Recently, at the graduation class of Wanwu Creation Camp S4, Dr. Xiao Feng, founder of Wanxiang Blockchain, chairman of HashKey Group, and initiator of Wanwu Island, gave a powerful sharing session - "Blockchain: Starting from the Origin". He talked about new trends such as RWA and PayFi, and also shared his thoughts after face-to-face communication with Vitalik. He did not sell anxiety or pile up technology, but tried to take everyone back to the original meaning of blockchain and talk about whether this industry can still be done and how to do it? This article has some secondary edits that do not change the original meaning. If you are confused about this circle, it is worth reading and collecting repeatedly, and perhaps you will have a new sense of direction.
Hello everyone, Yingmu told me that because of the market cycle and bad environment, everyone started to think: "Is it time to change careers?" She hopes to recharge everyone's "belief". I think it's okay. I have believed in this industry since 2014, and I have been obsessed with it until today.
Before I start, I want to say that I am happy - this is my second time to come to Dongyin Center. Last year, I gave a sharing here at the Creation Camp S3. This time I revisited the old place and saw familiar faces again. They were particularly cordial and especially welcomed the leaders of our Changning District.
I just came back from Hong Kong yesterday. This time I went to attend the four-day Blockchain Summit. This is the first time that a delegation from the mainland has participated in the Hong Kong Summit: the signal is of great significance. The biggest difference of this conference is that the Shanghai Municipal Government organized two official delegations, nearly 50 people, to go to Hong Kong. This is the first time that a local government in the mainland has organized a delegation to participate in such a crypto summit.
We have held the Blockchain Summit in Shanghai for 10 consecutive years, and this is the third year in Hong Kong. Why separate? Because it is really difficult to talk about "public chain", "Crypto" and "Token Economy" in the mainland. We are afraid that the speakers will not dare to come to talk, so we put the core content in Hong Kong. This year, through the statistics of scanning the QR code, the four-day summit attracted more than 8,000 independent participants, and the number of people was tens of thousands.
The application explosion period is coming
Many people ask, is this an industry crisis? I don't think so. I think: the blockchain industry has moved from the infrastructure stage to the second growth curve - the application stage. At this year's summit, you can clearly feel that the discussion of protocols and infrastructure is decreasing, while RWA, PayFi, USDT payment and other application-oriented topics have become the focus of the whole audience. I believe that this is not a crisis, but a turning point, and it is the accumulation period for the next outbreak. This means that the era of "building a framework" and "talking about protocols" has passed. The new opportunity lies in who can build applications that truly solve problems on this distributed ledger system.
On the last day of the summit, I had a conversation with Vitalik, the founder of Ethereum. There was no communication outline in advance, but I wanted him to talk about decentralization, and he really said a key sentence: "The application layer cannot be completely decentralized, and Layer 1 must insist on decentralization."
Why? The core of decentralization is "trustlessness" and "disintermediation", which means reducing costs and improving efficiency. If the cost of Web3 is higher than before and the efficiency is lower than Web2, why should we redo it? So we often say that "everything is worth reconstructing in Web3", and the premise is that the trust cost is reduced, the system efficiency is higher, and the business model can be established.
Don't think that blockchain is metaphysics, it has already entered the real world. Why? Because cross-border e-commerce is shifting from B2B and B2C to C2C. The customer is no longer a foreign trade company, but an American consumer who places an order on your website to buy a $50 T-shirt and wants to receive the goods within a week. He pays and you ship, and this is how it works. The best way to pay is to scan the USDT QR code - the account arrives in seconds, the stock is prepared in seconds, and it is delivered by air in a week. This payment method does not require a bank or a clearing system, and solves the problem of trust and efficiency in one second. In 2023, China will send 18 billion international packages throughout the year.
Without a USDT-based blockchain settlement system, China will be the biggest victim. So you can see why Hong Kong is pushing for stablecoin legislation? Because it realizes that if it does not actively embrace the new payment system, Hong Kong will be out of the competition for the settlement center of global trade.
