Author: Oasis Chinese

On July 26, 2022, at 19:30, the Oasis Network held a Twitter Space event themed "With Tencent's Huanhe Incident, How Do Internet Giants Navigate the Dilemma of Web3?"

On July 20, it was reported that Tencent was planning to shut down its "Huanhe" business this week. As a digital collectibles platform under the internet giant Tencent, this news was seen as a significant blow to market confidence in China and sparked widespread discussion in the community:

What are the differences between digital collectibles like "Huanhe" and NFTs? What inherent advantages and disadvantages do Web2 internet giants have in building Web3? Is collaboration between internet giants and high-performance privacy computing public chains like Oasis one of the important breakthroughs for their future development?

In this event, we were very fortunate to invite RbC Founder & Ekta Partner Rocio, Foresight Ventures Researcher AlexPF, and YouTube diamond hand DiamondHands host Zolo as guest speakers, along with the host, Oasis China Ecosystem Product Manager William, to discuss related topics.

This article is a review of the highlights from this AMA event, with some content edited.

Self-Introduction Session

First, let's welcome our guests and ask them to introduce themselves.

Rocio:

I am Rocio, the Founder of RbC Office and currently a Partner at Ekta. Thank you very much for the invitation from Oasis, and I look forward to discussing the topic of Huanhe with friends from the community tonight.

AlexPF:

I am AlexPF, a Researcher at Foresight Ventures, mainly researching GameFi and NFTs. I am also a builder at the NFT Marketplace X2Y2. I'm glad to communicate and learn with everyone today.

Zolo:

I am Zolo, the host of YouTube diamond hand DiamondHands. We mainly share in-depth projects and focus more on GameFi and infrastructure projects. I personally transitioned from the internet giant to the Web3 world, and I'm here to share and discuss with everyone on this topic.

Q&A Sharing Session

Question 1:

What are the differences between digital collectibles like "Huanhe" and NFTs?

Rocio:

I would like to discuss my views from two angles:

First, from the fundamentals, it is well known that when people in the crypto space discuss NFTs, they are often talking about products on public chains like Ethereum, Solana, and Polygon. In contrast, digital collectibles like Huanhe are primarily built on their own designed consortium chains, which is a significant difference.

Secondly, I believe there is a liquidity issue. For example, when we purchase an NFT avatar, we can trade it on platforms like Opensea, and all the rights associated with that NFT belong to us. However, the so-called digital collectibles in China currently lack clarity in terms of property rights and ownership, and many can only be traded on a single platform. For instance, if Huanhe shuts down, the value of the related digital collectibles on that platform would cease to exist and cannot be traded on other platforms.

Additionally, NFTs and digital collectibles differ in cultural and community backgrounds, including the definition of community and the construction of the entire business model.

AlexPF:

I think, essentially, domestic digital collectibles and foreign NFTs are currently in a very similar stage. Whether it's domestic digital collectibles or foreign NFTs, they are primarily focused on speculation at this stage.

The difference lies in the fact that the birth of NFTs essentially represents the establishment of ownership, where everyone can own their unique NFT. Its ownership is rooted in decentralized blockchain technology. However, domestic digital collectibles are centralized products, and the collectibles you own can only circulate and trade on the platform where you purchased them. Different digital collectibles and platforms are disconnected. There is a fundamental difference between centralization and decentralization.

In my view, this recent withdrawal is a negative signal for the digital collectibles industry in the short term. However, in the long term, it may accelerate the integration of domestic and international markets.

Zolo:

I think the core difference between digital collectibles and NFTs is the distinction between consortium chains and public chains, which leads to various secondary issues such as consensus and liquidity.

Tencent's withdrawal is a short-term negative but a long-term positive, reminding internet giants to explore and apply frontier technologies in a smarter way.

Question 2:

What impact will Tencent's withdrawal from the "Huanhe" business have on China's digital collectibles and NFT market? What characteristics do internet giants like Tencent, Alibaba, and Baidu exhibit in their exploration and layout of the blockchain world?

