Author|Wang Dashu
01
Blockchain is on the eve of the outbreak
Chain Catcher: Any industry has a cycle. In your opinion, what cycle is the current blockchain in?
Jiang Tao: It’s a bit like the mobile Internet around 2009. Two years after the iPhone came out, the App Store and 3G network were just launched. At that time, I also just started to invest. Although many investors realized that the App Store was an opportunity, there were basically only small games in the App Store at that time. At that time, a lot of Chinese teams made small games of 0.99 dollars and sold them to Americans, a month’s net profit may be several million yuan. We have also seen this kind of development team. In the end, it turns out that games are only a small part of the mobile phone era, and mobile apps are not limited to games.
From this perspective, the current blockchain is very similar to the Internet of that era. The infrastructure has just begun, and there are some breakthroughs in innovation, such as DeFi, but the future of the blockchain is by no means limited to DeFi.
Chain catcher: But from the perspective of the Gartner curve in 2020, the blockchain industry is in a low period of bubble bursting.
Tao Jiang: I think the real trough period should be last year. Just like the early APPStore, everyone knows that the blockchain is valuable but does not know its specific application scenarios. Will it make money next? But this year everyone saw that DeFi applications in the blockchain can make money. Just like games in the APPStore, the value of many DeFi products is also very clear. This is a trend from the bottom to the top, so my perception is It should be the early stage of the outbreak, and there will be many new opportunities in the next two years, and there will be a high probability of ushering in a period of prosperity.
Chain Catcher: From this point of view, how many driving forces might be needed for the next outbreak?
Jiang Tao: In essence, we still have to solve the user’s problem, and there are also some basic driving forces, such as platform, system, technology and so on. Of course, many voices think that these levels are difficult to achieve, but I am relatively optimistic. Compared with these, I think it is more difficult to obtain usage scenarios and solve user problems in the blockchain world.
In fact, the biggest problem with blockchain in the past was that everyone was saying that the technology was good, and then there was no more. This shows to a certain extent that technology is not the biggest obstacle. The fundamental problem lies in the failure to find a suitable application scenario. Once the scenarios are available and there are requirements, technical obstacles can be achieved through various compromises.
Chain Catcher: When we observe and study an industry, there will be a coordinate system or origin of thinking. What is the coordinate system or origin of your observation and research on the blockchain?
Jiang Tao: First, what are the user needs? Second, how to solve user needs? The third is why your solution is better? These are the basic logics when we make investment decisions.
Of course, many people in the current blockchain industry do not define user needs. Everyone cares more about whose performance is better, whether it is pure decentralization, and whether assets can be managed without custody, but whether these are true The user demand is actually a question that needs to be asked.
Take DEX as an example. Originally, many DEX wanted to make a non-custodial DEX based on the experience of centralized exchanges, but they were basically unsuccessful. Finally, Uniswap came out. This is the case of making products from user experience, and the problem of user needs The bottom line is whether the team paid attention to the nature of the problem.
Chain catcher: From the traditional VC to the blockchain industry, have you encountered anything or a phenomenon that is difficult to understand?
Jiang Tao: Many, mainly two points.
First, many project parties pay more attention to so-called investors than users and products. Although it is necessary for the founding team to actively communicate with the majority of investors, it is still necessary. If all the energy is spent on this, wouldn’t it be embarrassing that the product value and user value cannot be reflected, and the long-term value of investors cannot be reflected.
Second, the interests of investors and management teams are inconsistent. As a traditional investor, I feel that the founding team and investors provide value together. As the company grows larger, everyone can make money together, and it can be a win-win situation. However, Amber’s situation is more complicated now, and many projects have many complex unlocking terms and currency prices. In the system, teams and investors are often separated from each other. This kind of gameplay is not what we want, nor do we participate in this type of investment. We hope that the win-win cooperation is the team that does things, not the team that speculates coins.
02
DeFi investment logic
Chain catcher: We have seen that most of the projects that Shata has invested in in the past are biased towards areas such as lending and payment. Can you talk about your specific investment layout in the blockchain industry?
Jiang Tao: First of all, DeFi has always been our focus. As early as the second half of last year, when the fund was established, we talked to some overseas DeFi projects at a relatively deep stage, including projects that are currently hot in the market. However, in view of the fact that the epidemic failed to land in the end, it is still a pity. Later, we also participated in the secondary market, but fortunately, we have made good profits.
At present, our main investment direction is still related to finance, but we are also making corresponding adjustments during the investment process. In addition to finance, we are also looking at infrastructure, NFT and encryption art that can carry more users, social and content aspects including games, and the future mass traffic portals such as wallets. Recently, we have also invested in some domestic DeFi projects, which can be regarded as an extension of our original investment finance, and it is also a sector we will focus on next.
Chain catcher: Are there any specific standards or models when judging DeFi projects?
Jiang Tao: The primary market is still based on the three criteria I mentioned earlier: What are the user needs? How to solve user needs? Why is the solution good? In the secondary market, we are still trying to make some quantitative models, but given that each project situation is different. At present, it is difficult to sort out a concise methodology, but fortunately, there are data on lock-up volume, revenue, GMV, etc., so there is a chance to introduce a valuation model that can be referred to in the future.
