Xiao Feng's Graduation Speech to Entrepreneurs: Crossing the Chasm, Returning to the Starting Point

Author: ThreeDao of Wanwu Island

Hello everyone, Yingmu told me that due to the market cycle and poor environment, everyone is starting to think: "Is it time to change careers?" She hopes to recharge everyone's "faith." I think that's certainly possible. I have believed in this industry since 2014, and I am already enchanted by it today.

Before we begin, I want to say how happy I am------ this is my second time at Dongyin Center. Last year, the Wanwu Creation Camp S3 was held here, where I shared with everyone. Returning to this familiar place and seeing familiar faces is particularly warm, especially welcoming our leaders from Changning District.

I just returned from Hong Kong yesterday, where I attended a four-day Blockchain Summit. This is the first time a group from the mainland has participated in the Hong Kong summit: the significance of this signal is extraordinary. The biggest difference this time is that the Shanghai Municipal Government organized two official delegations, nearly 50 people to go to Hong Kong. This is the first time a local government from the mainland has organized a group to attend such a crypto summit.

We have been holding blockchain summits in Shanghai for ten consecutive years, while this is the third year for Hong Kong. Why separate? Because discussing "public chains," "Crypto," and "Token Economy" is indeed very difficult to unfold in the mainland. We were afraid that speakers would be reluctant to come, so we placed the core content in Hong Kong. This year, through QR code scanning statistics, the four-day summit attracted over 8,000 independent attendees, with the total number of participants reaching tens of thousands.

The Application Explosion Period is Coming

Many people ask, is this a crisis for the industry? I don't see it that way. I believe that the **blockchain industry has transitioned from the infrastructure stage to the second growth curve------the application stage. At this year's summit, you can clearly feel that: ** discussions on protocols and infrastructure are decreasing, while RWA, PayFi, USDT payments, and other application-oriented topics have become the focus of the entire event. I believe this is not a crisis, but a turning point, a period of accumulation for the next explosion. This means that the era of "building frameworks" and "discussing protocols" has passed. The new opportunity lies in who can build truly problem-solving applications on this distributed ledger system.

On the last day of the summit, I had a conversation with Vitalik, the founder of Ethereum. There was no communication outline beforehand, but I wanted him to talk about decentralization, and he indeed said a key sentence: "The application layer cannot achieve complete decentralization; Layer 1 must insist on decentralization."

Why? The core of decentralization is "trustlessness" and "disintermediation", which means lowering costs and improving efficiency. If the cost of Web3 is higher than before and the efficiency is lower than Web2, then why should we redo it? So when we often say that "everything is worth reconstructing in Web3," the premise is that: trust costs are lowered, and system efficiency is higher, only then can business models be established.

Don't think of blockchain as mysticism; it has long entered the real world. Why? Because cross-border e-commerce is shifting from B2B and B2C to C2C. The customer is no longer a foreign trade company but an American consumer who orders a $50 T-shirt from your website and wants to receive it within a week. He pays, and you ship; that's how it works. The best payment method is to scan the USDT QR code ------ instant arrival, instant stocking, and air freight delivery within a week. This payment method does not require banks or clearing systems and solves the issues of trust and efficiency in a second.

In 2023, China sent out 18 billion international parcels throughout the year. Without a USDT-based blockchain settlement system, the biggest victim is China. So you will see, why does Hong Kong want to promote stablecoin legislation? Because it realizes that if it does not actively embrace the new payment system, Hong Kong will be eliminated from the competition for the global trade settlement center.

Many people are still fixated on "Can I create a protocol, issue a coin, and get rich?" I tell you, that era has passed. The public chain era is over, and I have always advised entrepreneurs who are still thinking about creating public chains that it's not that your technology is lacking, but that the wind has passed. The key moving forward is: can you truly use this system to create real "applications" that serve the needs of the real world? This is the original intention of my speech titled------ "Blockchain: Starting from the Origin." What is the original intention of blockchain? It is to make system trust computable, verifiable, and achievable at low cost.

