2020 Investor's Congress discussion: Market fluctuations, how to predict capital?

On January 9, 2019, the 2020 "FAT" Summit Forum and Awards Ceremony, hosted by Odaily Planet Daily, ended in Beijing.

The roundtable forum of "How the capital fluctuates, how to predict capital?" Hosted by Ms. Wang Mengdie, founder and CEO of Odaily Planet Daily, invited Huang Lingbo, vice president of distributed capital, Mable Jiang, executive director of Multicoin Capital, and founding partner of Tongzhou Capital. Lin Weihao, Partner of Benrui Capital, and Yuan Hao, Partner of Fundamental Labs participated in the discussion.

When talking about other promising investment tracks in the blockchain field in 2020, Huang Lingbo, vice president of distributed capital, said that there are three investment opportunities in 2020: 1. Bitcoin is halved; 2. Old-fashioned high-quality public chains are brought online Ecological investment; 3. Global market increase, including data increase and capital increase. However, Huang Lingbo believes that the projects at the agreement layer in 2020, such as the Defi agreement and the governance agreement, have long-term investment value, but in 2020 there may be a lack of systematic and strong explosive opportunities.

Multicoin Capital executive director Mable Jiang is more optimistic about the track of open finance, and expressed that some institutions have brought fiat money into the cryptocurrency industry in 2019, and the problem solved by fiat money is truly global open finance. The problem.

Zhang Lei, the founding partner of Tongzhou Capital, and Yuan Hao, a partner of Fundamental Labs, are more optimistic about small middleware projects dedicated to improving the applicability of the blockchain and improving the developer's development environment. Although such projects are small in size, Prosperity will also bring the freedom and prosperity of developers and blockchain project teams, greatly improving their efficiency.

Ben Weihao, a partner of Benrui Capital, is optimistic about asset tokenization projects, and said that he will continue to pay attention to projects with strong viability and profitability, as well as commercial application landing projects.

The following is a roundtable discussion of shorthand collation (with deletions):

Wang Mengdie: According to Crypto Fund Research data, more than 70 Crypto Funds worldwide will fail in 2019, and this is certainly an incomplete statistic. At the same time, the fundraising situation and investment data of the fund will also show an overall decline in 2019. Of course, many people are also saying that this is the normal process of survival of the fittest in the market, because there are also many actively deployed funds here. So how do the guests view the market changes over the past year? How does your organization formulate its own strategy in the fast-moving market in 2019 and make precise shots?

Mable Jiang: Thank you Mandy. I mainly want to say three things. First of all, relative to capital, 2019 is not necessarily worse than 2018. Indeed, asset prices are still relatively reasonable or undervalued. As Mandy said, it's still very beneficial to buy some cheap assets when you have the money. In 2019 Multicoin Capital still made a very active fundraising move, and at the same time made some investments with this cash.

Secondly, as I just mentioned, it is not only a venture capital investment, but also a secondary market investment. Because we always think that cryptocurrency is an asset, since it is an asset, you can go long and short. If you have some cognition based on its fundamentals, you can do relatively medium and long-term transactions based on the fundamentals.

In the end, how did you make this money? The matter of making money should ultimately be attributed to poor cognitive and poor information. Like before, many traditional VCs overseas may only be in Silicon Valley or New York, but slowly realized that the arbitrage (arbitrage) between global markets is very large. So they went to Asia. These funds that came to Asia earlier made money.

Lin Weihao: The first question is what kind of changes will happen in 2019. My personal perception is that there are no particularly striking changes in technology. There are many changes in the policy. The policy has indeed closed some arbitrage opportunities during the bonus period, but at the same time, it has opened a new path. After a period of irrational capital boom, we will give you some new directions. I think these changes, for example, whether Libra is still working hard or DeFi is very hot, is also a step-by-step development of benchmarking traditional finance, including exchanges from spot to derivatives, from futures to options ETFs and so on. But for us as capital or investment or asset management, we need to allocate funds reasonably to do the best quality and professional management to achieve value-added, we will not be too limited to these.

Answering the second question, how to shoot quickly and accurately, you need to sink. At the beginning, it was widely understood, and there were many tracks. Regardless of whether it was from mining, chain, industrial services, or the original ecology, ST (asset tokenization), or DeFi, you must ask yourself at the end. In addition to providing pure financial services for the project, what else can the project provide to help him grow and also lead us to grow together? This is the truth.