Rocio:

The impact can be divided into two parts: the positive aspects and the negative aspects.

For the existing forms of some digital collectibles platforms, people will reflect on what went wrong—whether it was the policy or the profit model.

If a digital collectibles platform shuts down, then the related assets it issued may also disappear, which is undoubtedly beneficial for NFT platforms in the crypto space that offer better liquidity and security for users.

This incident will prompt more entrepreneurial teams to strive to refine their businesses. For example, the new concept of NFR that everyone has recently heard about. I believe many teams will explore this business model in the future.

I think a more beneficial impact is that it will foster the development of a new generation of digital collectibles platforms. Currently, digital collectibles platforms are still in a very early stage, and I view this event positively. I believe Tencent's actions are beneficial for the layout and exploration of the blockchain world.

AlexPF:

I think this withdrawal actually defines the digital collectibles business for the country: the state only defines digital collectibles as collectibles that cannot be resold or speculated in the secondary market, and it has never encouraged speculation.

I am not optimistic about the performance of digital collectibles in most areas of China, including Shenzhen and Shanghai. However, I do not rule out the possibility that the state may open special windows in places like Hainan and Beijing to create demonstration zones for the digital collectibles industry. The withdrawal of Huanhe is a very bad signal for most other internet giants' digital collectibles platforms in the short term.

I think internet giants should further consider how to transform in the future, not just limit themselves to the domestic market but also explore international business. Bilibili was the first among domestic internet giants to explore NFT business through its overseas subsidiary, and it is currently doing very well. Companies like Yingke, Baidu, and Momo are also issuing NFTs through their overseas subsidiaries.

Rather than being forced to go overseas under regulatory pressure, domestic giants should actively embrace internationalization; instead of getting caught up in the stagnant domestic market, they should embrace true Web3.

Zolo:

First of all, I think for those domestic companies planning to engage in NFTs long-term, there may not be much impact; it will only hit those with ill intentions. From this perspective, I think it's a good thing. Moreover, based on some recent information I received, it seems that the Huanhe team is only temporarily shutting down, but there will be some new plans next month.

These big companies actually have some small teams that are currently exploring more NFT market space overseas. Not just Tencent, NetEase, and Baidu, but in my view, they understand how to play with NFTs; they just used a method they deemed more suitable for the domestic market.

Additionally, some small and medium-sized internet companies are exploring NFT business, such as Bilibili, Yingke, and Xiaohongshu. Compared to the big companies, their explorations seem more aggressive and closer to some native crypto practices.

Question 3:

Shanghai has just officially announced support for leading enterprises to explore and develop the NFT industry, and shortly after, Tencent announced the withdrawal of its "Huanhe" business. Is there a causal relationship between the two?

Rocio:

I don't think there is a completely necessary connection between the two. The policy is not set by me, and the withdrawal of the Huanhe business is not my decision. As a non-core participant, I don't feel I have the right to evaluate this matter. However, from an open discussion perspective, I tend to believe that Shanghai's support for the development of leading NFT enterprises is aimed at better promoting the economic development of Shanghai.

Similarly, considering Tencent's closure of Huanhe, it may be that Tencent has sensed some policy signals. We speculate this because Tencent has always been a company highly sensitive to policies. However, I personally lean towards analyzing this matter from the perspective of the pandemic and the economy, especially since Tencent is a Shenzhen-based company, I don't think the policies released by Shanghai will have a significant impact on it.

At the same time, I believe there is a certain connection between the two. Perhaps Tencent's senior management made a comprehensive decision regarding its core business lines after considering Shanghai's policies.

Alex:

I agree with Rocio's earlier sharing, and I also believe that there is no necessary connection between the two. This is somewhat similar to our country advocating the vigorous development of blockchain technology since 2016 and 2017, but has never encouraged speculation in cryptocurrencies or NFTs.

