Babbitt Entrepreneurship + | "All changes are possible", how does the investment institution X-Order explore the new open financial order?

Babbitt's “Entrepreneurship+” section is dedicated to serving blockchain innovators and documenting how imaginative people are changing the world. We select representative/project companies to report based on industry, technology, business model, team, social value and other multi-dimensional judgments.

This issue of Babbitt Entrepreneurship + will introduce the story of X-Order, the cryptocurrency research institution, and its founder, Tao Rongzhen.

General interview Photo: X-Order founder Tao Rongzhen

X-Order is an investment research institute specializing in digital currency and traditional finance . Founded in early 2018 by Tao Rongzhen, a founding partner of NGC , a well-known blockchain investment institution , headquartered in Shanghai.

When the Babbit reporter visited, the team members were working intently on the computer, and the room was quiet. The metal pipes are barely exposed on the concrete ceiling, the fishing line wrought iron chandeliers are naturally falling, and the books stacked on the table are everywhere.

In this industrial-style office, there are nearly 20 members of the X-Order team, who are mainly after 90s, all graduated from world famous schools such as Harvard University, Carnegie Mellon University, University of Michigan, and ETH Zurich. More than 80% of the University of Tokyo, Tsinghua University, Fudan University, and Shanghai Jiaotong University have master's degree or above. The majors include mathematics and physics, computer science, and economics.


Tao Rongzhen is a very forward-looking person, whether it is transferred from the traditional financial industry to Bitcoin China in January 2014, or joined the small ant (NEO) as the secretary of the NEO Council in the first half of 2016, and then transferred to NGC. Partner, or X-Order was founded in early 2018. Each of his transformations occurred in the early days of the cryptocurrency market downturn. In his own words,

"I am the kind of person who is full of illusions and jealousy about the future. When the market is in a downturn, I always want to find a direction to break."

This is a beginning without warning. At the beginning of December 2017, Bitcoin broke through $10,000 for the first time. After half a month, it was close to 20,000 US dollars, reaching an all-time high. After the madness, Bitcoin opened the plunge mode, the first wave fell to around $13,000, the second wave went back to more than $7,000, and remained at around $8,500 in March.

At that time, Tao Rongzhen predicted that the market would enter the next bear market, so he decided to withdraw from NEO and look for the next direction.

"At that time, I had a lot of ideas, such as doing DAO or a community similar to the currency. Later, my thinking gradually became clear and I decided to make a knowledge map product in the field of cryptocurrency, so I set up X-Order. At that time, I felt that I found a position. It was later discovered that entrepreneurship is a very challenging thing."


Figure: X-Order logo

He believes that the challenge comes mainly from two aspects. First, the future of the knowledge map has not yet arrived, and the second is the technical challenge.

Knowledge Graph is a component of artificial intelligence technology. It is mainly used to describe the relationship between people, entities and entities, concepts and concepts. Because of the complex relationship, a huge network is presented through visualization. Figure.

Take the knowledge map of “encrypted gangs” as an example. In June 2019, Ash Egan, a partner of venture capital fund Accomplice VC, published the article “The rise of the new crypto “mafias””.

The term "encrypted gangster" comes from the "PayPal gangster". It was originally said that since PayPal was acquired by eBay in 2002, although most of the early core employees of PayPal chose to leave or start a business, they still maintain close contact with each other, just like a black hand. Party organizations control the US technology industry. In the field of cryptocurrencies, there are also such "gangsters", which we call "encryption gangs."

Picture 2 Figure: Coinbase "encrypted gang" knowledge map

In the interview, the X-Order team's small partners showed me the knowledge map analysis of Coinbase “encryption gang”, as shown above.

By collecting information on former Coinbase employees, current employees, and their projects, they found that if two former members came out of a large project (a big network of relationships), one of them founded an investment fund and the other founded one. Entrepreneurship project, then this fund is more likely to invest in this entrepreneurial project, such as 1Confirmation's Nick from Coinbase, Antonio before the Coinbase, then it is possible that 1Confirmation invested in dYdX, as shown above.

In fact, this model is common in Coinbase relational networks.

“We feel that these attempts can help ordinary people to look at the industry, but there are still many challenges in applying directly to investment.” In the past year, Tao Rongzhen thought about how to succeed and also experienced the challenges in the entrepreneurial process. He found that ,

“Whether it is traditional finance or cryptocurrency, knowledge maps are currently only an aid. To further become the basic tool for daily investment decisions, more data dimensions need to be added to verify feasibility, especially in the cryptocurrency investment industry. The coming of the future needs to wait for a long time."

660bb033-24be-55c2-a21b-f9930d6b158a Photo: In July 2019, Tao Rongzhen gave a speech at the Chainge Technical Salon.

This seems to be a paradox: as an investor, Tao Rongzhen must "live in the future" and see the ceiling of the industry; as an entrepreneur, he must "live in the moment" and face the real problem.

From the investor to the entrepreneur's identity change, Tao Rongzhen saw his own advantages and disadvantages. "When you build a team to do an innovative project, you need to explore a lot, and you will encounter many difficulties in the details. These difficulties You may not know how to solve it, or the cost of the solution is high."

