HOPE TALK Review: How to design an economic model and become a growth engine for the project.

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Host Sylvia: Welcome to the HOPE Talk Chinese Community AMA event, attended by villagers from Houpu New Village and project leaders from various industries. I am the host of this AMA, Sylvia. It is my honor to invite OGs from the DeFi and GameFi fields, including Flex, the founder of HOPE, Yuanjie, co-founder of Conflux, Boyang, founder of P12, Duo, growth director of AltLayer, and Fiona, consultant of Wu Shuo. Today, we will discuss how to design economic models and become the growth engine of projects. Before we officially start discussing this topic, let's have our speaker Flex and guests introduce themselves.

Flex: Thank you to all the guests for coming to today's HOPE Talk. Today's topic includes many professional terms, so guests may use simpler vocabulary to describe their ideas later. Welcome Boyang, Fiona, and Yuanjie.

Boyang: I am P12 Founder Boyang. Today, I am very honored to thank Flex for inviting me to participate in this HOPE Talk. The topic of discussion is a subject that we are very interested in, which is how to design a more healthy and sustainable economic model. I am very much looking forward to exchanging ideas with everyone.

Sister Duo: Hello everyone, I am Sister Duo. I am responsible for growth at AltLayer. AltLayer is a basic infrastructure that provides a one-click chain issuance service for projects, which is high-performance and decentralized. Thank you, and I am looking forward to today's discussion. Fiona: Hello everyone, I am Fiona. Wu said that blockchain is a media company with seniority and influence in the currency circle. So if any project wants to cooperate in the media field, please DM me or DM Wu said chain. Thank you.

Host Sylvia: Our first question today revolves around economic models. In the Web3 world, continuous innovation in economic models has been a significant indicator of industry change. From DeFi to GameFi, we have witnessed various evolutions of Tokenomics gameplay. It is like a double-edged sword that can make a project explode or sustainable, but we have also seen many projects die due to insufficient economic model momentum. The most typical example is LUNA, which went from prosperity to decline overnight. So, regarding LUNA, what do you think are the economic models that are worth continuing and innovating, and which ones need to be carefully considered?

Boyang: Around July-August 2021, we saw the LUNA and Terra projects, which attracted more attention in the industry. We looked at its whitepaper, understood its ecosystem and supporters, as well as its future development direction. LUNA is a template for e-commerce, with a business foundation that leans towards offline, such as deployment through POI in some cafes in Korea. At that time, its DeFi ecosystem received attention and is now known as RWA. In this context, "算稳" is a business/model that continues to appear and be proven false.

LUNA is also doing well in terms of algorithm stability, but he is quite serious and systematic in proposing ideas that are written in the whitepaper. Although the final results have also been obtained, this has led him to review and reflect. This kind of reflection is not common in the industry. HOPE raised this issue, which I think is very valuable. In LUNA's whitepaper, they conducted many simulation calculations and analyses, which obviously were done seriously. They have some qualified researchers considering this issue, and if the coin price drops by 50%, what will happen to our ecosystem and LUNA's price. They have proven that they can stabilize, even in the case of an 80% drop in land prices, they have made a series of simulations.

In these simulations, according to their conclusions, the entire ecosystem will not be affected and can return to this steady state on its own. However, the actual results are of course known to us. In reality, this death spiral and run on the bank happen very quickly in the current blockchain environment, not in days but in hours. This death spiral and reset are very, very terrifying. Therefore, I think what we can learn from Luna, including his existing practical business and his attitude towards treating whitepapers seriously and conducting in-depth research, were important reasons that attracted many people at that time. However, the lesson to be learned is that this type of mathematical on-paper calculation, especially with many assumptions, such as the assumption that the coin price can only fall by 80%, or the assumption that everyone will return to a steady state after a certain degree of decline, is actually unreliable.

When evaluating economic models later on, we cannot really judge whether the model is feasible or not based on whether it was proposed by a professor or whether the whitepaper is formal. This is a big warning, at least for us at that time, we thought that the whitepaper was very credible, but in reality, this judgment was too superficial.

Fiona: Okay, actually, I have a vivid memory of the whole Luna crash. It was on Mother's Day last year when my mom and I were having dinner outside and I noticed that UST and USDT had decoupled. Let me briefly explain that Terra is a token with a flywheel effect, consisting of three parts: Luna, its governance token, stablecoin UST, and its financial product with a 20% return. These three components provide continuous momentum, encouraging people to invest and expand the pool, driving up the price of Luna, and creating a positive cycle. Therefore, in an ideal or upward environment, the price of UST must be firmly anchored to the US dollar stablecoin. However, one night, it suddenly decoupled, which was the second time I had seen such a sign. Usually, it would immediately re-anchor, but that night, there was no sign of it. So, it was a bit like the panic-first theory, and we would withdraw our money from Luna because many of my friends were on Luna, either for storage or development in the ecosystem. Therefore, Luna's price began to collapse shortly after UST decoupled. So, I think it's both a success and a failure of Tokenomics.

From its flywheel effect, when it stabilizes at a high point, it can immediately push the entire ecosystem to a higher level. However, when it collapses, it is also from the collapse of UST, the sharp drop in the price of Luna, and the continuous breaking through of the liquidation point at that time. I remember it started at around $55, and then it kept breaking through downwards. Then UST completely lost its anchor, and the entire ecosystem collapsed instantly. So I think its entire token model design is very clever, which is one of the reasons why it can attract so many people to participate in the early stage. But at the same time, it is also a very delicate and fragile token model. Therefore, when there is a problem in one link, if it is not controlled well, the crack will become bigger and bigger, and the seemingly stable billion-dollar empire will collapse in an instant. So I think in the token model, in addition to a design for upward movement, everyone should also consider, as Boyang just mentioned, how to set up a protection mechanism when the coin price falls, so that it will not collapse immediately in an instant and give it some buffer time. From the countless collapses last year, from FTX, from Luna, we can actually see similar crisis handling failures. So, I think this is a pity, and I hope there will be more designs like this in future token models.

At the same time, I also want to add a little bit about the tokenomics of another collapse. Because I worked at Stepn for a while last year, and he is a move to earth, his situation is similar to Luna's, that is, when it goes up, there is a positive flywheel, and when it goes down, it runs smoothly because there is no new money coming in and no new liquidity coming in. It's just a matter of time before it collapses, so I think this example is not just Luna, it's just that it collapsed particularly tragically and quickly, so we have fresh memories of the pain it caused. However, there are many others that are slowly collapsing, and I think their token models also have major problems, so I also hope to hear from other guests whether they have any other opinions on this point. Thank you.

Boyang: Would like to ask a small question, do you remember the 20% financial product from Luna back then? Does it have a redemption period restriction or can it be redeemed immediately?