Many people are still staring at "Can I make a protocol, issue a coin, and get rich?" I tell you, this era is over. The era of public chains has ended. I have always advised entrepreneurs who still want to do public chains that it is not that your technology is not good, but that the trend has passed. The next key is: Can you really use this system to make real "applications" to serve the needs of the real world. This is the original intention of the title of my speech this time - "Blockchain: Starting from the Origin". What is the original intention of the birth of blockchain? It is to make system trust computable, verifiable, and low-cost.
I want to talk about the source of "belief". John Hicks, a Nobel Prize winner in economics, once said: "The Industrial Revolution had to wait for a financial revolution." The evolution of human society is inseparable from the changes in three elements: matter, energy, and information. Every industrial revolution is a synchronous revolution of these three elements. And the financial revolution is often the forerunner.
- The first industrial revolution: the steam engine, and the emergence of a bank lending system;
- The second: electrification, with supporting capital markets and joint-stock company systems;
- The third: the Internet revolution, with China entering from the middle;
- The fourth time: AI + blockchain, this time China and the United States are jointly leading the way.
The blockchain you see now is the next-generation financial system that supports the Fourth Industrial Revolution.
In an interview, I once made a blunt suggestion to the Ethereum Foundation: "Ethereum has fallen to this point today because you have lost China." From 2014 to 2016, China was the most solid base for Ethereum developers and users. At that time, Vitalik came to Shanghai to attend the blockchain conference every year, and he never missed the first seven sessions. But since the seven ministries and commissions of China issued relevant regulatory documents in 2017, the lawyers of the Ethereum Foundation have formulated a rule based on "compliance risks": Foundation members are not allowed to travel to China on business trips. As a result, Vitalik has been "absent" from China since then, not even because he is unwilling to come, but because he is "afraid to come."
Until 2023, when we held the first conference in Hong Kong, he still did not attend. Last year, he finally nodded and expressed his willingness to attend. I have been inviting him every year. I told him: It is time to return to China. Wanxiang Blockchain Lab is also willing to accompany you to continue to promote workshops, hackathons and various technology promotion activities in China. If you lose China, you will lose a large part of global developer resources. Blockchain developers are mainly concentrated in two language systems: the English world and the Chinese world.
I asked him: How many developers does the Ethereum Foundation have in Europe? He thought for a moment and said, "There are a small number of people working on the underlying technology in Berlin." But he also admitted that the underlying technology of Ethereum has matured and there is only room for optimization, and no more opportunities for reconstruction. You expect the application to explode, but can you only rely on the technical strength of Berlin? Can you only rely on European developers? Of course not.
So I suggested that the Ethereum Foundation set up an office in Hong Kong, and half-jokingly said, "We have the 11th Blockchain Conference in Shanghai in October. If you come and get arrested, I will go to jail with you." This is of course a joke - in fact, China's technical departments, government agencies, and developer groups respect Ethereum's technology. Your foundation should not stay away from China. The legal team you set up in Europe does not understand China at all, but it is making random regulations here, which will only make you go further and further astray. This is the content of my private communication with Vitalik.
Behind every industrial revolution, there is always a financial revolution
Now let’s look at the bigger picture: the Fourth Industrial Revolution, and the accompanying financial revolution, are happening.
The First Industrial Revolution: dominated by banks, credit and bonds were the main axes of financing, and there was no capital market.
The Second Industrial Revolution: Led by the US capital market, the rise of investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc. supported the wave of electrification.
The third industrial revolution: the birth of venture capital (VC) in the 1960s and the rise of Silicon Valley. As a Nobel Prize winner in economics said: "Behind every industrial revolution, there is a financial revolution."
Today, in the fourth industrial revolution, if you deny tokens and crypto, you will miss the new financial paradigm and even the opportunity for the entire revolution.
In the past year, I have discussed the relationship between Web3 and AI with four top AI experts: Harry Shum, Kai-Fu Lee, Ming Zhou, and the Dean of the School of Artificial Intelligence at the Hong Kong Polytechnic University. They all believe that Web3 and AI are two sides of the same coin and will eventually come together. In the United States, there are also two typical representatives:
1) Sam Altman: He leads Worldcoin, which has 10 million users worldwide. He issues three coins every quarter, which is a huge expense even if each coin costs less than one dollar. He represents the path of "AI+Crypto+Software".
