The former head of Tencent's blockchain business leaves to start a new venture. Why choose to go all in on Web3 at this time?

Author: Su Zihua

Editor: Qiao Qian

Source: 36Kr

Where is the Web3 industry heading?

36Kr has learned that Cai Yige, the former head of Tencent's blockchain business, founded the Web3 wallet Punk Code after leaving Tencent at the beginning of this year.

In the past, Tencent was a leader among internet giants in the blockchain application layer. When Tencent's blockchain business began to enter the public eye, Cai Yige often appeared as the official "spokesperson" at important events.

Cai Yige is a true "veteran" of Tencent. After graduating from the Computer Science Department of Nanjing University, he joined Tencent and served as the director of QQ membership services, reading, and animation businesses. After a brief stint in fintech entrepreneurship in 2016, he joined Tencent's fintech business line in 2017 as the general manager of Tencent's blockchain business, exploring the commercial application of blockchain technology. "Tencent Fintech" is part of the Corporate Development Group (CDG) and serves as the backend for financial products like WeChat Pay and QQ Wallet, while also independently operating services such as WeChat Pay Hong Kong Wallet, cross-border payments, Licai Tong, and communication recharge.

Since 2017, he has led his team to incubate the blockchain supply chain finance platform "Weiqichain," the country's first blockchain electronic invoice system, and the well-known "Zhixin Chain" used in judicial evidence scenarios. "Zhixin Chain" was also a choice for many digital collectibles platforms. Additionally, he participated in the establishment of Tencent's Hong Kong virtual bank Fusion Bank in 2020, exploring blockchain finance and digital asset scenarios.

Currently, the enthusiasm for Web3 has declined. In this regard, Cai Yige feels that "technological development follows a spiral upward pattern; the key is to judge whether there are still long-term dividends and whether the ceiling is high enough. If the answer is affirmative, then we should take root."

On the contrary, he believes that this is the moment when the "timing, location, and harmony of people" for Web3 entrepreneurship has arrived. After leaving Tencent, he immediately threw himself into entrepreneurship without taking a break. "I don't want to waste time."

PunkCode co-founder Guan Zhiyuan is also a Tencent "veteran," having served as the head of market communications for Tencent Interactive Entertainment's esports division and a founding member of the Honor of Kings marketing team. He is also a serial entrepreneur, having previously founded the Baiji Esports APP, which received tens of millions of dollars in funding from well-known institutions such as Sequoia Capital, Qiming Venture Partners, and ZhenFund.

There has always been a debate in the industry regarding the technical routes and philosophies of "public chains" and "consortium chains." Each side holds its own views. From representatives of consortium chains to entrepreneurs transitioning to the "public chain" ecosystem, we chatted with Cai Yige about reflections on the past, understanding of the industry, and judgments about the future.

1. From Big Tech Executive to Web3 Entrepreneur, from Consortium Chain to Public Chain

36Kr: Why is the project named PUNK CODE?

Cai Yige: Punk represents the most original punk spirit of Web3, which fits the tone of this circle. The early crypto culture also had a geek organization called cypherpunk, so we chose this name.

36Kr: You initially worked in entertainment-related businesses when you joined Tencent, and then in 2017, you entered Tencent's fintech business line to oversee blockchain business. There is quite a gap between the two.

Cai Yige: Actually, there was a brief entrepreneurial experience in between. At that time, I was doing fintech, and this experience ignited my passion for fintech. So when I returned to Tencent, it was natural for me to enter the fintech business line and start incubating blockchain business.

36Kr: How was Zhixin Chain incubated at that time?

Cai Yige: My most critical role in the team was to realize the scenario-based implementation of blockchain technology and release its commercial value. Initially, we collaborated with Lianyi Rong (a Hong Kong Stock Exchange listed company and a fintech company invested by Tencent) to create the country's first blockchain-based supply chain finance platform "Weiqichain"; later, we worked with the Shenzhen Tax Bureau to develop the country's first blockchain electronic invoice.

After completing these two projects, we not only trained the team but also established the team's reputation in the industry. At that time, we were thinking about where the next wave of blockchain commercialization opportunities lay and how to leverage Tencent's inherent resources to break through.

Thus, combining Tencent's internal advantageous scenarios and resources, and based on insights into the demand for evidence preservation and copyright protection in blockchain, we incubated Zhixin Chain.

36Kr: What is the difference between the hot blockchain concept in 2017 and the current Web3 concept?

Cai Yige: Big tech companies' discussions about blockchain were more about technical considerations, thinking about how blockchain technology could be integrated with different scenarios, and rarely involved the direction of "digital assets."

Today, when we talk about Web3, its two essential attributes are built on a decentralized public chain network: one is "rights confirmation" (digital assets), and the other is "incentives" (based on tokens).

