Discussion: The Future of Open Finance, Public Chain and Alliance Chain

Recently, X-Order invited some friends in the blockchain industry to discuss the value capture of the chain from the perspective of the project party, the investor, and the industry observer.

The following is a record of some wonderful discussions, hoping to give some inspiration to those who are still advancing in the industry, enjoy ~

Question 1: What is the impact of macro policies on the public chain?

X-Order: Changes in macro policies have made the review very strict. Has the public chain been affected?

Public chain representative A:

Relevant departments in Shanghai issued a document to investigate blockchain projects, mainly for new projects, not existing ones. If a new ICO is issued now, it will definitely be the target of severe blows. Exchanges will also be targeted, as trading is an ongoing process.

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There was a public document that said that public chains are not encouraged, deployment on public chains is not recommended, and alliance chains and private chains are encouraged. The official attitude is no different than before. The official crackdown on blockchain projects is mainly due to the increasing number of air currency and pyramid schemes in the industry, which have caused a worse impact than before.

X-Order: There are still some blockchain projects in the country that want to go big, like Nervos, Platon, Conflux, etc., have they been affected this time?

Project Party A:

I have exchanged a lot with public chains and exchanges recently. The most intuitive feeling is that there has been a lot of information in the last two weeks. When I went to Wuzhen in early November, Conflux arranged an interview for me, and they thought they were pretty good. Recently, the government has granted them a large piece of land, with a lot of resources to assist them. But after a week, I communicated with Conflux again at an event, and I felt that the situation had changed.

I feel that the transition from the public chain to the alliance chain is quite simple, because I think the public chain is a super body of the alliance chain. The public chain transformation is very flexible, as long as the consensus is cut off.

X-Order:

The direction of domestic policy has been continuous. Before the country develops the blockchain, it is necessary to clear the bad aspects of some industries first. Although a lot of blockchain finance mentioned now is supply chain finance, I am still optimistic about the development of blockchain in the financial direction. Blockchain as a technical framework is convenient for the world's money to flow into the country. Some internal studies have found that foreign capital has been flowing into China, and the world is in Long China.

Industry Researcher A:

Foreign capital entering China, in fact, the amount of public and private entry in recent years has been very large. Now about 300 billion US dollars come in through public channels every year, and recently they have mainly invested in A shares.

Top institutions in the financial sector are far-sighted. Perhaps as early as 16 years 17 years, they realized that the world's financial shuffle. Many funds are always looking for new investment paths. At this time, if domestic financial regulation is liberalized, it will be conducive to a large amount of external funds flowing in.

In addition, almost all large funds are now bearish on US stocks. Logically, the world has printed more than a trillion dollars of money in the past ten years. If this money is to be profitable and value-added, it must flow to high-growth places. Today, only three countries worldwide have grown by more than 6%: China, Vietnam, and India.

In the Vietnamese market, once foreign capital is withdrawn a little bit, the entire market will collapse. The foreign capital will definitely be withdrawn, and it is likely that there will be action in the next two months. Because its real estate prices have exceeded Shanghai, more than 20,000 US dollars per square meter. Many people are now flickering to invest in Vietnam, mainly because foreign capital is being withdrawn.

The other is India. The government's financial supervision is very strict, and even P2P can't get out.

Question 2: How does token capture value?

X-Order:

The current industry trend is Defi or hub. So what role does token play in it and how is value capture performed? Is it the same as Ethereum? Do you need a large market value to support the project itself?

Public chain representative A:

Not necessarily. It is as if the market value of the Shanghai Stock Exchange and the Hong Kong Stock Exchange is definitely much lower than all listed companies carried on it. Therefore, we cannot assume that the Hong Kong Stock Exchange cannot be a trading platform. However, if the public chain is completely open, it will be very difficult. Like Ethereum, you must be very large. If credit is not introduced, the market value needs to be enlarged.

X-Order:

If the current value of Ethereum is more attached to the Defi market, we believe that Ethereum itself and Defi are used as a mutual collateral, which is a value support.

For many public chains, how do you better combine the token with the project direction if you want to go in this direction ?

Investor A (blue collar):

I don't fully agree with your point just now. Ethereum's positioning has always been the design direction of transaction agnostic. In fact, Defi is also hot recently, instead of being designed in advance, it is just faster. In fact, the most run on Ethereum should be USDT. Strictly speaking, it has nothing to do with the value of Ethereum. Because Ethereum mainly reflects calculated value, it depends on the frequency of such on-chain transactions.