I think our country is currently actively exploring the further implementation of blockchain technology across various industries, allowing existing industries to upgrade towards a more intelligent direction. The future world that combines blockchain, NFTs, privacy computing, the Internet of Things, 5G, and other technologies is approaching us. In the future, we will be able to use a smartphone or other devices embedded with NFT technology to achieve better anti-counterfeiting and rights confirmation.

Zolo:

I also agree with the viewpoints shared by Rocio and Alex. From my observation, not only in Shanghai, but across the country, various policies related to NFTs and the metaverse are being introduced, including the establishment of related funds or industry support plans.

Our country holds an encouraging attitude towards blockchain industries that can integrate with real-world scenarios and focus on long-term benefits.

Question 4:

The crypto market is not short of entrepreneurs from top Web2 internet giants. In the early days, we also regarded this as one of the criteria for judging the quality of projects.

What do you think are the inherent advantages and disadvantages of these Web2 darlings in building Web3? How have they performed in the Web3 entrepreneurial landscape?

Rocio:

Although I am a native builder of Web3, due to founding RbC Office and currently being a partner at Ekta, I have encountered and closely collaborated with many individuals transitioning from Web2 to Web3. Using Ekta as a case study, let me provide a more detailed sharing.

There are three inherent advantages in building Web3:

• First, people from Web2, especially those with entrepreneurial backgrounds, have strong learning abilities. They do not have a transitional period for all new things in Web3; they can quickly adapt using their logic, abilities, and original methodologies.
• Second, they possess strong social resources, not only from Web2 but also from Web3. They can supplement other Web3 resources through open partnerships and recruitment.
• Third, compared to native Web3 builders, friends coming from Web2 tend to have a "benefit the world" entrepreneurial spirit. In seeking to strengthen their Web2 industries with Web3 technology, they consider practical applications more, rather than just designing financial scenarios to operate tokens. They will use low-risk products to balance some disadvantages of the Web3 world, such as asset risk, volatility, and cyclicality.

However, disadvantages do exist: Friends from Web2 may experience a lack of adaptability when entering the Web3 world due to differences in the industrial environment, such as a limited understanding of communities. They may have some cognitive biases when working in Web3.

Of course, in my investment process in many Web3 projects through RbC, I have also encountered some teams that performed relatively poorly during the transition. Overall, I am optimistic about Web2 darlings bringing their advantages to jointly build Web3 and expand the real-world use cases of blockchain.

Alex:

I also warmly welcome entrepreneurs and practitioners from Web2 to transition to Web3 and join our construction. However, in my experience, I have encountered some teams that seemed ill-intentioned, coming with the goal of profit-seeking, exhibiting rigid thinking, and doing things that harm our industry.

But whether in Web2 or Web3, if we remove the labels, I only care about whether the entrepreneurial team can get the job done.

Zolo:

I personally transitioned from the Web2 world to the new Web3 world. Based on my own experiences, I believe that the current wave of entrepreneurs entering Web3 from Web2, regardless of whether they reached the top level in Web2, still have significant advantages.

The blockchain industry has developed from zero to one, from Bitcoin to Ethereum, smart contracts, and now the continuous development of public chains and applications. We can see that blockchain technology is becoming more scenario-oriented. Those with Web2 work experience have a strong accumulation in scenario construction.

They can better understand how to serve users in building scenarios, and during the process, they can leverage their mature experiences in product design, operations, and growth to accelerate the improvement of user experience. Just like the recently discussed new public chains, their founding core teams have transitioned from the Web2 world and have performed extraordinarily in Web3.

Of course, as Alex shared, friends from Web2 may lack the spirit of native Web3 builders, but I believe this situation will improve with deeper experiences. I personally look forward to the future performance of this wave of individuals.

Question 5:

Last week, another internet giant, Didi, was fined 8.026 billion yuan for 16 violations, bringing the topic of privacy in the Web2 world back into the spotlight. Oasis is a high-performance Layer 1 blockchain network that combines privacy protection and scalability.