2) Elon Musk: Supports Dogecoin, while promoting autonomous driving and Optimus Prime robots, representing the direction of "AI + Hardware + Crypto".
Both directions are "AI on the left hand and Crypto on the right hand". This is not accidental, but inevitable in the development of history. Even President Trump responded. He originally planned to set up an AI committee and a Crypto committee, but later, at the suggestion of his staff, he simply merged them into an "AI + Crypto Presidential Committee". I learned from one of his crypto consultants the thinking behind this decision: AI and Crypto should not be divided and ruled, but should be linked and coordinated.
The financial revolution in the digital age is a revolution based on distributed ledgers and crypto capital. If you don't admit this, it will be difficult to keep up with the United States in the digital age. Why? Because blockchain is a new accounting system, payment and settlement system, and global ledger system. The digital world has no borders. It transcends space, time, organization, and borders. It requires a new registration, accounting, and settlement system. Traditional finance cannot meet this demand.
The way human society keeps accounts has undergone only three major changes so far:
1) Ancient single-entry accounting
2) Double-entry bookkeeping after the Renaissance (still in use today)
3) The distributed accounting system created by Bitcoin in 2009
This third accounting revolution has brought us from bank accounts to the era of crypto accounts. Why are small commodity merchants in Yiwu willing to accept USDT payments today? Because they don’t need a bank account, as long as they have a crypto account, they can complete the payment. The total settlement amount of US dollar stablecoins in 2023 is 16 trillion US dollars, which has exceeded the sum of VISA and Mastercard. Banks will certainly be nervous, and the government will certainly pay attention. Therefore, today, CEOs and chairmen of major banks around the world have admitted that blockchain is a revolutionary system that represents a leap in efficiency.
I remember in 2012, I had a debate with famous bankers at a conference on whether blockchain can change finance. They said, "The essence of finance will not change." I was right - the essence of finance has always been: wanting to borrow money and wanting to receive money quickly. This has been an unchanging demand for three thousand years. Do you think banks are the ultimate model of finance? The banking system has only a hundred years of history, and the central bank has only 400 years. In the early days of China, there were ticket houses and silver shops, and even earlier, there were escort agencies delivering silver. They can all change, so why can't banks?
Now you see, CeFi (centralized finance) is a traditional system, and DeFi (decentralized finance) is a new system. When I talked about DeFi before, banks thought it was risky. But I asked them, "From the perspective of lending behavior, is the risk higher for banks or DeFi?" The capital adequacy ratio of banks is only 12%, which is equivalent to 7 to 8 times leverage. Relying on high leverage to maintain profits, once the model is wrong, such as the subprime mortgage crisis in 2008, the entire system collapses instantly. In contrast, the risks of DeFi are transparent, quantifiable, and traceable on the chain.
What is DeFi? DeFi (decentralized finance) does not lend by adding leverage, but rather achieves returns by improving the turnover efficiency of funds. For example, if you pledge a bitcoin worth $100,000 to the DeFi protocol, you can borrow up to $50,000 at the current pledge rate of about 50%. In other words, DeFi is an over-collateralized loan, not a high-leverage one.
The most efficient capital turnover model in DeFi is “Flash Flash loan”, which is characterized by lending and repayment within one block, and the whole process takes only a few seconds. Although not all scenarios are suitable for flash loan, this demonstrates the efficient turnover ability of DeFi. Overall, DeFi’s annual capital turnover rate is 10 times that of traditional banks, and its income comes from the accumulation of high-frequency small profits rather than leverage. This is a more advanced financial system with strong vitality. At present, this “new financial infrastructure” has been built more than half, which is the key stage to accelerate the implementation of applications.
The application and impact of new financial infrastructure
As this infrastructure becomes more popular, payment applications such as PayFi are born. In 2024, the total amount of payments and settlements based on stablecoins will reach 16.16 trillion US dollars, 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, more and more payment settlements have turned to this new system, helping to sell goods globally.