I want to talk about the source of "faith." A Nobel Prize-winning economist, John Hicks, once said: "The Industrial Revolution had to wait for a financial revolution." The evolution of human society cannot be separated from the changes in three elements: material, energy, and information. Every industrial revolution is a synchronous revolution of these three. And the financial revolution is often the precursor.

The first industrial revolution: the steam engine, accompanied by the emergence of the banking lending system;

The second: electrification, accompanied by the capital market and the joint-stock company system;

The third: the internet revolution, with China inserting itself in the middle;

The fourth: AI + blockchain, which is currently being jointly led by China and the US.

What you see in blockchain is a new generation of financial systems supporting the fourth industrial revolution.

In an interview, I candidly advised the Ethereum Foundation: "Ethereum has fallen to this point because you have lost China." From 2014 to 2016, China was the most solid base for Ethereum developers and users. At that time, Vitalik would come to Shanghai every year to attend the blockchain conference, and he had never missed the first seven sessions. However, since the seven ministries of China issued relevant regulatory documents in 2017, the lawyers of the Ethereum Foundation, based on "compliance risks," established a rule: foundation members are not allowed to travel to China on business. Thus, Vitalik has been "absent" from China ever since, not because he didn't want to come, but because he "dared not come."

Until 2023, when we held the first conference in Hong Kong, he still did not attend. Last year, he finally nodded and expressed his willingness to participate; I invite him every year. I told him: it’s time to return to China. Wanxiang Blockchain Lab is also willing to accompany you to continue promoting workshops, hackathons, and various technical promotion activities in China. You lost China, which means losing a significant portion of global developer resources. Blockchain developers are mainly concentrated in two language systems: the English-speaking world and the Chinese-speaking world.

I asked him: how many developers does the Ethereum Foundation have in Europe? He thought for a moment and said, "There are a small number doing underlying technology in Berlin." But he also admitted that Ethereum's underlying technology has matured, leaving only optimization space, with no more opportunities for reconstruction. If you expect an application explosion, can you rely solely on the limited technical strength in Berlin? Can you rely solely on European developers? Of course not.

So I suggested that the Ethereum Foundation set up an office in Hong Kong, and half-jokingly said: "We have the 11th Blockchain Conference in Shanghai in October; if you get caught, I will accompany you to jail." This is, of course, a joke------ in fact, China's technical departments, government agencies, and developer communities respect Ethereum's technology. Your foundation should no longer stay away from China. The legal team you established in Europe does not understand China at all, yet you are making rules based on this, which will only lead you further astray. This is what I discussed privately with Vitalik.

Behind Every Industrial Revolution, There is Always a Financial Revolution

Now let's look at it from a broader perspective: the fourth industrial revolution is accompanied by a financial revolution that is happening.

The first industrial revolution: led by banks, credit and bonds were the main financing axes, with no capital markets.

The second industrial revolution: led by the US capital market, investment banks, Wall Street, Morgan Stanley, Goldman Sachs, etc., emerged to support the wave of electrification.

The third industrial revolution: the birth of venture capital (VC) in the 1960s, the rise of Silicon Valley. As a Nobel Prize winner once said: "Behind every industrial revolution, there is a financial revolution."

Today, in the fourth industrial revolution, if you deny tokens and deny crypto, you will miss the new financial paradigm and even miss the opportunity of the entire revolution.

In the past year, I have discussed the relationship between Web3 and AI with four top AI experts: Shen Xiangyang, Li Kaifu, Zhou Ming, and the dean of the School of Artificial Intelligence at Hong Kong Polytechnic University. They unanimously believe that Web3 and AI are two sides of the same coin, and they will ultimately come together. In the US, there are also two typical representatives:

1) Sam Altman: leading Worldcoin, with ten million users globally, issuing three coins every quarter, even if each is less than a dollar, it is still a huge expenditure. He represents the path of "AI + Crypto + Software."

