Instead of rigidly applying cryptocurrencies to incompatible scenarios, we should explore business opportunities that are naturally suited to cryptographic architectures.
Written by: Patrick Scott
Compiled by: Luffy, Foresight News
Every cryptocurrency cycle has its phases where some exit the market, others suffer heavy losses, and pessimistic voices abound. They claim that cryptocurrency is doomed, lamenting the time they've wasted in the industry, and asserting that the technology has no value other than being used for crime and speculation.
This scene plays out every few years.
I'm not writing this article to proclaim an "Altcoin bull market is coming," but rather to encourage optimism: now is the perfect time to build real business value in the cryptocurrency space. This article will share a series of entrepreneurial ideas that are ready to be implemented. These ideas have potential far beyond the small circle of the cryptocurrency community; they are practical, well-founded, and can create immediate real-world impact.
First, it needs to be clear that these kinds of articles are usually written by venture capitalists, but I am not one of them. I am neither a VC professional, nor do I run any investment fund, and I am certainly not an angel investor. To put it more bluntly: I cannot provide financial support for these entrepreneurial ideas. If you contact me saying you want to put them into practice, I will be genuinely happy that you are inspired, but I really cannot invest in you. At most, if I happen to know someone in the relevant field, I can help you by retweeting a post or making a business connection.
My true identity is that of the founder of a successful decentralized finance (DeFi) media outlet, operating one of the industry's largest DeFi-themed YouTube channels. Additionally, I previously worked at a leading DeFi data company, where I was responsible for building a sustainable revenue-generating business system. This background is crucial because many of the entrepreneurial ventures mentioned in this article stem from my firsthand observations within the industry.
For the past five years, I have been a heavy user of decentralized finance (DeFi) products. Based on my practical experience and industry background, I have a profound and confident judgment on the key factors for success or failure and the potential opportunities in the crypto space.
Some might ask, given the quality of these ideas, why don't I implement them myself? On one hand, I currently lead revenue and growth at the decentralized finance data analytics platform DeFiLlama, already creating significant value for the industry. On the other hand, I genuinely intend to put some of these ideas into practice, and even hope that readers of this article won't rush into these areas. However, after much consideration, these ideas are simply too valuable to keep secret. Ultimately, I've decided to share them, and sincerely hope that someone can turn them into reality.
Starting from the underlying logic, find the right direction for entrepreneurship.
To select startups that truly have practical value, rather than those that merely cater to crypto speculators, we need to deduce the underlying logic.
The underlying logic here is actually quite simple: What is the true value of cryptocurrency? And where do its inherent advantages lie compared to the traditional financial system?
Only by understanding these two issues can we discard the gimmick of "encryption for the sake of encryption" and get rid of the misconception of "using token incentives to attract users to use non-essential applications," and truly uncover the core value of encryption technology.
What we need to do is stop applying cryptocurrencies to incompatible scenarios and instead explore business opportunities that are naturally suited to cryptographic architectures.
First, I summarized the core advantages of encryption technology compared to the traditional financial system, and these advantages are the basis for us to explore entrepreneurial directions:
- Free flow of global capital: With the help of cryptocurrency, cross-border transfers can be made without paying foreign exchange fees or being subject to any capital controls.
- Instant 24/7 settlement: No need to wait several business days, transfers arrive instantly.
- Privacy protection features: Not all cryptocurrencies possess this attribute, but those that support privacy features can be used to build truly censorship-resistant applications.
- Extremely low transaction costs: In addition to the obvious advantage of "no credit card fees," low fees have also given rise to innovative applications such as "streaming payments," which are impossible to achieve under the traditional high fixed-fee model.
- Programmability and composability: Digital assets are controlled by code rather than intermediaries, making them "ownership by possession" assets. Therefore, they can freely circulate across decentralized applications, and can generate even more functions after being stored in smart contracts.
- The permissionless openness of cryptocurrency networks means that anyone, anywhere, and at any time can access them. This characteristic makes crypto technology an ideal fundraising option for groups facing the risk of account closure, and also provides a testing ground for financial products that need to overcome numerous regulatory hurdles to launch.
- Transparency and Traceability: The ownership of cryptocurrency assets and on-chain financial data can be tracked in real time, enabling the automation of previously cumbersome business processes.
