In 2011, Mark Anderson, the co-founder of A16Z, wrote an article "Why Software Is Eating the World" in the Wall Street Journal. Since then, the curtain of the mobile Internet has gradually opened, and the magnificent entrepreneurial boom has profoundly affected and changed everything around us.
Today, more than ten years later, Web 3 is going from budding to growing up, from zero to one, and we will wait and see whether it will also swallow the world and open a new era.
However, in the eyes of outsiders, Web 3 and Metaverse are almost metaphysical and lack concreteness. They seem magnificent, but they cannot get rid of the slightly embarrassing fact that they are more like castles in the air.
Still, no one wants to miss out on any potential Web 3 opportunities, even if it's still hard to tell what Web 3 is.
In the view of Chris Dixon, a well-known investor from A16Z who topped The Midas List in 2022: Web 3 is built on the blockchain, and the blockchain is a decentralized system that anyone can access but no one fully owns. The global computer, NFT corresponds to the computing power of this supercomputer, and every user can own Web 3 services by owning non-fungible (NFT) and fungible (Tokens) tokens.
In the latest cycle, DeFi, GameFi, and SocialFi have continuously refreshed our cognition. In the new Web 3 social track, every startup company in the long list such as Mem Protocol, DeFine, Mojor, Torum, and Project Galaxy has While exploring its own subdivision track, it challenges traditional forces such as Meta, Twitter, and Snap.
At present, under the surface of constant controversy over Web 3 and the Metaverse, an unprecedented paradigm shift is also undercurrent. From the underlying computing architecture, security protocols, to development tools, applications, and terminal devices, everything is facing Subversive opportunities and challenges.
A few days ago, 36Kr had an interview with Niu Fengxuan, a partner of Yunjiu Capital, about Web 3, and talked about many open topics about Web 3 and Metaverse.
Niu Fengxuan (Vincent) graduated from Stanford University with a major in financial mathematics. He has more than 7 years of Internet and blockchain entrepreneurial and angel investment experience. He focuses on blockchain industry infrastructure, middleware, application layers (DeFi/NFT) and other fields. invest. DappReview, a decentralized application data analysis platform he previously founded, was acquired by Binance in 2019. Since then, he has also served as the product leader of CoinMarketCap and participated in the investment of several early NFT and DeFi projects. Before that, he worked for BlackRock as a quantitative analyst.
The following is the transcript of the interview (excerpted)
36 Krypton: From the perspective of investment, how to clearly distinguish between Web3 and metaverse projects.
Vincent: We believe that investing in Web 3 is a higher-level concept and a bigger track. Metaverse is a branch of the Web 3 application layer. Although it also involves some infrastructure, it is still presented to C-end consumers. It will be easier to understand the application-oriented products of developers and regard it as a subdivision field in the big track of Web 3.
36 Krypton: Where will Web 3 and Metaverse grow in the future?
Vincent: This question is also about the coexistence of Web 3 and Web 2. Before discussing Web 3, let’s look at the clear timeline between the Internet and the mobile Internet. From the outbreak of the mobile Internet in 2013 and 2014, two or three years later, although Web 3 has already appeared, everyone will not be so sensitive to this term, because we The default is to invest in the underlying technology track of the network.
So in the long run, the Metaverse is more like an ideology. It is not limited to using Web 2 technology or Web 3 technology. It just happens that around Web 3 and the blockchain seem to be able to realize the concept of Metaverse and the concept we imagined more quickly. product.
We are now talking about the metaverse in the context of Web 3. In the future, if the entire Internet takes a step forward, there may be a concept of the metaverse. Perhaps driven by the development of the more advanced Internet, everyone is still discussing the metaverse, and the metaverse The universe may become like what we now call the new consumption.
Judging from the development of the consumption field in the past few hundred years, it is essentially driven by technological upgrading. Our consumption patterns are changing, but consumption itself remains unchanged. Therefore, the metaverse only has product iterations as technology advances. The relationship between Web 3 and the metaverse is not necessarily a parallel relationship. They are in different dimensions.
36 Krypton: Is there a landmark event in the emergence of Web 3, and how long will it be before it becomes an investment hotspot?