Achieving trust consensus through decentralized blockchain technology and realizing digital asset rights confirmation is, I believe, a significant breakthrough for human society.

Correspondingly, a new incentive mechanism has emerged. The more than ten years of secure operation of Bitcoin relies on an effective incentive mechanism for "miner" nodes, which is also a very important characteristic. I believe Web3 is an infrastructure that can bring innovation and breakthroughs to social production relationships; its impact has just begun, and we are still in the early stages, somewhat like the period before the email protocol emerged in the internet era.

36Kr: Ethereum is completely "decentralized," which is very different from the relatively "centralized" consortium chains promoted by big tech companies. In 2019, Ethereum founder Vitalik visited Tencent, and you seemed to be impressed by him.

Cai Yige: When I first met him, I thought Vitalik was very ordinary, with a typical tech nerd vibe—thin, carrying a regular cloth bag, and seemed like a person with not much energy. But when he shared with us about Ethereum and some of the goals he wanted to achieve, I saw a spark in his eyes.

What impressed me deeply was when he described Ethereum's roadmap, he said Ethereum would become a world machine that provides trust. At that moment, I began to follow his thoughts and felt this might be a very interesting and exciting direction.

Left: Vitalik, Right: Cai Yige

36Kr: Ethereum was launched in 2015. Did you not consider trying the direction he advocated before meeting him in 2019?

Cai Yige: When I first encountered blockchain in 2017, the ICO wave of cryptocurrencies was chaotic, and many issues arose. My previous team did not touch that; my original intention was to think about how to use blockchain technology to create valuable applications in specific scenarios.

When I talked with Vitalik in 2019, he mentioned that the previous successes of blockchain were built on decentralization, and perhaps a decentralized approach could be an effective weapon to enhance the success rate of entrepreneurship. Later, my understanding of this matter deepened.

36Kr: After 2019, did you try to implement this thinking in your daily business?

Cai Yige: Before 2019, the supply chain finance, electronic invoices, and even Zhixin Chain we developed were all around financial scenarios and assets. The later development of digital collectibles by Zhixin Chain was also a continuation of this thinking. At that time, I felt that focusing on financial scenarios and asset scenarios was where blockchain was more adept.

Later, starting in 2020, I also had the opportunity to participate in the establishment of Fusion Bank in Hong Kong and explore its new blockchain business.

At Fusion Bank, I led the blockchain team to do some innovative work around asset scenarios, but due to strict requirements in Hong Kong, the launch of new businesses took a long time.

36Kr: Web3 practitioners hold different views on consortium chains; everyone seems to prefer public chains. Why do you think that is?

Cai Yige: I think we need to return to the essence of the matter.

Blockchain fundamentally provides trust through technology, and this technological trust is based on "rights confirmation" and "incentives."

Consortium chains provide trust through a combination of technology and institutional participation, while public chains provide trust through absolute decentralized technology. I believe these are different route choices, each with its suitable scenarios.

When practitioners are working on consortium chain scenarios, they often face a soul-searching question: why use blockchain for this? Can it be done without it?

For example, even if China Merchants Bank does not use blockchain, people will still use their services. Essentially, it is the entity of China Merchants Bank that provides the trust endorsement, not the technology. However, many shining and exciting decentralized applications rely entirely on technology to provide trust, rather than institutions.

Therefore, practicing "rights confirmation" and "incentives" based on consortium chains faces the challenge of how to choose the most suitable scenarios to match this route (i.e., technology + institutions jointly providing trust). This indeed requires consortium chain practitioners to continuously think and practice. On the other hand, for public chain practitioners, how to avoid some industry chaos is also worth considering.

2. "The timing, location, and harmony of people for Web3 entrepreneurship have appeared"

36Kr: Why did you choose to go all in on Web3 entrepreneurship at this time?

Cai Yige: My co-founder Guan Zhiyuan and I have been pondering Web3 entrepreneurship opportunities for almost a year. Throughout this year, we have maintained regular communication, waiting for a chance to appear. Since the end of last year, Hong Kong's Web3 industrial policies have been gradually introduced, which has made us feel that the timing and location have emerged.

Additionally, from the perspective of the industry's development cycle, the improvement of blockchain infrastructure like Ethereum 2.0 and Layer 2, as well as the advancement of the abstract wallet protocol ERC4337, will significantly lower the entry barriers for new users and provide necessary conditions for the emergence of more application scenarios.

Finally, our partners are a combination of core business leaders from big tech companies and seasoned entrepreneurs, which is a rare foundation. With the timing, location, and harmony of people all present, we should be determined to proceed.

36Kr: You joined Tencent right after graduation and left in 2023, which is quite a dedicated career path.

Cai Yige: I have always been grateful to Tencent. After graduating from university, I joined Tencent, which has given me a lot and allowed an ordinary person from a modest background to establish a foothold and build a family in a city like Shenzhen.