Based on these core strengths, I have divided the entrepreneurial concept in this article into five major directions, each relying on the core value of multiple encryption technologies:
- Internet capital market: relying on three major advantages: global capital flow, programmability and composability, and permissionless openness.
- Anti-censorship applications: relying on three major advantages: privacy protection, permissionless openness, and global capital flow.
- Decentralized Science (DeSci): Leveraging the advantages of global capital flow, programmability, and composability.
- Stablecoins: encompassing all the core advantages mentioned above
- On-chain corporate governance: relying on the core advantage of transparency and traceability
Internet Capital Market
The future of cryptocurrencies, and even the future of the entire financial and internet industry, largely lies in the internet capital market.
Recently, this concept has gained a bad reputation. The reason for this is that many people have applied the Meme coin model to various assets, resulting in products that are essentially no different from Meme coins, filled with poorly designed token economic models, and packaging speculation as ownership investment.
To be honest, we may need a completely new terminology to define this track, but its underlying framework itself is extremely valuable.
In my view, a true internet capital market is not a game centered on speculative tokens, but rather about enabling cash flow to become natively investable on the internet.
Imagine a future where not only decentralized finance applications on the blockchain, but also the cash flow of everything in the world can be tokenized—including businesses in the real economy that generate stable cash flow, dividend-paying stocks, royalty streams, real estate projects, various applications, micro-subscription software portfolios, and all on-chain and off-chain products.
These assets will become investable, tradable, and can be recombine to form entirely new financial products. The entire process is open globally, permissionless, and has extremely low transaction costs.
This is the true form of the internet capital market.
I believe that the following specific areas urgently need someone to develop on-chain fundraising tools and applications for investor cash flow allocation:
- SME financing
- Financing for micro-subscription software and information products
- Royalties Revenue Stream Securitization
- Creator revenue rights financing
When the "fundraising by relatives and friends" model becomes unsustainable, what new paths for capital formation are there?
In traditional entrepreneurial models, entrepreneurs typically rely on relatives and friends to raise start-up capital. Even today, this remains a primary financing method for small and medium-sized enterprises (SMEs).
However, changes in social structure have gradually rendered this model ineffective: family sizes have shrunk, friends are scattered around the world, and relatives and friends live in different countries.
Nowadays, fundraising from relatives and friends is not only complicated and its compliance is questionable, but even the process of collecting funds is fraught with difficulties.
The internet capital market has made global fundraising possible again, and this model is applicable to all asset classes.
More importantly, the cash flows generated by these investments can be repackaged, combined, and embedded into new financial products. Once millions of businesses and products tokenize their cash flows, we can leverage financial primitives proven in native decentralized finance to build entirely new financial ecosystems on top of these assets.
Censorship Resistance: An Indispensable Core Competency
Another core attribute of crypto assets is censorship resistance.
This attribute stems from the two key characteristics of encryption technology: permissionless operation and privacy protection.
Public blockchains have achieved permissionless openness, but privacy protection has long been neglected.
It's important to note that my current work heavily relies on the transparency of on-chain data. However, it must be acknowledged that in many application scenarios, privacy protection is not only a better solution but also a necessity.
The line between compliance and non-compliance is quietly shifting.
You might think you don't need censorship-resistant features at all. But can you be sure that you won't need them someday?
In parts of Europe, the trend is already beginning to emerge: dissidents are being suppressed, bank accounts are being closed, and people are being arrested for their social media posts.
The next step is obvious: political groups are deprived of fundraising channels, their bank accounts are frozen, and their payment channels are completely cut off.
When that day comes, how will these groups function?
The answer is self-evident: cryptocurrency-based networks.
The following niche sectors are naturally suited to encryption technology and urgently need entrepreneurs to invest in them:
- Censorship-resistant fundraising tools for political groups: With European governments increasingly cracking down on populist parties, it's only a matter of time before these parties are deprived of banking services. Cryptocurrency solutions allow them to securely raise and store funds without fear of account closure. Privacy protection features are crucial to prevent retaliation against members.
- Crowdfunding platforms that cannot be censored: While some crowdfunding platforms claim to be censorship-resistant, they are ultimately still subject to payment service providers. In the past, activists and governments often pressured payment service providers to force crowdfunding platforms to remove specific fundraising projects. However, crowdfunding platforms built on encryption technology can fundamentally solve this problem. The payment process operates on a decentralized network, with no central node that can be pressured. Even if opponents of freedom of speech clamor, they will only achieve nothing.