Boyang: At that time, the situation was that Luna wanted to lock for seven days or 14 days, which was quite awkward. It might be possible to solve this problem by opening a position, but sometimes the liquidity of long positions is not enough. On the other hand, Ust seemed to be able to redeem instantly, which partly fueled the collapse. Therefore, this topic is very interesting. How to protect oneself during the decline and how to make these protections have positive effects.

Fiona: Yes, I also want to add that when UST collapsed, I actually saw it on Binance. I think Luna officials probably put up a wall of over $100 million at around 0.9798 to support the UST exchange rate. However, it may have only lasted for one night, and the exchange rate was eventually pushed down. I don't think this kind of hard support is very advisable because when panic selling occurs, even Silicon Valley banks have collapsed, let alone cryptocurrency projects. Therefore, I think there should be some other mechanisms to stop it, and maybe even suspend withdrawals. You need to eliminate this panic first, otherwise, it's generally difficult to withstand it by force. 

Duojie: Actually, there are quite a few points I want to make about this topic. First of all, regarding DeFi, the thing Fiona just mentioned about the price is like this: because UST has decoupled before, I can't remember it very well now, but it decoupled once shortly before the crash. At that time, Jump helped to save it, so it is not uncommon for market makers to protect an important position. Their willingness to save it at that point actually demonstrates the responsible attitude of market makers towards this project and the market. It is not a strange move. But why couldn't they save it this time? I think comparing it with Synthetix is a good way, because I used to work at Synthetix. And just this morning, I saw a Twitter big V with over 100,000 followers asking why there is no problem with Synthetix compared to Terra. I think this is also a good way to help everyone understand the problem with Terra in today's context. First of all, you should know that UST is relatively stable. 

The meaning of "算稳" is that you can burn a Luna token, for example, if one Luna is worth $50, you can mint $50 worth of UST. Then, if it drops to $1, you can burn one Luna token worth $1 and still mint $1 worth of UST. This mechanism is essentially unlimited issuance, especially during a coin crash like Luna. Any currency that can be infinitely issued is problematic, so the design of this mechanism is flawed. The outcome of most "算稳" projects is zero, except for Ampleforth (AMPL). Luna's crash is like other scam projects, where the crash and zeroing out is real. The negative spiral of this design can cause it to die directly. Another fatal problem is the design of its Anchor. When it first entered DeFi, it was called Mirror, which was similar to Synthetix, but it was a patchwork monster that couldn't compare to Synthetix. Later, they went crazy and created Anchor. Anchor can survive because the market began to enter a downward cycle, and the innovation of DeFi was stagnant. When Luna came out and said that it had a stablecoin that could provide a stable 20% return, it attracted traditional investment bankers or financial friends who would take their bank deposits and put them in FTX to earn interest. FTX can provide a stablecoin with more than 10% return during a bull market, which is unimaginable in traditional finance or banks. At that time, most DeFi protocols could not provide any returns, but Luna offered a fixed 20% return.

It's just a seemingly risk-free return that everyone is after, and the highest they've achieved is a scale of 20 billion. Who in the world can provide such a large-scale 20% interest? Where does this return come from? This is also the reason why Celsius collapsed. They also took a lot of money as a Cefi, but in the end, they found that they couldn't invest the money or they had a problem with long and short-term mismatches. They invested in long-term financial products or did ST, Lido and other long and short-term mismatched investments. When they had a liquidity crisis, they couldn't get their money back, and they couldn't really provide such high interest rates. So they all collapsed. So I think this is not a problem with the token model, but its design is essentially a scam. Maybe its purpose is not to be a scam, but all its designs, including the Anchor 20% interest rate, are doomed to have problems. It is doomed to collapse. At that time, many people questioned where the 20% interest rate came from, and they said they could subsidize it themselves because they had borrowed a lot of money and could afford to subsidize it. But in fact, if you have economic common sense, you know that no one can afford to subsidize it for a long time. He should have surrendered early and said that he couldn't afford to subsidize it and lowered the interest rate. Because in the economic downturn cycle, when the entire market bubble bursts, it is meaningless to insist on that 20%. If he doesn't insist on that 20%, I think this project has the possibility of continuing. Because calculating stability is always a bubble. As long as the bubble doesn't burst, you can hold on for a day. It's not something that is optimistic in the long term, but it has its value. Speaking of Synthetix, it's completely different. It's a CDP. It was originally modeled after MakerDAO. It has collateral, collateralized SNX tokens, and then mints a stablecoin. At first, it was 8:1, and eight SNX tokens could mint one SUSD. Later, it may have been reduced to 4:1, but the most important thing is that when the price of SNX drops by 80%, you can liquidate it.  

When your entire mechanism can be settled, you can protect the rights and interests of all pledgers to a great extent, instead of an infinite death loop. Of course, SNX has many other advantages, which I won't go into detail about. It's important to distinguish whether a coin is stable or a CDP with collateral, and then talk about two other points. One is some investment institutions that I am very familiar with. In fact, they invested in Terra in 2018. At that time, their main selling point was that they were part of the Cosmos ecosystem and had many retail resources. They had some store resources in South Korea and could create a corresponding stablecoin for the Korean won. Their idea was not to do DeFi, and many people invested at that time. However, when Terra transformed and the whole personality became very erratic, the investment institutions I was familiar with actually cleared their positions. Some of them missed the big rise later, but a person's attitude can reflect some problems of the project. Another friend of mine was a business leader in Terra's early days. He reported Terra to the SEC and some US institutions for serious fraud issues many years ago. So this project has serious problems, not just what everyone sees. I hope everyone doesn't treat this fundamentally problematic thing as a misfortune or a question of how to do it better. That's all for now.  

Flex: Actually, the analysis just now was quite comprehensive. As for Terra and Luna, because of the industry, I didn't pay much attention to these things after retiring in 2021. However, in my spare time, I had a lot of contact with various parties at that time, including people from PayPal Financial and those after I retired. The first half of 2022 was an extremely anxious situation, as mentioned earlier by Duo Jie, where money couldn't be lent out. 

For example, in March or April, what I knew was that PayPal had about 400-500 million US dollars in its account, earning 6% interest, but there was no way out. Celsius had more, probably between 1 to 2 billion US dollars. Therefore, Celsius later had no choice, and everyone actually had no assets to get. The core reason is as mentioned earlier, why everyone chooses to ignore such a big problem and continue to choose so-called Terra and Anchor.