Financial infrastructure refers to a set of institutional arrangements, including laws, accounting standards, etc., which are aimed at maintaining financial stability and serving the public interest. Its technical level involves hardware and system security. "Financial market infrastructure" is a subset of it, mainly including the three major links of payment, clearing and settlement of funds.
- Payment: If you pay by bank card, first verify whether there is a balance in the account.
- Settlement: If there is a balance, the amount to be paid will be frozen.
- Settlement: The actual transfer of funds between different banks or accounts.
In 2016, a security incident on Ethereum was caused by the failure of the smart contract to properly handle the liquidation process, which led to users repeatedly withdrawing assets and causing a loss of about 60 million US dollars. This incident highlights the importance of the liquidation mechanism. China's foreign exchange trading center, clearing house, settlement center and other institutions are representatives of the traditional financial market infrastructure. They guarantee the payment and settlement of different types of transactions.
Compared with 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, and achieving trustless and efficient point-to-point transactions.
In the old system, it may take days or even weeks to send money from Shanghai to the United States; but with blockchain stablecoins, it can be transferred in seconds. For example, I recently sent money from Hong Kong to Shanghai, but it took a month to confirm that it failed. If stablecoins are used, it may be completed in ten seconds.
With such a huge gap in efficiency and cost, isn't it worth rethinking the direction of the financial system's transformation? Although the decentralized blockchain system bypasses SWIFT, the US government still chooses to support the development of the US dollar stablecoin. Trump has explicitly asked Congress to pass legislation related to the US dollar stablecoin by August 2025. The bottom line of the United States is: you can bypass SWIFT, but don't bypass the US dollar. If this new system bypasses even the US dollar, the United States will completely lose its global financial dominance.
Trump's presidential adviser once said that the thing the US government wants to promote most at present is not the strategic reserve of Bitcoin, although the latter is equally important. The priority is to promote the legislation of the US dollar stablecoin. The United States must ensure that the US dollar remains the main payment and settlement tool in the new generation of financial infrastructure. If the US dollar loses this status, the United States will face fundamental risks.
Looking back at history, in order to make the world accept the US dollar, the United States linked the US dollar to gold through the Bretton Woods system after World War II, and other countries' currencies were linked to the US dollar, thus establishing the global currency status of the US dollar. With the collapse of the system, the United States promoted the formation of the European dollar market and the "petrodollar" system, unified the commodity settlement currency into the US dollar, and created a global application scenario for the US dollar. Today, the US dollar is entering the third stage of evolution: tokenization. The US government is trying to ensure that the "tokenized dollar" occupies a core position in the future global financial infrastructure, which is far more significant to national interests than Bitcoin reserves.
At present, the digital currency system is developing rapidly, including native cryptocurrencies (such as Bitcoin), digital twin stablecoins (such as USDT, USDC), etc., which represent the evolution of currency forms from precious metals, paper money, and electronic currencies to encrypted assets.
Cryptocurrencies can be divided into two categories: one is CBDC (Central Bank Digital Currency) promoted by the national central bank, which belongs to M0 (base currency); the other is market-driven stablecoins, which belong to M2 (broad money), which is the currency created by institutions after credit expansion based on the central bank's base currency. The bank deposits, wealth management products, money funds, etc. that we use daily are all in the M2 category and are bank liabilities, not central bank assets. For example, in China, banks only guarantee deposits of less than 500,000 yuan; in the United States, the limit is 500,000 US dollars. If the bank goes bankrupt, the deposits exceeding the limit will not be guaranteed.
In the financial system, M0, M1, and M2 each have different functions and are not interchangeable. It is difficult for central bank digital currency to replace M2-level currency and is not suitable for all consumption scenarios. The United States is well aware of this and has made it clear that it will not issue CBDC. During his campaign, Trump promised that he would not allow the Federal Reserve to issue central bank digital currency during his term. The Federal Reserve has also publicly stated that it does not consider issuing such currency.
