers? Of course not.
So I suggested that the Ethereum Foundation set up an office in Hong Kong. In fact, China's technical departments, government agencies, and developer groups respect Ethereum's technology. Your foundation should no longer stay away from China. The legal team you set up in Europe has no understanding of China, but they are making random regulations here, which will only lead you further astray. This is a private conversation between Vitalik and I.
Behind every industrial revolution, there is always a financial revolution
Now let’s look at the bigger picture: the Fourth Industrial Revolution, and the accompanying financial revolution, are happening.
The First Industrial Revolution: dominated by banks, credit and bonds were the main axes of financing, and there was no capital market.
The Second Industrial Revolution: Led by the US capital market, the rise of investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc. supported the wave of electrification.
The third industrial revolution: the birth of venture capital (VC) in the 1960s and the rise of Silicon Valley. As a Nobel Prize winner in economics once said: “Behind every industrial revolution, there is a financial revolution.”
Today, in the fourth industrial revolution, if you deny tokens and crypto, you will miss the new financial formalization and even the opportunity of the entire revolution.
Over the past year, I have 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: Leading Worldcoin, which has 10 million users worldwide. Three coins are issued every quarter, which is a huge expense even if each coin is less than one dollar. He represents the path of "AI+Crypto+Software".
2) Elon Musk: Supports Dogecoin, while promoting 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 result of historical development. Even President Trump 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 the thinking behind this decision from one of his crypto consultants: AI and Crypto should not be divided and ruled, but should be coordinated and collaborated.
The financial revolution in the digital age is a revolution based on distributed ledgers and encrypted capital. If you don't acknowledge 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 clearing system, and global ledger system. The digital world has no borders; it transcends space, time, organizations, and national boundaries. It requires a new registration, accounting and settlement system. Traditional finance cannot meet this demand.
The accounting methods of human society have undergone only three major changes so far: single-entry accounting in ancient times; double-entry accounting after the Renaissance (still in use today); and the distributed accounting system created by Bitcoin in 2009.
This third accounting revolution has taken us from bank accounts to the era of crypto accounts. Look at the small commodity merchants in Yiwu today, why are they willing to accept USDT payments? Because no bank account is required, payments can be completed with just a crypto account. The total settlement volume of US dollar stablecoins in 2023 was US$16 trillion, which has exceeded the total of VISA and Mastercard. Of course banks will be nervous and the government will certainly take it seriously. Therefore, today, CEOs and chairmen of major banks around the world have admitted that blockchain is a revolutionary system that represents a leap in efficiency.
I remember in 2012, I had a debate with famous bankers at a conference on whether blockchain could change finance. They say, "The essence of finance will not change." I think they are right - the essence of finance has always been: wanting to borrow money and wanting to receive the money quickly. This has been an unchanging need for three thousand years. Do you think banks are the ultimate model of finance? The banking system is only a hundred years old, and the central bank is only 400 years old. In the early days of China, there were banknote exchanges and silver shops, and even earlier than that, there were escort agencies that delivered silver. If they can all change, why can't banks?
Now you see, CeFi (centralized finance) is the traditional system, and DeFi (decentralized finance) is the 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 in banks or DeFi?" The bank's capital adequacy ratio is only 12%, which is equivalent to a leverage of 7 to 8 times. Profits are maintained by relying on high leverage. 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 achieves profits by improving the turnover efficiency of funds. For example, if you pledge a Bitcoin worth $100,000 to a DeFi protocol, based on the current collateral ratio of about 50%, you can borrow up to $50,000. In other words, DeFi is overcollateralized lending, not high leverage.
The most typical representative of the most efficient capital turnover in DeFi is “Flash loan Loan”, which is characterized by completing lending and repayment within one block, and the whole process only takes a few seconds. Although flash loan are not applicable to all scenarios, this demonstrates DeFi’s efficient turnover capabilities. Overall, DeFi's annual capital turnover rate is 10 times that of traditional banks, and its income comes from the high-frequency accumulation of small profits rather than through leverage. This is a more advanced financial system with strong vitality. Currently, this "new financial infrastructure" has been built more than halfway, and it is the critical stage for accelerating the implementation of applications.