Despite all the thorns, X-Order is still working hard and has formed two lines of business:

In terms of investment , X-Order focuses on project investment in the field of cryptocurrency.

In terms of research , X-Order established X-Order Lab, which is dedicated to the use of machine learning and deep learning research methods to conduct interdisciplinary research on the new economic field represented by the digital assets of the certificate, and to display the research results through knowledge maps. Discover valuable projects and capture investment opportunities.


The WeChat public account “Generation” and “Spark Series” are two channels for X-Order to communicate with each other.


Photo: WeChat public number "generation view"

The implication of "algebraic view" is "token observation", which is devoted to studying various phenomena in the cryptocurrency market, including Ponzi, cycle and so on. The series of articles such as "Pen's Research", "Cycle Observation" and "Token Watch" are widely acclaimed in the industry.

To a certain extent, the "generational view" reflects some of Tao Rongzhen's personal characteristics, such as the admiration of complex economics and the yearning for open finance.

Complex economics is a concept created by the economist Brian Arthur. Complex economics sees the economy as a dynamic system of constant self-calculation, constant self-creation, and self-renewal. It emphasizes contingency, uncertainty, meaning building and “all changes are possible” and is a “verb” discipline based on prediction, response, innovation and substitution.

There is no exact definition of open finance . In Tao Rongzhen's view, open finance refers to the global financial system realized by the blockchain (accurately the encryption algorithm) as the underlying technology foundation in the wave of financial technology and Internet digitization. He recognizes the bottom-up open concept embodied in the blockchain industry, through the openness of code, the opening of technology, the opening of knowledge, the opening of exchanges, the opening of markets, and the openness of competition, so that finance itself is iteratively evolution.

Tao Rongzhen is excited by the concept of complex economics and open finance. He loves the industry and enjoys the thrill of rapid change.

“Open finance can accommodate all kinds of possibilities and can't see the ceiling. It's self-initiating fast and can get feedback quickly, such as financing mechanism. ICO used it for 2 years from birth to disappearance. IEO used it. 10 months. However, ICO did not really disappear, it evolved into IEO; IEO did not really disappear, it may be combined with the Nasdaq mechanism."

He said that X-Order hopes to make an open financial knowledge map by the end of this year.


Photo: "Spark Salon" scene, May 24, 2019

The “Sparks Series” includes “Sparks Salon” and “Spark Interview”. The “Spark Salon” is a regular collision of thoughts organized by the X-Order team, with open finance as the direction and community exchange discussion. “Spark Interview” is a character interview program organized by X-Order to communicate with top researchers in different fields to learn about the latest developments in related fields.

As for the exploration direction of X-Order, Tao Rongzhen mainly focuses on the application of digital currency and its appropriate boundaries (geography, culture, cost, etc.), understanding Hype Curve from the technical/market/cognitive level, and its profit-seeking energy in the digital financial era. Use boundaries and break boundaries, etc.


Regarding the investment logic, Tao Rongzhen pays special attention to the two concepts of Hype and Deviation .

Hype, Hype Cycle; divergence, that is, when the price of a currency falls or rises, it keeps innovating low (high), while some technical indicators do not follow the phenomenon of low (high) innovation.

WechatIMG1229 Figure: Hype and deviation curves

In the interview, he took Cosmos, a cross-chain project, as an example to explain the Cope's currency price and Hype and deviation from project development.

“The development of the project will not change significantly with the exposure of the news. If you find that many people think that the project is good, but in fact, the project development has not yet reached the price matching position, you have to sell it. If there is A news report that 40% of the new PoS blockchain cross-chain cross-chain use Cosmos agreement, for the Cosmos target, its development is indeed rising steadily, but it has not been successful, the price is going down, This creates a divergence."

Tao Rongzhen is a post-80s. After two cycles, he has a calm, rational and objective attitude towards the cryptocurrency market, just like his calm expression . For the world, he seems to have never cared about him. He will not deliberately please others, nor will he change his principles because of others, just like his unruly hairstyle.

The X-Order team's friends told the Babbitt reporter that Tao Rongzhen was "very real."

Indeed, I remember that on May 17 this year, at a roundtable forum of the 2019 Global Blockchain (Hangzhou) Summit Forum hosted by Babbitt, Tao Rongzhen’s discussion on blockchain investment sparked sparks with other guests. Oh, no one finally persuaded anyone.

201905171338432060 Photo: Tao Rongzhen at the 2019 Global Blockchain (Hangzhou) Summit Forum, May 17, 2019

Interestingly, because of this summit, Tao Rongzhen ended the white matrix founder Wu Xiao, and the two talked very much. Soon after, Tao Rongzhen invested in a pure white matrix. Later, the Babbit reporter discovered that Tao Rongzhen and Wu Xiao had liked to play games since childhood. Although the years left a trace on their faces, they still lived in a "big boy."

“What kind of company do you want X-order to become in the future?” asked the Babbit reporter.

He said, " I hope to continue in the direction of exploring the essence of finance and economy. Based on these explorations, our investment business can also operate steadily. "