Vincent: The more important time node is the explosion of the Ethereum ecology, which proves the feasibility of a programmable smart contract platform built on the blockchain as the bottom layer. I am more inclined to think that the blockchain is an important infrastructure of Web 3. The blockchain can be regarded as a decentralized operating system and a decentralized computing platform. In the last four or five years, this ecology A variety of subdivision tracks and applications have been derived from it.
Back in 2017 and 2018, everyone was still imagining what they could do on the public chain. Of course, there were many financial directions. At that time, there was no word DeFi, only blockchain finance, blockchain games, and no GameFi. These words will only start appearing in 2021. In fact, the word metaverse must be traced back. It is always a cliché to talk about "Avalanche", but under different technical backgrounds, everyone will have different imaginations. Underlying technologies such as XR and blockchain promote the evolution of Web 3 and the Metaverse from different dimensions.
36 Krypton: Web 3 emphasizes decentralization. In the process of decentralization, will you encounter resistance from many traditional Internet companies and technology companies?
Vincent: Decentralization does not mean that there is no center, but one or two centers without absolute control. There is no absolute decentralization in the network. Centering and decentering are not the relationship between 0 and 1, or zero degrees and 100 degrees, but to find a balance point in the middle. It can also be understood as the evolution from centralized control to matrix optimization.
I don't think all companies will be hit very hard. Starting from Internet+, not all Internet companies have been completely reshaped. Facts have proved that it can optimize the efficiency of some companies, but it may not necessarily change the business model and profit model. Web 3 will not change everything either. For example, for SaaS services, the business model is no different from that of traditional SaaS companies, but the users and industries they face are brand new. Decentralization will not subvert all industries, but there may be a lot of room for change and optimization in specific tracks, and it will gradually have a huge impact on related industries.
In the end, although the Internet has changed many of our daily behaviors, it has little impact on traditional industries such as manufacturing. Blockchain and Web 3 also have differentiated impacts on different industries. Some industries may have a revolutionary impact, and traditional giants may face a crisis; some industries have a fixed impact. For example, although games have been very popular, they are essentially limited in their connection with the blockchain. Hardcore players play on Steam. Stand-alone games have nothing to do with Token and NFT. Of course, there are also some games with strong social attributes, which can generate an internal circular economy, so that it is possible to make rewards such as NFT and Token.
Where there are more interactions between people, Web 3 and Token are more likely to bring about change and influence.
36 Krypton: Both the Web 1 and Web 2 eras have experienced the transition from a hundred flowers to monopoly. Will Web 3 also be unable to avoid the same trend?
Vincent: Monopoly and decentralization are two concepts. Even if it may be a monopoly in business, and the monopoly itself may be that the blockchain protocol occupies a relatively high market share in a market segment, but the product itself is still decentralized. It is not fully controlled by a certain entity or company, which is different from the monopoly cognition of Web 2.0.
For example, the first two items in the DeFi lending agreement account for 70% to 80% or even higher, but it is different from traditional banks or financial technology companies. The money in and out is all in a smart contract. The top project party cannot touch a penny of the user's money. It can be clearly seen on the smart contract that all actions take place on the chain, and there is no need to rely on third-party audits and reports. The process is very clear and transparent.
That is, monopoly and decentralization are indeed two concepts. A monopoly position in business does not affect the product, which is absolute decentralization. These two things are not contradictory.
36 Krypton: So from the perspective of investment, of course we also hope that the Web 3 projects and companies invested in can become giants.
Vincent: There is no problem. Commercially, it has become the top project in the industry, with the largest number of users and the largest market share. This is the result of commercial competition, but whether the business logic is decentralized is another question. For investors, no matter betting on a centralized company, whether it is social networking, financial technology, or gaming, if it wants to become an industry leader, it can be centralized or decentralized. This is not only a different business model, but also a concept of two dimensions.
36 Krypton: In the past few years, there have been many unicorns in the financial technology field around the world. Is there any connection between their business and the financial business of Web 3?
