Produced by: TechFlow & Hotpot DAO

Interview: 0xmin/Sally

Excerpts from WuBlockchain

He Yi, co-founder and CMO of Binance and head of Binance Labs

1. I’ve always believed that predicting the future is the hardest thing to do, and that new hot spots usually occur in areas that people haven’t really talked about or predicted.

Like in the six months to a year before ICO, DeFi, NFT, Metaverse, GameFi and so on came alive, it was hard for anyone to predict exactly which sector would really explode, but they did. A successful sector, like a successful industry, depends on the product ecology of the sector and the industry. Once there is a very innovative and attractive product, it will involve more users, driving traffic, and finally forming the outlet and trend.

2. Every industry has its own cycle and evolutionary process, and innovation will accelerate the development and adoption of the industry.

Each winter was warmer than the last; Each cycle, the industry also gets bigger. For example, blockchain technology developed slowly at the beginning and its application was relatively narrow. However, with the emergence of technologies such as smart contracts, the application scenarios were further given more space to play, and the progress of technology and industry was faster and faster, and the game was more and more changeable. At the same time, more traditional institutions and enterprises also entered this field one after another, bringing not only capital but also more talents. Therefore, overall, I am optimistic that the overall industry will continue to grow, and that there will be some disruptive innovation in the near future that will generate mass adoption and push the industry into the next fast lane.

Blockchain/WEB3 is still in the early stages of development. Overall, blockchain applications are still high and complex for many people to use. Therefore, Binance Labs pays special attention to innovative projects including infrastructure, applications, security and data services when investing. For example, infrastructure refers to applications that solve the pain points of the current blockchain industry, while application refers to practical problems that can help ordinary people have a better life in the real world. We hope to help the public find more adoption scenarios in the New Year, leaving behind the really important companies and projects that support the industry. The future is very much to look forward to.

3. 2023 will be a “repair” year for industry confidence. Don’t discount the value of an entire industry because of a temporary dip.

In the past year, we have seen a series of extreme events, which constantly remind us of a simple truth — “safety should not forget danger, survival should not forget death, and governance should not forget chaos”. We must have enough reverence for this market, adhere to the bottom line and principles, and then lower our heads to work, do a good job of products, good service users, the enterprise can be long-term, the industry can develop.

Feng Liu, a partner at BODL Ventures and former editor-in-chief of ChainNews

Frankly, the last year of stormy washing in the cryptocurrency market, from Luna to 3AC to FTX, has been terrifying, but not complete:

The bloated, exciting, and giddy aphrodisiac effects of token economy design, DeFi Summer and the drumbeat NFT craze, have made too many people accustomed to making “quick money,” but after the moneymaking effect fades, the various use cases of cryptocurrencies are soberly devoid of real users.

The collapse of some of the big centralised institutions that heavily disrupted and operated markets seems to have shattered the belief that centralised institutions are “too big to fail”, but far from shattering the illusion of following or relying on giant centralised institutions and whales to profit from them, from exchanges to the Mega fund, Giant centralised institutions actually have an increasingly concentrated voice and influence in the primary and secondary markets, and are clearly using that voice and influence to arbitrage.

So, we have reason to be cautious about the development of the industry.

No pain, no gain. Despite the downward trend in cryptocurrencies over the past year, I get a pain in the skull every time I see people analyzing, citing, or debating the bottom of a bear market based on market sentiment and historical trading patterns: If our great industry is ultimately driven by the interaction of market sentiment and long-term cycles, with technological breakthroughs, users, and use cases emerging as by-products, then it really doesn’t deserve the word “great.”

It’s time to get back to fundamentals and common sense. In my opinion, it’s worth rolling up your sleeves for a long time to come in the following areas:

(1) Innovative solutions that enable ordinary users to use cryptocurrency technology “mindlessly” and securely achieve self-custody of assets (including data assets). These solutions should include mnemonic-free key management solutions, self-hosting solutions with social recovery capabilities, basic tool suites that make it easier and more secure for ordinary users to sign or verify on-chain information, as well as lightweight, easy-to-run blockchain client/node devices. This should be the key to driving the “hockey stick effect” of growth in the number of real users of cryptocurrencies, as well as the fundamental conditions to help so-called “Web2 users” get used to and confident in controlling their assets and moving towards “personal sovereignty”.