The application and impact of new financial infrastructure
As this infrastructure became more popular, payment applications such as PayFi were born. In 2024, the total amount of stablecoin-based payments and settlements reached US$16.16 trillion, completely bypassing the traditional banking system and the 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 to promote global sales of goods.
Financial infrastructure refers to a set of institutional arrangements, including laws, accounting standards, etc., which aim to maintain financial stability and serve the public interest. Its technical level involves hardware and system security. "Financial market infrastructure" is its subset, which mainly includes the three major links of payment, clearing and settlement of funds.
Payment: If you pay by bank card, first verify whether there is a balance in the account.
Settlement: If there is a balance, the amount to be paid will be frozen.
Settlement: The actual transfer of funds between different banks or accounts.
A security incident on Ethereum in 2016 was caused by the smart contract failing to properly handle the liquidation process, which led to users repeatedly withdrawing assets and incurring a loss of approximately US$60 million. This incident highlights the importance of liquidation mechanisms. China's foreign exchange trading center, clearing house, settlement center and other institutions are representatives of traditional financial market infrastructure. They ensure the payment and settlement of different types of transactions.
Compared with the traditional financial system, the new financial infrastructure has undergone significant changes in technical architecture, participants and settlement units. Its core is based on blockchain, using Bitcoin, ETH and stablecoins as transaction media, completely eliminating intermediaries and achieving trustless and efficient point-to-point transactions.
In the old system, it might take days or even weeks to send money from Shanghai to the United States; with blockchain stablecoins, it only takes seconds to arrive. For example, I recently transferred money from Hong Kong to Shanghai, but it took a month to confirm the failure. If I had used stablecoins, it could have been completed in ten seconds.
With such a huge gap in efficiency and cost, isn’t it worth it for us to rethink the direction of changes in the financial system? Although the decentralized blockchain system bypasses SWIFT, the US government still chooses to support the development of the US dollar stablecoin. Trump has explicitly asked Congress to pass legislation related to the US dollar stablecoin before August 2025. The bottom line for 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 what the US government most wants to promote at the moment is not the strategic reserve of Bitcoin, although the latter is equally important. The priority is to promote legislation for a US dollar stablecoin. The United States must ensure that the dollar remains the primary payment and settlement tool in the next generation of financial infrastructure. If the 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 dollar to gold through the Bretton Woods system after World War II, and other countries' currencies were then pegged to the dollar, thus establishing the dollar's global currency status. As the system collapsed, the United States promoted the formation of the European dollar market and the "petrodollar" system, unified the commodity settlement currency into the U.S. dollar, and created a global application scenario for the U.S. dollar. Today, the dollar is entering the third stage of its evolution: tokenization. The U.S. government is trying to ensure that the "tokenized dollar" occupies a core position in the future global financial infrastructure, which is far more important to the national interest 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 currencies to encrypted assets.
Cryptocurrency 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 stablecoin, which belongs to M2 (broad money) and is the currency created by institutions after credit expansion based on the central bank's base currency. The bank deposits, wealth management products, money market funds, etc. that we use in our daily lives are all within the M2 category and are bank liabilities, not central bank assets. For example, in China, banks only insure deposits of up to 500,000 yuan; in the United States, the limit is 500,000 US dollars. Deposits exceeding this amount will not be guaranteed if the bank goes bankrupt.
In the financial system, M0, M1, and M2 each have different functions and are irreplaceable. It is difficult for the central bank's digital currency to replace the M2-level currency and it is not suitable for all consumption scenarios. The United States is well aware of this and has therefore made it clear that it will not issue a CBDC. During his campaign, Trump promised that he would not allow the Federal Reserve to issue central bank digital currency during his term. The US Federal Reserve has also publicly stated that it is not considering issuing such currency.
