Original Title: "Xiao Feng's Graduation Speech to Entrepreneurs: Crossing the Divide, Back to Basics"

Original Author: Xiao Feng, Founder of Wanxiang Blockchain

Recently, at the Wanwu Chuangzao Ying S4 graduation ceremony, Dr. Xiao Feng, Founder of Wanxiang Blockchain and Chairman of HashKey Group, as well as the initiator of Wanwu Island, delivered a powerful sharing session titled "Blockchain: Starting from the Origin." He talked about new trends such as RWA and PayFi, and also shared his reflections after a face-to-face exchange with Vitalik. He did not peddle anxiety or engage in technical jargon, but instead tried to bring everyone back to the original meaning of blockchain, discussing whether this industry can still be pursued and how. This article has undergone a slight edit that does not change its original intent. If you are feeling lost in this circle, it is worth reading and bookmarking repeatedly, as you may find a new sense of direction.

Hello, everyone. Ying Mu told me that due to market cycles and unfavorable conditions, everyone is starting to think, "Should I switch careers?" She hopes to recharge everyone's "faith." I think, of course, you can. I have believed in this industry since 2014, and my belief has become an obsession today.

Before we begin, I would like to say I am delighted—it is my second time at Dongyin Center. I gave a sharing session here last year during the Wanwu Chuangzao Ying S3. Returning to this familiar place and seeing familiar faces is especially heartwarming, and I extend a special welcome to the leaders from Changning District.

I just returned from Hong Kong yesterday, where I attended a four-day Blockchain Summit. It was the first time a group from the mainland participated in a Hong Kong summit: a significant signal. The most significant difference at this conference was that the Shanghai government organized two official delegations, with nearly 50 people traveling to Hong Kong. This was the first time local governments from the mainland sent delegations to such a crypto summit.

We have been hosting blockchain summits in Shanghai for 10 consecutive years, while this is the third year in Hong Kong. Why the separate events? Because it is indeed challenging to discuss "public chains," "crypto," and "token economy" on the mainland. We were worried that speakers might not dare to come and speak, so we placed the core content in Hong Kong. This year, through QR code scanning, the four-day summit attracted over 8,000 independent attendees, with tens of thousands of person-times.

The Era of Application Explosion is Imminent

Many people ask, is the industry in crisis now? I do not think so. I believe the blockchain industry has transitioned from the infrastructure stage to the second growth curve—the application stage. At this year's summit, you could clearly feel that the discussions on protocols and infrastructure were decreasing, while topics such as RWA, PayFi, USDT payments, and other application-centric discussions became the focus of the event. I believe this is not a crisis but a turning point, a period of accumulation for the next explosion. This means that the era of "creating frameworks" and "discussing protocols" is over. The new opportunity lies in who can build truly problem-solving applications on this distributed ledger system.

On the last day of the summit, I had a dialogue with Ethereum's founder, Vitalik. There was no preset agenda, but I wanted him to talk about decentralization. He indeed said a key sentence: "The application layer cannot achieve full decentralization; Layer1 must adhere to decentralization."

Why? The core of decentralization is "trustlessness" and "disintermediation," which means reducing costs and increasing efficiency. If the cost of Web3 is higher than before, and the efficiency is lower than that of Web2, why redo everything? So, as we often say, "everything is worth rebuilding in Web3," the premise is that the cost of trust is reduced, system efficiency is higher, and the business model can be viable.

Don't think that blockchain is mystical; it has long entered the real world. Why? Because cross-border e-commerce from B2B, B2C is shifting to C2C. The customer is no longer a foreign trade company but an American consumer who places a $50 T-shirt order on your website and expects delivery within a week. He pays, you ship—that's how it works. The best payment method is scanning a USDT QR code—instant payment, instant stocking, air freight delivery within a week. This payment method does not require a bank, does not need a clearing system—it resolves the trust and efficiency issues in a second. In 2023, China sent out 18 billion international packages throughout the year.

Without a USDT-based blockchain settlement system, the biggest victim is China. So you will see why Hong Kong is pushing for stablecoin legislation. It realizes that if it does not actively embrace a new payment system, Hong Kong will be marginalized in the competition to be the global trade settlement center.

