Live Review｜New Trend of Web3 Investment

On December 12th, Blockbeats and RockTree Capital had a live conversation on the theme of "New Trends in Web3 Investment". As an event to look at the investment trend of Web3 from the perspective of institutional investment, the guests in this live broadcast are team founders with rich investment experience, including Omer Ozden, chairman of RockTree Capital, GP David J.Namdar of Coral Capital, Waterdrip YuShan Zheng, co-founder & managing partner of Capital. This is also the first episode of the RockTree OG Talk Series, a series of live events from RockTree Capital.

The following is the basis

BlockBeats (host):Welcome to today's BlockBeats live video room, today's theme is "New Trends in Web3 Investment", this event is also the first episode of RockTree Capital's live broadcast event RockTree OG Talk Series. RockTree Capital is an international investment group and early investment fund, focusing on the investment and ecological support of blockchain projects. As a bridge and link between Greater China and North America, RockTree Capital invests in high-quality projects with low valuations in the early stage, and provides services in transaction execution, overseas financing, community development, legal compliance, etc. for top blockchain projects . RockTree Capital's professional teams are located in Beijing, Shanghai, Nanjing, Singapore, New York, and Toronto, providing truly global solutions for blockchain projects.

We are honored to have today Dr. Omer Ozden, Chairman of RockTree Capital, and Coral Capital GP & Galaxy Digital co-creator David J.Namdar and Waterdrip Capital co-creation & managing partner Mr. Yushan Zheng, the three guests will discuss with us and express their opinions on topics such as the investment direction and the future development prospects of Web3.0.

Omer Ozden:Thank you very much for the introduction of the host, in fact, you have introduced I have mentioned some of my personal content, and I would like to add one more point. First, RockTree Capital is involved in some investment projects in China’s Asia Pacific and the West. As early as the 1990s, I came to China with New Oriental Group to do related projects. some items. At the same time, I now have an in-depth cooperative relationship with the ZhenFund established by the founder of New Oriental. We also learn from their investment philosophy and pay attention to the teams of the invested projects.

As early as the last century, we have already participated in the investment of major projects including Baidu, Ali, Netease, Facebook, etc. Next If we want to find and face the next generation of "Baidu", "Ali", "NetEase", "Facebook", thank you very much.

BlockBeats (Moderator): Many thanks for the addition, Omer. Then David, please briefly introduce your background and experience.

David J.Namdar:Thank you very much for the introduction, I think Let me briefly introduce my background to you. At the beginning, I worked in UBS Investment Bank in Hong Kong, China. One of the reasons I am most grateful for this job is that it helped me open up the landscape and learned that there is a business that can invest in cryptocurrency. When I was at UBS Investment Bank, my daily job was to engage in some currency transactions and some hedging transactions for the Asian market other than the Japanese market, and of course the European and American markets.

I returned to New York from Hong Kong in 2010 to work for Millennium Hedge Fund, but I still keep an eye on the performance of Asian markets as a whole. By 2011, I began to pay attention to cryptocurrencies, especially Bitcoin, because I learned that Bitcoin itself is the original currency rooted in the Internet. According to my past experience in Hong Kong, the large Most people actually have an advantage over the rest of the world because they have seen and accepted other neighboring currencies in addition to their own, such as the US dollar, euro, Australian dollar, and Japanese yen.

Later, around 2012~2013, I completely gave up the traditional currency and investment work. I founded an encryption-related business, and in 2014, I started to engage in some derivative products of cryptocurrency.

A few years later, together with Maichal Novogratz, I founded Galaxy Digital, which has become the largest financial services company in the crypto industry, as Thomas introduced one. Last year, I established Coral Capital in Puerto Rico. This is also a company that focuses on decentralization and helps some families manage their wealth based on Web3.0 technology. At the same time, I actually helped a company go public last year. I also served as a related management job. Thank you all.

BlockBeats (Moderator): Thanks David for the great introduction. Next, I would like to invite YuShan Zheng, co-founder & managing partner of Waterdrip Capital, to introduce himself to everyone.

YuShan Zheng: Hello everyone, I am YuShan Zheng from Waterdrop Capital , First of all, I am very grateful to RockTree Capital for the invitation. I am very happy to share it with you tonight.