The reason is clear: central bank digital currencies could lead to the state's full control over payment data and undermine user privacy. For example, if digital U.S. dollar currency is used for payments in Hong Kong, Singapore or Japan, the U.S. Federal Reserve may obtain transaction data, which is difficult to accept internationally. Unless it is implemented through compulsory means, it will be difficult to implement. The United States is aware of its limitations, so it has turned to supporting market-issued stablecoins pegged to the US dollar.
RWA (real world asset) tokenization also falls under the M2 category, such as the US dollar money fund tokens issued in Hong Kong. Its essence is 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 forms, but also the evolution of asset issuance models. From the "gold dollar" to the "petrodollar" and then to today's "tokenized dollar", 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 currency "Made in China". However, due to regulatory reasons, China voluntarily gave up this strategic resource and gave it 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 new financial systems. If tens of billions of devices around the world are to create GDP without human involvement in the future, payments and settlements between them will have to rely on programmable currency. Traditional banking systems find it difficult to support automatic machine-to-machine payments, but systems based on blockchain and smart contracts have this capability, and there is currently no better solution. On this basis, a new asset issuance system is also being constructed. The new generation of industrial revolution calls for a matching financial revolution, namely 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, which are anchored to fiat currencies and used for daily payment settlement. In the future, stablecoins such as the Hong Kong dollar, Japanese yen, and euro will also appear.
- Reserve tokens: such as Bitcoin, are transforming from risky assets to strategic reserve assets. Several states in the United States have enacted legislation to include Bitcoin in state government asset reserves, which is evolving from household assets and corporate cash management to a national strategic reserve.
The book "The Monetary Pyramid" once predicted that Bitcoin will become a reserve asset of central banks in the future. The reason is simple: for digital natives under the age of 30, Bitcoin is more attractive than gold. This book speaks directly to the central bank governors and finance ministers who are now in their seventies and eighties - you will eventually leave the stage of history, and those young people who have been exposed to the digital world since childhood will eventually take your place, and they are more likely to include Bitcoin in national reserves. The trend is irreversible, and individual will cannot resist the tide of the times.
Surprisingly, the person who started this trend was not a digital native, but an 80-year-old man - Trump. This reality actually confirms the judgment that "the situation is stronger than people." I thought only young people would drive change, but it turned out that an old man was the first to put it into practice.
At present, the trend of Bitcoin as a reserve asset has begun to emerge. Amid recent market volatility, most crypto assets have fallen sharply, but Bitcoin's decline has been relatively small. The reason is that most cryptocurrencies are still considered "risk assets", while Bitcoin is gradually transforming from a risk asset to a "credit asset".
The core function of credit assets is to hedge against the excessive issuance of fiat 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. U.S. stocks and U.S. bonds have fallen, while gold and Bitcoin have remained strong, indicating that Bitcoin is gradually acquiring the characteristics of a credit asset. It is expected that within the next year, Bitcoin will complete its comprehensive transformation from a risky asset to a credit asset.
Currently, the market value of Bitcoin is less than 2 trillion US dollars, while that of gold is over 20 trillion US dollars. If Bitcoin eventually reaches the market value level of gold, whether in five years or ten years, it will be a huge opportunity for investors.
As for Ethereum (ETH), it is still a utility token. Its value depends on its actual applications in the ecosystem. Only when the applications explode on a large scale will 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.
Regarding the growth path of functional assets, you can refer to Silicon Valley’s classic book “Crossing the Chasm” published 30 years ago. The book points out that the growth path of users 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 adopters do not pursue immediate practical applications, but just love new technologies. For example, in 2015, when Vitalik came to Shanghai, Wanxiang Blockchain still invested US$500,000 in it even though the Ethereum mainnet had not yet been launched.
Pragmatist stage: The general public begins to pay attention to whether technology can truly bring value and solve practical problems. This is the "chasm" period that determines the life and death of the product, and 80% of projects fail at this stage.
Late adopters: They adopt the product only after seeing others benefit from it, and they make up the majority of the user group. The threshold for this stage is relatively low, but the prerequisite is that you must cross the "pragmatist gap".
Denier stage: The “traditionalists” who always reject new technologies. They prefer a stable, nostalgic lifestyle and are not receptive to new things without forced transformation.
