In this episode, the guests engaged in an in-depth discussion about key events and trends in the Web3 space for 2024. Topics included the growth of the Solana ecosystem, investment strategies, Telegram mini-programs, the Meme Coin craze, and the integration of AI with blockchain technology. The event also featured a detailed analysis of the interaction between foundations and communities, technical development challenges, and the industry’s strategic priorities for the coming year, such as BTC-related DeFi, improvements in developer tools, and multi-party collaboration strategies.

Disclaimer: The views expressed by the guests do not represent those of Wu Blockchain. Wu Blockchain does not endorse any products or tokens. Readers are advised to strictly comply with local laws and regulations.

This audio transcript was generated by GPT and may contain inaccuracies. Listen to the full podcast here:

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Solana: From Infrastructure Strength to the Rise of Memecoin Mania

Colin:

Let’s start with Adam. As an OG in the Solana ecosystem and a former FTX employee, Adam has a wealth of experience and stories to share. One topic that might interest everyone is the trends we’ve observed this year. Solana has emerged as a hub for memecoins, but I recall you mentioning before that this wasn’t a deliberate focus for you. Instead, you’ve been emphasizing areas like PayFi and infrastructure development. From your perspective, why has memecoin mania erupted so prominently on Solana this year?

Adam:

Thanks, Colin, for the question. I think this phenomenon is a mix of chance and inevitability. Memecoins, as we all know, started with projects like Dogecoin and Pepe during broader market cycles. In this cycle, if I’m not mistaken, it began with the BONK airdrop on December 24, 2022, shortly after the FTX collapse. The airdrop targeted wallets with prior interactions, and its price performance created significant buzz. People realized that participating could lead to similar rewards, sparking widespread engagement. This marked the start of the current memecoin frenzy, leading to the emergence of a wave of memecoins themed around dogs or other animals.

Solana became the epicenter of this trend primarily due to its infrastructure advantages. Solana’s speed and low transaction fees make it frictionless for users to trade memecoins or handle large transfers. This seamless user experience laid the groundwork for the growth of memecoin communities.

Additionally, the Solana community’s cohesion has been a critical factor. Despite facing numerous challenges, the projects, teams, and users in the Solana ecosystem have demonstrated exceptional solidarity and activity, fostering an environment where both the inevitable and the serendipitous could flourish.

Colin:

A quick follow-up: PumpFun has been one of the key players in Solana’s memecoin ecosystem, generating astonishing profits. Do you think the Solana Foundation played a significant role in supporting it, or did it grow organically through a wild west-style expansion? PumpFun’s value lies in providing standardized support for memecoin issuance and initial liquidity. What’s your take on its success and dominance?

Adam:

PumpFun’s UI isn’t particularly user-friendly — it feels a bit chaotic at first glance. However, its timing was impeccable. Early memecoin launches often involved sharing wallet addresses on Twitter. Chinese users might remember “Maji Brother’s” wallet address, which sparked a frenzy of transfers. PumpFun capitalized on this momentum by offering a tool for users to issue their own tokens. Combined with the political and cultural narratives at the time, it gained a strong foothold.

As for the Solana Foundation, I believe they’ve dedicated almost no resources or attention to memecoins, likely for regulatory reasons. However, from a broader ecosystem perspective, the foundation has made significant efforts to enhance user experiences — such as promoting mobile ecosystems, improving network security, fostering a better development environment, and exploring cutting-edge technologies.

Colin:

Got it. Do you think Solana ETFs will see progress next year? Can you share your thoughts?

Adam:

I see ETFs as a long-term goal. Bitcoin and Ethereum ETFs are viewed as bridges between crypto and traditional finance, and something similar could eventually happen for Solana.

Colin:

Indeed, Solana has faced many challenges over the past year or two. Following the FTX incident, Solana’s price was deeply affected. Yet, with the active developer community and support from major institutions, it managed to rebound. Do you think Solana’s success is primarily driven by institutional backing or the strength of its developer community?