Let me introduce myself first, because today’s host is also OG Talk, I want to prove that I am relatively "old". The first time I knew about Bitcoin was in 2012, when I was about to graduate from PhD. When I was writing my doctoral thesis, I had a lot of time to read magazines, and then I discovered the existence of Bitcoin by accident, and bought some in small quantities. In fact, I really entered this industry in 2013 when I joined BitShares. I believe that many old people should know about this project. It is actually the first decentralized trading platform. Of course, I did not join the team. I joined its official community as a volunteer. As the moderator of the Chinese forum of the forum, he is responsible for the communication between fans of Chinese and foreign teams, and is also responsible for communicating some matters at home and abroad. Until 2017, I joined the cryptocurrency industry full-time and founded Waterdrip Capital with three other friends. These friends are also the earliest batch of blockchain practitioners in China.

Let me also introduce Waterdrop Capital. Our Waterdrop Capital focuses on the investment of early projects. Since 2017, we have also launched several The fund has invested in more than 100 projects in total, and also invested in some projects with RockTree, and the performance is generally good. Part of our funds are also invested in Bitcoin mining. Of course, it was greatly affected by last year’s policy, and now we have basically launched it overseas to continue our business.

Our latest development is that we will launch our fund in Hong Kong next year, and we have already signed an agreement with a giant. Of course, because there is no public release yet, I can't disclose the name yet, but I hope everyone will pay attention to us, and then relevant information will be released in the next few months. thank you all.

BlockBeats (host ): Thank you very much for YuShan Zheng's introduction, and I look forward to the announcement of related good news as soon as possible. After a brief introduction, we enter today's topic. First of all, I would like to ask you a macro question. Most people think that the bear market is a good time for us investors to invest in the market, and it is the same for developers. It can be said that the entire industry of cryptocurrency is developing very fast. The phenomenon of fast-moving projects in the industry, of course, some may be able to develop very well, but there are also cases where projects disappear within 1-2 months of launch. I would like to ask the three of you, which projects do you think are worthy of attention and investment? Which ones may have lost everyone's investment focus and discussion?

Omer Ozden:In fact, at RockTree Capital we always have a complete set of investments Philosophy, investing is like playing ice hockey. The speed of the ice hockey is very fast. What we need to pay attention to is not where the ball is now, but which direction the ball will soon go in the future.

Generally speaking, in the future, we are very concerned about the development of cross-chain, including Layer1, Layer2, and the middle layer. In the next 2~10 years, I expect these are some of the directions that will lead the future in terms of technology. As far as users are concerned, he will also pay great attention to some developments of multiple layers. Generally speaking, there are two major trends that are still worthy of attention:

The first is still DeFi, which is the core of the entire cryptocurrency. In the future, what we need to do is more innovation. In fact, this innovation has already begun in 2019, but we will see more Such a trading place for DeFi.

The second major direction is Social Decentralization (social decentralization). I have cooperated with Facebook in 2006. I think In the field of DeFi, they are doing some financial disruption and innovation, so in the field of social decentralization, just like Facebook, they will also become an important point of disruption.

BlockBeats (Moderator): Excellent answer. From your reply just now, I also want to ask a supplementary question, because I am also very interested in the development of the social layer. In fact, since last year, many people have predicted that Social Decentralization will have great development. But everyone has not seen such an outbreak, so I would like to ask you, at what time point do you think we will find this huge and significant change?

Omer Ozden:In fact, we have seen the current DeFi and SocialFi has encountered many challenges in the global regulatory environment. It is not easy to predict the future based on the current situation, but I think SocialFi will make progress in 3 years, and will move towards a vigorous development stage in 10 years .

David J.Namdar:Omer has answered very well, in fact, my point of view is very similar to his What we should pay attention to is the future development. We all know that cryptocurrencies have gone through several cycles in the past years. People basically hide bad projects when the market is good and the overall market environment is good. So I always insist on operating with such a counter-cyclical vision and some anti-trend concepts. In fact, I also communicate and empower some of my teams in this way, so that they always remember to watch for a few more years.

In fact, I think the development of a technology depends more on the attitudes of some young people and the public. For example, I found that in the past one or two years, many young people think that blockchain technology is very interesting and fascinating, and they are willing to develop technology for the sake of technology. There is hope. Because the key to the development of DeFi is that people are willing to use it and use it more. We have also seen that, in fact, people used it to do some derivatives such as lending or doing some such transactions before, which is very good.

Of course, we have also seen that the reason why the financial system has many problems is that traditional centralized finance is used very much Many, which will still bring a lot of related problems.