The reason is clear: central bank digital currencies could lead to the state's full control over payment data, undermining user privacy. For example, if the US dollar digital currency is used for payments in Hong Kong, Singapore or Japan, the Federal Reserve may obtain transaction data, which is difficult to accept internationally. Unless it is implemented by coercive means, it will be difficult to implement. The United States is aware of its limitations, so it has turned to support stablecoins issued by the market and anchored to the US dollar.
RWA (real world asset) tokenization also falls into the M2 category, such as the US dollar money fund token issued in Hong Kong. Its essence is based on the credit creation of sovereign currency, issued by banks and other financial institutions, and is still a bank liability.
The core of the new generation of payment and settlement systems is not only the innovation of currency forms, but also the evolution of asset issuance models. From the "gold dollar" to the "petrodollar" and then to the current "tokenized dollar", each round of evolution has strengthened the global influence of the US dollar.
It is worth mentioning that China once controlled 70% of the global Bitcoin mining share, which means that Bitcoin was once a currency "Made in China". However, due to regulatory reasons, China took the initiative to give up this strategic resource and gave way to the United States. From an industry perspective, it may not be a bad thing, but from the perspective of national interests, this is a major loss.
The development of AI also provides a clear demand for the new financial system. If tens of billions of devices in the world can create GDP without human participation in the future, the payment and settlement between them must rely on programmable currency. The traditional banking system is difficult to support automatic machine-to-machine payments, while systems based on blockchain and smart contracts have this capability, and there is currently no better solution. On this basis, a new asset issuance system is also being constructed. The new generation of industrial revolution calls for a matching financial revolution, that is, a comprehensive upgrade of the payment and settlement system and asset tokenization. The current five main types of token assets include:
- Payment tokens: such as USDT and USDC, which are anchored to legal tender and used for daily payment settlement. In the future, stablecoins such as Hong Kong dollars, Japanese yen, and euros will also appear.
- Reserve tokens: such as Bitcoin, are transforming from risk assets to strategic reserve assets. Several states in the United States have passed legislation to include Bitcoin in state government asset reserves, evolving from household assets and corporate cash management to national strategic reserves.
The book "Monetary Pyramid" predicted that Bitcoin will become a reserve asset for central banks in the future. The reason is simple: for the digital native generation under 30, Bitcoin is more attractive than gold. This book tells the central bank governors and finance ministers in their 70s and 80s that you will eventually leave the stage of history, and those young people who have been exposed to the digital world since childhood will eventually take your place, and they are more likely to include Bitcoin in national reserves. The trend is irreversible, and personal will cannot fight against the tide of the times.
Surprisingly, the person who started this trend was not a digital native, but an 80-year-old man, Trump. This reality actually confirms the judgment that "the situation is stronger than people." It was thought that only young people would promote change, but it turned out that an old man was the first to practice it.
Currently, the trend of Bitcoin as a reserve asset has begun to emerge. In the recent market fluctuations, most crypto assets have fallen sharply, but Bitcoin's decline is relatively small. The reason is that most cryptocurrencies are still regarded as "risk assets", while Bitcoin is gradually transforming from a risk asset to a "credit asset".
The core role of credit assets is to hedge against the excessive issuance of fiat currencies. For example, gold has long been regarded as a means of storing value worldwide, and its price has risen against the trend in recent years. U.S. stocks and U.S. bonds have fallen, while gold and Bitcoin have remained strong, indicating that Bitcoin is gradually acquiring the characteristics of a credit asset. It is expected that within the next year, Bitcoin will complete a comprehensive transformation from a risky asset to a credit asset.
Currently, the market value of Bitcoin is less than 2 trillion US dollars, while gold is more than 20 trillion US dollars. If Bitcoin eventually reaches the market value level of gold, whether it is five years or ten years, it will be a huge opportunity for investors.
As for Ethereum (ETH), it is still a functional token. Its value depends on the actual application in its ecosystem. Only when the application explodes on a large scale, ETH will have significant room for growth. Unlike Bitcoin, which is expected to become "digital gold", ETH cannot become a credit asset, but as a functional asset, its prospects are still broad.
