Viewpoint | The boundaries between primary market and secondary market are slowly becoming blurred

First, the primary market and the secondary market

In the traditional stock market, the primary market and the secondary market are clearly differentiated.

The secondary market is listed on the Shanghai and Shenzhen exchanges through IPOs. It has the code and can directly buy and sell the market through the securities trading software. The ordinary people in the secondary market can also participate.

The primary market can be understood as a general term other than the secondary market, mainly referring to the shares and equity of non-listed companies. Compared with the secondary market, the number of participants in the primary market is relatively small, the liquidity of assets is relatively poor, and the primary market is mainly based on the combination of offline and offline. It can also be said that it is necessary to rely on interpersonal relationships and social networks to promote transactions.

There is another difference between the primary and secondary markets. It is to see whether the assets need to pass the corresponding compliance supervision. For example, if the IPO is successfully listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, it needs to be sponsored by the securities firm. It will take several years to reform. Strict financial review and ongoing supervision, all of which are met before they can enter the exchange listing. The assets in the primary market are much looser. Basically, there is no need to accept any review. For example, the equity of a non-listed company basically only needs to be filed with the Trade and Industry Bureau.

Second, in the blockchain era, the boundaries between the primary market and the secondary market are gradually blurred.

However, after entering the blockchain era, the boundaries between the primary market and the secondary market are slowly becoming blurred.

Popular in the blockchain is the generalized economy, that is, the token is used as an equity carrier to carry the corresponding rights, such as equity, credit, income, and use rights. Since it is too convenient to pass the financing of the pass, and currently there are a lot of exchanges in the blockchain world, it is easy to issue a certificate and it is convenient to finance the exchange.

Most of the Tokens have not undergone any review during the issuance and financing. Even the current IEO seems to have accepted the review of the exchange. This type of review is often more formal than the substance. For example, an exchange's IEO project is taken by the Public Security Bureau. Filing a case and saying that there is suspicion of fraud is a good example.

On the one hand, the issuance of Token is completely voluntary and does not require strict review. On the other hand, the difficulty of trading on the exchange is very low, making it impossible to become the clearest distinction between the first and second markets . After some Tokens are issued, there is only one exchange, and there is a stand-alone exchange that has an interest in the project itself. The significance of such an exchange is not too great.

Trading on the exchange is only one aspect. What's more, there are many Tokens who can get high liquidity even without using the exchange . For example, there are many tokens that comply with the Bancor agreement. It can be exchanged freely with other tokens issued under the Bancor agreement, such as EOS, and then exchanged with other digital currencies through EOS. Can be exchanged indirectly with any token.

In this case, the token itself does not go to the exchange, which means that it does not enter the so-called secondary market, but its liquidity is extremely high, and it can be freely exchanged with any other token, so It is difficult to judge whether it belongs to the primary market or the secondary market. The problem behind this reaction is that in the blockchain era, the boundaries between the first and second markets are slowly becoming blurred .

Third, the transaction efficiency of the primary market in the future may not be inferior to the secondary market.

In the traditional capital market, the transaction efficiency of the primary market is relatively low. This inefficiency is not only at this stage of the synthesis, but the transfer after the merger is also very complicated. Sometimes the transfer needs to go to the local industrial and commercial bureau to handle. If the other party is in Tibet, you may need to take a plane to Tibet to register for business.

If the asset certification can become a reality on a large scale, then the asset transfer efficiency after the pass is much higher, and the “transaction is the settlement” can be guaranteed while the “transaction is the transfer”. When the transaction is extremely efficient and at the same time it is directly facing the global market, its liquidity will increase dramatically.

Even after the asset is certified, it does not have a clear real-time price for stocks in the secondary market, and its price is still discrete. It seems that some companies now have a long-term non-price, and have waited until the first round of financing, there is a price, the second round of financing has a price, the third round of financing has a price, and each financing may be different. In a few months, the price is updated in a few months.

Although the price of the asset after the asset is certified, it still depends on the bargaining price of both parties. However, because of the high liquidity, the transaction speed will be very fast; with technical support and global market support, the number of transactions will increase; the number of transactions will increase, and the price that can be referenced will increase; The number of transactions is also when the liquidity is high to a certain extent. In fact, its price discovery ability is not much different from the secondary market.

Moreover, with the decentralized exchange DEX and the spread of various cross-chain technologies, the transaction efficiency of the primary market will be greatly improved, and in addition to transactions, the issuance, transfer, dividends, cancellation, etc. of assets in the primary market The efficiency will not be lower than the traditional secondary market. In this case, there is not much difference in whether the assets belong to the primary market or the secondary market.

Fourth, what really matters is trading, not volatility.