BlockBeats (moderator): Thank you David for your statement, I also agree very much. Because you also mentioned just now that you have many close interactions and some intersections with many developers and some people engaged in technical development, so I would like to ask you to give us an example to see which cool tools get for good usage and development?

David J. Namdar: Actually, one of the examples I want to give It is the Lightning Network (Lightning Network), and some related payment functions, because today we are talking about the development of Bitcoin and cryptocurrency. On the Lightning Network, I found that it has a very good purpose , is to increase its scalability, and its development is actually better than we thought. The so-called scalability is also a common goal that many of our different networks want to achieve. Because just now Omer also said that there will be many new technologies in the future, and I also believe that there are applications of artificial intelligence that we can think of.

BlockBeats (host): YuShan Zheng, please tell us your point of view.

YuShan Zheng: First of all, everyone mentioned the Lightning Network, which is also our very Pay attention to a track that is also very heavy investment. We believe that the bear market is a very perfect time to make some early investments. During the bull market, many organizations, including individuals, paid more attention to the narrative, rather than whether the project really solved the problem, or did it really create value for the industry?

But in a bear market, if a founder asks himself, what if the market doesn’t buy my story? It doesn't matter, I think even if people don't buy your story, they can happily use your products to reduce costs, or improve efficiency, or really solve practical problems. I believe that no matter whether your story is good or not, at least users are willing to buy your product. When someone buys a project product, this project must be a good project.

Waterdrop Capital is mainly investing along three main lines of investment: the first is the infrastructure of the blockchain, of course not It refers to Layer 1. On the contrary, we feel that there are already too many Layer 1s in the market, and most of them may not exist in the next bull market. The Layer 1 we are talking about is more about this kind of hardware and software infrastructure. For example, the hardware infrastructure of the blockchain includes distributed storage and distributed computing, and the software infrastructure includes decentralized Asset management, or a decentralized development environment.

There are too many native programmers in the encryption field who are relatively casual, or relatively young, they do not have much experience, so many The development is not standardized enough, or the details are not enough attention, which leads to the theft of many DeFi products, most of which are caused by the lack of experience or carefulness of the developers. If there are some decentralized development environments, some developers Can be done in a standardized way, I believe these situations can be avoided.

If we want to migrate many applications of the entire Web2 to Web3, I believe that the decentralized storage, computing, Software infrastructure and so on are very necessary.

The second area of investment we focus on is blockchain games or some high-traffic applications that are originally carriers. These applications are best undertaken by teams with strong traditional capabilities and teams with very successful development and operation experience in traditional industries. Because it is hard for you to imagine that an inexperienced team can make a product with many bugs and retain more than 100,000 users. This is relatively difficult. This is different from DeFi. Many DeFi products may only need a small amount of development because there are not many lines of code in total, but this kind of game or metaverse is completely different and requires the joint efforts of many people. cooperate.

The last area we are focusing on or investing in is the Lightning Network, which is the new Bitcoin Layer 2. Everyone may have thought that the Lightning Network is equal to a fast payment network for Bitcoin, but in fact there are many new Lightning Networks, which can be used for DeFi, and there may even be decentralized transactions on it. Open up a new field, allowing many applications to effectively use the largest piece of assets in the entire virtual currency market, that is, Bitcoin to do some DeFi, so that when there is not enough new capital inflow, we can also use it ourselves It is possible that there will be another round of bull market in the circle.

BlockBeats (host): YuShan Zheng gave the audience a very comprehensive answer. It seemed like the focus of every panelist was on the Lightning Network, and I've talked to some developers myself and they did say it's a very interesting area. So the next question is David, one of the early participants in the industry, how do you accurately predict hot spots, and how to explore whether a certain project is feasible in terms of venture capital, including using the DeFi platform for liquidity mining? How to judge the change of trend?

David J. Namdar:Okay. First of all, I have been in the cryptocurrency industry full-time since 2014, and I have felt that this has become my calling since then. The encrypted world not only helped me open my horizons, but I also want to impart the knowledge I have gained to all my peers. At the same time, I also want to protect them and warn them to invest in a safe way instead of simply going to Chase hot spots.

I have a theory that is very applicable to everyone, that is, when you develop a product or project, you can ask if Are you a user and would you buy it? Will you use it? Or is it that you develop this project and this product just to sell it to others.