Regarding the growth path of functional assets, you can refer to the classic book "Crossing the Chasm" published 30 years ago in Silicon Valley. The book points out that the user growth path of all high-tech products can be divided into five stages:
The technical geek stage: products are created by technical geeks. Take Satoshi Nakamoto and Vitalik as examples, Bitcoin and Ethereum were originally created by them from scratch.
Technology enthusiast stage: Early users do not pursue immediate practical applications, but are just passionate about new technologies. For example, in 2015, when Vitalik came to Shanghai, Wanxiang Blockchain invested $500,000 in Ethereum even though the mainnet had not yet been launched.
Pragmatist stage: The general public begins to pay attention to whether the technology can really bring value and solve practical problems. This is the "chasm" period where the product is at stake, and 80% of projects fail at this stage.
Late adopters: Most users adopt the product after seeing others benefit from it. This stage has a low threshold, but the prerequisite is to cross the "Pragmatist Gap".
The rejecter stage: Traditionalists who always reject new technologies. They prefer a stable, nostalgic lifestyle and do not accept new things without forced conversion.
Projects that can acquire users and realize cash in the third and fourth stages have a foundation for sustainable development. In addition, there are two types of assets worth paying attention to:
- Security Tokens: For example, RWA (real-world asset tokenization), which is essentially the digitization of securities investment tools, must comply with securities regulatory rules. Ignoring regulation will eventually lead to legal risks.
- Meme coin: For example, the Meme coin launched by Trump is aimed at speculators who are looking for entertainment purposes, similar to Las Vegas casinos. Although it is mainly for "fun", there are also real users and market demand, and it belongs to an independent asset category.
In summary, in the new generation of asset systems, tokens are mainly divided into five categories: reserve, functional, credit, securities, and entertainment. Knowing which category your project belongs to will help you more accurately judge its development path and regulatory requirements.
The essence and development direction of the new generation financial market system
The essence of finance is the cross-period mismatch of time and space value. For example, a startup company borrows money from a bank due to expansion needs, and the bank lends money based on its growth potential in the next two years. This is actually using current funds to realize future value in advance, which is a typical time value mismatch. Being able to achieve this value transfer in a more efficient and lower-cost way is the core mission of "good finance", and other superficial behaviors are secondary.
DeFi (decentralized finance) and CeFi (centralized finance) are not opposites, they can be used in combination to jointly optimize the risk-return structure. The new generation of asset trading markets is global and all-weather - assets issued based on public chains are naturally globally accessible, and anyone can participate in transactions at any time and place.
Traditional exchanges such as Nasdaq and NYSE have also begun to try to extend trading hours, from the original 5 days a week and 5 hours a day, to a "5×23 hours" near-all-day trading system. In fact, new technologies can already support "7×24 hours" trading, which can fully cover global time zones and break the previous "anti-human" trading time settings. Now that the technology is available, embracing change is a natural choice.
AI and blockchain together constitute the infrastructure of the new generation of wealth distribution system. In the AGI era, the new financial system based on blockchain will become the optimal global wealth distribution mechanism.
Blockchain is not only a financial infrastructure, but also a new business governance tool. The data on the chain has the characteristics of real-time disclosure (once per block), immutability, traceability and auditability, so that enterprises can achieve efficient and transparent information disclosure without relying on the traditional semi-annual and annual report systems. Compared with the traditional accounting system, the blockchain-based information disclosure mechanism is more efficient and credible. New organizational forms such as DAO (decentralized autonomous organization) are based on transparent data on the chain, which is a new governance model that allows strangers around the world to collaborate and complete complex tasks.
The AI era is an era of large-scale collaboration among strangers around the world. Traditional methods such as company contracts and bank transfers can no longer support the demand for efficient collaboration. On-chain protocols, smart contracts, and token incentive mechanisms will become the infrastructure for new business activities.
RWA: The Tokenization Process of Real World Assets
RWA (Real World Assets) is essentially the tokenization process of assets, which is to convert off-chain assets into standardized, share-based, and securitized forms on the chain. As early as ten years ago, stablecoins such as USDT and USDC have achieved the tokenization of legal tender, which can be regarded as the starting point of RWA.