Chain catcher: Just mentioned that one of the main sectors that Shata focuses on is mass traffic portals, but from the current situation, most users are still biased. It seems that there is still an opportunity to create mass traffic portals.
Jiang Tao: Yes, but I think to some extent DeFi is an opportunity to create a mass traffic portal. In this DeFi boom, we found that there are not a lot of traditional funds entering DeFi, otherwise stable coins will not There will be such a large scale.
There are only so many Amber assets. It is basically impossible for DeFi to increase its scale by 10 times on the original basis, so it is certain that some of the previous liquidity of DeFi was funded by outsiders. However, there are differences in external funds. Some funds are from individuals, some are from institutions, and some are pooled from individuals to institutions. In short, as long as DeFi products can really solve the problem, it will not hinder the entry of new funds.
Chain Catcher: In your opinion, what kind of problems DeFi needs to solve to attract a lot of new funds?
Jiang Tao: For example, maintaining reasonable, low-risk and high-return for a long period of time; another example is the convenience of entrance, including easier-to-use wallets. In fact, I think that DeFi’s liquidity mining will definitely be concentrated in similar fund forms in the future. Whether it’s centralized or decentralized, as long as it solves user problems and brings benefits, it will attract mass traffic, but the current domestic situation is compared. It is complicated. For example, many overseas projects have done a good job in this regard. For them, DeFi is a high-yield deposit based on the blockchain, which can be done with an operating license, and this is a compliant business in the United States.
03
Talk about UniSwap and Maker
Chain catcher: At present, some people in the industry are also questioning the value of DeFi. For example, the liquidity mining model that revitalizes the DeFi market is essentially a series of mortgages and unlimited dolls between various stimulating assets. This model attracts mostly speculators. Wait, what do you think of these views as an investor who continues to pay attention to DeFi?
Jiang Tao: In fact, the essence of liquid mining is some form of subsidy, and the project team hopes to attract users to participate. Similar to the subsidies of Internet companies, except that the Internet subsidies money. DeFi subsidies are stocks. It is more to give participants a little thought. This kind of stock can be realized at any time. If the price rises, users may not sell it or sell it directly. .
Looking back, some companies in the Internet subsidy game have failed, and some companies have stood still, so no one can beat the liquid mining model to death, like Are you hungry, how many subsidies Meituan has issued, but in the end subsidies When it is no longer or reduced, users will still use them to order takeaways, because it solves user needs. Users will order takeaways without subsidies. The difference may be that the order volume is less than when the subsidy.
So liquid mining is the same as Internet subsidies. The key to long-term success lies in the core competitiveness of the product, that is, user value.
Of course, different projects have different values, borrowing has loan value, and transaction has transaction value. From Compound to Uniswap and YFI, the value of each project is different. The effects of subsidies are naturally different, and it is not easy to make a conclusion. .
Chain Catcher: Yes, I think you once lamented that a minimalist team like Uniswap faces a lot of doubts. Not long ago, Uniswap finally issued the governance token UNI after facing the challenge of Sushiswap. What are your thoughts on the market performance of UNI?
Tao Jiang: Issuing the governance token UNI is a positive thing, which shows that Uniswap’s competitiveness has become stronger, and it also gives the community more motivation and opportunities to participate. In fact, looking at the process of Uniswap from birth to prosperity, after all, it has been solving problems from the perspective of user needs. This is why I was optimistic about it at the beginning. As for the market performance of its Token, I did not think much about it. This is the market. No one can explain the problem clearly. Just like I believe that most people will recognize Tesla as a good company, but how much this good company is worth has always been controversial, as are Uniswap and the governance token UNI.
Chain catcher: Speaking of good companies and good projects, you said before that Maker is the most mature product in DeFi, especially the MKR mechanism design that the holders take the risk of the system, but the mechanism is innovating frequently. The current situation is considered to be contradictory. The reason is that the current Maker not only lowers the profit rate, but also dilutes the holders together, which is not very user-friendly. Do you agree with this statement?
Jiang Tao: I don’t agree. The rate of return has nothing to do with the maturity of the MKR mechanism. They are completely different. First of all, the stable rate of zero is determined by the community’s voting, not a personal behavior, but a decision made by the community to promote the generation of DAI; secondly, the rate of zero now does not mean that it has been zero, and we cannot say that the stable rate has shrunk to Zero means Maker is worthless, maybe the rate will become 10% next month.
The key is to understand the question of whether to choose large-scale or profit first. The issuance of DAI has grown rapidly in recent months. Recently, the stable rate of DAI has been adjusted to 4%. Therefore, in my opinion, the above-mentioned questioning is only aimed at short-term market behavior, and the maker’s bottom-covering mechanism itself is not problematic. I still recognize its rationality and maturity.
Chain Catcher: Yes, where do you think the next hot spot will be after DeFi?
Jiang Tao: We are currently more optimistic about the art of encryption, but DeFi is an important sector that needs long-term attention. Just like games to APPStore, it is still an important part of the mobile phone ecology, and DeFi is also the same for blockchain, although the bubble will Disappeared, but the core value has always been there , so we will continue to focus on DeFi innovation for a long time, and we will also invest in DeFi projects. Frankly speaking, for entrepreneurs who are steadfastly making products, the sooner the bubble bursts, the better. Only by working steadily can we truly achieve results in solving user problems.