Because the development of the industry is too early, for many projects, I personally put it right, there is no way to make a very sure valuation including the price of BTC. If valuation cannot be done, vertical cycles, etc., many things have no cash and no profitability as a basis to invest in it (except for exchanges).

The only question I want to answer is what kind of track and what kind of assets can be found or the project empowers him to assist in the matching of assets and funds on a global scale. Probably like this.

Zhang Zhang: We remain sensitive to short-term market changes, such as the mining exchange boom, the gaming DApp boom, the new IEO funding model, STO, stablecoin, Staking, Libra, Dcep, and so on. But we value the industry cycle and predictable long-term dividends. Tongzhou Capital was established when the market was the most "bear" in mid-2018, and maintained the principle of own capital within a few years. The reason why it is confident to do so is because of the saying: "Look at the blockchain industry and it is profound Realize that it has just begun. "

When you are optimistic about the future of a certain asset and want to hold a large amount, will you choose to buy in large quantities when there is a large bubble, or choose to buy in large quantities when the bubble is small? I believe everyone will choose the latter. In fact, the principle of "buy low and sell high" is simple, but maybe 90% of people can't. So we are very firm in the bear market. We have invested a total of 70 projects in the bear market that started in mid-2018. As far as I know, we should be the capital in the industry that has taken the most shots in the bear market. We have invested in many projects together with distributed.

In general, our strategy is: use the lowest cost and the most effective money to obtain the most high-quality assets, awe and respect the industry cycle, stretch the time, and let the chips fly for a while.

Finally, how to make precise investment, from 2018 to 2019, we successfully avoided many craze pits, including the mining boom of the exchange, the DApp boom led by EOS and TRON, and so on. We can't understand or think it might not be the trend of the future after we understand it. We will boldly and firmly adhere to the "more research, less shot" strategy. When others are crazy, can we stay calm and not anxious, or because we think we are sober and rational. The suggestion for investment institutions is to rationally look at the development cycle of new blockchain technology, to allocate assets with appropriate proportions at the appropriate stage, to evaluate the benefit-output ratio, and to develop in a balanced way. Thank you!

Huang Lingbo : In fact, I have talked with many friends about how everyone feels in 2019. The basic unified opinion is that 2019 is a very confused year. There are probably two main reasons. The first is that the underlying technology of the blockchain industry itself is not available. Get strong development. The second is that many popular applications, including DeFi and DApp, have been difficult to form large-scale or sustainable development in the end. It is possible that many hot spots in 2018 or the hot spots that continued in the first half of 2019 eventually became calm and sane, and many previously fantasy bubbles began to burst.

In general, everyone knows that it took more than thirty years for the Internet to become relatively popular. As many guests mentioned earlier, the blockchain is very early, so this confusion and trough is very normal. of.

For distributed, we were established relatively early, and have also experienced many bulls and bears. Therefore, the entire investment rhythm of the distributed interior is still relatively stable, but we think that during the trough period, there is a good opportunity to explore "gold". The relatively speculative or insufficiently capable teams in the industry will be gradually eliminated. And what really stays is the team that really has ideals or really good quality. Therefore, in 2019, distributed capital mainly seeks investment from such teams in the primary market. In the secondary market, especially in the second half of the year, we will do some mining and investment in the top 100 projects by market capitalization, and will follow its transactions. Volume, fundamentals, development of the main network, community conditions, and prices, select certain projects for investment and get better returns. Although it is a trough, there are still good opportunities, and everything remains relatively stable. Thank you!

Yuan Hao: I think 2019 is the year when fakes are stored. It was too hot in 2017, and there was inertia in 2018 after the hot, so there are many cottage projects and garbage projects on the market. In 2019, I participated in many projects like Web3, and saw relatively few primary market projects, which is a year of value return.

For our investment institutions, it is very important that you grasp the cycle. In the bear market of 2018, everyone was afraid to take the shot, especially at the end of 2018 and the fourth quarter of 2018, many projects could not be financed at all. , But we were still shooting at that time. There will be investment returns only in early 2019. This is a counter-cyclical point that is very important to us. In particular, it is not the same as our previous VC and PE. The periodic nature is very strong, stronger than the original VC and PE, just like Bitcoin is halved every four years. Therefore, it is very important to grasp the timing, especially the timing of entering and exiting.