NFT was very popular last year. At that time, I also saw many such projects, and some were based on such blockchains For some games, many people came to me (investment) and I asked them, do you think you plan to buy NFT projects yourself, or are you just selling them to others? Basically, more than 99.9% of people say that they will not buy or use it themselves, they just sell it to others, so I am very concerned about this.

I will uphold this principle in my daily work, including monthly review, and even in my annual work. This is true whether it is my personal investment, cross-chain development, or simple currency transactions between friends. In addition to this, in fact, I also value how some experienced people in this industry operate when we enter a new industry, because they can also help me better avoid some risks.

BlockBeats (host): Then I want to ask Omer, because you can be said to be a very successful investor , has the title of "Decacorn" hunter. We also know that risk control is very important in the investment field. In the past few years, you have invested in many projects with a market value of more than 1 billion or even 10 billion, including Chainlink, GRT, dYdx , Fantom and Pocket, etc., so I would like to hear your investment philosophy and some philosophy of risk control.

Omer Ozden: I just shared with you, the early years were Yu Minhong, Xu Xiaoping, and Wang Qiang, the founders of New Oriental, brought me to Beijing. We have been working closely with ZhenFund. They told me that the core of investment lies in the investment team itself. Although the cryptocurrency industry we invest in is decentralized, it is actually centralized, because no matter how advanced the technology is and how safe the entire development process is, we will always invest in people, especially in the early stages of the project when.

We were in the last round of bull market, that is, 2016~2017. In fact, we did not move so fast when investing. Knowing that in American society, when we decide whether to invest in a new project, the routine process is to conduct some due diligence and hold some meetings to make a decision. But I actually appreciate and respect some of China's business culture. We will get to know the founders, their conduct and some of their characteristics through some business dinners, face-to-face conversations, and private communications. This is the first point.

The second point is that I am very concerned about the relationship with the founder, because the core of this relationship is to see whether we can communicate with each other trust. For example, when Yushan and I decided to invest in projects together, when we shared our ideas with David, it was a process to see if we could build trust with each other. After all, when getting to know the founder of a project, trusting him is the key. You need to look at his basic qualities, whether his conduct is honest and upright.

Although we are engaged in the cryptocurrency industry, we do not want this to happen, and some founders may soon Get rich, once he gets rich, he becomes less willing to manage the project, which is not what we want to see. Therefore, we also hope that the founder can maintain a clear mind and a diligent attitude, no matter whether he is relatively well-off in his own right or he has accumulated wealth through entrepreneurship.

So of course we have recently, for example, since we invested in the project in 2018, we may take some seats on the project board. Now we look at the project , Including looking at projects in the next bull market in the future, we also hope that there are people in this team who we trust and can rely on.

BlockBeats (host): Thanks to Omer, the unique combination of Chinese investment style and Western investment style is also very advantageous and characteristic of. So Yushan Zheng, as the founder of Waterdrip Capital, you have also brought stable returns to investors, so what is your investment situation in 2022? Some investors think 2022 will be their worst year, how do you rate your 2022?

Yushan Zheng:First of all, I believe that 2022 will be a very difficult year for all crypto funds, especially some star institutions in the past two years. In fact, this incident is not a special accident. We often say that profits and losses come from the same source. A very high leverage operation has made them and destroyed them at the same time, only within a bull-bear cycle. We were lucky in our own words, as we were not directly affected by several crashes, such as Luna, Three Arrows, and FTX. Of course, we have invested in many projects with these institutions at the same time, which will inevitably be affected, and it is also very tragic.

We are actually a lot more conservative now than a year ago. In 2020 and 2021, we have invested in a total of over 70 projects, but in fact at the end of 21 , we changed the investment logic. We were very strongly aware that a bear market might be coming, so we have only invested in 12 projects in the entire 22 years so far.

In terms of performance, our previous funds were very lucky to have positive performance, and they were all investments for us People, including our team, have brought profits, at least on the books, because some funds have not been fully launched. Of course, we hope to maintain a relatively good record. Even in the next year, we think at least one year, we expect a bear market, everyone wants to keep the record, if we have to rate ourselves, we barely score 80 points, there is still room for improvement, thank you.