Adam:

At its core, the ecosystem is the driving force. Late 2022 and early 2023 were incredibly bleak for the market. Teams like BONK were like beacons in the dark, propelling projects forward within the ecosystem. Developers remained committed to innovation and building despite the bearish conditions, showcasing resilience and focus. While capital follows profit, its movement is ultimately guided by actual growth and progress. This ecosystem-driven innovation has been crucial for Solana’s resurgence.

Colin:

I see. It seems like both factors play a role. Thank you, Adam, for your insights.

Dragonfly’s Investment Strategy and Responding to Community Criticism

Colin:

Could you start by briefly introducing Dragonfly’s investment focus during this cycle? My impression is that Dragonfly initially leaned more toward Asia, investing heavily in regional projects. During the middle stages, you focused on DeFi and achieved significant success in the last DeFi boom. Later, you ventured into centralized entities, including some well-known cases. What is your main investment strategy in the current cycle?

GM:

Thank you, Colin, for the question. Dragonfly was founded in 2018 as an investment firm dedicated to the crypto space. Our first fund spanned 2018 to 2021, the second from 2021 to mid-2022, and now we are in our third fund, which is behind the investments you’ve recently seen.

Over the past two and a half to three years, our strategy has become more focused. For instance, in this fund, we’ve invested in projects such as Ethena, ZKSync, Monad, MegaETH, Kaito, and Polymarket. Compared to earlier funds, we’re doubling down on industry-leading projects, often starting from the seed round and continuing through Series A, B, and beyond. This is the biggest shift in strategy compared to our first two funds.

Colin:

Got it. I recall some of your prominent investments, including Ethena, MegaETH, Monad, and others. Could you elaborate on these projects and the rationale behind your investments?

GM:

Sure. During this cycle, the most notable projects in terms of exposure have been Ethena, Monad, ZKSync, as well as Kaito and Polymarket, which have gained traction on social media recently. These projects have had significant influence and drawn widespread attention in the industry.

Our overarching strategy is to focus on the three most established business models in the crypto space: exchanges, blockchains (Layer 1 and Layer 2), and stablecoins. These areas — and their emerging players — remain our core investment focus. From a business perspective, these three categories are the most mature and successful models in the crypto industry.

Colin:

Your partners are well-known KOLs on Twitter with substantial followings. As a VC, how do you view the growing anti-VC sentiment in the community? This sentiment was particularly strong before Q4 last year, during the market downturn. Even though the market has improved since Q4, skepticism persists. Is this trend unique to the Chinese-speaking community?

GM:

This phenomenon is real and worth addressing. The root cause lies in the cycle from late 2021 to early 2022, when the primary market raised excessive funds disproportionate to the market’s actual capacity. This led to several issues:

1. There weren’t enough high-quality projects in the primary market to absorb the capital.

2. This excess capital had to be deployed, inflating project valuations.

3. These inflated valuations complicated value discovery in the secondary market.

Now, we’re in a correction phase. Funding in the primary market has significantly decreased, while secondary market liquidity has grown. Especially from Q4 onward, we’ve seen more opportunities for broader market participation.

Colin:

Which projects do you think have performed best during this period?

GM:

I believe the standout projects for 2024 include Ethena and Hyperliquid. These projects share two key characteristics: first, they create significant value for investors, ecosystems, and developers; second, they effectively release that value into the market. For instance, Hyperliquid has opened market trading mechanisms to broader participation. This process of value creation and release is one of the most exciting and impactful aspects of the crypto market and, in my opinion, represents a critical trend for the future.

Additionally, projects like Ethena exemplify this by opening fundamental trading mechanisms, such as basis trading, to users. Similarly, Hyperliquid democratizes market-making tools, allowing more participants to engage. This ability to release and distribute value is at the heart of what makes the crypto space so innovative and compelling, and I see this trend shaping the industry over the next year and beyond.