Projects that can acquire users and realize cash from the third and fourth stages have a foundation for sustainable development. In addition, there are two types of assets worth paying attention to:
Security Tokens: For example, RWA (real-world asset tokenization), which is essentially the digitization of securities investment tools and must comply with securities regulatory rules. Ignoring supervision will eventually lead to legal risks.
Meme coin: Such as the Meme coin launched by Trump, its target users are speculators who are looking for entertainment purposes, similar to casinos in Las Vegas. Although it is mainly used for "fun", it also has real users and market demand, and is an independent asset class.
In summary, in the new generation of asset system, tokens are mainly divided into five categories: reserve type, functional type, credit type, securities type, and entertainment type. Understanding which category your project belongs to will help you more accurately determine its development path and regulatory requirements.
The essence and development direction of the new generation financial market system
The essence of finance is the cross-period mismatch of time and space value. For example, a startup company applies for a loan 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 the early realization of future value with current funds, which is a typical time value mismatch. Being able to achieve this value transfer in a more efficient and lower-cost manner 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 are global and all-weather — 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, 5 hours a day, to a "5×23 hours" near-round-the-clock trading system. In fact, the new technology 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 the natural choice.
AI and blockchain together constitute the infrastructure of the next-generation 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 information on the chain has the characteristics of instant disclosure (once per block), immutability, traceability and auditability, allowing companies to achieve efficient and transparent information disclosure without relying on the traditional semi-annual and annual reporting systems. Compared with traditional accounting systems, blockchain-based information disclosure mechanisms are more efficient and credible. New organizational forms such as DAO (decentralized autonomous organization) are based on transparent information on the chain and are a new governance model that enables 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 company contracts, bank transfers and other methods can no longer support the needs of efficient collaboration. On-chain protocols, smart contracts, and token incentive mechanisms will become the infrastructure for new business activities.
RWA: Tokenization of Real World Assets
The essence of RWA (Real World Assets) is 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 had already achieved the tokenization of fiat currencies, which can be regarded as the starting point of RWA.
From the perspective of development stage, RWA is mainly divided into three phases:
Phase 1 (2015): Tokenization of legal currency represented by USDT. Since sovereign currencies themselves have strong credit endorsement and are less dependent on oracles, the market can trust them as long as the custodian bank issues a receipt.
Phase 2 (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, law firm audits, etc.
Phase 3 (future): Tokenization of physical assets. This stage is the most difficult. The core difficulty lies in the authenticity verification and proof of ownership of off-chain assets, and the oracle becomes a key bottleneck.
There are three main types of oracle solutions:
1) Crypto-native oracles such as Chainlink: have realized the on-chain of crypto market prices and data.
2) DePIN (Decentralized Physical Infrastructure Network): It is the key oracle for future machine data on-chain, such as real physical world data generated by autonomous driving, humanoid robots, etc. With the development of AI and hardware, its importance will increase significantly.
3) Financial institution oracle: regulated financial institutions provide on-chain data endorsement through custody and other means. For example, a bank as a custodian confirms instructions on changes in the number of tokens to ensure that on-chain assets are credible.
The on-chain reflection of physical assets still faces huge challenges. There is currently no mature and reliable credit guarantee mechanism, but the continued development of oracle systems in the future is expected to solve this problem.
When discussing RWA (real world assets), it would be too idealistic to think that "everything can be RWA". To do RWA, we first need to solve two core problems:
First, how to chain it. That is, how to ensure that the data is authentic, unalterable and traceable. This often relies on an oracle system, but oracles themselves face issues of trust and accuracy.
Second, the issue of compliance. Certain financial products require approval from securities regulators before they can be tokenized. 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.
Furthermore, tokenization cannot be done just for tokenization’s sake. For ordinary investors, the returns from purchasing a US dollar money fund are not fundamentally different from those from purchasing 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 purchased everywhere, with no threshold at all.
Therefore, for RWA to be established, it must have its own unique purpose and added value. Otherwise, real-world asset securitization is already mature enough and there is no need for another layer of tokenization. In other words, tokenization must solve problems that traditional finance cannot satisfy.