Many people are still eyeing "Can I create a protocol, issue a coin, and get rich?" Let me tell you, that era is over. The public chain era has ended. I have always advised entrepreneurs still thinking about creating a public chain: it's not that your technology is inadequate, but the opportunity has passed. The key now is: can you genuinely use this system to create a real "application" that serves real-world needs. This is the essence of my talk titled "Blockchain: Starting from Scratch" this time. What was the original purpose of blockchain's birth? It was to make system trust computable, verifiable, and cost-effective.

I want to share the origin of a "belief." Nobel laureate in economics, John Hicks, once said, "The Industrial Revolution had to wait for a financial revolution." The evolution of human society cannot be separated from the transformation of three elements: matter, energy, information. Every industrial revolution is a simultaneous revolution of these three. And the financial revolution is often the pioneer.

· First Industrial Revolution: Steam engine, accompanied by the banking lending system;

· Second: Electrification, accompanied by the capital market and the corporate stock system;

· Third Stage: Internet Revolution, with China joining the midstream;

· Fourth Stage: AI + Blockchain, with both China and the US co-leading this time.

The blockchain you are witnessing now is the next-generation financial system designed for the Fourth Industrial Revolution.

In one interview, I candidly advised the Ethereum Foundation: "Ethereum has declined to its current state because you lost China." From 2014 to 2016, China was the most solid foundation for Ethereum developers and users. Vitalik used to attend blockchain events in Shanghai every year, never missing the first seven. However, since the Chinese seven ministries issued relevant regulatory documents in 2017, the Ethereum Foundation's lawyers, citing "compliance risks," established a rule: Foundation members are not allowed to travel to China on business. Thus, Vitalik has been "absent" from China since then, not because he didn't want to come, but because he "dared not come."

It wasn't until 2023 when we held the first conference in Hong Kong that he still did not attend. Last year, he finally agreed to participate. I invite him every year. I told him: It's time to return to China. Wanxiang Blockchain Labs is also willing to accompany you to China to continue promoting workshops, hackathons, and various technical events. Losing China is like losing a significant chunk of global developer resources. Blockchain developers are mainly concentrated in two language systems: the English-speaking world and the Chinese-speaking world.

I asked him: How many developers does the Ethereum Foundation have in Europe? After some thought, he said, "There are a few doing core technology in Berlin." However, he also acknowledged that Ethereum's core technology has matured, with only optimization space left and no more opportunities for restructuring. Do you expect an application explosion relying solely on the technical strength in Berlin? Can you rely solely on European developers? Definitely not.

So I suggested that the Ethereum Foundation establish an office in Hong Kong, and half-jokingly said, "We have the 11th Blockchain Conference in Shanghai in October. If you get caught when you come, I'll go to jail with you." This is, of course, a joke—indeed, China's tech departments, government agencies, and developer communities respect Ethereum's technology. Your Foundation should no longer stay away from China. Your legal team established in Europe has no understanding of China, yet they are making arbitrary regulations, which will only lead you further astray. This is the content of my private conversation with Vitalik.

Behind the Industrial Revolution, There is Always a Financial Revolution

Now, let's take a broader perspective: the Fourth Industrial Revolution is accompanied by an ongoing financial revolution.

· First Industrial Revolution: Led by banks, credit and bonds were the mainstay of financing, with no capital markets yet established.

· Second Industrial Revolution: Led by the U.S. capital markets, investment banks, Wall Street, J.P. Morgan, Goldman Sachs, and others emerged, supporting the wave of electrification.

· Third Industrial Revolution: In the 1960s, venture capital (VC) was born, and Silicon Valley rose. As a Nobel laureate in economics once said, "Behind every industrial revolution, there is a financial revolution."

Today, in the Fourth Industrial Revolution, if you deny tokens, if you deny crypto, you will miss out on a new financial paradigm, and even miss the opportunity for an entire revolution.

Over the past year, I have discussed the relationship between Web3 and AI with four top AI experts: Xiangyang Shen, Kai-Fu Lee, Ming Zhou, and the Dean of the School of AI at The Hong Kong Polytechnic University. Without exception, they all believe that Web3 and AI are two sides of the same coin and will eventually converge. In the United States, there are also two typical representatives:

1) Sam Altman: Leading Worldcoin, which already has 10 million users globally, distributes three coins every quarter. Even if each coin is worth less than a dollar, it is still a significant expense. He represents the path of "AI + Crypto + Software."