The second aspect is about the infrastructure aspect. There are many application layer projects in 2017 and 2018, of course, there are also infrastructure facilities parties, but at that time more projects in the market were application layer projects. But later you will find that there is a big problem with the application project. Users cannot use it at all or users in the market cannot support or accept the product. Therefore, we feel that the next stage of blockchain development still needs to be improved in terms of the underlying infrastructure, and we will continue to make arrangements in this regard.

In other respects, as an investment institution, we must have a strong spirit of independent judgment. There are many hot spots in 2019, such as IEO, but these hot spots are fleeting. It is not necessary for investment institutions to pursue these hot spots, and investment institutions must have a long-term thinking. Judging from past investment experience, we have always wanted to invest in projects that are native and have long-term vitality. For example, we invested in Coinbase before, and Coinbase has done very well in compliance, and it has been very stable.

Secondly, for those projects that have a foundation in the crypto world and that have fundamental value, we can continue to add weight and bet. For some speculative or hot projects, we should still observe and take action. So calm and independent thinking is also an important aspect for investment institutions. Thank you!

Wang Mengdie: Thank you all for your wonderful speeches. In fact, the speeches made by the guests just now are quite exciting. I especially like the bearish market that the boss said just now. It sounds particularly confident. It's true that the media often use the concept of crossing bulls and bears. Next is the last question. In the new year, which tracks and directions of investment will everyone continue to pay attention to, or do you think it is still a new opportunity? Blue ocean, and which areas are many people betting, but you Not optimistic?

Mable Jiang: There is still quite a lot to say about this issue, but because time is limited today, I will summarize it next. Let ’s start with a small advertisement. Please move to the official website of Multicoin Capital. We have an article about the cognitive section of the new Web3 stack in 2019. There is a Chinese version. I think it is worth reading. The theme of Web3 is omitted here.

Here I mainly talk about open finance. I think the previous round table discussed a lot about DeFi and CeFi, which is quite interesting. Because I have not always liked the concept of DeFi, I think it makes more sense to call it open finance. The reason is still the same, black cats, white cats, catching mice is a good cat.

For example, in the existing financial system, there are many institutions that need strong centralization to support, rather than being able to solve it with decentralization. As a best example, imToken recently released the ERC20 BTC that can be used as collateral to borrow on Ethereum. Based on the perception of many users, they are not necessarily willing to trust the weak center ERC20 BTC to take it. Completely replaced with one-to-one BTC. For some individuals and institutions with borrowing needs, they can go directly to a relatively strong center such as imToken, which is a good example.

Secondly, if you look at the overall economic situation in the world, you will find that deposit rates in some developed countries are very low, and their US dollars are not particularly good targets. For example, being an individual user in the United States can rarely buy particularly good assets as a financial management target without being a private user. On the other hand, relatively speaking, developing countries like China and Vietnam have strong demand for assets, but they cannot be met in traditional banks.

In fact, there is a mismatch on both sides. How can we connect the two demand and supply sides? In fact, I think we may see a big improvement in 2019. Because some institutions are already capable of bringing the fiat currency of centralized institutions into the cryptocurrency industry. I think the first step is to mobilize the global capital side from the supply side, and then go further. What may not be seen in 2020 is the actual asset anchoring asset side. The problem solved in this way is a truly global open finance problem. This is a bigger one, and we are looking forward to it.

Finally, talk about the question Mandy just asked. Do you think it is too hot (not very suitable for investment)? At present, we still have some confusion about investing in some decentralized applications on the mainnet that are not yet online. It mainly refers to those decentralized products that have done well on relatively large public chains, but it is still worth pondering, what is the risk of investing in it?

Lin Weihao: Considering the track and direction of 2020, my idea is still to focus on survivability and profitable projects, and then commercial application landing projects.

Everyone has been talking about the essence of commercial application landing. In fact, the presentation of value is logical and understandable, but many things are really incomprehensible at the present time. Failure to understand may be the right person and problem. Go avoid it. In fact, some projects whose trading system revolves around the financial attributes of trading links will have a certain amount of enthusiasm at the beginning. I think there is still investment value in this area.

The development process of benchmarking traditional finance and the existing global regulatory framework, as well as existing technologies, whether it is a Dex or a centralized trading platform, etc., should remain sensitive and concerned. Because good things can happen at any time.