The most precious ten years of my life were spent growing alongside Tencent, which accompanied me through very critical periods of my life.

However, when you realize it's time to enter a new stage, even if it's hard to part with, you must make a choice. While you still have ideas and drive, you should take a leap; otherwise, you might regret not doing it later.

36Kr: Recently, the enthusiasm for Web3 has decreased significantly, and discussions about Web3 have become less frequent.

Cai Yige: The so-called decline in Web3 enthusiasm has happened several times. During bear markets, everyone tends to be quiet or have negative emotions, but when bull markets arrive and Bitcoin surges, people suddenly feel like something significant is happening again.

As I said, most people tend to overestimate the short-term impact of a disruptive technology while underestimating its long-term effects, lacking patience.

AI is not a new technology; it has gone through several cycles of highs and lows. This year, with the emergence of ChatGPT, it has become a topic that everyone must discuss.

Therefore, technological development inevitably follows a spiral upward pattern. For entrepreneurs, the most critical point is to base their actions on the deepest insights and engage in long-term endeavors to earn their dividends. The core is to judge whether there are still long-term dividends and whether the ceiling is high enough. If the answer is affirmative, then take root in the early stages; the opportunity will be greater. I believe this is the only thing entrepreneurs should focus on and think clearly about, rather than blindly following trends.

36Kr: After you left Tencent at the beginning of this year, you immediately jumped into entrepreneurship. Why didn't you take a break first?

Cai Yige: I believe entrepreneurship has a time window. Now is a very good time window for Web3 entrepreneurship, and I don't want to waste it. This is the bear market cycle of the Web3 industry, which is the best stage to do projects and refine products.

We started building the team after the New Year, and in April, we attended the Web3 conference in Hong Kong. Every step has been just right. We took the opportunity to bring our ideas to Hong Kong and engage with the industry. Without the previous preparations, we wouldn't have been able to have such exchanges.

36Kr: How long do you think this time window will last?

Cai Yige: It's hard to predict. However, from discussions with practitioners who have experienced several bull and bear cycles in this industry, everyone generally predicts that this cycle may last for another year to two years.

36Kr: The Hong Kong Web3 conference attracted over 10,000 practitioners, and you had in-depth discussions with many people. Did you gain any insights?

Cai Yige: While browsing the exhibition, I noticed that ZA Bank (Zhong An Bank) also had a booth, which is a positive signal indicating that banks have begun to engage in the Web3 field. The Chief Executive of Hong Kong has also endorsed Web3, showing that they are committed to this initiative. I am looking forward to what kind of cryptocurrency policies and regulations the Hong Kong government will introduce in June.

Compared to Singapore, Hong Kong has a better geographical advantage. Some entrepreneurial teams can use Hong Kong as a base to radiate overseas, making the process smoother.

36Kr: What impact will the cryptocurrency-related policies to be launched in Hong Kong in June have on you? It seems there is still a distance from ordinary users.

Cai Yige: Actually, it's not far. It may lower the threshold for retail investors to buy and sell cryptocurrencies. We are more looking forward to Hong Kong providing a compliant industrial environment policy, as it is crucial for entrepreneurs to have confidence in Hong Kong.

3. Seizing the Traffic Entry of Web3

36Kr: Web3 is still a relatively small circle with a high threshold. How do you think this industry should be popularized in the future?

Cai Yige: There is a recognition of disruptive technology: if it cannot cover or influence more people, it cannot be considered disruptive.

Web3 is still in its early stages, and many phenomena in the industry are quite laughable. If Web3 remains confined to a small group doing transactions, trading coins, and speculation, it cannot be considered disruptive.

I believe it will become a disruptive technology in the future, and I hope to find scenarios and applications that can impact more people.

36Kr: The methodology for product development in the internet industry is already quite mature. Why is the user experience of Web3 products still poor?

Cai Yige: The development of this industry has not yet reached the stage of competing on user experience.

Its infrastructure is still at a very early stage, with a high usage threshold. This limits what can be done. It also leads to the current industry situation being primarily focused on financial scenarios. The purpose of doing finance is to make money, and in such scenarios, users can tolerate high fees and poor product experiences.

For example, when you trade stocks, would you abandon a brokerage because its stock trading software is difficult to use? No, you would only care about its fees. If another brokerage offers lower fees, you would switch to it. As for how difficult its software is to use, you would endure it. However, breaking out of this circle is quite challenging.

However, blockchain technology is advancing and will gradually reach a critical point.

36Kr: You chose the wallet track for entrepreneurship. How do wallet applications in the Web3 field differ from WeChat Pay and Alipay?

Cai Yige: The wallet in Web3 is a user entry point, a product that users use frequently to help manage and custody digital assets. In contrast, WeChat Pay and Alipay are payment integrations based on the banking system.