I think there are two main reasons. The first reason is that in 2021, the bull market had three stages: early, middle, and late. In the early stage, for example, the funding rate of perpetual agreements and the rate of futures were both around 20%. Then, in January 2021, this rate suddenly increased to 50-60%, and even reached 70-80% at its highest point. This lasted for a while, but how did the rate decrease? Actually, there were two reasons. One reason was that more and more funds were entering the market, which lowered the risk-free rate to around 20-30%. The other reason was that as leverage in the market gradually increased, there was a crash in May 2021, and after that, the rate returned to normal for a while. However, as the risk-free rate decreased from 60-70% to 20-30%, those who had already invested in the market were mainly two types of people. One type was investors who were not willing to give up their investment, as they had paid a high price to enter the market. The other type was fund managers who had made high interest rate promises to their LPs or borrowers, and had to find alternative products. This is where the so-called TVL of anchor, which went from several million dollars to 18 billion dollars at its highest point (almost reaching 20 billion dollars), came in.

The process actually started in May and June of 2021, and it wasn't until the Luna crash in 2022 that people realized the issue. Essentially, I don't think it was that people couldn't see the problem, but rather that they ignored it because they were too focused on making money. Everyone was anxious during that time.  

Whether it's the anxiety of not being able to make money or the anxiety of wanting to make more money, it was very serious at that time. Hmm, not everyone can be clear-headed and exit the market, but that's also the charm of this market. I believe that even if we do so many reviews and think so much about things, when the interest rates are still high in the next wind end in 2025, greed will continue to prevail. This is something that will never change. Returning to the story of Luna Terra, I think their entire mechanism, when they discovered this problem and started to want to reserve, it was actually too late. The entire market had entered a downward cycle, and the macro environment, monetary policy, and fiscal policy were all contracting, while CPI was rising. In fact, they had no way to reserve VC well anymore. Instead, they were more focused on pumping up the market. In the small spring of March and April 2022, it was mainly the Luna team's pumping. They kept buying BTC and told a good story about reserving 1 million BTC. During the whole process, most people still believed in this story. The most important thing is what prevented everyone from making the right choice. I think the main reason is that it's too troublesome to exit. Whether it's the exit of cryptocurrency in China in 2022 or the redemption of stablecoins from stablecoin institutions in the United States or other regions, the exchange of US dollars was a very difficult choice at that time. For those who entered the cryptocurrency market in China, such as in early 2021, exchanging USDT for RMB was a very frictional business. 

Then overseas, actually everyone hoped that because of the noisy sentiment in the entire market, there would always be a 20% return, which was better than national bonds. So when it came to exiting, everyone was very hesitant. Therefore, a 20% interest rate may not have been a benchmark for everyone in that situation. Everyone forgot to calculate the issue of the historical expenditure of 18 billion yuan, which was mentioned earlier, with an annualized rate of 20% and a scale of 42 billion US dollars.

So actually, stability has always been what we want to pursue. I think it is a new stone, or a new gold. But in this process, if some basic properties of currency are not achieved fundamentally, it is difficult to complete this task. That is to say, the establishment of consensus is a long process. In ancient times, it may take four or five hundred years to establish consensus on gold, and a few hundred years on silver, and then it will be replaced by the so-called fiat currency of various countries, which will take a few hundred years for each currency, right? Let's take the US dollar as an example. Its growth process is actually a very worthy reference and a corresponding example to Luna.  

There may not be a good example in the currency circle to illustrate how Luna can take another path. Of course, as mentioned earlier, there are many other fundamental issues that need to be addressed. Let's set those aside for now and focus on how Terra can make changes. In my opinion, the best reference is the US dollar. After World War I and II, the position of the British pound became unstable due to the comprehensive war in Europe. Most European families continuously sent their gold to the United States, to the Federal Reserve in New York. This process caused two events that allowed the US dollar to become the currency that replaced the British pound. Although the United States may have surpassed the UK to become the world's largest GDP country in the 1880s, it took about 40-50 years to truly establish the process of replacing the British pound with the US dollar. I think many of these things were coincidences, but I believe the US dollar chose the right path. What did it choose? It called itself the "gold-backed" dollar, which means it was backed by gold reserves.  

So, why was gold so important at that time? In fact, during the many wars in Europe, the German mark lost its credibility. Previously, the mark was a gold mark, but later it became a paper mark, which changed from a reserve stablecoin to a stablecoin based on algorithms.  

Then, the pound also failed to maintain stability in reserves and became "stable". After continuously sending gold to the United States, a very unique and strange thing happened in 1933. President Roosevelt ordered all private gold to be collected, not called confiscation, but required to be exchanged for US dollars by the Federal Reserve. That was the first step for the US dollar to move from a regional currency to a reserve currency. In 1944, at the end of World War II and during the process of global order restructuring, the US dollar still did not use debt as its reserve to issue US dollars. It chose to use gold as its reserve to issue US dollars, and other countries' currencies were pegged to the US dollar at a fixed exchange rate. At that time, it was called the Bretton Woods system. This Bretton Woods system actually lasted for nearly 37-38 years. Therefore, the US dollar spent 37-38 years as a sovereign country to truly establish its credit. Then, in 1972, the US dollar was decoupled from gold. Of course, on the one hand, it was because the rapid development of the global economy made the so-called gold reserves insufficient to support the US dollar market or something. I think that is a false proposition because the issued US dollars are not equal to the circulating US dollars. We all know that there is a currency multiplier for currency, and banks can also create currency. In the process from M0 to M2, banks deposit money and lend it out, which has already doubled. Therefore, the currency multiplier of the circulating US dollar at that time was more than 20 times, which could support the development of the world economy. However, at that time, there were several opportunities that allowed the US dollar to completely decouple from gold and use the US government's bonds held by the Federal Reserve as the basis for issuance.  

Actually, the process has been going on for more than 30 years. Although the cryptocurrency industry is fast, the traditional economic and financial cycles are 20, 40, or 50 years. The cryptocurrency industry has a four-year cycle. However, it is impossible to gain the trust of the world and create new momentum and environment in just two years, especially when there is still some room for algorithm optimization in this new environment. So, at that time, I didn't pay much attention to Terra. It was in 2020 and 2021 that I became more familiar with it. At first, I didn't think they were doing anything special. When I looked back, many people had their own opinions and views. But I think the core issue is that they chose the wrong order or the causal relationship was inverted. Credit should come before stability, not the other way around. How can a cryptocurrency project have credit in the current environment? Therefore, it is necessary to use assets with only credit as reserves to discover, whether it is a lending mechanism or other mechanisms, just like the US dollar, which was initially backed by gold. So, I think the cryptocurrency industry is too fast, which has caused ordinary people or ordinary experiences to be forced or compelled to do this. Because some people believe that DeFi is safer than CeFi, this kind of thinking bias is deeply ingrained in many people's minds. If this kind of cognitive bias cannot be avoided, then this loss is actually deserved. However, for those LPs who are managing money, I think this loss is too innocent and there is really no way to avoid it.