From the perspective of development stage, RWA is mainly divided into three phases:
- Phase 1 (2015): Tokenization of legal tender represented by USDT. Since sovereign currencies have strong credit endorsement and are less dependent on oracles, the market can trust them as long as the custodian bank issues a receipt.
- Phase 2 (2024): Represented by BlackRock's Build, promote the on-chainization of financial assets such as short-term treasury bond funds. Such assets are credit-guaranteed by licensed financial institutions, securities supervision, custodian banks, and law firm audits.
- The third stage (future): Tokenization of physical assets. This stage is the most difficult, and the core difficulty lies in the authenticity verification and ownership proof of off-chain assets, and the oracle becomes the key bottleneck.
There are three main types of oracle solutions:
1) Crypto-native oracles such as Chainlink: have realized the on-chain of crypto market prices and data.
2) DePIN (Decentralized Physical Infrastructure Network): It is the key oracle for the future on-chain machine data, such as real physical world data generated by autonomous driving and humanoid robots. With the development of AI and hardware, its importance will increase significantly.
3) Financial institution oracle: Regulated financial institutions provide on-chain data endorsement through custody and other means. For example, a bank as a custodian confirms the token quantity change instruction to ensure the credibility of on-chain assets.
The on-chain mapping of physical assets still faces huge challenges. There is currently no mature and reliable credit guarantee mechanism, but the continued development of oracle systems in the future is expected to solve this problem.
When discussing RWA (real world assets), it is too idealistic to think that "everything can be RWA". To do RWA, we first need to solve two core problems:
First, how to put data on the chain. That is, how to ensure that the data is authentic, unalterable and traceable. This usually relies on the oracle system, but the oracle itself also faces problems of trust and accuracy.
Second, compliance issues. Certain financial products need to be approved by securities regulators before tokenization. For example, the tokenization of money market funds must be approved by the Securities and Futures Commission in Hong Kong before it can be implemented.
In addition, tokenization cannot be done just for the sake of tokenization. For ordinary investors, the returns from buying a US dollar money fund are essentially the same as buying its tokenized version. Instead, it increases the complexity of wallet management, private key security, and other operations. In reality, money funds can be bought everywhere, with no barriers to entry.
Therefore, for RWA to be established, it must have its unique purpose and added value. Otherwise, the securitization of real-world assets is already mature enough and there is no need for another layer of tokenization. In other words, tokenization must solve problems that traditional finance cannot meet.
A typical scenario is combining with DeFi. For example, the current annualized rate of return of US dollar money funds is between 4.5% and 4.9%. If you continue to enjoy this return after tokenization, and at the same time get an additional return of about 5% through DeFi lending, this is a way to increase value "without increasing risk". This type of income comes from improved capital efficiency rather than leverage, and is an innovation worthy of recognition. We are currently communicating with regulators, but have not yet been approved, and cannot officially use tokenized money funds for DeFi lending.
Let’s take another example of gold RWA: People often think that gold is naturally suitable for ETF or RWA, but this depends on the specific implementation entity. If a gold miner or smelter claims that it produces gold every day and wants to tokenize it, it is not feasible. The outside world cannot verify the ownership, purity or security of gold. However, if a gold ETF is issued by a licensed financial institution, approved by securities regulators, and has bank custody, such as a Hong Kong issuer storing gold in the HSBC vault, with HSBC as the custodian, then this gold ETF is converted into RWA Token, which is credible. In other words, the market trusts HSBC, not the mine owner.
In general, not all assets are suitable for direct RWA. Usually they need to be converted into compliant financial products first and then tokenized. This is the reality that the industry must face at this stage.
Combination of AGI (Artificial General Intelligence) and Blockchain
When discussing the combination of AGI (artificial general intelligence) and blockchain, I would like to share a little episode. Three weeks ago, I met with Shen Xiangyang in Hong Kong. He also said that AI and encryption are naturally adapted fields, and we are jointly exploring ways to combine the two.