Vincent: It can be divided into two categories. One is a completely traditional model, but it is doing Web 3 assets and customer base business. For example, Robinhood and Coinbase are also doing Crypto transactions, but they are still centralized exchange brokers in essence. Let users conduct compliant cryptocurrency transactions. It also includes some underlying data service companies just mentioned, which provide data tools and customized products on a subscription basis.
The second type is in terms of business model, product logic is native Web 3 business, such as decentralized exchanges, games with certain NFT and Token attributes.
36 Krypton: Is there any obvious difference in underlying logic between using Bitcoin or Ethereum to invest in Web 3 companies and the current more mainstream US dollar investment?
Vincent: Investing in Bitcoin or Ethereum in the early days is just a short-lived phenomenon. In 2017 and 2018, many projects were carried out on Ethereum, but stable coins such as usbt and usbc have not been as popular as they are today. Many exchanges use BTC or Ethereum as their basic tokens, so at that time there will be There are many similar investments.
Objectively speaking, at that point in time, investment institutions were also relatively early, with limited funds, and the issuance of tokens in the Ethereum ecosystem had the attributes of that era. However, as investment tends to become more professional, formal LPs began to raise funds. After the professional operation began, including some encrypted funds, they began to turn into US dollar funds or other fiat currencies for investment. It is just a phenomenon unique to the times, and there is no right or wrong, or other macro factors.
36 Krypton: Will the enthusiasm for investment in Web 3 gradually cool down after the global exit from quantitative easing and the transition to the interest rate hike cycle?
Vincent: Personally, I think there will be a relatively large impact. Judging from the past two or three cycles, there have been relatively large-scale transactions. Bitcoin is the main one after 12 or 13 years. The previous transaction volume is negligible. From 2013 to last year, the entire macro market has been under the rhythm of a large easing cycle and continuous release of water. During this period, the cryptocurrency has undergone two to three cycles of verification. The macro environment has undergone major changes since this year, and it is difficult to judge whether Web 3 will follow the four-year cycle (bull and bear half).
In the bull market, the release of water and the increase of liquidity on a global scale have indeed promoted the abundance of funds in the Web 3 industry to some extent.
36 Krypton: After the crisis in 2008, the mobile Internet has ushered in rapid growth. From the economic crisis of globalization to the subsequent adjustment and recovery period, will it also be an opportunity for Web 3?
Vincent: Web 3 is the first and it develops very fast, largely because the bottom layer is interoperable, which can be understood as everyone is on the same database and on the same open computing platform. Co-write codes and create new things together, so the transmission of information is very fast, and it faces the global market. In the past few years, all parts of the world have been building and developing together. And in the construction process, you can choose to copy or rebuild, which is a very natural and smooth thing.
In the past Internet entrepreneurship, most projects had a long cycle from development to promotion to customer acquisition. There will be a lot of unknown competition and uncertainty in the middle. But in Web 3, it is not so volume. Everyone adopts a collaborative working method and can use a lot of open source resources.
Developers can do more interesting things on the basis of other products, components, and protocols, which virtually improves development efficiency and quality. The composability of code is an interesting feature of blockchain, which allows developers around the world to quickly build new products and ideas on top of each other's code. So Web 3 can maintain innovation and rapid iteration. Although the financial development of the industry precedes the fundamentals, both the actual income and the value brought to users have undergone earth-shaking changes compared with four years ago.
However, from the perspective of traditional finance, rapid fluctuations and fluctuations are definitely unreasonable, and the valuation corresponding to the number of users is definitely unreasonable. So the industry is still fluctuating wildly. In the bear market, fluctuations in the entire capital market and secondary market will tend to be flat. Developers have time and energy to continue to build the fundamentals of the industry. So maybe in the next two or three years, we can pay more attention to the fundamentals of the industry and projects in a cycle that is not likely to be a bull market.
36 Krypton: In order to improve the fundamentals of Web 3 and cover more users, what killer applications may be needed?
Vincent: In the past cycle, decentralized finance has gone through the verification stage from 0 to 1, and partly from 1 to 100. The collected data on funds, users, transaction volume, etc. are very real, and its value has been precipitated. But finance is not on the scale of hundreds of millions or billions of users.