Colin:

Has your team considered models like Hyperliquid’s? It’s unique — no VC backing, no reliance on centralized exchanges, and full self-sufficiency. Could this become a model for other projects to emulate?

GM:

I personally admire Hyperliquid’s approach. In crypto, the most valuable accomplishments are, first, creating a worthwhile product and, second, distributing that value through a community-centric approach. Achieving value creation doesn’t necessarily require VC funding.

Even in traditional industries, there are exceptions, like Jeff Yan, the founder of Hyperliquid, or the Deep Seek team in AI. These individuals and teams often have the resources, funding, and know-how to independently develop their products without external financing. In extreme cases, like Elon Musk’s projects, external funding is often unnecessary. When the product is inherently valuable, it’s a net positive for the industry.

That said, most founders don’t have the initial capital reserves that Hyperliquid enjoys. This is why VC funding and community-based financing models will continue to play a vital role for the majority of startups.

Colin:

You mentioned AI earlier. From your observations, does the intersection of AI and crypto offer genuine value, or is it mostly hype?

GM:

The intersection of AI and crypto has certainly garnered significant market attention and attracted many developers to explore its potential. While we’ve seen some early experiments, most business models are still focused on token issuance. Beyond that, sustainable models haven’t yet emerged. Many projects use tokens to gain traction and leverage AI to boost appeal, but the long-term viability of this approach remains limited.

That said, I have faith in developers’ capacity for innovation. Over the past year, discussions about AI in crypto have accounted for over 40% of the space’s focus, making it one of the most talked-about areas. With increasing resources and attention, I believe we’ll see more interesting and innovative models in the future.

Colin:

While there’s optimism about innovation, it’s also possible that this trend could be short-lived.

GM:

That’s certainly a possibility.

Colin:

As with many past trends, high enthusiasm doesn’t always translate into longevity — it ultimately depends on the core value of the model itself. Let’s wrap up here. Thank you for sharing your insights.

Challenges in the Telegram Ecosystem and TON Foundation’s Future Plans

Colin:

This year, the TON ecosystem saw a significant surge in popularity. Binance launched four or five TON-based mini-games consecutively, generating tremendous buzz. However, the excitement seemed to fade quickly, and even second-tier exchanges stopped listing TON mini-games. What’s your take on this phenomenon? Why did it experience such a sudden rise and decline?

John:

Thank you for the question, Colin. First, let me correct a slight misconception. While it may seem like second-tier exchanges have stopped listing TON-related projects, this isn’t entirely true. Up until late December, around seven or eight TON projects were listed on what I’d consider second-tier exchanges — by which I mean exchanges ranked within the global top ten. However, Binance did pause after launching several mini-games.

As for the decline in popularity, the reasons are quite clear. The mini-games initially launched on Binance were extremely simple, and most can hardly be called “games.” Apart from Catizen, the others were essentially clicker-style mini-programs. Their primary purpose was to help exchanges attract users. After launching several similar projects in quick succession, Binance likely paused due to user fatigue and strategic adjustments.

Another factor is that many Telegram mini-programs didn’t integrate with the TON blockchain but instead used other chains like Solana, Aptos, and Sui. These blockchains saw substantial transaction volumes driven by Telegram’s mini-programs. Next year, we plan to address this by enforcing certain restrictions — for example, requiring all mini-programs to connect exclusively via TON Connect to TON wallets, much like how WeChat restricts links to Alipay.

2023 marked the first year that the TON ecosystem gained mainstream visibility. We’ve had highs and lows, but the current slowdown isn’t necessarily a bad thing. It has revealed key issues. During this early stage of ecosystem development, some degree of macro-level intervention is necessary, akin to the capital controls China implemented during its early reforms. While TON has a large user base, its per capita capital is relatively low, making it a “poor” chain (in quotes). Moving forward, we aim to enhance capital inflows and lay a stronger foundation for the ecosystem.

Colin:

You mentioned issues TON faces in the Memecoin phase. Could you elaborate?

