Dialogue Standard Crypto Partner: This is the best bear market cycle in history, and the next bull market will be driven by new applications

整理 & 编译：深潮 TechFlow

The Block's latest episode features an interview with Alok Vasudev, co-founder of Standard Crypto. In this conversation, Alok discusses the changes and trends in the bear market, as well as the reasons behind market fluctuations. He believes that each crypto cycle will bring a new blockchain application to drive the bull market. They also talk about the potential of crypto gaming, the economic crisis, and the combination of AI, ZK, and blockchain.

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Here are the main points from this conversation, transcribed and organized by 深潮:

Host: Frank Chaparro, The Block

Speaker: Alok Vasudev, Co-founder of Standard Crypto

Original Title: "Crypto's 'Best Bear Market Of All-Time'"

Podcast: "The Block"

Episode: Link

Trends in Bull and Bear Markets and the Explosion of Application Layer

• Alok discussed some changes and trends in the bear market. He mentioned that during a bear market, the speed of transactions slows down, but the quality of transactions improves. He believes that the current market participants are more serious, no longer entering the crypto space just because it seems cool or to chase hype. Now, many founders are entering the crypto space for the second or third time, bringing richer experience and better understanding.

• Frank and Alok discussed the reasons behind market changes. Alok believes that BlackRock CEO Larry Fink changing his view on Bitcoin and cryptocurrencies could be a significant factor in the market shift. Alok mentioned that the crypto market may have been undervalued in November and December of last year, as cryptocurrencies and blockchain technology are on the right historical path, and the market should reflect the balanced prices of these assets based on the progress made.

• Regarding trends in the crypto market, Alok believes that each crypto cycle will have a new blockchain application to drive the bull market. For example, the bull market of 2013 was primarily driven by Bitcoin, the 2017 bull market was driven by tokens and ICOs, and the 2021 bull market was driven by DeFi protocols and NFTs. He thinks that the next cycle may be driven by new applications, as we are no longer limited by infrastructure as before.

• They discussed the biggest obstacles hindering the explosion of the application layer. Alok believes that for more consumer-grade applications to work, people first need to own wallets. He thinks that as more people start using wallets, the difficulty of using wallets should decrease, making it as simple as using a browser. This means that cryptocurrency wallets should become more user-friendly, accessible, and easy to operate, thereby encouraging more people to participate in cryptocurrency usage.

• Alok mentioned the concept of "small network effects," which refers to the idea that as the number of users of a new product or service increases, the value of that product or service also increases. Network effects are a common economic phenomenon that indicates the value of a product or service is proportional to its number of users.

• Alok's view is that there are now enough users to start forming this small network effect in new products. This means that as more users begin to use a new product or service (such as a cryptocurrency wallet or application), the value of that product or service will increase. This increased value may manifest as better user experiences, more features or services, higher security, etc.

• Alok believes that social networks need to start relatively niche and not introduce a large number of celebrities right away. Successful social networks are those that can cultivate their own celebrities rather than those that bring in celebrities and expect them to bring their own fans.

• Alok believes that the big opportunity for social networks lies in figuring out tomorrow's Status Game, which may include NFTs and other crypto features. He thinks that a cryptocurrency-centered social network is a cool place because it meets all the characteristics; it is still relatively niche, but he believes many cryptocurrency enthusiasts are on the right side of history.

The Potential of Crypto Gaming and the Economic Crisis

• Alok and Frank shifted to discussing gaming. Alok mentioned an interesting investment strategy of looking back at the previous market cycle to identify projects that resonated but may not have fully succeeded. He believes these projects could be great investment opportunities. Alok cited two examples, Cryptokitties and Axie Infinity. Both games have achieved some success but also have flaws. He believes these games showcase the immense potential of gaming in the cryptocurrency market.

• They discussed economic crises in gaming and how to manage these crises. Alok believes that economic crises in games may arise from falling token prices, market volatility, or other factors. He mentioned that to address these crises, game developers need to take measures to maintain the game's appeal. He thinks that financialization is an effective solution that can help attract players and provide them with additional incentives.

• Alok also mentioned that financialization in cryptocurrencies and gaming can be achieved through token rewards, token economies, DeFi protocols, etc. These financialization methods can help game developers attract players and provide them with additional incentives. He believes this is an effective way to keep games appealing even when token prices are under pressure.