2) Elon Musk: Supporting Dogecoin while also advancing self-driving technology and Optimus-like robots, representing the direction of "AI + Hardware + Crypto."

These two directions both involve "AI in the left hand, Crypto in the right hand." This is not coincidental but an inevitable result of historical development. Even former President Trump responded to this trend. He originally planned to establish an AI Committee and a Crypto Committee but later, at the suggestion of his staff, opted to merge them into an "AI + Crypto Presidential Committee." I learned from one of his crypto advisors the rationale behind this decision: AI and Crypto should not be separated but should work together in tandem.

The financial revolution of the digital age is based on distributed ledgers and cryptographic capital. If you do not acknowledge this, it will be challenging to keep pace with the United States in the digital era. Why? Because blockchain is a new accounting system, payment settlement system, and global ledger system. The digital world is borderless, transcending space, time, organization, and borders. It requires a new system for registration, accounting, and settlement. Traditional finance cannot meet this demand.

The accounting methods of human society have only undergone three major transformations to date:

1) Ancient Single-Entry Bookkeeping

2) Double-Entry Bookkeeping since the Renaissance (still in use today)

3) Distributed Ledger System created by Bitcoin in 2009

This third revolution in bookkeeping has led us from bank accounts to the era of encrypted accounts. Look at the small commodity merchants in Yiwu today, why are they willing to accept USDT payments? Because they don't need a bank account, they can complete transactions with just an encrypted account. The settlement volume of the US dollar stablecoin in 2023 is $16 trillion, exceeding the total of VISA and Mastercard. Banks are certainly nervous, and governments certainly pay attention. Therefore, today, CEOs and chairmen of major global banks have all acknowledged: Blockchain is a revolutionary system that represents a leap in efficiency.

I remember in 2012, I debated with famous bankers at a conference on "Whether Blockchain Can Change Finance." They said, "The essence of finance will not change." I said right—The essence of finance has always been: Want to borrow money, want to receive money quickly. This has been an unchanged need for three thousand years. Do you think the bank is the ultimate model of finance? The banking system is only a hundred years old, and central banks are only 400 years old. In early China, there were draft banks, pawnshops, and earlier even security carriers delivering silver. They can all change, so why can't banks?

Now you see, CeFi (Centralized Finance) is the traditional system, and DeFi (Decentralized Finance) is the new system. In the past, when I mentioned DeFi, banks felt the risk was high. But I asked them, "From the perspective of lending behavior, is the risk higher for banks or for DeFi?" Banks have a capital adequacy ratio of only 12%, equivalent to leverage of 7 to 8 times. Relying on high leverage to maintain profits, once the model is wrong, as in the 2008 subprime mortgage crisis, the entire system collapses instantly. In contrast, DeFi's risks are transparent, quantifiable, and traceable on-chain.

What is DeFi? DeFi (Decentralized Finance) does not lend by leveraging but achieves returns by improving capital efficiency. For example, you collateralize a Bitcoin worth $100,000 into a DeFi protocol, with a current collateralization rate of about 50%, you can borrow up to $50,000 at most. In other words, DeFi is over-collateralized lending, not high leverage.

A typical representative of the highest capital efficiency in DeFi is "Flash Loan," characterized by lending and repayment within one block, taking only a few seconds for the entire process. While not all scenarios are suitable for flash loans, this demonstrates DeFi's high-efficiency turnover capability. Overall, DeFi's annual capital turnover speed is 10 times that of traditional banks, with revenue coming from high-frequency small-profit accumulations rather than leverage amplification. This is a more advanced financial system with strong vitality. Over half of this "new financial infrastructure" has now been built, which is a key stage in accelerating application landing.

Application and Impact of the New Financial Infrastructure

With the proliferation of this infrastructure, applications such as PayFi have emerged. By 2024, the total volume of payments and settlements based on stablecoins reached $16.16 trillion, completely bypassing the traditional banking system and the SWIFT network. In this regard, China is one of the biggest beneficiaries. In our cross-border trade, an increasing number of payment settlements have shifted to this new system, boosting global commodity sales.