Host: Everyone says that the bear market is a golden growth period for BUIDLER, and HOPE is a project born in the bear market. Many hundred-fold coins/thousand-fold coins are polished well in the bear market, and they are qualified to soar only when the bull market comes. Of course, a good project must not be separated from a good economic model. When understanding the economic model of a project, do you have your own set of evaluation standards or considerations to share?

Boyang: This issue is actually quite complex. Maybe we can provide our perspective on it. When we look at an economic model, we often look at its value input. At the same time, there is a point that we tend to avoid, which is that any claim of a perpetual motion machine that makes a stable profit will be viewed with skepticism and criticism if we think rationally. These two points can be separated. The first is that many times, in order to promote it, the economic model tends to go towards the idea of "I will definitely make a profit." Whether you come in early or just operate in a certain way, or when it falls, you can unlock the pledge or move the warehouse, so you can make a stable profit and not lose money. Generally, we don't believe this kind of claim and we look for the loopholes in what they actually say. This is considered a negative point.

When it comes to the positive aspects, we will look at the value input of any economic model, regardless of how well-designed it is. If something actually generates strong value and has strong external input, such as people being willing to pay for its services or various values it provides, such as NFTs or entertainment content, then we will believe that this economy has a greater chance of success, even if it has some small problems that can be adjusted. On the other hand, if there is no value input, the economic model is very dangerous and can only be self-circulating and self-destructive. From this perspective, Fiona just mentioned the Stepn project.  

Yes, in fact, reviews like this are particularly valuable. We feel that Stepn has created value in many ways. So when his economic model really went wrong, he sometimes showed stronger resilience. This is because some people still like this product. For example, he did a good job in product design, and its functions have certain value, whether I want to run or walk. The shoes look good, so I like to buy them, and I don't want to sell them at the first time. 

These are all considered value, and we will place great importance on this.

Fiona: First of all, I strongly agree with Boyang's point of view. And then the characteristic you just mentioned - value input, we had a term with the same meaning called external positivity. In fact, we have done research and found that the users in the cryptocurrency circle are the most difficult to please because their purpose is very clear. They are not saying that they want to be healthy, or that is not their top priority. Their top priority is to make money, and then they want to calculate the payback period. For example, if I buy shoes and it takes 40 days to break even, it seems unreasonable when viewed from the perspective of traditional finance. It seems like a Ponzi scheme. At that time, the team hoped to attract web2 users because web2 users are not traditional or normal people. They do not care about gains and losses or payback periods. They are more likely to consider whether something can make money, which is a vague concept. And, I can also be healthy by walking, which is like buying a gym membership. So, Stepn, in fact, he hoped that his users, and in the end, most of his users were not native to the cryptocurrency circle, but outsiders. Therefore, when I participated in some offline activities in Taipei at that time, I found that many people who had no idea about wallets came to participate in the event. I was shocked. That was the first time I realized that if a cryptocurrency project could open a channel between Web2 and Web3, it would have tremendous potential. As for the question itself, I don't have a good solution. I mainly hope to hear everyone's excellent opinions. But I may also share some data dimensions that I look at for projects. It is not just Tokenomics because I am not particularly good at Tokenomics. For some TOC projects, I pay more attention to their DAU and MAU, which is like how many active users they have per day and per month, and how they are really using it. This may directly apply to GameFi and SocialFi. This year, I have seen many game projects, but currently, if a project can have more than 1000 DAU, it is very rare, but there are indeed a few. If it is a decentralized finance project, I may pay more attention to its capital utilization efficiency, which I think is the most important. And its mortgage rate, etc. Finally, it may be more related to marketing because I think the current market is a bit different from the past. In the past, it seemed like I did a project, then I raised funds from VC or public offering, and then I launched the coin and the story was over. But now, because the project often has more users than the coin, marketing has become an increasingly important part, such as how to let users know about your existence and how to impress users to participate. This is becoming more and more difficult. So, including Twitter hashtag statistics, community data, holding address analysis, and smart money tracking, although smart money may not be very smart, but roughly speaking, smart money tracking, these dimensions, I also think are becoming more and more important for doing a project or discovering a project. Yes, it may be a bit off-topic because it is not particularly related to Tokenomics. I hope to hear other people's opinions. Thank you.

Yuan Jie: Personally, I have participated in many projects and have seen many economic models. Generally speaking, the design of an economic model determines whether the team wants to do the project well. Many economic models have very high inflation at first glance, and then they use a low circulation and high STV state to make everyone's APR very high. Such projects often have not thought about doing well. On the other hand, some projects have a very slow release, and there is a long period of at least three or four years in terms of coins. Basically, they want to do the project well, rather than using high inflation to do the project. In this way, you can probably know what kind of mentality your investment cycle is with this project. On the contrary, many projects do not need to stimulate with tokens, such as Uni, whose token economy is simply planned to be very poor. 

So even he deliberately does nothing, relying solely on innovation to support its market value. But there are also projects like Curve that combine economic models and functionality, but their development time is relatively long. So basically, I will take a look at the economic model of the project and can probably judge whether they intend to do something long-term or short-term. Then I will decide how to participate in the project. Because, to put it bluntly, most of the time, people say that the project party and the user are playing games, but in fact, it is not just the project party. There are also big players, market makers, and many scientists involved in this market. But basically, the ambition of a project party can be seen through the economic model.  

And then there is this desire they want to develop, which I think can be illustrated by taking HOPE as an example. We can see that the release of HOPE is very gentle, and its planning is very long-term. You can see the ambition of Flex in our HOPE project, which is definitely to make it a long-term project, rather than completing it in one go and then running away. So I think this is very, very important. The second point is the design of the Token economy, whether it has the correct incentives for the correct behavior. This is the second point that we need to study in depth, because sometimes the economic model established at the beginning of a project is not something I agree with. Why? Because at this time, everyone does not know whether the go-to-market strategy of the project is correct or not. If you incentivize at the beginning, you don't know if it is the correct behavior.  

This actually requires a trial-and-error process. So what is the logic that we have gradually developed in the cryptocurrency industry? It is to first use non-transferable points, such as Blur, which has actually implemented several different incentives before issuing tokens. They had three waves of incentives, and each time the incentive logic was different. It wasn't until the third time that their core incentive was to encourage placing orders.

Especially when it comes to paying the bill, it provides liquidity. The last time it was considered a very core innovation point, and then based on this point, they moved forward, issued coins, and at least achieved a good effect at that time. Later, they found that this effect was not sustainable, so they were not in a hurry to issue coins and started to constantly try new products. 