• Alok believes that Axie Infinity is a significant milestone for many game developers, prompting them to delve deeper into the cryptocurrency space. He noted that the success of Axie Infinity shows that games can remain appealing even when token prices are under pressure. He believes this is because financialization in games can help attract players and provide them with additional incentives.

The Combination of AI, ZK, and Blockchain

• Alok introduced their investment philosophy, emphasizing that they focus more on finding potential entrepreneurs rather than pursuing specific investment theories. They believe that the key to successful investing is finding promising entrepreneurs rather than chasing specific investment theories.

• They discussed the intersection of artificial intelligence and the crypto space. Alok believes there is a deep connection between the two. He mentioned that both AI and the crypto industry are technology-driven fields that are rapidly evolving and have significant potential. He believes both fields are exploring new business models and application scenarios, which could have a profound impact on society and the economy.

• Both AI and the crypto space require vast amounts of data and computing power. The crypto space can provide a secure, transparent, and decentralized platform for data exchange and computation for AI. At the same time, AI can offer smarter and more efficient trading and contract execution for the crypto industry.

• Alok also mentioned that AI can help the crypto space better predict market dynamics and risks, while the crypto space can provide a safer and more efficient payment and trading platform for AI.

• With the development of blockchain and crypto technology, NPCs in games may have their own bank accounts and wealth. He believes this will provide more opportunities for innovation and interaction for game developers and players.

• For example, NPCs may engage in transactions, investments, or other financial activities with players. This scenario will make games more interesting and realistic. Players can interact with NPCs in more complex ways, experiencing a more authentic game world. At the same time, this will provide game developers with more business opportunities, such as advertising, promotions, or other commercial activities through NPCs.

• Alok Vasudev discussed the impact of technological development on the crypto market, particularly the advancements in zero-knowledge proof (ZK) technology. Alok mentioned that zero-knowledge proofs allow one party to prove to another that a statement is true without revealing any other information. This technology has many applications in the crypto space, such as protecting transaction privacy and verifying the correctness of smart contracts.

• Alok believes that ZK technology will enhance market trust. By using ZK technology, both parties in a transaction can verify the correctness of the transaction without disclosing any other information. This will help increase market transparency and trust. Additionally, ZK technology will help improve market efficiency. By using ZK technology, both parties can complete transactions more quickly and securely, which will help enhance market liquidity and transaction speed.

• Finally, ZK technology will help expand the application scope of the market. By using ZK technology, the crypto space can better meet users' privacy and security needs. This will help attract more users to the market and broaden the market's application scope.

The Impact of Market Cycles on Technology Development and DeFi

• Alok believes that market cycles play a crucial role in driving technology development. He explained that market cycles can inject funding into technology development. During bull markets, cryptocurrency prices rise, and market participants' assets appreciate accordingly. This means there is more funding available for technology development. These additional funds can help develop new technologies, optimize existing technologies, or expand the application scope of technologies.

• Alok pointed out that the progress in the crypto market has far exceeded past levels, with healthier market fundamentals. The current crypto market has more participants, more applications, more technological innovations, and greater compliance.

• Alok specifically mentioned DeFi protocols and believes they are the ideal targets for venture capital. Alok thinks DeFi protocols have several advantages:

• Low Capital Requirements: DeFi protocols typically do not require significant capital investment, as they are based on blockchain technology and do not need traditional centralized infrastructure. This makes them ideal targets for venture capital.

• Strong Defensive Nature: DeFi protocols usually have strong defensive characteristics because they are decentralized and less susceptible to attacks or manipulation. This makes them more stable and secure in the market.

• High Operational Leverage: DeFi protocols often have high operational leverage because they have almost no operational expenses, with users bearing transaction costs. This allows them to operate more efficiently and achieve higher returns.

• Alok also mentioned that the revenue of DeFi protocols differs from that of software companies. Software companies typically incur high operational expenses, while DeFi protocols have almost no operational expenses, with users bearing transaction costs. This allows DeFi protocols to operate more efficiently and achieve higher returns. Alok believes that DeFi protocols represent the best business model ever.

• Alok also expressed optimism about the revival of Bitcoin. He believes Bitcoin may be experiencing a renaissance. He noted that Bitcoin was once a vibrant ecosystem that attracted many developers and tech enthusiasts. However, over time, this vibrancy gradually faded. But he believes Bitcoin is recapturing that vibrancy, and many newcomers to the crypto market may not realize Bitcoin's potential.