John:

In the second half of the year, Memecoins flourished on Solana, while TON’s performance in this area lagged. The main reasons include TON’s relatively high gas fees, the complexity of its programming language, and a smaller pool of developers. These factors make TON less suited for the initial stages of Memecoin development.

To address this, we plan to improve Memecoin-related infrastructure by reducing gas fees, optimizing development tools, and introducing better launchpad tools. Memecoin success often relies heavily on social interaction, and TON has a natural advantage in this regard through Telegram. This gives us confidence in TON’s future potential.

Colin:

So, next year, you plan to enforce restrictions on Telegram mini-programs?

John:

Yes. We will require all Telegram mini-programs to connect exclusively to TON wallets via TON Connect. This decision has already been finalized internally but hasn’t been formally announced yet. Our founder will share more details in a forthcoming blog post.

Colin:

From my perspective, Telegram is unique among Web2 giants in actively supporting Web3 initiatives. This is TON’s core advantage. Compared to platforms like Facebook or WeChat, Telegram’s focus on Web3 is unparalleled. That said, TON’s trajectory — like the mini-game surge and its quick cooldown — has been quite volatile. Was this surprising to you?

John:

It was. From April to June, TON experienced a period of intense popularity, and our strategy at the time was highly effective. However, the rapid rise also exposed certain issues. During subsequent adjustments, we realized the need for longer-term planning rather than relying solely on short-lived trends. This has prompted us to focus more on infrastructure improvements to lay the groundwork for sustainable growth in the future.

Colin:

Was no one surprised by your sudden surge in popularity?

John:

In a way, the surge in April was the culmination of 12 months of effort. We laid a solid foundation across various aspects, which led to the breakout in April. Let me give a few examples:

First, the launch of USDT was a pivotal moment. At the end of April, our founder announced it on stage in Dubai. Before this, the TON ecosystem lacked a stablecoin, which made it almost impossible to develop DeFi. The introduction of USDT filled this gap, and Tether has been very pleased with TON’s performance. TON has become the fastest-growing blockchain in Tether’s history, with USDT liquidity exceeding $1 billion. This number is expected to grow significantly next year as the potential of social payments is far from fully tapped.

Another key event was the launch of the mini-game project Catizen. I met the team in March 2023 and invited them to join the TON ecosystem. Before launching Catizen, they tested several mini-games and chose the one with the highest retention rate for development, releasing it at the end of March. This became a driving force behind TON’s mini-game boom.

The Hong Kong conference in April was also a highlight. We secured the main stage on the third day to showcase the TON ecosystem and its projects. Next April, we plan to take the main stage again at Hong Kong’s Web3 Festival, with even more activities. TON projects interested in sponsorship can reach out to us directly.

Lastly, the high-profile appearances of the TON founder in April made a big impact. He attended the Token 2049 event in Dubai and gave interviews to The Financial Times and other media outlets. These were his first major media engagements in seven or eight years, and they significantly boosted TON’s visibility.

Colin:

That was certainly a moment of glory. What are the next steps for TON in the DeFi space?

John:

DeFi is a key area where we need to make breakthroughs. The primary challenge is the complexity of our current programming language. We’re developing a new language called TOLK, similar to JavaScript, which we announced at the Dubai conference in November. TOLK will significantly reduce development difficulty and attract more developers.

Additionally, we’re expanding our focus on BTCFi. In February, we’ll host a BTCFi hackathon with ecosystem partners to advance the development of cross-chain bridges from Bitcoin to TON. The bridge’s testnet is already live, and the mainnet version is expected to launch in April. This will attract Bitcoin holders to the TON ecosystem, increasing DeFi TVL and liquidity. We also plan to combine mini-games and mini-programs with DeFi protocols to explore innovative use cases, such as products resembling money market funds.

Colin:

You mentioned plans to promote Memecoin development in the TON ecosystem. What strategies are in place?