Financial infrastructure refers to a comprehensive institutional arrangement, including laws, accounting standards, etc., aimed at maintaining financial stability and serving the public interest. Its technological aspect involves hardware and system security. "Financial Market Infrastructure" is a subset of this, primarily including the payment, clearing, and settlement of funds.

· Payment: Such as swiping a bank card, first verifying if the account has sufficient funds.

· Clearing: If sufficient funds are available, then freezing the amount to be paid.

· Settlement: Completing the actual transfer of funds between different banks or accounts.

The Ethereum security incident in 2016 was due to a smart contract not handling the clearing process properly, leading to users repeatedly withdrawing assets and causing a loss of around $60 million. This event highlighted the importance of the clearing mechanism. China's Foreign Exchange Trading Center, clearinghouses, settlement centers, and other institutions are representatives of traditional financial market infrastructure. They ensure the payment and settlement of various types of transactions.

Compared to the traditional financial system, the new financial infrastructure has undergone significant changes in technical architecture, participants, and settlement units. Its core is based on blockchain, using Bitcoin, ETH, and stablecoins as transaction media, completely eliminating intermediaries, achieving trustlessness, and enabling efficient peer-to-peer transactions.

In the old system, remittances from Shanghai to the United States could take days to weeks; whereas with blockchain stablecoins, the funds can arrive in seconds. For example, the author recently attempted to remit from Hong Kong to Shanghai, only to have the transaction fail confirmed a month later; whereas if stablecoins were used, it might have been completed in ten seconds.

Given such efficiency and cost differences, isn't it worth reconsidering the direction of financial system reform? Although decentralized blockchain systems bypass SWIFT, the U.S. government still chooses to support the development of the USD stablecoin. Trump has made it clear that he expects Congress to pass USD stablecoin-related legislation by August 2025. The U.S.'s bottom line is: you can bypass SWIFT, but don't bypass the dollar. If this new system even bypasses the dollar, the U.S. will completely lose its global financial dominance.

President Trump's advisor once stated that the most important thing the U.S. government is currently looking to advance is not a Bitcoin strategic reserve, although the latter is equally important. The priority is to push forward legislation for a USD stablecoin. The U.S. must ensure that the dollar remains the primary payment and settlement tool in the new generation of financial infrastructure. If the dollar loses this status, the U.S. will face fundamental risks.

Looking back at history, to make the global adoption of the dollar a reality, the U.S. post-World War II pegged the dollar to gold through the Bretton Woods system, with other countries' currencies then pegged to the dollar, establishing the dollar's global currency status. As the system collapsed, the U.S. pushed for the formation of the Eurodollar market and the "Petrodollar" system, unifying the settlement of commodities in dollars, creating a global use case for the dollar. Today, the dollar is entering the third stage of evolution: tokenization. The U.S. government is trying to ensure that the "tokenized dollar" occupies a central position in the future global financial infrastructure, a significance far greater to national interests than a Bitcoin reserve.

Currently, the digital currency system is rapidly evolving, including native cryptocurrencies (such as Bitcoin), digital twin stablecoins (such as USDT, USDC), which represent the evolution of currency from precious metals, fiat currency, to crypto assets.

Cryptocurrencies can be divided into two categories: first, CBDCs (Central Bank Digital Currencies) driven by national central banks, falling under M0 (base money); second, market-driven stablecoins, falling under M2 (broad money), are currencies created by institutions through credit expansion based on central bank base money. The bank deposits, wealth management products, money market funds, etc., that we use in our daily lives all fall under the M2 category, bank liabilities, not central bank assets. For example, in China, banks only guarantee deposits up to 500,000 yuan; in the U.S., the limit is $500,000. If deposits exceed this amount, banks may not be able to guarantee them in the event of a collapse.

In the financial system, M0, M1, and M2 each have different functions and are not interchangeable. Central bank digital currencies are unlikely to replace M2-level currencies and are not suitable for all consumption scenarios. The U.S. is well aware of this and has explicitly stated that it will not issue a CBDC. Trump promised during his campaign that he would not allow the Fed to issue a central bank digital currency during his tenure. The Fed has also stated publicly that it is not considering issuing such a currency. The reason is clear: a central bank digital currency could lead to comprehensive state control over payment data, undermining user privacy. For example, if the digital dollar were used for payments in Hong Kong, Singapore, or Japan, the Fed could obtain transaction data, which would be difficult to accept internationally. It is difficult to implement unless by force. The U.S. understands its limitations and has therefore turned to supporting stablecoins issued by the market, anchored to the dollar.