2) Elon Musk: supports Dogecoin while promoting autonomous driving and humanoid robots, representing the direction of "AI + Hardware + Crypto."

These two directions are both "left hand AI, right hand Crypto." This is not accidental; it is a historical inevitability. Even President Trump has responded. He originally planned to establish an AI committee and a Crypto committee, but later, under staff suggestions, simply merged them into an "AI + Crypto Presidential Committee." I learned from one of his crypto advisors about the thinking behind this decision: AI and Crypto should not be treated separately but should work together in synergy.

The financial revolution in the digital age is based on distributed ledgers and encrypted capital. If you do not acknowledge this, it will be difficult to keep pace with the US in the digital age. Why? Because blockchain is a new accounting system, payment clearing system, and global ledger system. The digital world knows no borders; it transcends space, time, organizations, and national boundaries. It requires a new registration, accounting, and settlement system. Traditional finance cannot meet this demand.

Human society's accounting methods have only undergone three major changes:

1) Ancient single-entry bookkeeping

2) Double-entry bookkeeping after the Renaissance (still in use today)

3) The distributed ledger system created by Bitcoin in 2009

This third accounting revolution has taken us from bank accounts to the era of crypto accounts. Look at the small commodity merchants in Yiwu today; why are they willing to accept USDT payments? Because they do not need a bank account; they can complete payments with just a crypto account. In 2023, the total settlement amount of dollar stablecoins reached $16 trillion, surpassing the total of VISA and Mastercard combined. Banks are certainly nervous, and governments are paying attention. Therefore, today, CEOs and chairmen of major global banks are acknowledging: blockchain is a revolutionary system that represents a leap in efficiency.

I remember in 2012, I had a debate with famous bankers at a conference about "Can blockchain change finance?" They said: "The essence of finance will not change." I said yes------ the essence of finance has always been: wanting to borrow money and wanting to receive money quickly. This is an unchanging demand for three thousand years. Do you think banks are the ultimate model of finance? The banking system has only a hundred years of history, and central banks have only existed for 400 years. Early China had banks, silver shops, and even earlier, there were escort agencies delivering silver. They can all change; why can't banks?

Now you see, CeFi (centralized finance) is the traditional system, and DeFi (decentralized finance) is the new system. When I used to talk about DeFi, banks thought the risks were high. But I asked them, "From the perspective of lending behavior, is the risk higher for banks or for DeFi?" The bank's capital adequacy ratio is only 12%, equivalent to a leverage of 7 to 8 times. Relying on high leverage to maintain profits, once the model goes wrong, like in the 2008 subprime mortgage crisis, the entire system collapses instantly. In contrast, DeFi's risks are transparent, quantifiable, and traceable on-chain.

What is DeFi? DeFi (decentralized finance) does not lend by leveraging but achieves returns by improving the efficiency of capital turnover. For example, if you mortgage a Bitcoin worth $100,000 in a DeFi protocol, with a current collateralization rate of about 50%, you can borrow up to $50,000. In other words, DeFi is over-collateralized lending, not high leverage.

The highest efficiency in capital turnover in DeFi is represented by "flash loans," which are characterized by completing borrowing and repayment within a single block, taking only a few seconds for the entire process. Although flash loans are not suitable for all scenarios, they demonstrate the high turnover capability of DeFi. Overall, the annual capital turnover speed of DeFi is ten times that of traditional banks, and its returns come from the accumulation of high-frequency small profits rather than from leveraging. This is a more advanced financial system with strong vitality. The current "new financial infrastructure" has been more than halfway built and is at a critical stage for accelerating application landing.

Applications and Impacts of the New Financial Infrastructure

With the popularization of this infrastructure, payment applications like PayFi have emerged. In 2024, the total payment and settlement amount based on stablecoins will reach $16.16 trillion, completely bypassing the traditional banking system and SWIFT network. In this regard, China is one of the biggest beneficiaries. In our cross-border trade, an increasing number of payment settlements have shifted to this new system, helping products sell globally.