Then it's about trying new products and figuring out what behavior should be incentivized for this token to ensure long-term development. As for what was mentioned earlier, the person who is promoting the coin doesn't care about your PUA, but rather whether the product has found product market fit. Once it's found, then they can incentivize the core users' needs. I believe that this team and product are worth trusting and investing in for the long term. So, I think that more and more people will use non-transferable points, and after a period of circulation or issuance, there will be enough users to truly allow for the transfer or trading of tokens. This effect will become more and more common and reasonable. Sometimes, when designing innovation, you don't know what the correct behavior is to incentivize. Sometimes, when you incentivize, you attract users who are not your target audience. Therefore, I think that everyone needs to consider this carefully. You can use a transitional phase, like Blur mentioned, to complete this process. The third point is the innovation of the economic model itself. In the cryptocurrency industry, many people are constantly innovating, such as doing three-three, curve, or rebase. I don't think these are the things that a true product person should focus on. Instead, they should borrow from others and see how they do it, and then use it themselves. Because financial engineering is a very professional thing, it can be separated from the design of your professional product, and you can learn from it. These are my views. Thank you.

Flex: Actually, I think what you just mentioned is non-transferable points. I believe this mechanism will be applied to more and more projects in the future, including HOPE. Next, we will launch a product that encourages everyone to use it, which is a combination of a card and an NFT, as well as an offline coffee shop. We will not issue new coins, but still use LT. However, if the original mechanism of LT is to encourage liquidity provision, we will encounter a huge problem. That is, the economic model of LT cannot be adjusted. That is to say, when we have two goals, one is the scale of HOPE, and the other is the number of users and user scenarios. In the process where user scenarios were not so clearly considered at the beginning, we encountered a challenge of how to encourage this behavior with LT. Later, we will have a new points system, and based on this points system, the NFT will be upgraded. After the upgrade, it will be similar to the BBS in the past. The higher the level, the more rewards you will get, including LT and NFT with land and real estate permissions. You will find that if the lifecycle of each project is long, it will need different incentive methods continuously. For example, in the Web2 era, companies like Uber and Didi used financing and subsidies to compete with each other. However, in the world of cryptocurrency or Web3, the approach may be to continuously issue coins to stimulate, but these are not very healthy. 

So just now, Yuanjie mentioned that this approach is a good way to patch things up. In other words, in the future, it won't be like Terra or Luna where each protocol has its own coin and constantly uses new methods to incentivize users. Instead, it's more likely that some points will be generated and users will be encouraged through point levels, rights, and other means, rather than solely through coins. I think this may be a better way to incentivize the right users, but we're just trying it out, so it's a continuous trial-and-error process. Additionally, I think there are many useful tools that we need to think about in the future. Recently, I saw some people upgrade the term "Tokenomics" to "Technology," which I think is particularly important because I agree with one point: Token's usefulness not only includes its monetary value, but also includes ownership, different economic structures, and how to better connect creators and users. It also includes ways to access goods and services. It's not just an economic model, but often a social model or community model. There are many things worth thinking about, not just revolving around the simple term "economics." 

Host: Taking HOPE as an example, based on the above elements, what kind of thinking and planning did HOPE do when developing the dual-currency economic model? What roles do HOPE and LT play in the entire HOPE ecosystem and what are their functions?

Flex: A project that has different stages in its lifecycle, with different target audiences for each stage. Tokenomics is hardcoded into the code. Once the code is written, it is a demonstration of trustworthiness, as we will not make any further changes to the code. 

At the same time, everyone will have a very clear standard for future inflation expectations, but the downside is that when different stages have different incentives, such as encouraging scale at the beginning and then encouraging behavior and activities later, it is difficult to switch to this method. Therefore, we need to consider the multi-token model or the double-token plus points and NFT model. The result of complexity is actually to make the user experience better, which is the same as our initial vision. We hope to provide products with better user experience for everyone, rather than just self-indulgence. So now we are also thinking about how to move forward. However, returning to the Tokenomics of the HOPE project, essentially we are doing one thing, that is, I may say some inexplicable financial proprietary terms next, but there will be a sentence to give an example in the end. First, we combine the so-called volatility of the two most representative and liquid coins of this cryptocurrency through options and design it into this Token. This allows the volatility of BTC and Ethereum to be monetized as external kinetic energy and become everyone's income.  

That is to say, when you buy HOPE, it is equivalent to buying BTC and ETH, while selling a call option for twice the amount of BTC and ETH, and receiving LT as your premium. The premium is also known as the reserve call. After this long paragraph, it may be a bit confusing, but in fact, it means that holding HOPE for a certain period of time means holding something that has native income more than BTC and ETH. Meanwhile, LT is a long-term and perpetual lottery ticket for those who are bullish on BTC and ETH.

Why is LT considered a perpetual call option? When you buy HOPE, it's like buying BTC and ETH while selling a call option for twice the amount of BTC and ETH. At the same time, you receive LT as your premium.

So LT is actually the call reserved by the entire HOPE. Because HOPE will be anchored at $1 for a long time, but the value of the reserve will continue to grow, and this space is reflected in LT.

So, in this process, when it comes to attracting future customers or users to join this industry, there may be more words that I haven't thought of yet. But what I have been thinking about is an example that we used to say that the Communist Manifesto is an extremely complex thing. In fact, when the Communist Manifesto and communism were first proposed, it was more about carrying out a social practice and reforming the relationship between productivity and production. In that process, what everyone wanted to bring to this community or community was very complex and difficult to describe, involving productivity, production relations, and many other economic models of communism. 

However, when it comes to rallying the group that we want to encourage to support this communist revolution, the complex Communist Manifesto can be simplified into a few sentences. For example, joining the Red Army, receiving land distribution, or stimulating the peasant and worker masses who have long been oppressed by capitalists and landlords to join the revolution. In this matter, I haven't come up with a particularly good word or language, but the process is actually very simple. LT is actually bullish on this industry and believes that it has the potential for long-term growth. This is the only thing that needs to be emphasized, and it should be noted that this is not investment advice. If you treat LT as a lottery, it means that if you think this industry is good and BTC and Ethereum will rise in the future, then mining and obtaining LT can be held without selling, which is more profitable. This is roughly the idea. However, I think there will be many ideas to try in the future, including the issuance of credit cards and the improvement of user experience for deposit and withdrawal. There are many other actions and methods that need to be incentivized, which may require other things. Therefore, it is still quite complicated, and there are still many places to think about how to move forward in this whole process. But I think this kind of dilemma is still okay, it's just a bear market, which is relatively lucky, so you don't have to be so anxious.

Host: The governance mechanism in economic models has always been a hotly debated topic. Some projects have a community governance that is virtually non-existent, while others have become more mature and on the right track due to strong community consensus. What do you think are the key points that need to be considered or balanced in the process of designing a governance model to ensure that it plays its proper role? What are the key points that need to be considered or balanced in the process of designing a governance model to ensure that it plays its proper role?