For example, for example, everyone knows that the market value of derivative commodities may be dozens of times the spot price. But whether the existing trading users have the conditions for participation and the cognitive threshold, and whether the market's liquidity has been reached, it is worth digging into it. I think it hasn't been reached yet, because the time I just said is not yet up.

For other circuits, I personally pay more attention to asset tokenization. It is also a security token that has been hot for a while. I have recently seen some project parties work very hard on his prerequisite infrastructure. Go for it.

Zhang Zhang: Compared with the Internet, the architecture of the blockchain, whether in terms of efficiency or throughput, including stability, is far away, which is a difference. In addition, the decentralization and detrust mechanisms that the blockchain itself advocates are facing logical and security challenges. I think that all capital can not be ignored, and it still revolves around the optimization of the "impossible triangle" performance of the public chain.

However, we are often harsh on the public chain and expect it to be as useful as the Internet. In fact, the current situation of the public chain can already meet the basic requirements of a large number of application scenarios, but DAPP has been slow to open the situation. It is worth our reflection.

If the blockchain architecture is divided into the underlying public chain, protocol layer, and application layer, I think the protocol layer is currently a big gap, especially the general-purpose protocol. For example, DeFi mentioned by the last round table, which requires digital identity protocols, loan agreements, privacy protocols, etc. At present, protocol products are basically affiliated with application products. There is basically no excellent team to improve the protocol ecology based on a certain business model.

The protocol layer is connected to each other. The lack of the protocol layer ecology directly leads to the failure of application projects to land and the public chain ecology to flourish. So I am looking forward to the future. The protocol layer is perfect and prosperous. All industries and industries can deconstruct and restructure based on the blockchain. According to their own business and needs, they can freely plug and combine protocols with different functions, bringing a qualitative leap in value transfer rate This will be a new type of business that is extremely open and free. This is also the form of Web 3.0 we expect, and we will pay more attention after 2020.

Finally, we have been looking at some middleware projects since 2018.These projects are mainly used to improve the applicability of the blockchain or improve the development environment of developers. At present, these projects are often small tool projects. Small amount, the demand point to solve is also small. Balanced to economic benefits, so although I personally like this type of project, I have really invested less. However, such projects are actually very strong in implementation and demand. To be honest, they are much more than many public chains I have seen. With the arrival of the 20's, I believe that the blockchain is more developed and talents are pouring in. We will pay more attention to middleware projects in the future. The prosperity of middleware will also greatly promote the degree of freedom, communication and prosperity of developers and innovation teams, and greatly improve the development of the new technology of blockchain.

Huang Lingbo: Time is tight. Let me just talk about the idea of ​​investment in 2020. I personally think there are three investment opportunities in 2020:

The first one is definitely halving bitcoin. I won't say much. Everyone must have read many articles.

The second one I personally think is the launch of a high-quality old-fashioned public chain project, of which Pokadot and Filecoin may be relatively well-known. Filecoin's own mining and the ecological appearance of the protocol layer, or the emergence of polkadot parachain and the protocol layer, may be a wave of investment opportunities in 2020.

Many of the previous guests have said about the protocol layer. I also agree that the protocol layer has great opportunities, and it is still very early. However, I personally think that in 2020, the number of projects that include data protocols, DeFi protocols, or governance agreements may not be too many and scattered. I personally saw the emergence of on-chain data indexing protocols or derivative staking protocols or DAOs, but they will not present systemic or strong explosive investment opportunities, but some similar projects may appear in stages. .

The third one I personally think is that the larger opportunity in 2020 is the global market increase. The global market increase is mainly divided into two parts: capital increase and data increase.

Let me talk about the increase of funds, mainly institutional funds and personal funds. The main reason for the increase in institutional funds, I personally feel that the global blockchain compliance policy is becoming more and more mature, so more institutions will start to lean into the blockchain industry . And so more and more institutional funds will be invested in the industry. You can also see that Bakkt's transaction data is gradually rising. For this field, we see that such projects are more biased towards its compliance and its companies. Service capabilities.

As for personal funds, we found that many projects are now doing some things to reduce the threshold for users, including projects such as keyless wallets or smart investment consulting apps. Such projects may have certain technical barriers or certain compliance, but it may be more important for them to have strong operational capabilities. Such a project is similar to the Internet's to C project. Only strong operating capabilities can become a leader in the industry and form a certain traffic entry barrier. Of course, the regionality just mentioned, including Vietnam, is also one of the advantages of this strong operational capability.