It is impossible to compare the number of users of financial products with games and live broadcasts. Big DAU products must still focus on pan-entertainment and social-related fields. After all, financial products must have principal and investment willingness. These are the thresholds, but playing Gaming and using social products have a relatively low user threshold, and of course it is easier to produce large DAU products.
Because blockchain is naturally very close to financial attributes, the development of DeFi is also very natural in this cycle, becoming the first track to explode. Games, NFT, and Metaverse have completed the process from 0 to 0.5 in this cycle, but they have not yet fully reached 1. First, we have indeed seen many products, and phenomenal applications such as Axie Infinity have also appeared in GameFi, but its life The cycle is relatively short, maybe only a few months to a year, so it is judged that GameFi and others are still in the exploratory stage, which is accompanied by the outbreak of DeFi and NFT. There is a wave of hype on this track, but the fundamentals are still very weak. Most players focus on making money instead of playing games.
Therefore, most users in the ecology are for blood-sucking purposes, rather than really creating value for the ecology, so GameFi is only fast from 0 to 1, but there is still some distance in the next stage. The NFT circle has actually been completed, which means that the process from 0 to 1 has been completed, but the next step depends on what real value can be created. The value of avatars and the like is very limited. The next stage depends on the use of NFT in specific scenarios such as games What games can be created.
The underlying interoperability of the blockchain enables NFT to essentially connect to any other application, or the association gives NFT special added value, which is a direction worth exploring in the next cycle. Several other areas include social networking, of course, but social networking is at an earlier stage of exploration. If we look at some more realistic data, most NFT and GameFi projects have almost no income. The so-called income comes from the hype in the bull market. There will be very outrageous income for a few months, but after the tide fades, you will find that The fundamentals return to zero in an instant, so in the new cycle, we must explore long-term sustainable and truly valuable business models.
36 Krypton: Should research on NFT mainly focus on the nature of its computing power, or the business model?
Vincent: To make an NFT product now is more like using a new technology to build a platform and a new method to build a brand. Using a lower-level thinking logic is the same as the current goal of consumer product brand building, to improve the user's recognition of the brand and the position of the brand image in the user's psychology.
In practice, whether it is online or offline, what kind of experience a brand can create for users, for example, what Boring Ape can represent needs to be defined by everyone. It is more like a mixture of brand attributes, cultural attributes, and community attributes. It is difficult to define. It is a native Web 3 category that can give users more ways to play and value across online and offline. But in the end its business model is hard to come to a conclusion.
36 Krypton: What other ways can NFT be played?
Vincent: The avatar is just the basic gameplay of NFT, and it can also be applied to game props, but the life cycle of most GameFi is not very long, and the corresponding NFT value is also very limited. But in the long run, if NFT props are in a more sustainable game, new gameplay can actually be derived. For example, NFT becomes a key connection in a series of games, and becomes the key to the next game or the secondary development of others.
From another point of view, the core of this industry comes from the value of NFT and its transaction volume. If everyone wants to quote the core assets of the Killer App and Killer game, or hope to benefit from the core assets, then this core Asset prices will definitely rise, because it is similar to a pass that can obtain unique benefits in another 100 types of games, then NFT will generate value associated with GameFi.
On the one hand, it is empowerment, and on the other hand, it can collect traffic. NFT can empower while collecting traffic, which is actually a win-win thing. This is the underlying logic that may open up the ceiling of the existing NFT imagination in the future. Because once everyone can freely refer to other people's NFT assets, such as digital assets in games, and can refer to each other, it is possible to create many interesting gameplays.
NFT is to Web 3, just like there is a high probability of gold in a large wasteland. Now everyone starts digging together. In the process of digging slowly, we still don’t know how and what kind of efficiency can dig out the largest gold nugget. . Other NFTs can also have many other scenarios. In the future, some equity certificates, such as members who subscribe to a website, will make an agreement. Buying members will have a permission and exist in the form of NFT, which will stipulate the validity period of the permission. Flexible transactions, otherwise the current centralized subscription cannot be freely traded in the middle.
In the future, using NFT can unlock Premium services and resell them in the secondary market without thresholds. For users, it is much more reasonable than centralized companies trying to trick users through lengthy user agreements.