Fiona: I may briefly share my opinion to start a discussion. Firstly, I think community governance is a significant difference between blockchain projects and traditional companies. Most projects provide token holders with a way to participate in the governance process, such as voting or proposing. I think it is meaningful, but it also has risks. For example, the Tornado hack incident was caused by a Trojan proposal that was passed through voting. Therefore, I believe that everyone should participate in governance, but not everyone should have equal voting rights because not all token holders have the necessary knowledge to make decisions that benefit the entire protocol. Therefore, some restrictions should be imposed, and a secondary review mechanism may be needed for code changes to make the democratic governance process safer. Secondly, because I am currently based in Taiwan and grew up in mainland China, I feel that there are differences. If everyone can participate in governance and is busy doing so, it is a sad thing. I advocate for governance by wise people, where people with wisdom participate in governance, and the rest of the people only need to believe in the project and let it progress smoothly. Therefore, I am not very optimistic about completely decentralized organizations because not everyone has the experience, professional knowledge, and enthusiasm to participate in governance. I suggest giving a limited number of people the maximum governance authority and letting them maintain routine work. The rest of the proposals can be voted on by everyone, and the people responsible for routine work can handle the rest. This is my opinion. Thank you.

Duojie: I think this thing is actually two things. First, how to give governance rights to tokens, or how to use tokens to incentivize the governance behavior that we want. In my opinion, the best design in the industry is vtoken, which was possibly invented by Curve and has become a consensus in the industry. Basically, every new DeFi project that comes out will have a vtoken design, including the recent V33. Essentially, users can obtain governance rights by locking their governance tokens for a long period of time or through different implementations of lock-up. They can also receive some benefits, including protocol-generated revenue, additional revenue, or even new token distribution. This is like a way of forcing users to lock up their tokens to ensure that the interests of those who participate in governance are aligned with the project's goals.

Another direction is the issue of whether people who participate in governance have the ability to govern, which is actually a problem that is rarely discussed in the industry. Often, people think that they have above-average intelligence or trading ability, so they all hope to have governance rights. However, since the birth of most DeFi projects, what we have obtained is not the governance rights of the project, but a feature button. This button is like whether you want a red or yellow button, which means that the token distribution of the project should be 10% or 15%. We have more of these rights rather than the core design of a project. Even some project treasuries are not in the hands of governance participants, but in the hands of the project team. If the project team runs away with the private key tomorrow, it is also something that we cannot govern. So, what are we really governing and do we have the ability to govern? I agree with Fiona's point that most people actually do not have the ability to govern a project, including Terra before it collapsed or went bankrupt. No one dared to say for sure that it would definitely collapse. Maybe people had doubts or would question it loudly, but no one dared to say 100% that it would fail, right? Therefore, if it was left to the community to govern, could they solve this problem and prevent its collapse? So, if you think about it carefully, most of us do not have the ability to govern a project. Who has the ability to govern a project like DeFi? I think at least they need to have financial knowledge, trading ability, or the ability to read code. They also need to be willing to focus on the community and spend a lot of time participating in detailed discussions or discussions on important functions, and have the patience to do so. They cannot just lose interest after three minutes and put it down when they think it is no longer profitable.

Synthetix is rarely talked about, but it has a very interesting governance system called representative democracy. It has a council composed of nine Spartan warriors elected by the community every three months. After the council is elected, they have the right to deal with all kinds of things. They almost discuss important topics every day on Discord and have weekly meetings to discuss agenda items. After they have discussed and agreed on a proposal, they will publicize it to the community and then execute it after everyone agrees. At first, Synthetix founder Kain was not eligible to run for election. All council members were community members. We also have a very powerful community whale who participated in the election and became an important contributor to the project. Later, Kain was allowed to run for election and Ken was elected. Some of our team members also participated in the election, and even the Treasury became a DAO organization, no longer controlled by our COO, but truly managed by the community. However, all of this management is done through representative democracy, managed by the council. I think to this day, I haven't heard of a second project that does this, but I think Synthetix's design is very thoughtful and has many advantages after so many years of execution.

Another thing is that economic models and token economics can be modified. When problems arise, we can fully rely on the community to propose modifications or by the council or the person responsible for proposing modifications. Token economics problems can be completely salvaged. For example, Synthetix was the first project to invent liquidity mining. At that time, the proposal for liquidity mining included changing the project's deflationary design from eight years to a design that included inflation. This proposal was first proposed by the community and then completed through discussion. Therefore, I believe that there are very outstanding elites in the community who can lead everyone to a very good new path, but not everyone has the ability to judge whether all designs or modifications are correct. Therefore, I myself am more inclined to Synthetix's design.

Flex: Actually, what Fiona and Duo Duo just mentioned is the political system. In fact, I think humans proposed a very good political system more than 2,000 years ago, called the republic.  

During the Greek period, due to the developed economy of the Mediterranean, the so-called market force was developed with the advanced economic foundation. A very good community was derived from it, and then the community derived the mechanism of the first generation republic, which is the separation of powers. What does the separation of powers mean? It means that the executive power, legislative power, and judicial power are independent. Just now, Duo Duo and Fiona mentioned the legislative power together, and Duo Duo derived the legislative power from the governance of the community. Everyone had a questioning attitude towards the governance of the entire community. I think the fundamental reason is that Plato had talked about it before. In the Republic, he had already told the story that human society may always be in reincarnation.  

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In the future, I don't know if there will be a better administrative system when AI emerges. Of course, in the current situation, there must be a legislative mechanism in human society. This legislative mechanism, or the republican mechanism, has always had a legislative mechanism in the constitution, whether it is China or the United States. The United States has the House of Representatives and the Senate, with two senators from each state and 500 members of the House of Representatives, elected in a different way. It is actually a representative system. In China, the National People's Congress has central committee members and standing committee members, which is what was mentioned earlier as the Sparta Council. The standing committee is responsible for deciding on some important matters. I think that when we are doing tokens or building the web3 community, we are actually conducting a social experiment. 

Originally, in this social experiment, we should have stood on the shoulders of giants, which could have started with the republic. Who does the administrative power belong to? Actually, the administrative power belongs to the project party, which means that many executive tasks, such as the government, are the project party. For example, after the National People's Congress proposed this proposal, it should be executed by the State Council. So the project party is more like the State Council, and the National People's Congress is more like the community governance mechanism. There is also the judiciary, which is the public security, procuratorate, and court system in China, and the judiciary system in the United States. We actually noticed that the time cycle of different functions is different. For example, in the government, it is four years in the United States and five years in China. Then in the United States, the Congress has different cycles. Why are there these mechanisms? In fact, these mechanisms are derived from humans constantly building their own social systems, constantly revising and modifying them, and ultimately forming some mechanisms. So I think that no matter what direction the project is in, whether it is DeFiGameFi, I think everyone should have the right to be separated at the beginning. Therefore, I think that more attention should be paid to the so-called distribution of benefits in Treasury and other things, and this problem is balanced between different rights, so that better mechanisms can be formed in this process.