Over the past year, I have been looking for truly valuable AI+Crypto projects. It is not about building a chain, issuing a coin, and putting an AI label on it, but about solving practical problems and doing real engineering. For example, distributed reasoning networks are the direction of our long-term investment. We hope to build a system that can support 200, 2,000, or even 20,000 devices to complete AI reasoning tasks together. This is not a slogan, but a deep engineering at the hardware and network levels. At present, our system is expected to launch TGE (Token Generation Event) within 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 landing capabilities. I know that many entrepreneurs in the Creation Camp S5 are also making similar attempts, and everyone is welcome to discuss it together.
In fact, as early as February last year, I found the CSDN team and hoped that they could mobilize developers and run large models in a distributed manner. This project has been promoted for more than a year, because everyone is working very seriously and down-to-earth, we think it is worth it.
We are also working with Shen Xiangyang's team, the Hong Kong University of Science and Technology, and the Hong Kong Polytechnic University. For example, they have compressed the AI model to run on mobile phones. We are discussing: If it is not possible to pre-install the model, can we cooperate with mobile phone distribution channels to pre-install the model during the sales process and activate it after user authorization. According to our tests, 90% of users will not actively uninstall it, but are willing to keep it.
This decentralized edge computing node network will allow users to get token rewards for sharing computing power in the future, thereby activating the entire ecosystem. This is not an easy task, but because it is difficult, it means there are opportunities. Truly valuable innovations are never "something that is being done everywhere."
Regarding AGI, OpenAI has proposed five stages: Chatterer, Reasoner, Agent, Innovator, and Organizer.
At present, 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 - the agent is in the process of advancement. Musk's autonomous driving system, humanoid robots, etc., all belong to this stage. Autonomous driving is expected to mature within two years, and the application of humanoid robots in factories is also accelerating. As for the full application of home scenes, it may take another 5 years or even longer. The two more complex stages are innovators and organizers. Innovators create from 0 to 1, while organizers need to standardize, systematize, and scale the innovation results, which is more difficult. Once all five stages are connected, AGI will be realized. Optimistic estimates show that AGI will arrive in 2027, and conservative forecasts are 2030.
After AGI, we will enter the era of ASI (super artificial intelligence). The key question at this stage is: how to distribute the huge social wealth created by AI?
This leads to an old but important proposition: National Basic Income (UBI). Economists have long proposed the UBI model to ensure that humans can still get a reasonable distribution in the AI era. I saw a news report where someone asked a tech tycoon what the final destination of AGI is, and he answered: socialism. In a sense, it is right - AI does not consume or waste, and the wealth it creates needs to be redistributed. The concept of UBI is not to distribute according to work, but to distribute according to "people".
The next stage is UHI (Upper National Income), which matches the exponentially growing wealth created by ASI. In the future, perhaps you plan to travel to Antarctica, the Arctic, or space, and the systems in the AI era may be able to support you. This is no longer a fantasy.
Do we still remember Andrew Yang, who ran for the US presidency in 2020? His core platform was UBI, where every American would receive $2,000 per month. He spoke too early about the inevitable trend of the AI era. Why did Sam Altman of OpenAI want to make Worldcoin? It is to build a global identity authentication system (World ID) and a supranational currency system to lay the foundation for future UBI. Because wealth in the AGI era no longer belongs to a certain country, it must be fairly distributed through supranational currencies and transnational platforms.
Musk is also exploring similar issues. The identity authentication and economic behavior of AI machines must be based on blockchain. Otherwise, we cannot verify the interactive relationship between devices. Payment and settlement between machines naturally require smart contracts, and therefore must be based on programmable currency and decentralized ledgers.
Therefore, the combination of AGI and blockchain will be reflected in two aspects:
1) Decentralized collaborative networks at the computing power and task levels, 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 in the future - when the means of production of human society are completely taken over by intelligent entities, our value system, distribution mechanism, and incentive system must also be reconstructed. Blockchain may be the infrastructure that is closest to this answer.
Well, that’s all for today’s sharing. Thank you everyone!