According to the current consensus mechanism, the price of Ethereum itself should affect its security level, especially they are now doing POS. The security based on market value is actually more critical, rather than compared with the market value of assets on the chain.

X-Order:

The initial calculation value of Ethereum is that smart contracts will be used in various fields. As the project evolves, Ethereum is more convenient and efficient than Bitcoin, and its popularity is also high. This is actually a first-mover advantage of Ethereum.

In this case, what should other public chains do?

Media Party A:

Actually, I wonder if Ethereum is capturing value?

Investor A:

Computational value was mainly captured. But it is not completely proportional to the assets on its chain.

Media Party A:

If it is calculated value, taking Defi as an example, it doesn't need so many transactions.

The Ethereum incentive model is designed to collect only gas fees. In fact, the most frequently traded volume is USDT. However, when the value on USDT is large enough, if the market value of Ethereum cannot match it, and the gas fee generated by the transaction is not enough to encourage the miners to continue participating in supporting the Ethereum network, it is very dangerous. Because it is possible to steal USDT by double spending. This is actually the value of the underlying network security.

Public chain representative A:

I don't think that the underlying chain must have a large market value to support the value of all on-chain tokens. If the world is to develop according to this logic, we cannot be traffic lights, we can only be roadblocks. When the red light comes, we raise the barricades so that your car can't drive at all. This model is to extract the value of the assets on the chain as its value.

There are two ways to guarantee rules in this world. One way is to prevent beforehand. The cost is very high , which is to set up roadblocks. Another is to investigate after the fact , such as various mechanisms such as traffic lights, cameras and probability sampling. After large-scale practice by human beings, the latter method is found to be more efficient, but it cannot be absolutely fair. There is also a probability that if we want to improve the overall social efficiency, we will eventually switch in this direction more or less. It is impractical to rely on the original method. This is also the concept of Bitcoin and Ethereum.

In addition, regarding the value of the project , if more value is captured by a project, it means that the cost of use is also higher. Once the cost of another system is lower than yours, the project will shift. Ethereum now has a strong network effect, and value capture can be slightly more. But if it is ten times more than others, the project side is likely to leave this platform.

X-Order:

Does a larger market value mean higher costs for his operations?

Public chain representative A:

The larger the market value is in the human concept, the greater the importance it holds. It is equivalent to how much we are willing to pay for security, similar to the value of national defense. You don't necessarily use defense, but you are willing to spend some of your property on defense.

X-Order:

What if Ethereum's Defi can't make it?

Investor A:

Find new directions and constantly find new directions.

Project Party B:

Ethereum's positioning from its emergence is the superworld computer, and its core is programmable. Its market value has gone through several stages from the beginning to the present. The first rise in market value is the expectation that the entire ICO market will pull up the market value of Ethereum. After the ICO system slowly broke down, Ethereum began to find a new concept, Defi, and its physical volume was very different.

Ethereum has made a choice of direction. Previously, ICO was similar to the first line of investment, but now it actually has a little conversion: Ethereum uses its chain as a financial chain and follows the solution of the financial vertical industry.

So if Defi doesn't work in this direction, I believe it will definitely choose another vertical industry. At that time, its market value will change again.

Question 3: The relationship between the cash flow brought by the alliance chain business and the public chain token

X-Order:

After 1024, more and more alliance chain business and public chain teams had some interaction, generating cash flow. What is the relationship between these cash flows and the tokens of the public chain?

Public chain representative B:

The alliance chain does have continuous demand, and there are many ways to cooperate. Because the perspective of the alliance chain has several aspects, one aspect is partial supervision, which is equivalent to the invoice made by Tencent before. As for how to realize the needs of the alliance through the logic of the alliance chain, it is not very clear.

Public chain representative A:

The cash flow generated by the alliance chain project is actually not much, and it is one-off.

Investor B:

I actually think that the policy is weakening the domestic public chain. The team took the project of the alliance chain, and the energy invested in the landing of the public chain may be less.

Think Tank A:

After 1024, there are various blockchain needs everywhere, and many scenarios in the blockchain need to find solutions. Many demanders may not know the blockchain well, but they also want to try it. Some listed companies are also willing to pay, because they need to have a better story to make some adjustments to its valuation space. So the whole environment will be more friendly. At least more people will learn about the blockchain industry, and there may be more opportunities.