Yuanjie: I have some experience to share with everyone. Have you ever seen a photo where one person is digging a hole in a pit, and there are seven or eight people on top of the pit? Some say let's go to BSC, some say let's issue NFTs. The person in the pit is labeled "project party," and above them are the community members. They all have one thing in common, which is community governance represented by a round bubble. This is the true state of many project parties. Before you can really find people to help you govern the project, don't expect to have community governance. Although voting on the chain has greatly simplified the process of shareholder voting, everyone can easily vote.  

But it's really like what my friends said earlier. It's rare to have such a high-quality governance atmosphere or people in our environment, or in the Chinese environment. Because in the United States or the West, they are a country with a strong sense of citizenship. This sense of citizenship also comes from their democratic system, which leads to their high enthusiasm for participation in governance. Therefore, participating in governance is a very important part of their lives. However, in cultures dominated by the East, such as China or the Chinese, participation in public affairs and democratic decision-making processes is rare. 

Yes, so you will find that during the trial and error process, or during the token issuance process, you can really find those who are willing to walk with you and participate in community governance. In our Chinese-led projects, it is really rare to find such people. On the other hand, in many projects in the West, they have this foundation. So I don't think it has much to do with the design of the economic model. It's about how you find these people, how they identify with your ideas, and how they are willing to walk with you. At this time, they don't care how many tokens they hold. They are willing to have quality speeches and debates here, which I think are very valuable. You must keep these people, no matter in what form. In fact, in the process of doing the Conflux project, I am working hard to find them. 

What kind of people did I finally find? I can tell you that they are very patriotic people who regard cryptocurrency as a project with geopolitical implications. They believe that Conflux is tied to the fate of the motherland, so they really govern in the Conflux community. They also believe that China will definitely have its own public chain. Therefore, first of all, interests cannot bind everyone together, because everyone will feel that if your token falls, they will leave. 

It's really about the recognition of cultural concepts and values that will make them stay here and truly participate. At the beginning of a project, you can't expect such things. However, if you can find a group of people who share the same values as you, you must keep them. It's not about how many tokens they hold in their hands, but whether they truly believe in you and are willing to follow you. At this point, you must have the vision to give them greater voice and the ability and authority to allocate resources. Only then will these people follow you. But to be honest, most people can't find these people in the first place, and even if you do, you may not have the vision to release your power. This is a very dialectical and dynamic topic, not just about voting on the chain in blockchain, which simplifies the traditional proxy structure. It's more about the psychological aspect. So this is my experience, and it's really difficult.

Moderator: The last question is, what are the necessary conditions for the economic model to become hardcore and mature for the next bull market? At the same time, what kind of economic model can steadily promote the sustainable development of the project ecology while carrying more and more traffic? What do you think are the core elements that make up this flywheel effect?  

Boyang: This question is not easy to answer, and I dare not say that I have the ability to easily comment on it. However, from a macro perspective, my personal view is that with the crypto projects and the development of smart contract blockchain to today, it allows everyone to compare and issue assets without permission, which is ultimately a very good thing that conforms to the first principle. Because this competitive mechanism eliminates the inferior and brings us the possibility of experimentation. If there were no blockchain, only sovereign states could issue currency, and there are only a few of them, although there are many small and turbulent countries. This is only a few hundred countries, and every time there is a change of dynasty, they issue a new currency, set some monetary policies, and finally see whether it works or not. Economists can only obtain some historical evidence and data points from these processes. In this case, many of the people who make decisions on fiscal policy may not necessarily be the smartest, and they may be very conservative or have a series of different motivations. 

It will make this experiment very incomplete, and the information is often confidential, which is very secretive. But with this blockchain WEB3, at least everything that can be done in this iterative experiment is completely open. Anyone can issue assets, and everyone can judge whether your assets and economic model are good or not. Your whitepaper and smart contracts are public, and everyone can iterate on the mechanism to see if it is good or not. As long as we don't stand still in the next round and don't completely follow the old path, we can repeat all the patterns that have been proven false. As long as we don't stand still, the economic model will become better and we will become smarter. Whether it is entrepreneurs in the industry or the industry as a whole, we have contributed a lot of new knowledge and structures to human society. The upward trend in the future will definitely be good. As for which specific economic model to design, it is difficult to predict, but overall, I think we should remain cautiously optimistic.

Yuanjie: To be honest, I have always felt that there are many good thought experiments and practices in the cryptocurrency industry. It is a pity that we have not systematically studied them or had an academic journal to research these things. In the future, I hope to use some of my money to publish a magazine about cryptocurrency finance. I have already thought of a name for it, "The Journal of DeFi Finance," which will focus on discussing Tokenomics and the design of DeFi, including product logic and pure Tokenomics. Our industry is one where practice is ahead of academia, which is the opposite of many other industries. Many academic studies are pure nonsense, but I think our industry has already practiced many things, but there is no academic research that is relatively reliable. We need to establish a best practice and slowly turn it into a standard practice, and then iterate. There is also another branch, which I think is GameFi Tokenomics. For example, the logic of giving birth to children, which was pioneered by Axie, has been further developed by Stepn, and many other models are based on this logic. Some models are too aggressive, so they need to be adjusted, such as reducing the rate of inflation. These things have not been studied, so today if you ask me a question, I cannot give you the answer, but I can tell you that there is a path to finding the answer, which is for everyone to do research together. We can combine the results of our experiments with theoretical models to draw some good experiences. Even if traditional economists and financial experts do not recognize our academic achievements, it doesn't matter. We can study them first, and then I am willing to publish this magazine. If someone else is willing to publish it, I am very happy to invite them to join me. I think our industry has already produced many things worth studying, and we need to systematize them and move towards a direction of fuzzy precision.  

But no one is doing this. Everyone is just focused on investing, launching projects, getting listed, succeeding or failing, right? However, I believe that there is already some accumulated knowledge that can be academicized, developed, and even used to guide practice in reverse. But there is a bit of a gap in this area, which I personally think is a pity. So I want to do this, thank you all.

Interactive Session:

Question: Recently, I saw that HOPE participated in the financial summits held by Caixin in Hong Kong and Singapore. Can Flex share the traditional finance industry's views on Web3? Or their views on the macro economy in the next 1-2 years?