A typical scenario is combining with DeFi. For example, the current annualized yield of US dollar money funds is between 4.5% and 4.9%. If you continue to enjoy the benefits after tokenization, and at the same time get an additional return of about 5% through DeFi lending, this is a way to increase value "without increasing risk." This type of income comes from improved capital efficiency rather than leverage, and is an innovation worthy of recognition. We are currently communicating with regulators, but have not yet received approval, so we cannot officially use tokenized money funds for DeFi lending.
Let’s take another example of gold RWA: People often think that gold is naturally suitable for ETFs or RWAs, but this depends on the specific implementing entity. If a gold miner or smelter claims that they produce gold every day and want to tokenize it, it is not feasible. There is no way for outsiders to verify the ownership, purity or security of the gold. However, if the gold ETF is issued by a licensed financial institution, approved by the securities regulator, and has bank custody, for example, a Hong Kong issuer stores the 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 rather than the mine owners.
In general, not all assets are suitable for direct conversion into RWA. It usually needs to be converted into a compliant financial product before being tokenized. This is the reality that the industry must face at this stage.
The combination of AGI (artificial general intelligence) and blockchain is under discussion
When talking about the combination of AGI (artificial general intelligence) and blockchain, I would like to share a little 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.
Over the past year, I have been looking for truly valuable AI+Crypto projects. It’s 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 networks are our long-term investment area. 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 just a slogan, but a deep engineering project at the hardware and network levels. Currently, 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 Creation Camp S5 are also making similar attempts. Everyone is welcome to discuss together.
In fact, as early as February last year, I found the CSDN team, hoping that they could mobilize developers and execute large models in a decentralized manner. This project has been underway for more than a year, and because everyone is working very seriously and down-to-earth, we feel 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 AI models to be executable 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 the user's authorization. According to our tests, 90% of users will not actively uninstall the app, but are willing to keep it.
This decentralized edge computing node network will allow users to earn token rewards for sharing computing power in the future, thereby enabling the entire ecosystem. This is not an easy task, but precisely because it is difficult, it means there are opportunities. Truly valuable innovations are never things that are “being done everywhere”.
Regarding AGI, OpenAI has proposed five stages: chatter, reasoner, intelligent body, innovator, and organizer.
Currently, ChatGPT has achieved its first stage; reasoners (such as DeepMind's Alpha series or OpenAI's O1) are also gradually taking shape. The third stage — the 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 comprehensive application in home scenarios, it may take another 5 years or even longer. The two more complex stages are innovators and organizers. Innovators create from 0 to 1, while organizers need to standardize, systematize and scale the innovative results, which is more difficult. Once all five stages are completed, AGI will be achieved. Optimistic estimates put AGI at 2027, conservative projections put it at 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 brings up an old but important proposition: national basic income (UBI). Economists have long proposed the UBI model to ensure that humans can still receive fair distribution in the AI era. I saw a news report where someone asked a technology tycoon what the ultimate destination of AGI would be, and he replied: socialism. In a sense, this is true - AI does not consume or waste, and the wealth it creates needs to be redistributed. The concept of UBI is to distribute according to "people" rather than work.
The next stage is UHI (Upper National Income), which matches the exponential growth of wealth created by ASI. In the future, perhaps you plan to travel to Antarctica, the Arctic, or space, and the systems 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 US president in 2020? His core policy is UBI, which would give every American $2,000 per month. He predicted the inevitable trend of the AI era too early. Why did OpenAI's Sam Altman create Worldcoin? It is to build a global identity authentication system (World ID) and a supranational currency system to lay the foundation for the future UBI. Because wealth in the AGI era no longer belongs to a certain country, it must be fairly distributed through supranational currency and transnational platforms.
Musk is also exploring similar issues. The identity authentication and economic behavior of AI machines must be based on blockchain. Otherwise we cannot verify the interaction 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, such as the UBI architecture built by Worldcoin.
This is a question that must be thought about for the future - when the means of production in 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 that comes closest to this answer.
Well, that’s all for today’s sharing. Thank you everyone!