Decentralized Science (DeSci): The Intersection of Artificial Intelligence and the Internet Capital Market
The development of artificial intelligence is significantly lowering the barriers for individuals and small teams to conduct original scientific research.
This has been demonstrated in cutting-edge scientific breakthroughs such as protein folding. Artificial intelligence can process massive amounts of literature and data, uncovering potential connections that humans might not be able to discover even after decades of research.
However, scientific discoveries alone are far from enough; bringing scientific research results to the market requires the support of capital.
This is precisely the gap that decentralized science (DeSci) fills.
DeSci addresses the core pain points
I worked at a nonprofit organization focused on children's cancer research. That experience made me realize the immense value DeSci can create in the fields of medical aid and scientific research.
Many rare or niche diseases are often overlooked by pharmaceutical giants due to their small patient base and limited short-term commercial value. Research in these areas either relies on the secondary development of existing drugs or suffers from insufficient funding and slow progress.
By leveraging the permissionless global capital markets, we can find people who genuinely care about these diseases and fund research projects.
When artificial intelligence is combined with DeSci, individuals and small teams can also carry out cutting-edge scientific research.
The most heartbreaking scenario is that of patients with rare diseases. There may be only 20 people in the world suffering from the same disease, research on this disease is almost non-existent, and the probability of obtaining research funding is extremely low.
The emergence of DeSci has made scientific research on this type of disease possible and may even lead to groundbreaking treatments.
This model also applies to disease areas with large patient populations that have been sidelined by pharmaceutical giants.
DeSci's path to capital return
Fundraising is only one part of the DeSci ecosystem. We also need to establish a mechanism to validate research results, distribute returns to investors, package intellectual property and royalties, and achieve efficient revenue distribution.
The on-chain milestone-based funding unlocking mechanism can significantly reduce administrative costs, allowing more funds to be truly invested in scientific research. At the same time, greater transparency allows donors to clearly understand the flow of funds, thus encouraging them to invest more capital.
To enhance the investment appeal of DeSci projects, we can learn from the portfolio models in venture capital and film financing—the success of one project can cover the costs of the entire portfolio.
Specifically, an investment portfolio of 10 high-risk, high-return research projects can be constructed. By investing in this basket of projects, investors increase the probability of producing groundbreaking scientific results. Once a treatment is developed from a project, AI tools can help identify other commercial applications for that treatment.
Stablecoins: The least controversial goldmine
Currently, the total global supply of stablecoins has exceeded $300 billion, an increase of hundreds of billions over the past two years.
According to Treasury Department forecasts, the total supply of stablecoins will approach $3 trillion by 2030.
Conservative estimates suggest that hundreds of billions of dollars will flow into the blockchain over the next few years; optimistic estimates suggest this figure could reach trillions. This does not include funds already on the blockchain that have not yet been fully utilized.
Startup opportunities in stablecoins can be mainly divided into two categories: "savings" and "payments."
Savings apps
Globally, a large number of people desire to hold US dollar assets. This is particularly evident in developing countries.
Despite its many flaws, the US dollar remains the most stable and liquid currency for trade settlement globally.
By leveraging stablecoins, we can develop savings products that far exceed those of the traditional financial system. For example, savers can allocate customized asset portfolios of currencies and commodities and earn returns from foreign exchange trading through liquidity providers.
Payment and utility applications
Stablecoins offer significant advantages in payments: instant settlement, no cross-border fees, extremely low transaction costs, and availability 24/7.
Several companies have already demonstrated the feasibility of stablecoin payments through their own practices.
The following areas are excellent application scenarios for stablecoin payment solutions:
- Gig Economy Platforms: Labor arbitrage models often involve cross-border payments. Traditional transfer processes are cumbersome and costly, while stablecoins can perfectly solve this pain point.
- Cross-border remittances: Wire transfers may be the first traditional financial service to be impacted by cryptocurrencies, but there are still gaps in the market. We need better services to bridge the last mile between cash and cryptocurrency payments.
- Disaster relief: In disaster-stricken and war-torn regions, distributing stablecoins directly to the wallets of affected people can bypass bureaucratic red tape, corruption loopholes, and banking system paralysis, enabling aid funds to be accurately and directly delivered.