(2) Push breakthrough blockchain scaling solutions from “proof of concept” to actual engineering implementation. scaling will be the crown jewel of blockchain technology development for a long time. Over the years, various scaling solutions have been proposed and optimized, but the engineering implementation has yet to be accelerated, and the industry needs more developers with engineering skills to drive the process.

(3) Using on-chain tools, new social tools and reputation system, effectively organize “professionals” with certain professional abilities to continuously output and contribute to specific subdivided knowledge fields, which may be the breakthrough to help ordinary people really participate in the “DAO” organization. The more vertical the field, the easier it may be to increase stickiness and recognition, and create a long tail effect.

(4) Rediscover and advocate the spirit of “crypto native”. Or, only when more people understand that the initial and most significant driving force behind the creation and popularization of cryptocurrency currencies is the protection of freedom and the basic sovereignty of individuals, can the entire market be far away from speculation (although speculation is one of the important game forces) and develop in a more sustainable and diversified way. The road will be long and winding, but it is the only way.

Justin Sun, founder of Tron and global advisor of Huobi

I think in 2023, if the bull market is going to happen, Asian power, especially Chinese power, is going to play a very important role.

Looking back at the bull markets of 2013, 2017 and 2021, the strength of Asia, and in particular China, played an important role in the previous two bull markets. 2021 May be the only bull market dominated by Americans. Therefore, I think 2023, if Crypto industry to recover from the bear market, the most important is the Crypto strength in Asia.

At the same time, I think DID is going to be an interesting sector in 2023, and I’m a big believer in decentralized identity because it’s tied to exchanges’ KYC, citizenship, and on-chain real-name authentication.

DiscusFish, founder of Cobo

1. Scaling is one of the biggest sector in the future market. From 2017 to now, the big direction still needs to be solved by multi-layer network.

2. The balance of security and application of the underlying private key in the Crypto world is the core problem that has hindered the emergence of a large number of new users in the entire industry. With the influx of traditional capital and a large number of new users over the past five years, whether it is Gamefi or a game-like application like StepN, MPC-based unselfish key wallet can make the user experience and threshold more balanced.

3. With the development of blockchain performance and underlying private key management technology, decentralized finance, including decentralized derivatives exchanges, will gradually emerge, and the whole DeFi interaction mode and possible form will also undergo new iterations.

DEX is relatively mature. As ZK comes online, the way of order book will be gradually improved.

On-chain futures and options derivatives could be the next big thing.

Evans, Head of investment at Huobi Ventures

1. Last year was the acceptance of trust in traditional centralized institutions, this year is the collapse of trust in crypto centralized institutions. Trust in crypto in traditional institutions will take longer to rebuild, and new economies may accelerate their embrace of Crypto in the event of macro weakness or even recession.

2. In terms of the overall sector, new opportunities have emerged at the Exchange Sector. The old wave of exchanges had a hard time certifying assets themselves, and the new ones, if they can separate banking and trade settlement without ruining the user experience, have a good chance of capturing a decent share of the market in the next bull market.

3.Digital Entertainment ecology is my main focus. There are opportunities for infrastructure middleware, such as the use of MPC+TSS at the Authentication layer, NFT Marketplace with White Label, good on-chain content (probably still focused on games for now), on-chain content publishers, Content-based user portraits, etc.

4. For infrastructure, I’m not a professional, but I think there’s a good chance that all Layer2 will end up in a similar situation — Layer2 as a service. The existing Optimistic Rollup will also launch its own ZK Rollup after stabilizing its market share. You can continue to focus on the OP Rollup of the head such as Arbitrum and Optimism, they Launch earlier and have accumulated a lot of capital and project resources. Overall, both layer2 and the new L1s will prove that Scalabiliy is relevant, and whoever can catch the Killer app will have an edge in the next wave.