BlockBeats (Host): I think all the Survivors have definitely been winners over the last few years. Many institutional and retail investors were not immune to the Luna, Three Arrows, or FTX events. Our dialogue has also come to the last part, please conclude today's dialogue by commenting on the following two questions. The first question is, what is the most important thing you have learned in 2022? And the second, are there any lessons you can apply in future investing, especially in the next bull market?
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Yushan Zheng: For 2022, I think the most important thing I have learned is that survival is the first priority . This is a sentence from the three bodies of science fiction. Some people may know that the water droplets in our Waterdrop Capital are actually taken from the novel The Three-Body Problem.

I think whether it is for institutional investors or retail investors, always let yourself be on the poker table and never put the last Getting a bullet out is the most important thing in the investment market. Because there are always many opportunities in this market, as long as you have chips in your hand, you can always wait for such opportunities. This is what we have learned in 2022. We have gone through several cycles, and every time in each cycle, some star organizations appear and then disappear, but those who really persist will find that they are getting stronger and bigger all the time. This is what we have learned Yes, especially in a bear market I think it is very important.

As for the prospect of the next bull market, first of all, we have enough patience to wait for the arrival of the next bull market, whether it is a year later, Two years or even three years later. We have enough bargaining chips and enough patience, and we really firmly believe that from the analysis of various data and logic, the bull market will definitely come, and it will be a stronger bull market than before. A summary of this sharing, welcome everyone to communicate with me privately in the future, thank you.

David J. Namdar: For me there are two such related experiences in 2022, maybe I haven't done it so thoroughly yet. The first thing is to ensure diversification when investing. For example, we try to find as many trading platforms as possible to reduce the direct impact caused by the possible problems of some major platforms. For example, we can set such a limit by ourselves, 5%~10%.

Then the second is that I think everyone must maintain a certain reasonable space for suspicion when the media propaganda is very fierce. For example, I think that in the past few years, I have always been very optimistic about Tether, but in fact the media’s evaluation is not high. On the contrary, the media’s publicity and reports on FTX and LUNA are very positive, and they often promote the so-called "best trader". ", "the best company" and so on.

Everyone must be very vigilant when investing, and must maintain this kind of suspicion Attitude, instead of just paying for everything when you see the media’s publicity, only in this way can you reduce the probability of mistakes as much as possible and maintain a long-term stability.

Omer Ozden: I think one of the big things we learned in 2022 is that whatever we learn in 2022, we might forget it in 2025 , Just like the experience and lessons we summed up in 2017, we have forgotten today. We actually knew a few years ago that some cryptocurrencies in the entire market may be problematic, and the leverage of some products and projects is too high , but now everyone has forgotten. What we can do is to be able to reflect on and review the mistakes we made at that time, and see if we can prevent the recurrence of mistakes through the mistakes we made before. This is what we want to do. One meaning of positioning, so that we can better prepare for the next bull market.

The second point is Web3.0, which we can regard as a centralized Tools and places, because of the development of Web3.0, it is essential to focus on people. We need to cooperate with trustworthy people and people worthy of investment to achieve success.

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BlockBeats (host): Very good summary. Because the guest just talked about the centralization issue. It reminds me of another topic, because this year’s thunderstorm Incidents happen frequently, and the governments of some regions and countries are strengthening their supervision, including the trend in Singapore and the United States, and the US Securities Regulatory Commission is also one of the promoters. So I would like to ask whether centralization will become an issue in the future. The future trend? Will the government strengthen the supervision of cryptocurrencies, and whether the centralization we are talking about today is a natural opponent of the blockchain?

Omer Ozden:The answer is yes. Because it is true that centralization is not conducive to the development of the blockchain, and some governments are indeed curbing it The development of the entire DeFi is also really not conducive to decentralization. As far as the market is concerned, we know that the technology has been developed now, and the developed technology cannot make people go back to the past. So this kind of regulatory pursuit is also Well, the pressure on regulation is good. In many cases, there are some traditional institutions behind the scenes, including I think Wall Street is one of the typical examples. In terms of promoting the suppression of decentralization, Wall Street does not mean to achieve government The purpose is not for the general welfare of the whole society, they are more to satisfy some interests of their traditional financial institutions.

BlockBeats (host): Thank you very much for your wonderful views! This is the end of today's conversation. I believe that the audience will benefit as much as I did. Thanks to the three guests.

About RockTree Capital

RockTree Capital (RockTree Capital) is an international investment group and an early investment fund. It is in a leading position in innovation in China and North America. It focuses on blockchain project investment and ecological support, and also seeks international capital for many The blockchain project provides services such as global legal compliance, professional project execution and international development.

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