Flex: I think we can talk about it from two aspects. First, regarding the Caixin event, I shared the traditional finance's view on web3. Traditional finance is actually quite divided now. In Hong Kong and Singapore, many Chinese-funded or Hong Kong-funded institutions are eager to try their hand at cryptocurrencies. There are appearances of these institutions in Hong Kong, and they have a deep belief in cryptocurrencies. 

Even the prejudices against cryptocurrency, which have been overcome, have aroused a lot of interest and understanding in this cryptocurrency among many people we have met outside the venue this time, including some license schemes that have already begun to explore how to participate in this opportunity. So I think there is a very promising and spacious future for cryptocurrency in Hong Kong. As I mentioned before, the openness of cryptocurrency in Hong Kong is actually an important plan C for China's de-dollarization, which is the application of CBDC in plan A for RMB internationalization, plan B for Hong Kong dollar, and plan C for cryptocurrency. Cryptocurrency, as an important part of it, will be a very important thing in the future policy of Hong Kong. So what I see is that Chinese-funded or Hong Kong-funded companies are more interested in this area, but they certainly cannot do so in China. In fact, Hong Kong is completely different from the mainland. Hong Kong is a region without capital controls, while the mainland has some capital controls. Therefore, in this regard, I think there is this observation. Of course, before Caixin, I actually went around the Middle East, Europe, and the United States, and I noticed several phenomena. The Middle East still has a deep interest in cryptocurrency, which may not be as deep as before, but because of several recent events, it has become a very important consideration for the Middle East. Especially after the Russo-Ukrainian war, a lot of Russian money went to the Middle East, which has become a real thing they are beginning to pay attention to. In the future, when international geopolitics continues to change, it has a very good position as a supplier of crude oil and energy supply regions, so it has a good position in trade. Therefore, cryptocurrency is important to it. So we see that many families or funds in the Middle East have begun to lay out a lot of cryptocurrency. Europe is somewhat unique. In Europe, I can fully feel a different sentiment towards cryptocurrency in the entire region. After the Russo-Ukrainian war, everyone's understanding of cryptocurrency in Europe has changed slightly. For example, in the Middle East, everyone will consider dollar-based products, but in Europe, everyone will consider currency-based products, such as the returns of BTC and Ethereum, because it can be seen that many families, families or institutions in Europe have already held a lot of BTC and Ethereum. The United States is completely different. When I was in the United States this time, I went to New York and the Bay Area. Some people I had made appointments with were cancelled temporarily. In fact, it was just three or four weeks before the SEC took action. I think they had already heard the wind, so fundamentally, the United States is extremely cold towards crypto now. What I mean by cold is that this is the attitude of early investors or those who are superficial. We also see that in the recent large-scale traditional financial institutions, whether it is BlackRock, Fidelity, or other institutions, they are very interested in institutionalization in this industry, but they still see the future opportunities. So I think it mainly depends on where the traditional financial people are. They have completely different attitudes towards Crypto in different places. This is two aspects. Then the macroeconomics of the next one to two years, currently, the recent article said it well, there is a demand for RMB depreciation against the yen, plus next year is also a big election year, the demand for loose fiscal policy, and now the monetary policy, because of the current high interest rates, the US banking system has a large unrealized loss of about 700-800 billion US dollars. Because the United States has just solved the debt ceiling problem, when it issues one to two trillion dollars in bonds next, if everyone buys short-term bonds and makes many people who are holding money in banks rush into the short-term government bond market, it will also be a huge blow to the banks. So overall, I think that the current so-called high-interest environment is the last gasp, and it is more of a way for the central bank to adjust expectations when the bullets are gone, or to maintain market expectations. Therefore, the monetary policy perspective will gradually move towards easing, so I see that the macroeconomic and financial policy trends and trends in the next one to two years are relatively loose, and at the same time, due to the changes in international geopolitics, cryptocurrency is an important tool for reconnecting the world, and I think it also has great opportunities.  

Question: The encryption market has experienced a significant drop in the past two weeks due to SEC's accusation against Binance. How do people view compliance in the face of ongoing regulatory policies? And how does HOPE view and mitigate regulatory/compliance risks?

Flex: If this question is for me, actually my original plan or the plan for Hope is to avoid touching licenses as much as possible, because we are a distributed stablecoin, and we have a distributed distributor. So from the perspective of the distributor, we look for institutions that comply with local laws and regulations, because regulatory agencies are more concerned about monitoring activities, that is, the most important thing they monitor is the inflow and outflow of funds, or the channel that connects the two worlds, because they are worried that the risk of cryptocurrency will spread to the traditional world. I think this also gives the entire Asian project a good opportunity. If the policy and attitude in the United States is like this now, then many project parties will come back to the East, whether it is Hong Kong or the Middle East. So I think this is a good opportunity for the industry and for people here.  

So the benefits of cryptocurrency are reflected in its distributed nature, so any country or unilateral action will not completely destroy it. For example, the actions taken by China in 2017 and 2021 did not eliminate cryptocurrency, and cryptocurrency is thriving in other places. I even believe that this action by the United States will not eliminate cryptocurrency, but instead it will thrive in other places.

Question: There was mention of many preparations being made for a bull market. Do people still believe there will be a bull market? Or what factors will contribute to the occurrence of a bull market?

多姐: I think it's just BlackRock, as the strongest player in traditional financial institutions, coming to launch BTC ETF, which actually shows the future of BTC.

Flex: I always believe that cryptocurrency is an important link to reconnect the world, a bridge, and I think it is very important. Cryptocurrency itself is the most sensitive asset to monetary and fiscal policies, so as long as these policies change, cryptocurrency will perform better than so-called high-risk stocks. In addition, many people think that AI and blockchain are combined, but there are actually many ridiculous things recently. However, I believe that there will be a significant combination in the future, because if you want AI to progress to the next stage, it is currently a large language model, but it has not evolved into the so-called self-awareness. In the next words, I believe that it will soon have the so-called sovereignty consciousness. Of course, this may be 10 or 20 years later. When this sovereignty consciousness appears, will it believe in the government's books? No, will it use a bank account? No, I think it will definitely use crypto. So, if it wants to provide a service to others, and others want to request algorithm services, it will definitely only accept crypto, and it will pay for the algorithm call fee, such as data center, like paying electricity bills, paying for the data center, which is the algorithm call fee, and it will also pay with cryptocurrency. Therefore, although Ethereum is currently technically POS, I think that in the process of AI becoming more and more mature in the future, Ethereum will return to POW in essence, because when you continuously use this graphics card miner, when artificial intelligence calls, it may give you a copy of Ethereum. So in the future, I think this may return to the perspective of POW, so there are many important combinations.

This article is from a submission and does not represent the views of BlockBeats.  

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