Financial infrastructure refers to a complete set of institutional arrangements, including laws, accounting standards, etc., aimed at maintaining financial stability and serving the public interest. Its technical aspects involve hardware and system security. "Financial market infrastructure" is a subset of this, mainly including the three major links of payment, clearing, and settlement.

Payment: For example, when swiping a bank card, the first step is to verify whether the account has a balance.

Clearing: If there is a balance, the pending payment amount is frozen.

Settlement: Completing the actual transfer of funds between different banks or accounts.

A security incident involving Ethereum in 2016 occurred because the smart contract did not properly handle the clearing process, leading to users repeatedly withdrawing assets, resulting in a loss of about $60 million. This incident highlighted the importance of the clearing mechanism. China's foreign exchange trading center, clearing houses, and settlement centers are representatives of traditional financial market infrastructure. They ensure the payment and settlement of different types of transactions.

Compared to traditional financial systems, the new financial infrastructure has undergone significant changes in technical architecture, participants, and settlement units. Its core is based on blockchain, using Bitcoin, ETH, and stablecoins as trading mediums, completely removing intermediary institutions, achieving trustlessness and efficient peer-to-peer transactions.

In the old system, remitting money from Shanghai to the US could take several days or even weeks; however, through blockchain stablecoins, it can arrive in seconds. For example, I recently remitted money from Hong Kong to Shanghai, and it took a month to confirm the failure, while using stablecoins could have completed it in ten seconds.

Such efficiency and cost differences make us rethink the direction of financial system reform, don't they? Although the decentralized blockchain system bypasses SWIFT, the US government still chooses to support the development of dollar stablecoins. Trump has explicitly requested Congress to pass legislation related to dollar stablecoins before August 2025. The bottom line for the US is: it can bypass SWIFT, but not the dollar. If this new system bypasses the dollar, the US will completely lose its global financial dominance.

Historically, to have the world accept the dollar, the US linked the dollar to gold through the Bretton Woods system after World War II, and other countries' currencies were then linked to the dollar, establishing the dollar's global currency status. As the system collapsed, the US promoted the formation of the Eurodollar market and the "petrodollar" system, unifying the settlement currency for commodities as the dollar, creating global application scenarios for the dollar. Now, the dollar is entering the third stage of evolution: tokenization. The US government is trying to ensure that "tokenized dollars" occupy a core position in future global financial infrastructure, which is far more significant for national interests than Bitcoin reserves.

Currently, the digital currency system is rapidly developing, including native cryptocurrencies (like Bitcoin), digital twin stablecoins (like USDT, USDC), etc., representing the evolution of currency forms from precious metals, paper money, and electronic currency to encrypted assets.

Cryptocurrencies can be divided into two categories: one is CBDC (central bank digital currency) promoted by national central banks, belonging to M0 (base currency); the other is market-driven stablecoins, belonging to M2 (broad money), which are currencies created by institutions based on central bank base currency through credit expansion. The bank deposits, wealth management products, and money market funds we use daily fall into the M2 category, which are bank liabilities rather than central bank assets. For example, in China, banks only guarantee deposits up to 500,000 yuan; in the US, the limit is 500,000 dollars. Any amount exceeding this will not be guaranteed if the bank goes bankrupt.

In the financial system, M0, M1, and M2 each perform different functions and are irreplaceable. Central bank digital currencies are unlikely to replace M2-level currencies and are not suitable for all consumption scenarios. The US is well aware of this, which is why it has clearly stated it will not issue CBDCs. Trump promised during his campaign that he would not allow the Federal Reserve to issue central bank digital currencies during his term. The Federal Reserve has also publicly stated that it does not consider issuing such currencies.

