Dialogue with Cypher Capital: What kind of L1 can win the "Web3 operating system" competition?

Despite the strong dissatisfaction in the community due to the "abandonment storm" not long ago, the hot IEO situation of various trading platforms has once again brought Sui back to the mainstream crypto market. middle. "Curse, scold, buy, buy", this has always been the most accurate sentence to describe the encryption market. For those projects and teams with "recognized potential", whether they are institutions or individuals, they will never hesitate to invest in their funds. When they met Sui, Cypher Capital was like this. They quickly took out 5 million US dollars and became Sui's sole investor and main network node operator in the Middle East. After the "Sui IEO Boom", we had the honor to talk with Cypher Capital Chairman Bill again about Sui and the future of the Web3 public chain field.

Cypher Capital is the investment fund of Phoenix Group, the largest Web3 platform in the Middle East. The Phoenix mine owns 7% of the global network computing power, and also operates the upcoming compliant exchange M2.com and the quantitative trading fund Cypher Labs. As an investment entity of Phoenix, Cypher Capital is a multi-strategy Crypto investment fund headquartered in the UAE and Hong Kong, covering BTC mining, secondary market, Fund of Funds, nodes, VC and other fields. In the field of VC, Cypher Capital has invested in various star projects around the world, such as Mysten Labs, Ton, Sei, and Cymbal. (BlockBeats note, for more information about Cypher Capital, please read "Interview with Cypher, the top Web3 venture capital in the Middle East: Learn from Chinese Internet investment Dubai's upstart")

The following is the conversation between BlockBeats and Cypher Capital GP and Chairman Bill:

BlockBeats: Can Bill briefly talk about why Cypher invested in Sui?

Bill: I should be the last one among global investors to see Evan’s, but we chatted very well. At that time, he was already 3 times oversubscribed, but he quickly realized that his cap table lacked EMENA investors, and the Middle East is becoming a new center that cannot be ignored by the global Web3, so On the spot, he promised me that he would communicate with other people, and welcome us to invest 5 million US dollars. We are excited to partner with a team of veterans like Sui. I think Evan is among the founders of L1, a technical leader who has rare experience in platform development through three technical cycles.

At the same time, we are also running the only node of the Sui mainnet in the entire EMENA area, doing As the world's largest Bitcoin mine, node operation is naturally our strong point. In addition, because I am also a co-founder of the Wanwudao community, Cypher Capital will also cooperate with Wanwudao to build Sui's developer community in Asia and help more developers join the Sui ecosystem.

BlockBeats: Layer 1 competition is becoming more and more fierce, Bill believes that the future competition in the new public chain field What will the situation look like?

Bill: About Layer1, if we start from the "operating system" From the perspective of understanding, then this is actually not a new industry. First let's look backwards and make a technical history comparison. If we look at the "Layer 1" operating system of the Web2 mobile Internet, there are only two operating systems in the mobile Internet, one is iOS and the other is Android. Their competition actually ended as early as 2010. You will never encounter Symbian and Windows Mobile after 2010, because they were eliminated in the Layer1 competition of the mobile Internet. Winner-take-all is a common phenomenon in Web2. One driving factor is economies of scale, and the other is network effects. As long as these two points are fully understood, it can become a monopoly economy.

So I often joke that in more than 190 countries and regions around the world, the most ruthless taxation for companies is not in these 190 Sovereigns, but iOS and Android, because they charge a 30% sales tax on businesses in the "jurisdiction". Please note that this is a business tax, that is, a tax deduction directly on income. It is terrible. The UAE only charges a 5% consumption tax. This is the power of monopoly. Compared with them, the tax rate of Web3 Layer 1 today, that is, Gas Fee, is still relatively friendly, even for the complained Ethereum mainnet layer 1 network.

In addition, Layer2 is a good thing. In the Chinese area, when WeChat established its status as a super app, it naturally began to settle down and started a "Layer 2" that spans "two Layer 1" (iOS and Android) - WeChat Mini Program Development Platform . It is worth mentioning that, as Web2 Layer 2 with the most pricing power in the world, as of 3Q22, the daily activity of WeChat Mini Programs is 600 million, and as of 1Q22, the number of developers of WeChat Mini Programs is 3 million, dozens of times that of Web3 developers worldwide. This example also tells us that if you are a super application, you may accumulate infrastructure. For example, the two largest public clouds in the East and the West (AWS and Alibaba Cloud) actually come from the application layer, and have been focusing on the bottom layer IBM has never had the opportunity to become any kind of defined "Layer 1".