I think for the public chain, its isomorphism or similar alliance chain runs through, indicating that it has the ability to land in the short term. But if one day the public chain is going to expand to more scenarios, it will connect these more chains together, and they are all isomorphic. Gradually, the boundary between the public chain and the alliance chain is blurred , which makes the concept of a public chain to a certain extent slowly come into being. Perhaps a public chain will become the one that everyone is more willing to choose through this approach.

X-Order:

If the public chain team has made more and more money through the alliance chain, what exactly is the token of the public chain? Is it a technical demo?

Public chain representative A:

I have a metaphor that the token of the public chain is essentially a technology tax, collects taxes from users around the world, and then uses them to develop open source projects.

Project Party B:

In fact, there was a time when the voice of the alliance chain was high, and the voice of the public chain was high.

There are two points to clarify on this question. First, suppose the alliance chain can be profitable. What is its profit model?

The profit point of the alliance chain is actually not in the token. It is sometimes even a currencyless blockchain that relies on a business model to make a profit . So you cannot use token thinking to understand the alliance chain to make money.

Secondly, I ignore the issue of the alliance chain token for the time being. I assume that the alliance chain makes money with its unique characteristics. What characteristics does the alliance chain have?

It actually has very typical locality. It's a bit like the renminbi, which can only be used in China. If it is used internationally, I may need to use Bitcoin. In fact, the public chain will play this role in this perspective, because other countries are not willing to use the alliance chain of a certain country. This is a question of trust. Everyone will tend to use their own alliance chain or use it on the public chain. Therefore, under such a premise, many ideas of the alliance chain can be fed back to the public chain. In fact, the global integration is ultimately promoted.

X-Order:

In fact, all of us here are speaking in the context of China, many things can not be touched, such as revenue, the company and the supply chain are very clearly separated. As an investor with a foreign background, do you think that the need for equity and tokens needs to be so clearly separated? Does it fit together?

Investor C:

From an investor's point of view, investors just want to make a profit. So wherever his interests are, I will vote. For example, if the project income is distributed through equity, then I definitely invest in shares. If it is on a token, I will vote for it. And now, basically every blockchain project will encounter the value contradiction between equity and token. This problem persists and has not changed much recently.

Investor A:

When designing an economic model, many tokens use code to capture value. For example, Ethereum's gas fee is guaranteed by code. However , the value capture of some tokens is entirely manual, and there is no guarantee that the value will be captured. The reason why stocks in traditional financial markets can capture a company's growth value is actually manual capture, but there are laws to enforce it. If the law is not enforced, many shares may also be worthless.

This is also true for many tokens. It is necessary to manually take the value and distribute it to the holders (typically the platform currency of the exchange), instead of relying on the code, which has many uncertainties. Because it cannot be guaranteed by code, investment income is determined by the will of the issuer.

Public chain representative A:

If it is a dividend-type platform coin, the revenue contained in the shares is actually cut out and put into the token. The problem is that the middle ratio is controlled flexibly, that is, the issuer controls it completely. So now investment institutions are generally investment companies, and then you can give me a token in proportion. If only tokens are invested, in case the project party does not take out dividends to buy back, this is very problematic.

Investor D:

If we don't look at tokens, can the protocol itself capture value?

X-Order:

If the project is to be a protocol, it must be the largest protocol in order to survive.

Regarding the value of protocol, I think the value for projects like Ethereum and Cosmos is very large. Although there is no direct binding between the token and these chains, as well as the behavior of users, such an ecological and chain and human binding is very strong.

When we go to the erc 20 token on the Ethereum wallet, it will involve ETH, even if he does not bind these things together through smart contracts.

For another example, Cosmos, he wants to be a hub, even if there is no set of economic models, but as long as the future traffic, or if you need to use Cosmos chains or tools in the process, it will have an impact on the value of Cosmos .

This actually means that you need to be a central node to survive, after all, it is the entrance and exit of traffic.

Investor A:

From the perspective of the Protocol developer, its greatest power is his governance power. To benefit economically from China, it is still difficult.

Public chain representative A:

Protocol is actually a coupling thing. When designing, the right to governance and the right to dividends are fused together. In fact, they can be separated in theory. So he said that the only governance power left in the future means future standards, and future design will not couple payment media design.

But there is no such trend now, because there is not a good enough payment medium.

The domestic public chain NEO is like this, one is the right to governance, and the second is the right to dividends. In fact, these two rights are coupled together. In theory, the two can be divided, but it is too cumbersome. Bitcoin is very liquid today, but it is more a payment medium than a value scale, nor is it a value store, because its value fluctuates.

the above.

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