36 Krypton: The term GameFi 2.0 is starting to appear now. Is it just a concept, or has it achieved a significant upgrade from the perspective of business model and technology implementation?
Vincent: This is a matter of different opinions, and the wisdom of the wise. The biggest problem with GameFi is the short cycle. The essence is that there is a problem with the incentive method. Now most players can get certain rewards for completing the established tasks in the game. This logic must be problematic. For example, if a game project really has 10 million DAUs, and each person can get 10 US dollars for 20 minutes a day when he goes online, he will send 100 million US dollars that day. Where does this 100 million US dollars come from? It is impossible to create 100 million US dollars out of thin air.
Incentives for games should be given to core value creators, not to every user indiscriminately. In traditional games, there are also two types of people who can make money from games. One is to play well and become a professional player, who may make money through competitions. Earn money by interacting. The premise is that there are skills, but the Play to earn advocated by GameFi ignores the core of the game and is not a reasonable incentive logic.
Under this logic, the game has become a financial product, because the current output model of GameFi is based on the principal output, just like buying financial products, the more you buy, the higher the return. this productdesign bookIt is not a game itself, but a financial product wearing a game vest. So the next-generation GameFi 2.0 user base should be different from the current GameFi users.
In the future, more than 50% of GameFi 2.0 users, or even 70 to 80% of users, will come because of the playability of the game. Playing games does not consider such issues as payback cycle, investment principal, and how much money they make, and The logic of playing other games is the same. For one to 20% of the core users, they have invested more time and have a deeper understanding of the game. These talents are core users worthy of rewards.
In traditional games, less than 1% of people may be able to play professionally or live broadcast. Their income is not directly in-game income, but from the surrounding ecology of the game.
36 Krypton: In fact, there is at least an order of magnitude gap between gamers and users of social software, so will SocialFi have more room for imagination?
Vincent: First of all, Web 3 generates a lot of data, and various interactive DeFi and GameFi will generate and retain a lot of data, and the data comes from different applications. Now the data of each company in the Web 2 application is separated, try to prevent your own data from being leaked, assuming that there are 10 APPs in a mobile phone, user information will be stored in the servers of different companies as part of all daily behaviors, and then be tried Create a user profile.
This has formed the strategic approach of Internet companies, but even if 1,000 applications are used on the public chain, all the data is in one address. Users can see the interactive operations of 1,000 applications on the public chain. Although they may not know who is behind this node, the portrait of this address is clear. It is logically possible to construct a new way of socializing based on these data.
Everyone will report expectations that this track has great potential, because there is indeed a lot of data accumulated here, everyone's portrait can be clearly drawn, and these data are real. The user's historical behavior is completely recorded and cannot be tampered with. These behaviors on the chain are all real information and verification left over. If we can socialize in a certain way through addresses on the chain, a trust relationship will be directly established between users, reducing the cost and friction of trust.
However, whether the specific form of social networking is a new form, a new way of interaction, or an iteration and upgrade on existing social tools, it is actually difficult to say clearly. It seems that the direct decentralized version of Twitter and Weibo may not be successful. So SocialFi may need a new model.
There are at least dozens of teams around the world working on SocialFi. Many teams are actually doing similar things, but they haven't verified whether the product and the market fit at the user level. SocialFi may still need the next twothree creationsThe industry's continuous exploration to find the right way to open.
36 krypton: When each node accumulates a large amount of user data. Will AI virtual humans like Xiaoice Framework activate these data? From a technical point of view, can a virtual person represent the computing power value of a node?
Vincent: This question involves whether the precipitation of data on the chain is valuable to a person. If a person is an in-depth user of the industry, he will find that, for example, entrepreneurs are making new DeFi products, and they definitely hope that a group of people who know DeFi best will become seeds user. So where do you find these users? Entrepreneurs hope that if someone can make a DeFi score, no one knows who this person is, and everyone does not need to know his true identity, but he can make everyone believe in his ability. In reality, fair judgment criteria include graduate school, work experience, professional ability, entrepreneurial projects, etc., and then make judgments based on these. Our subjective cognition and judgment really don’t need to refer to real standards in Web 3, and in terms of data processing capabilities, AI virtual humans are much better than humans.