5. Valuations in the Zero knowledge space are still very high, but there are still very few protocols that actually make it to the ground.

JX, Partner of OFR

1. Next year, several zkEVMs are committed to the mainnet, which is a great benefit to the whole EVM ecology. After EIP4844, there will be a L2 outbreak period of zk.

2. The progress of infrastructure also needs to be driven by application innovation. As the current application narrative is deflating the bubble in the market environment, users and investors are more inclined to the application with real agreement revenue and users. At the same time, the demand for decentralized asset custody is stimulated against the background of regulatory and security issues faced by exchanges, and more users are bound to try smart contract wallet. The above applications belong to the defensive type of bear market.

3. Offensive applications still rely on liquidity. Pigs fly when the wind blows. Offensive concepts does not currently see a specific sector, the more ethereal the better. It may take the second half of 2023 to have the relevant concepts appear.

Wang Xi，BI XIN Ventures partner

As we look ahead to 2023, we will continue to focus on two major directions:

1. Foster and facilitate infrastructure projects for the large-scale adoption of unlicensed and decentralized networks;

2. Innovative tools and applications that attract billions of new users while developing sustainable economic models.

We will focus on the following sectors:

(1)L1s, technical advances around Rollups and modular blockchains (Arbitrum, Optimism, Celestia, Subspace, etc.) that will improve the experience of current Web3 users. We are also optimistic about the potential of high-performance, high-throughput and low-cost blockchain in creating landing commercial platforms (such as Aptos, Sui, etc.);

(2) Middleware. As the underlying blockchain expands, we expect decentralized storage solutions, decentralized pledge solutions, permissionless prognostics, trusterless Bridges, and unmanaged solutions to play a big role and possibly decoupled some existing business systems;

(3) The underlying logic of the application layer lies in “user-centered design and value added”. We hope to see more innovative designs in asset issuance, trading and asset management by DeFi in 2023, rather than mere copying;

(4) GameFi, we believe the next wave of games will focus on leveraging blockchain technology to enhance the gaming experience, whether in game asset ownership or interoperability or even esports, but teams need to focus on thinking about the relationship between playability and financialization;

(5) NFT, NFTfi (valuation, liquidity, lending and even leasing) are currently popular directions for community exploration. We are open to practical NFT more closely integrated with Web2, which will promote the importance of decentralized ownership of digital assets to be widely accepted.

Jun Yu, Partner at ANT Capital

1.ZKP will continue to shine beyond L2.

By recording the calculation process in ZKP, the trustless application of the results is realized, which has a significant improvement in solving the cross-chain impossible triangle and getting through the off-chain calculation.

2.Web3 user entry will realize Web2 experience.

At present, there are a large number of wallet projects on the market to lower the user threshold. From Ethereum ecology to Move L1s, both account abstract scheme and MPC scheme are expected to achieve helpless word memory, social retrieval and other functions in 2023, and simplify transaction operations.

3. Exchanges will become more transparent and decentralized:

The FTX affair has stung the market. Centralised Exchange, which includes custody, trading and settlement, carries a high degree of moral hazard. Exchanges are already experimenting with the disclosure of reserves, and 2023 is likely to see more transparency and centralised exchanges stripped of custody and clearing functions.

4. Mevs will be taken more seriously:

With ETH Merge, Validators replace miners to provide consensus and security for Ethereum. Accordingly, the MEV market has changed a lot, with MeV-boosts generating higher revenue for Validators. As on-chain activity picks up in 2023, revenue gains from MEVs for Validators will be more significant, and the decentralization and trustless of the MEV market will be paid more attention.

5. Market attention will return to the application layer:

After the infrastructure boom, there will be a return to the bear market soul questioning “what can blockchain do”; Thanks to its own internal economic system, games are likely to be the next blockchain application explosion after finance.

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