Next, we will talk about data increments. This is very interesting. I personally think that 2020 may be the year of Oracle (oracle). Everyone should know what Oracle means. Oracle itself is divided into three categories: The first category is generated on-chain Data is the native on-chain database Oracle. The second type of Oracle is to cooperate with traditional institutions to grant credit to traditional institutions, let them act as nodes of the public chain or alliance chain, and let them output data to the chain. The third type is to verify and upload the data itself through the governance mechanism.

I personally think that the third type of Oracle is still too early. It may not be developed until M2M is more mature. The second type of Oracle that may get a lot of development in 2020 is why there are two reasons why I think the second type of Oracle may be a big development:

First, the blockchain technology itself is a technology that is supported by governments around the world, so it has caused a large number of Class B users, that is, institutional users (including governments), financial institutions, or large enterprises have begun to put their data on the chain. In fact, most of the massive data in real life is in their hands, including corporate and personal financial data, identity data, consumption data, content data, and so on. If their data can be chained, it is a very good infrastructure for the blockchain industry. I personally think that it is very likely that many previous application layer and protocol layer projects have not developed and are very related to this. This is the first reason.

The second reason, I personally feel that there are more and more to C traditional scenes starting to connect to the blockchain. how to say? There were many scenarios before that I wanted to be a blockchain, but we found that most of the projects were created by themselves in the industry or in the blockchain circle. This is a very difficult thing in itself, a bit similar to doing the Internet to C project, the elimination rate is very High and consumes a lot of resources. So there are very few such successful projects and their sustainability is poor. But I see that many projects are beginning to transform, and they are starting to cooperate with traditional traffic scenarios. The business model is not pure to C, but to Bto C service model. In the traditional scenario, the user does not need to know that the thing I bought is related to the blockchain, but only bought one thing, and it only has the right of authenticity. This might be a good way.

What is worth mentioning here is the NFT method. NFT itself is a very good blockchain carrier that cuts into traditional scenarios. We have already seen such cases. NFT itself can be used as a carrier of some electronic credentials that require authorization, including various types of tickets or IP content. I think it may not be enough to diverge, and everyone can brainstorm.

Generally speaking, from the perspective of data increment, it is actually only the first step for the blockchain to cut into our traditional life, because it only just puts the data on the chain. The real value of the blockchain may be various Derivative development, including possible on-chain data transactions, multi-party privacy computing, or DeFi, regulatory technology, etc. These may be the next steps, but I personally think that it needs to be done step by step. What may be more important in 2020 is the process of these incremental on-chain and capital entry processes. This is my personal opinion. Thank you!

Yuan Hao: I think investing in blockchain is quite interesting and I have shared it with the company. There are three directions:

The first is to invest in companies that have cash flow for the purpose of making money, typically similar to Xinhua Exchange, including businesses that can make money and earn cash flow, such as Coinbase and PayPal Finance. As long as these businesses are valuable and have cash flow, they can continue to invest for a long time, and they can continue to watch in 2020.

The second one is investing in projects that do not make money. It is like Bitcoin. Do you say it makes money? Not making money, just building a network. Ethereum is also creating a network that everyone can use on the platform. In this direction, invest in projects that have original value.

Third, what is a company that does not make money? It's a little different from before. I wrote an article about middleware a year ago. Why is middleware an area that everyone deserves attention today? Do you say it must be for the purpose of making money? Not necessarily. These company teams are very affectionate and dreamy, and at the same time they are down-to-earth to help the long-term development of the crypto world. The blockchain has always been a small circle. The blockchain is a very small group, and the number of users is now 30-50 million. If everyone in this market only does what they like to do or earns the money they can make, it is difficult to make the industry bigger without a long-term one.

Why do we need to pay attention to the third area? Because they help project developers reduce the barriers to development, or increase the availability of some applications. Now you will find that the DeFi project is very hot, but it is really rarely used. why? It's because its usability is too poor and there are too few users. What are we going to do now? Middleware companies can really help bring these applications to the mainstream society. Only in the future will the blockchain have a great future and a better tomorrow. Thank you!

Wang Mengdie: Thank you all for your wonderful sharing.