RWA (Real World Asset) tokenization also falls under the M2 category, for example, the U.S. dollar money market fund tokens issued in Hong Kong. Its essence is credit creation based on sovereign currency, issued by banks and other financial institutions, still being bank liabilities. The core of the new generation of payment and settlement systems is not only the innovation of currency form but also the evolution of asset issuance models. From the "Gold standard Dollar" to the "Petrodollar," and now to the "Tokenized Dollar," each round of evolution has strengthened the global influence of the dollar.

It is worth mentioning that China once held a 70% global share of Bitcoin mining, meaning that Bitcoin was once a "Made in China" currency. However, due to regulatory reasons, China voluntarily gave up this strategic resource, yielding to the United States. From an industry perspective, this may not necessarily be a bad thing, but from a national interest standpoint, it is a significant loss.

The development of AI has also provided a clear demand for the new financial system. If in the future hundreds of billions of devices globally can generate GDP without human involvement, their payments and settlements will rely on programmable currency. The traditional banking system struggles to support machine-to-machine automatic payments, while systems based on blockchain and smart contracts have this capability, with no better solution currently available. On this basis, a new asset issuance system is also under construction. The new era of industrial revolution calls for a matching financial revolution, namely a comprehensive upgrade of the payment settlement system and asset tokenization. The current main five categories of token assets include:

· Payment Tokens: such as USDT, USDC, anchored to fiat currencies, used for daily payment settlements. In the future, stablecoins pegged to the Hong Kong dollar, Japanese yen, Euro, and others will also emerge.

· Reserve Tokens: such as Bitcoin, are transitioning from a risk asset to a strategic reserve asset. Several U.S. states have already passed legislation to include Bitcoin in state government asset reserves, evolving from household assets and corporate cash management to national strategic reserves.

The book "The Pyramid of Money" once predicted that Bitcoin would become a reserve asset of central banks worldwide. The reason is simple: for the digital native generation under 30, Bitcoin's appeal has surpassed that of gold. This book bluntly tells today's seventy-eight-year-old central bank governors and finance ministers — you will eventually exit the historical stage, and those young people who have grown up in the digital world will take over your positions and are more likely to include Bitcoin in the national reserves. The trend is irreversible, and individual will cannot resist the tide of the times.

Surprisingly, the initiator of this trend is not the digital native generation but an 80-year-old man — Trump. This reality actually confirms the judgment that "the situation is stronger than the individual." It was originally thought that only young people would drive change, but the practice was initiated by an elderly person.

Currently, the trend of Bitcoin as a reserve asset is emerging. In the recent market volatility, most cryptocurrencies experienced a significant decline, but Bitcoin's decline was relatively minor. This is because most cryptocurrencies are still seen as "risk assets," while Bitcoin is gradually transitioning from a risk asset to a "credit asset."

The core function of a credit asset is to hedge against fiat currency overissuance. For example, gold has long been globally viewed as a store of value and has seen a price surge in recent years. U.S. stocks and bonds have fallen, while gold and Bitcoin have remained strong, indicating that Bitcoin is gradually acquiring credit asset characteristics. It is expected that within the next year, Bitcoin will complete a full transition from a risk asset to a credit asset.

Currently, Bitcoin's market cap is less than $2 trillion, while gold exceeds $20 trillion. If Bitcoin eventually reaches the market cap level of gold, whether in five years or ten years, it will be a huge opportunity for investors. As for Ethereum (ETH), it is still a utility token. Its value depends on actual applications within its ecosystem, and it only has significant upside potential when applications scale massively. Unlike Bitcoin, which has the potential to become "digital gold," ETH cannot become a store of value asset. However, as a utility asset, its prospects remain vast.

Regarding the growth path of utility assets, you can refer to the classic work "Crossing the Chasm" from Silicon Valley 30 years ago. The book points out that the user growth path of all high-tech products can be divided into five stages:

1. Innovators Stage: Products are created by innovators. For example, Bitcoin and Ethereum were initially created from scratch by visionaries like Satoshi Nakamoto and Vitalik.