The reason is clear: central bank digital currencies could lead to comprehensive control of payment data by the state, harming user privacy. For example, if the dollar digital currency is used for payments in Hong Kong, Singapore, or Japan, the Federal Reserve may obtain transaction data, which is difficult to accept internationally. Unless enforced by coercive means, it is hard to implement. The US understands its limitations, which is why it turns to support market-issued, dollar-pegged stablecoins.

Tokenization of RWA (real-world assets) also falls under the M2 category, such as dollar money market fund tokens issued in Hong Kong. Its essence is credit creation based on sovereign currency, issued by banks and other financial institutions, still classified as bank liabilities.

The core of the new generation of payment and settlement systems is not only the innovation of currency forms but also the evolution of asset issuance models. From "golden dollars" to "petrodollars," and now to "tokenized dollars," each round of evolution has strengthened the global influence of the dollar.

It is worth mentioning that China once controlled 70% of the global Bitcoin mining share, which means Bitcoin was once a "Made in China" currency. However, due to regulatory reasons, China voluntarily gave up this strategic resource to the US. From an industry perspective, this may not be a bad thing, but from a national interest standpoint, it is a significant loss.

The development of AI also provides a clear demand for the new financial system. If in the future, hundreds of billions of devices globally can create GDP without human involvement, their payments and settlements will rely on programmable currencies. Traditional banking systems cannot support machine-to-machine automatic payments, while systems based on blockchain and smart contracts have this capability, and currently, there is no better solution. On this basis, a new asset issuance system is also being constructed. The new generation of industrial revolution calls for a matching financial revolution, namely a comprehensive upgrade of payment settlement systems and asset tokenization. The five main categories of token assets currently include:

Payment tokens: such as USDT, USDC, pegged to fiat currencies for daily payment settlements. In the future, stablecoins for Hong Kong dollars, yen, euros, etc., will also emerge.

Reserve tokens: such as Bitcoin, which is transitioning from a risk asset to a strategic reserve asset. Several states in the US have already legislated to include Bitcoin in state government asset reserves, evolving from household assets and corporate cash management to national strategic reserves.

The book "The Currency Pyramid" predicted that Bitcoin would become a reserve asset for central banks in the future. The reason is simple: for the digital-native generation under 30, Bitcoin's appeal has already surpassed that of gold. This book directly tells the current central bank governors and finance ministers in their seventies and eighties------ you will eventually exit the historical stage, while those who have grown up in the digital world will take your place, and they are more likely to include Bitcoin in national reserves. The trend is irreversible, and individual will cannot counter the tide of the times.

Surprisingly, the initiator of this trend is not the digital-native generation but an 80-year-old man------ Trump. This reality confirms the judgment that "the situation is stronger than individuals." It was originally thought that only the young would drive change, but it turned out to be an elder who took the lead.

Currently, the trend of Bitcoin as a reserve asset has begun to emerge. Recently, during market fluctuations, the vast majority of crypto assets have fallen sharply, but Bitcoin's decline has been relatively small. The reason is that most cryptocurrencies are still regarded as "risk assets," while Bitcoin is gradually transforming from a risk asset to a "credit asset."

The core function of credit assets is to hedge against the excessive issuance of fiat currency. For example, gold has long been viewed globally as a means of value storage, and its price has risen against the trend in recent years. US stocks and bonds have fallen, while gold and Bitcoin have remained strong, indicating that Bitcoin is gradually acquiring the characteristics of a credit asset. It is expected that within the next year, Bitcoin will complete its transition from a risk asset to a credit asset.

Currently, Bitcoin's market value is less than $2 trillion, while gold exceeds $20 trillion. If Bitcoin ultimately reaches the market value level of gold, whether in five years or ten years, it will be a huge opportunity for investors.

As for Ethereum (ETH), it still belongs to functional tokens. Its value depends on the actual applications within its ecosystem; only when applications explode on a large scale will ETH have significant upside potential. Unlike Bitcoin, which is expected to become "digital gold," ETH cannot become a credit asset, but as a functional asset, its prospects remain broad.