John:

Yes, we’re organizing an official Memecoin competition called “Meme LANDING,” offering incentives for both unlaunched teams and existing projects. We also recognize the need to improve infrastructure for Memecoins in TON, such as reducing gas fees and enhancing development tools. These adjustments aim to make the ecosystem more supportive of Memecoin issuance and growth.

Colin:

TON’s potential in the mini-program space is significant. What are your plans in this area?

John:

Mini-programs are a strategic focus for TON. We’ve already seen AI projects commercializing through Telegram mini-programs. For instance, an AI character generator project has become profitable and is exploring how to integrate tokenomics with AI-driven gameplay. We aim to attract more such applications.

Moreover, we expect some major Chinese internet companies to launch mini-programs and public channels tailored for the TON ecosystem next year. This will expand TON’s real-world applications, extending from mini-games to e-commerce, short videos, and utility-based apps. We’re confident about TON’s future and are clear on where improvements and expansions are needed.

Colin:

The programming language challenge you mentioned is indeed critical. Lowering the development barrier will significantly boost TON’s ecosystem. Looking forward to your progress next year!

OKX Ventures’ Investment Philosophy

Colin:

Can you briefly share any particular sectors or intriguing projects that OKX Ventures focused on this year?

Kiwi:

Of course, and thank you for the question. We’ve collaborated closely with Dragonfly, Solana, and TON and co-invested in numerous projects. The past year has been remarkable, filled with both challenges and opportunities. I recently came across an end-of-year report that listed OKX Ventures as one of the most active players in the industry, highlighting that we invested in 50 projects. The actual number is even higher, reflecting our proactive support for industry growth. At OKX Ventures, our focus isn’t just on financial returns — we aim to back innovative and practical products that can contribute meaningfully to the space.

Colin:

So OKX Ventures isn’t solely focused on financial returns but also aligns with the group’s broader strategy, correct?

Kiwi:

Exactly. There are two perspectives here. First, we obviously want our investments to generate returns, whether financial or in the form of collaboration opportunities and traffic for the OKX exchange to drive overall growth. Second, as a longstanding player in the industry, OKX often supports early-stage projects even before narratives mature or gain significant traction. For example, at the beginning of last year, we started investing in the Bitcoin ecosystem when the adoption rate for Bitcoin Taproot clients was still very low, around 1% to 3%. Even though the narrative wasn’t yet fully formed, we chose to support these early-stage projects — a strategy we’ve consistently upheld.

Colin:

OKX has indeed done well in this regard, such as offering open APIs as a way to give back to the industry. What criteria do you use when selecting startups to support?

Kiwi:

Honestly, investing is a craft. While AI has made significant strides in investment analysis and forecasting, the essence of investing still lies in making one-on-one judgments about projects. It’s not a formulaic process; you can’t simply rely on a few scoring criteria to make decisions.

Of course, we look at whether a product has innovative ideas, whether the technology is unique, whether operational data is compelling, and whether the economic model is sound. These are all important considerations. But in my opinion, the most critical factor is the founder and their team — whether they have genuine intent and determination to succeed. The human element is indispensable in investment decisions.

Colin:

Looking ahead to next year, which sectors will you prioritize?

Kiwi:

Great question. GM’s earlier remarks left a strong impression on me. I believe AI is currently one of the most significant narratives and is beginning to reshape the direction of various sectors, including DeFi and gaming. AI’s influence is growing across the board, but the pace of investment in this space is relatively slow. Very few investment firms are keeping up with the AI trend, and I see this as a sign that VCs are lagging behind market narratives and developments in this cycle.

Going forward, we aim to stay more closely aligned with the market, focusing on emerging technologies and trends. OKX Ventures recently published an annual investment review, summarizing the 60 projects we invested in this year and predicting 14 future trends. If anyone is interested, I’d recommend reading the article — it’s largely written by me and reflects my views.

Colin:

Thank you for sharing. OKX Ventures has indeed made a significant contribution with great content. We look forward to your continued success!

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