The boundaries between the primary and secondary markets are slowly becoming blurred, and it is not a big deal. Because of the difference between the primary and secondary markets, the more essential point is whether there is sufficient liquidity and price discovery function . If the primary market has sufficient liquidity and the price discovery function is sufficient, what is the difference between the primary and secondary markets?

Moreover, most of the assets in the primary market do not need such high volatility, and even do not need volatility. The primary market is the most suitable place for them . For example, things like points, contracts, supply chain finance, and patent rights, they only need to find the seller better and faster, and can find the seller directly after the point-to-point transaction. After the transaction is completed, they can directly confirm the right, do not need to run business Bureau, do not need other excessive processes. What is really needed in the assets of the primary market is that if these things can be solved, the transaction efficiency of the entire primary market assets can be greatly improved.

In fact, even in the current traditional financial market, the regulatory authorities are cautious about volatility. They need to have certain fluctuations in assets to maintain their vitality. At the same time, they must resist the skyrocketing and plunging. The skyrocketing and plunging is very harmful to the whole project.

The first and second markets are gradually blurring this matter, and to some extent it is even a good thing. Although the current blockchain projects are all for financing purposes, they are all aimed at listing transactions, and they are willing to let prices fluctuate. However, many financings are actually unreasonable. There is no corresponding interest in the future. I believe that the future blockchain will mature. These actions will be effectively regulated.

For example, the current certificate issued by many blockchain projects actually represents the right to use. For example, it represents a point card or a handling fee, and the card and the fee itself do not need to fluctuate. No fluctuations are needed, but the more stable the better, the fluctuations will only have a negative impact.

For example, the most typical case is EOS. EOS's CPU and NET are essentially commodities. For merchandise users, that is, developers, the most desirable thing is to see that the price is stable, so that it is convenient to make budgets in advance. On the other hand, when real project development falls, the cost can be effectively controlled, which allows developers to focus all their efforts on the development of the project.

However, because the current EOS CPU and NET are based on the bancor protocol, the liquidity is very high, and such high liquidity makes it often generate large price fluctuations, making its speculative property too strong. Even for a while, when CPU and NET prices were high, many developers were forced to suspend development on EOS and switch to other blockchain projects because they could not afford to pay for development on EOS.

This is a bit of a reversal. Solving the problem of limited CPU and NET resources requires other ideas, so that they have such high volatility is not the best choice.

Except for the example of EOS I mentioned here, in fact, most of the points, unlisted company equity, contracts, patents, supply chain finance, etc., as long as they can trade and transfer, do not need to make the secondary market so strong. The liquidity and such high price fluctuations.

What really matters is trading, not volatility; trading is the core demand after the digitization of assets, and fluctuations are not.

5. The primary market is the main battlefield of the future value Internet.

If, according to our previous definition, certain categories have passed the audit of the regulatory body and the assets of the exchange are referred to as assets of the secondary market, then the assets in the secondary market must be limited. Since the primary market can be issued completely voluntarily, the amount of assets in the primary market in the future must be massive, at least several orders of magnitude higher than the assets of the current secondary market .

We often say that we will usher in the era of the value of the big blast of the Internet, in fact, it refers to the big explosion of assets in the primary market. This is actually reasonable. In reality, there are many SMEs in the business, and it is really difficult to finance. The most needed blockchain is the SME.

In fact, the outbreak of the primary market is also good for our ordinary investors. You can think of it this way. Although the stocks in the secondary market seem to be some big companies, on the one hand, the valuation is high, on the other hand, the enterprises are far away from the horizon. Maybe the company’s products have not been used by themselves. The management did not know it. If there were any problems, they could not find anyone to consult. It was entirely based on luck.

However, now that the primary market is hot, many people around you are issuing assets, and the phenomenon of issuing assets by companies around them will become more and more common. The space that allows us to choose is much larger. We can choose companies that are close to us and equally good. Maybe we usually know the bosses of the company and even work on these companies. At least the products of these companies have been used. These companies are not far from their homes, and they can always look at how they are developing.

In this way, in the process of investing, you can participate in the project more deeply, and the understanding of the project will be deeper, and the companies around you may have lower valuations and higher growth because they know fewer people. There is more room for profit in the future. At this time, investing in your own side is certainly a better choice.

It can be said that the value Internet that we usually say is exactly the corresponding assets of the primary market, corresponding to the massive assets with no price fluctuations, corresponding to the massive non-standard assets of Token, corresponding to the massive non-listing Company equity, points, warehouse receipts, letters of credit, patents, supply chain finance, etc.

Only when the primary market really prospers, will we usher in the legendary value Internet era .