2. Early Adopters Stage: Early users are not necessarily seeking immediate practical application but are driven by their love for new technology. For instance, in 2015, when Vitalik visited Shanghai, despite the Ethereum mainnet not being live yet, Wanxiang Blockchain still invested $500,000 in it.

3. Pragmatists Stage: Mainstream users start to focus on whether the technology can truly deliver value and solve real-world problems. This is a critical "chasm" period for products where 80% of projects fail.

4. Conservatives Stage: Users adopt technology after seeing others benefit from it, representing the majority of the user base. This stage has a lower barrier to entry, but crossing the "pragmatists' chasm" is a prerequisite.

5. Skeptics Stage: The "traditionalists" who always reject new technology. They prefer a stable and nostalgic lifestyle, resist new things, and do not need to be forcefully converted.

Projects that can acquire users and monetize from the third and fourth stages have a solid foundation for sustainable development. Additionally, there are two types of assets worth noting:

· Security Tokens: For example, Real World Asset (RWA) tokenization is essentially the digitization of security investment instruments and must adhere to securities regulatory rules. Ignoring regulations will eventually lead to legal risks.

· Meme Coins: Such as meme coins introduced by figures like Trump, these target users who are speculative for entertainment purposes, similar to a Las Vegas casino. While primarily for "fun," they still cater to real users and market demand, constituting a distinct asset class.

In summary, in the new generation asset system, Tokens are mainly divided into five categories: Reserve-based, Utility-based, Credit-based, Security-based, and Entertainment-based. Understanding which category your own project belongs to can help more accurately assess its development path and regulatory requirements.

The Essence and Development Direction of the New Generation Financial Market System

The essence of finance is the intertemporal misallocation of value. For example, a startup company borrows money from a bank for expansion needs, and the bank lends based on its potential growth over the next two years. This is actually an advance realization of future value using current funds, which is a typical mismatch of time value. The core mission of "good finance" is to achieve this value transfer more efficiently and at a lower cost, and all other superficial behaviors are secondary.

DeFi (Decentralized Finance) and CeFi (Centralized Finance) are not opposites; they can be used in combination to jointly optimize risk-reward structures. The new generation of asset trading markets has a global and 24/7 nature — assets issued based on the public chain inherently have global accessibility, allowing anyone to participate in transactions anytime, anywhere.

Traditional trading platforms such as NASDAQ and NYSE are also beginning to extend trading hours, evolving from the original 5 days a week, 5 hours a day to a "5x23 hours" approach to a near-24/7 trading system. In fact, new technology can already support "7x24-hour" trading, fully covering global time zones and breaking the previous "anti-human" trading hour settings. Since the technology is already available, embracing change is a natural choice.

AI and blockchain together form the infrastructure of a new generation wealth distribution system. In the AGI era, a blockchain-based new financial system will become the optimal global wealth distribution mechanism.

Blockchain is not only financial infrastructure but also a new business governance tool. On-chain data has real-time disclosure (once per block), tamper resistance, traceability, and auditability, allowing companies to achieve efficient and transparent information disclosure without relying on traditional semi-annual or annual reporting systems. Compared to traditional accounting systems, a blockchain-based information disclosure mechanism is more efficient and trustworthy. New forms of organizations such as DAOs (Decentralized Autonomous Organizations) are based on transparent on-chain data, enabling global strangers to collaborate and complete complex tasks under a new governance model.

The AI era is an era of large-scale collaboration among global strangers. Traditional methods such as company contracts and bank transfers are no longer able to support the efficient collaboration needs. On-chain protocols, smart contracts, and token incentive mechanisms will become the infrastructure of new business activities.

RWA: Tokenization Process of Real-World Assets

RWA (Real World Assets) essentially involves the tokenization of assets, transforming off-chain assets into on-chain standardized, fractionalized, and securitized forms. As early as a decade ago, stablecoins such as USDT and USDC achieved the tokenization of fiat currency, marking the starting point of RWA.