Programmable money and streaming payments
Another key advantage of stablecoins is their programmability.
This characteristic has given rise to a continuous, streaming payment model, rather than the discrete payroll cycle model of the traditional financial system. The decentralized payment protocol LlamaPay is an excellent example of this model.
Based on this concept, we can develop even more innovative products:
- Streaming Payroll System: Integrates streaming payment with attendance software—when employees clock in to work, the payment process automatically starts; when they clock out to leave, the payment process stops immediately. Payroll is settled and credited instantly, eliminating the need for a two-week pay cycle and concerns about payroll delays.
- Subscription-based software: Currently, users are increasingly fatigued with subscription services. Subscription models for software and API services can be combined with streaming payments, allowing users to pay only for actual usage. This model establishes a clearer link between usage and revenue, and avoids cumbersome processes such as invoices and bills.
On-chain corporate governance: New possibilities beyond decentralized autonomous organizations (DAOs)
The governance model of decentralized autonomous organizations (DAOs) has become a laughing stock within the industry. This assessment is not without merit.
However, on-chain corporate governance may be one of the most transformative applications of cryptography.
Even leaders in the traditional financial sector acknowledge the value of on-chain voting: Larry Fink, CEO of BlackRock, wrote, "Tokenization technology enables the digital tracking of asset ownership and voting rights, allowing shareholders to exercise their voting rights conveniently and securely from anywhere in the world, significantly reducing governance costs."
The failure of the DAO governance model stems from its attempt to promote direct democracy, a model that is completely unsuitable for business operations.
What should an ideal on-chain governance model look like?
Token holders often worry that their tokens are worthless, and this concern is often not unfounded.
However, the solution is definitely not to have token holders vote on all matters.
An ideal on-chain governance model should mimic the governance structure of traditional enterprises: clearly defining the rights of all parties, protecting the interests of minority shareholders, having shareholders elect the board of directors, and then having the board of directors appoint management to be responsible for daily operations.
A company's day-to-day operational decisions should never be made by direct voting from shareholders or token holders. Instead, the core right of token holders is to elect a board of directors, giving management full authority over the company's operations. We can solidify these rules through on-chain code, for example, by granting the majority of token holders the right to take over the treasury.
Currently, the market urgently needs a product that can replicate this traditional corporate governance structure on the blockchain.
From crypto governance tools to publicly traded infrastructure
Currently, thousands of crypto protocols serve as testing grounds, evaluating various on-chain governance models. Once a governance architecture is proven feasible, it can be continuously optimized and iterated upon, and eventually extended to traditional listed companies.
In the future, we can build on-chain equity and on-chain shareholder voting systems for traditional listed companies.
Thus, a clear path emerges from niche DAO tools to capital market infrastructure for listed companies.
Other on-chain company governance derivatives
As more and more enterprises adopt on-chain governance models, market demand for a series of related supporting products will also emerge:
- Standardized financial disclosure tools: In the past few years, many risks in the crypto market could have been avoided if standardized financial disclosure, transparency of treasury fund flows, disclosure of token unlocking and buyback information, and announcements of major events had been implemented. These tools will also be applicable to other on-chain enterprises in the future.
- Mergers and Acquisitions Tools: With some crypto teams facing funding difficulties, a wave of industry consolidation and mergers is imminent. The market needs a professional platform to facilitate token swaps, M&A payment, treasury consolidation, and other functions, ensuring complete transparency throughout the process.
- On-chain governance access tools for listed companies: These tools help traditional listed companies gradually pilot on-chain voting models without disrupting their existing governance structures.
- Payroll Management Tool: Based on on-chain milestone verification, manages payroll-related matters such as performance bonus distribution and token option unlocking.
Compound interest effect: a positive cycle in the on-chain ecosystem
In the coming years, one of the major attractions of the crypto industry is that every instance of real-economy cash flow being recorded on the blockchain will make the technical architecture of decentralized finance more valuable, while also enhancing the utility of other financial primitives.
All the entrepreneurial ideas mentioned in this article can now create tangible value. But the real magic will emerge after tens of millions of real economy enterprises complete their on-chain transformation; at that time, various financial primitives that have been tested in the field of decentralized finance over the past five years will be re-energized to serve these external cash flows and give rise to a brand-new financial ecosystem.