In the meantime, let's look at the Sovereign Nation "tracks", let's just call them "tracks". Now there are about 195 subjects that can be called Nation in the world. There are 195 sovereign entities in the world now, and they operate a total of 180 legal currencies. We can call them "paper tokens". Node clearing accounts". But we must understand that Nation, as a concept of modern civilization, actually only has a history of 400 years. Before that, people gathered in hundreds of tribes and city-states.

So what exactly is my point of view?

My point of view is that the general trend of the world is that if it is divided for a long time, it will be united, and if it is united for a long time, it will be divided. In the first 70 years of human computer history, this market has been continuously concentrated. Today, there are only 4 public clouds in the world (AWS, Microsoft Cloud, Google Cloud, Alibaba Cloud), and only 2 Web2 mobile operating systems (iOS and Android). , the history of human computing in the past 70 years is a process of continuous concentration.

But I think that in the future competition of Web3 operating system, the market will not be concentrated to such an extreme situation. After all, this industry and Web2 and mobile Internet Not the same,The "impossible triangle" makes the first movers not necessarily "bigger and stronger", but often "bigger and more difficult", which will give many latecomers Take your precious time window. At the same time, we must not ignore the changes in ideology and trends of thought. In the process of evolution, the blockchain itself is decentralized. From an ideological point of view, why can’t there be more operating systems in this industry? Why can't a big application have its own operating system?

Of course, ETH’s head advantage as “World Computer” is already very strong today, and this is a fact we cannot ignore. I think that the future Web3 Layer 1 will have one superpower and many powers, there will be a superpower "the United States", there will be its allies, and opponents with completely different routines and ideologies. So I think there will be empires in the future of this industry, but there will also be city-states and tribes; ta will have a certain degree of concentration, but it will not be as extreme as today's web2.

BlockBeats: So in your opinion, what kind of Layer1 will become the "superpower" of Web3?

Bill: I think there are several levels, Zeng Guofan thinks the world The best people in the world are nothing more than "contributing to meritorious deeds, and establishing words". I personally think that the founders of the first type of Layer1 are "establishing morality" and "creating words", so that their Integrity and the theoretical high ground for ideology Occupation has become the core competitiveness. The ideological theory here, the Web3 industry likes to call it "Narrative".

The second category is "contributory", manage your own Layer1 like managing a company, hold daily, weekly, monthly meetings, and constantly recruit People and Kairen are on the technology, supply side, and demand side. Compared with the second category, the disadvantage of the first category is "slowness". If a founder is born with the DNA of "Li De" and "Li Yan", then the bandwidth left by ta for strong execution may be slightly limited. Of course, the advantage of the first category is that once it is done well, it will become the global Mecca of this industry.

Looking at the world today, I think there is no controversy, ETH is the first category. The disadvantage of the second category compared to the first category is that it may win for a while, but it lacks some anti-fragility and endless vitality. After all, this model is a "corporate system" operating system. Polygon belongs to the second category. In my daily chat with Sandeep, he also admitted that execution and top leaders are the biggest advantages of Polygon.

So which of these two methodologies is better? My point of view is that "a fist has no strength or weakness, but a person has heights". There is no absolute good or bad methodology. In the end, you still need a key to open a lock. The most important thing is that the right person meets the right methodology.

BlockBeats: Thanks Bill, do you have any final thoughts to share?

Bill: In the past 300 years, there have been two big One of the driving forces is the improvement of productivity, relying on "AL", which I call "Artificial Labor", that is, the industrial revolution has created a large number of machine labor for the world. The second is the innovation of factor distribution, which includes the combination and recombination of various factors such as capitalism, socialism, and state capitalism. At the moment, as a major change unseen in a century, we also have two major drivers, one is AI, and the other is factor distribution, that is, the value Internet of Web3 is reconstructing the commercial value distribution network. Coupled with the changes in geopolitics, the good show has just begun. Let us embrace the changes, be friends with time, and encourage everyone.

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