From a developmental perspective, RWA is mainly divided into three stages:

· Stage 1 (2015): Fiat tokenization represented by USDT. Since sovereign currency itself has a strong credit endorsement and low reliance on oracles, only requiring a custody bank to issue a proof of payment, the market can trust it.

· Stage 2 (2024): Represented by BlackRock's Build, this stage promotes the on-chainization of financial assets such as short-term government bond funds. These assets are credit-supported through licensed financial institutions, securities regulation, custody banks, and legal audits.

· Stage 3 (Future): Tokenization of real-world assets. This stage poses the highest difficulty, with the key challenge being the validation of off-chain assets' authenticity and ownership proof, where oracles become a critical bottleneck.

Currently, there are three main oracle solutions:

1) Native Cryptocurrency Oracles like Chainlink: They have achieved on-chain crypto market prices and data.

2) DePIN (Decentralized Physical Infrastructure Network): A crucial oracle for on-chain machine data in the future, such as real-world data generated by autonomous driving and humanoid robots. With the development of AI and hardware, its importance will significantly increase.

3) Financial Institution Oracles: Provided by regulated financial institutions through custody and other means to endorse on-chain data. For example, a bank acting as a custodian confirms token quantity change instructions to ensure on-chain asset trustworthiness.

The on-chain mapping of real-world assets still faces significant challenges, as there is currently no mature and reliable credit enhancement mechanism. However, the ongoing development of oracle systems is expected to address this issue. When discussing Real World Assets (RWA), if one believes that "everything can be RWA," it must be overly idealistic. To engage in RWA, two core issues must be addressed:

First, how to go on-chain. That is, how to ensure that data is authentic, tamper-proof, and traceable. This usually relies on the oracle system, but oracles themselves face trust and accuracy issues.

Second, compliance issues. Some financial products need approval from securities regulatory bodies before tokenization. For example, tokenizing a money market fund in Hong Kong requires approval from the Securities and Futures Commission before implementation.

In addition, tokenization should not be just for the sake of tokenization. For the average investor, purchasing a US dollar money market fund to earn returns is no different from buying its tokenized version, but it adds complexity in terms of wallet management, private key security, and other operations. Money market funds in the real world are easily accessible with no barriers.

Therefore, for Real World Assets (RWA) to be established, they must have a unique purpose and additional value. Otherwise, real-world asset securitization is already mature enough and does not need another layer of tokenization. In other words, tokenization must address issues that traditional finance cannot solve.

A typical scenario is integrating with DeFi. For example, the current annualized return of a US dollar money market fund is between 4.5% and 4.9%. If tokenized, one can continue to enjoy this return and also earn an additional 5% or so through DeFi lending, creating value "without increasing risk." This additional return comes from improving capital efficiency rather than leveraging and is an innovative approach worth recognizing. We are currently in communication with regulatory bodies but have not yet obtained approval, so we cannot formally use tokenized money market funds for DeFi lending.

Another example is a gold-backed RWA: Gold is often considered suitable for ETFs or RWAs, depending on the executing entity. If a gold miner or refinery claims to produce gold daily and wishes to tokenize it, it is not feasible. External parties cannot verify the ownership, purity, or security of the gold. However, if a licensed financial institution issues a gold ETF approved by securities regulators and held in bank custody, such as a Hong Kong issuer storing gold in a HSBC vault with HSBC as the custodian, then converting this gold ETF into an RWA Token becomes credible. In this case, market trust is placed not in the mine owner but in HSBC Bank.

Generally speaking, not all assets are suitable for direct tokenization into RWA. They usually need to be transformed into compliant financial products before being tokenized. This is the reality that the industry must currently face.

Combining AGI (Artificial General Intelligence) with Blockchain

When discussing the combination of AGI (Artificial General Intelligence) with blockchain, I'd like to share a brief anecdote. Three weeks ago, I met with Shen Xiangyang in Hong Kong, and he also expressed that AI and crypto are a naturally compatible area where we are jointly exploring how to combine the two.

Over the past year, I have been actively searching for AI+Crypto projects that truly bring value. Not just creating a chain, issuing a coin, and slapping on an AI label, but actually addressing real-world issues and conducting genuine engineering. For example, a distributed inference network is the direction we have been dedicating efforts to in the long term. We aim to build a system that can support 200, 2000, or even 20,000 devices collaborating on AI inference tasks. This is not mere rhetoric but a deep engineering effort at the hardware and network levels. Currently, our system is expected to launch a TGE (Token Generation Event) in two months.