Do you think collaboration between internet giants and high-performance privacy computing public chains like Oasis is one of the important breakthroughs for their future development?

Alex:

I think the topic of privacy has always been quite hot in China, but until now, there hasn't been a good monetization path found. Because, as everyone knows, information leakage is very common in China. Therefore, I believe that blockchain technology has a significant application in the future, and this application is not about monetization but about meeting compliance requirements.

I have always been very interested in Oasis, a highly technical and academic team, but I also see a limitation in Oasis's collaboration with domestic internet giants: in the current environment, it is necessary to avoid tokens. However, in the future, I believe that as internet giants delve deeper into the blockchain industry, they will prioritize collaboration with high-performance public chains like Oasis that possess professional capabilities, as this can greatly help companies achieve complementary advantages and improve technical standards and user service capabilities.

From a broader perspective, the more Web2 and Web3 can combine, the further we can optimize the productivity of the entire world.

Zolo:

I think if big companies want to collaborate, there are a few points to consider:

First, whether the public chain itself is technically advanced, then whether it is safe and compliant, and also whether it can be implemented.

From these points of view, I personally think choosing Oasis is a great option. Because I had learned about Oasis before entering Web3, I know that many Web2 giants have chosen to collaborate with Oasis.

Rocio:

We all know that due to the impact of the pandemic and other macroeconomic factors, the domestic real economy has been in a downward state, and many internet companies are facing significant pressure. Many people in traditional industries are eager for new knowledge about Web3 and are keen to actively promote industrial transformation. As long as cooperation can lead to a win-win situation, I believe nothing is impossible.

The more economic crises occur, the more they will give rise to a new generation of innovative and next-generation industrial models. I am currently closely watching which companies can provide more valuable solutions for economic development during the economic downturn as time goes on.

Question 6:

Finally, let's talk about NFTs: Currently, various types of NFTs, including art, avatars, games, and privacy, are flourishing. What do you think will be the next innovative point and explosion point that leads the community trend in NFTs?

Rocio:

I personally believe that the next explosion point for NFTs needs to combine Web2's physical assets to bring a large amount of traffic to Web3, considering the practicality of assets or meeting more scientific investment needs. Using Ekta as an example, let me explain further.

Currently, while designing NFT products with the founding team of Ekta, we have discussed an interesting topic: buying a house. It is well known that many people buy houses not for living but to meet investment needs. Ekta is now addressing this market demand by designing fractional investment NFTs specifically for real estate, private jets, and private yachts.

By lowering the investment threshold, more community friends can participate more easily. For example, if community friends collectively buy a property in Bali, then if the property appreciates, the buyers' assets can also increase in value. The NFT serves as proof of purchase, allowing the buyers' rights to circulate more freely.

Alex:

I think the next explosion point for NFTs should focus on liquidity solutions, as this demand is genuinely significant but has not been well addressed. Many current solutions that introduce bonds to solve liquidity issues have problems, and I do not agree with the idea of automating NFT trading through AMM.

I believe further developing game-related NFTs is a direction worth exploring. By integrating NFTs with GameFi, we can achieve better game interaction and upgrades, making games more enjoyable.

Zolo:

Currently, NFTs like PFPs are experiencing a gradual decrease in liquidity, and I believe that what will make NFTs more liquid is game-related NFTs. By integrating NFTs into more game scenarios, we can incentivize players to purchase and exchange various NFTs to obtain skins and other items.

Additionally, I am also looking forward to the scenario mentioned by Rocio, where NFTs are connected with more real-world scenarios. Currently, NFTs need to be more integrated with real-world scenarios. We can envision a future where NFTs help us solve more real-world problems.
Thank you to the guests for their answers, leading us to further understand the development pattern and future trends of internet giants entering Web3. Thus, this Space session comes to an end. Thank you to the guests for their wonderful speeches, and thanks to everyone present for their active participation, as well as the strong support from the media partners of this event.

Looking forward to the next event, see you then.

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