36Kr: The apps we usually use have a "My" interface at the bottom. Is the Web3 wallet more like making "My" a standalone app?

Cai Yige: In internet products, the data belongs to the platform. Every app has a "My" section, but it is not actually "mine"; it is "the platform's." Therefore, it is challenging to make "the platform's" a standalone product. However, in Web3, this becomes very natural because, in the Web3 scenario, data and digital assets belong to the user and can be taken away. You can bring your digital assets into different scenarios.

This means you can connect your data and digital assets to a platform, interact on that platform, and then take the data away.

This reflects the essence of Web3: you can truly own your data and digital assets.

36Kr: Why did you choose the wallet track?

Cai Yige: We are actually thinking about seizing the next wave of Web3 traffic entry. We are not just making a wallet; we want to capture the new traffic that will emerge in Web3. Where will the traffic appear? We currently believe that users entering Web3 will start by registering a wallet, so we decided to start with wallets; this is our thought process.

Perhaps as we progress, we will find that the traffic entry may not only be wallets but also trading platforms or game distributions, and we will pursue those as well.

Therefore, our underlying logic is not just to make a wallet for the sake of making a wallet, but to discover opportunities for breaking out of the circle and seizing the traffic. Different stages may require different judgments.

36Kr: The wallet track is currently very competitive. How will you differentiate your positioning?

Cai Yige: Currently, the usage threshold for wallets is relatively high, attracting mainly trading users.

We believe that as the infrastructure improves, Web3 will see some more interesting applications that break out of the circle, such as crypto games with weaker financial attributes and better playability.

In this case, new users from outside the circle will come in, and the first thing they will encounter is the wallet.

Thus, we will serve potential breakout projects well and create a wallet entry with a good experience. We aim to develop a consumer-grade wallet that is highly playable and oriented towards entertainment.

This is also where our team's strengths lie. My partner has experience in game platform development, and before I entered blockchain, I worked on QQ membership at Tencent, where membership was priced at 10 yuan per month. When I left the membership team, the highest annual revenue was over 6 billion yuan. The underlying system was a well-developed membership level system and rights.

Our team has deep experience and know-how in gamified platform design and user operations, which will help us stand out in competition.

36Kr: Do you have any criteria for selecting team members during your expansion?

Cai Yige: First of all, you need to be willing to believe in this matter, believe in the underlying logic of Web3, and believe it will impact the future. Because this is a very new industry, patience is required. Only then comes personal experience and skills.

36Kr: Why do you prioritize belief?

Cai Yige: This industry has strong bull and bear cycles. If you don't believe in it, it's hard to navigate through the cycles. During bear markets, when everyone is reluctant to speak, do you still believe? This is the most challenging time for people. I think the development of this industry is not easy; there are challenges. Therefore, those who can truly accompany us for the long haul must be willing to believe in this matter.

36Kr: Practitioners in this industry always emphasize being crypto native, as if those who come from such backgrounds have an advantage. Do you think this is important?

Cai Yige: We should return to the "first principles" and think about the essence of the problem. What is crypto native? I summarize it in two points: rights confirmation and incentives; nothing else.

For example, what is the essence of issuing tokens? Essentially, it is a means of incentive. Don't underestimate the topic of incentives; even today, discussing company incentives and organizational incentives in top business schools is a very important subject. Web3 has innovative approaches to community incentives.

Whether a project is crypto native must return to its essence.

36Kr: What do you think about issuing tokens? Many Web3 companies issue tokens for financing but then show little movement in technology and product development.

Cai Yige: I think it should be looked at case by case. Issuing tokens purely for monetization will lead to a lack of long-term growth motivation for the team. If it is mainly used for community incentives, then it is still a good choice. There is an essential difference between the two. It's like a knife; whether you use it to harm others or to cook is the same principle.

Conversely, the "issuing tokens" weapon is too advanced; it tests human nature. Project parties may originally want to innovate technologically, but it is too easy to exit and gain returns. After getting rich quickly, will you still be willing to work hard? This tests human nature, which often cannot withstand scrutiny.

Issuing tokens is a means; it is not the goal. For example, the MetaMask wallet has not issued tokens, but that does not prevent it from having the highest market share.

36Kr: How much funding do you think is needed to make the wallet successful?

Cai Yige: It's hard to say right now. Your positioning will determine your strategy, and your strategy will determine how you use money.

Currently, many wallet applications in the industry mainly target the asset trading field, serving trading users, and are essentially competing for existing market share, spending a lot of money on subsidies to attract users. This is resource-intensive and consumes cash, which is not suitable for entrepreneurial teams.

Our positioning is to create a scenario-based wallet for entertainment and consumption. Therefore, insights into the needs of the corresponding scenarios are crucial.

Secondly, our connection with crypto games is very important, whether on the B-side or C-side, or connections with NFT communities, etc. We are more willing to spend money on such ecological interactions.