We firmly believe that the deep integration of AI and blockchain will definitely happen, and we are actively looking for entrepreneurial projects with practical application capabilities. I know that many entrepreneurs in the Maker Carnival Season 5 are also making similar attempts, and I welcome everyone to discuss together.

In fact, as early as February last year, I reached out to the CSDN team, hoping they could mobilize developers to run large models in a distributed manner. This project has been progressing for over a year because everyone is working diligently and conscientiously, and we believe it is worthwhile. We are also collaborating with Shen Xiangyang's team, the Hong Kong University of Science and Technology, and the Hong Kong Polytechnic University. For example, they have successfully compressed AI models to run on mobile phones. We are exploring the idea of collaborating with mobile distribution channels to pre-install models during the sales process and activate them upon user authorization if pre-installation is not possible. In our tests, 90% of users do not proactively uninstall, but are willing to retain the installed models.

Furthermore, this decentralized edge computing node network can allow users to earn token rewards by sharing computing power, thereby activating the entire ecosystem. This is not an easy task, but precisely because it is difficult, it signifies an opportunity. Truly valuable innovation is never something that is "commonly seen everywhere."

Regarding AGI, OpenAI has proposed five stages: chatterbox, reasoner, agent, innovator, and organizer.

Currently, ChatGPT has achieved the first stage; reasoners (such as DeepMind's Alpha series or OpenAI's O1) are also gradually taking shape. The third stage—Agent—is currently in progress. Musk's self-driving system, humanoid robots, etc., fall into this stage. It is expected that self-driving technology will mature in the next two years, and the application of humanoid robots in factories is also rapidly advancing. As for the comprehensive application in home scenarios, it may take another 5 years or even longer. The more complex stages are innovator and organizer. The innovator is the creation from 0 to 1, while the organizer needs to standardize, systematize, and scale the innovative results, posing a higher level of difficulty. Once all five stages are achieved, AGI will be realized. Optimistically, AGI is expected to arrive in 2027, while a conservative estimate suggests 2030.

After AGI, we will enter the era of ASI (Artificial Superintelligence). The key issue in this stage is: How can the enormous social wealth created by AI be distributed?

This raises an age-old but important proposition: Universal Basic Income (UBI). Economists have long proposed the UBI model to ensure that humans can still receive fair distribution in the AI era. I came across a piece of news where someone asked a tech giant what the ultimate destination of AGI would be, and he responded: socialism. In a sense, he is correct—AI does not consume, does not waste, and the wealth it creates needs to be redistributed. The concept of UBI is to distribute based on "people" rather than labor.

And the next stage is UHI (Universal High Income), matching the index-level wealth created by ASI. In the future, perhaps you are planning to travel to Antarctica, the Arctic, or space, and the systems of the AI era may be able to support you, no longer just a fantasy.

Do you still remember Andrew Yang, who ran for the U.S. presidency in 2020? His core policy was UBI, giving every American $2000 per month. He spoke too early about the inevitable trend of the AI era. Why is OpenAI's Sam Altman working on Worldcoin? It is to build a global identity authentication system (World ID) and a supranational currency system, laying the foundation for future UBI. Because the wealth of the AGI era no longer belongs to a single country, it must be distributed fairly through a supranational currency and cross-border platforms.

Musk is also exploring similar ideas. The identity authentication and economic transactions of AI machines must be based on blockchain. Otherwise, we cannot verify the interaction between devices. Machine-to-machine payments and settlements naturally require smart contracts, and therefore must be based on programmable currency and decentralized ledgers.

So, the integration of AGI and blockchain will be reflected in two aspects:

1) Decentralized collaborative networks at the computing power and task level, such as distributed reasoning;

2) Global identity and settlement systems at the wealth distribution level, such as the UBI architecture built by Worldcoin.

This is a question that must be considered for the future—when the means of production in human society are completely taken over by intelligent entities, our value system, distribution mechanisms, and incentive systems must also be restructured. And blockchain may be the infrastructure closest to this answer.

Well, that's the end of my sharing for today. Thank you, everyone!

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