Regarding the growth path of functional assets, we can refer to the classic book "Crossing the Chasm" from Silicon Valley 30 years ago. The book points out that the user growth path for all high-tech products can be divided into five stages:

1. Technology enthusiast stage: Products are created by technology enthusiasts. For example, Satoshi Nakamoto and Vitalik created Bitcoin and Ethereum from scratch.

2. Early adopter stage: Early users do not pursue immediate practical applications but love new technology. For instance, in 2015, when Vitalik came to Shanghai, even though Ethereum's mainnet had not yet launched, Wanxiang Blockchain still invested $500,000 in it.

3. Pragmatist stage: Mainstream users begin to care about whether the technology can truly bring value and solve real problems. This is the critical "chasm" period for product survival, where 80% of projects fail.

4. Late majority stage: Users follow suit only after seeing others benefit, making up the majority of the user base. This stage has a lower threshold, but the premise is that they must cross the "pragmatist chasm."

5. Laggard stage: The "traditionalists" who always reject new technology. They prefer stability and nostalgic lifestyles, do not accept new things, and do not need to be forcibly converted.

Projects that can acquire users and monetize from the third and fourth stages have a foundation for sustainable development. Additionally, two types of assets are worth noting:

Security tokens: For example, RWA (real-world asset tokenization), which is essentially the digitization of securities investment tools and must comply with securities regulatory rules. Ignoring regulations will ultimately lead to legal risks.

Meme coins: Like the meme coin launched by Trump, targeting users who are speculators for entertainment purposes, similar to a Las Vegas casino. Although primarily for "fun," there are still real users and market demand, making it an independent asset category.

In summary, in the new generation of asset systems, tokens are mainly divided into five categories: reserve, functional, credit, security, and entertainment. Understanding which category your project belongs to can help more accurately judge its development path and regulatory requirements.

The Essence and Development Direction of the New Generation Financial Market System

The essence of finance is the cross-period mismatch of value across time and space. For example, a startup borrows from a bank due to expansion needs, and the bank lends based on its growth potential over the next two years; this is essentially an early realization of future value using current funds, which is a typical time value mismatch. Achieving this value transfer in a more efficient and lower-cost manner is the core mission of "good finance"; other superficial behaviors are secondary.

DeFi (decentralized finance) and CeFi (centralized finance) are not oppositional; they can be used in combination to optimize the risk-return structure. The new generation of asset trading markets has global and round-the-clock characteristics------ assets issued on public chains inherently have global accessibility, allowing anyone to participate in trading at any time and place.

Traditional exchanges like NASDAQ and the New York Stock Exchange are also beginning to extend trading hours, evolving from the original five days a week and five hours a day to a "5×23 hours" nearly round-the-clock trading system. In fact, new technology can already support "7×24 hours" trading, fully covering global time zones and breaking the previous "inhuman" trading time settings. Since the technology is already in place, embracing change is a logical choice.

AI and blockchain together form the infrastructure for the new generation of wealth distribution systems. In the AGI era, the new financial system based on blockchain will become the optimal global wealth distribution mechanism.

Blockchain is not only financial infrastructure but also a new business governance tool. On-chain data has characteristics of real-time disclosure (once per block), immutability, traceability, and auditability, allowing enterprises to achieve efficient and transparent information disclosure without relying on traditional semi-annual or annual reports. Compared to traditional accounting systems, the blockchain-based information disclosure mechanism is more efficient and credible. New organizational forms like DAOs (decentralized autonomous organizations) are based on transparent on-chain data, enabling global strangers to collaborate on complex tasks through a new governance model.

The AI era is an era of large-scale collaboration among global strangers. Traditional company contracts and bank transfers can no longer support the demand for efficient collaboration. On-chain protocols, smart contracts, and token incentive mechanisms will become the infrastructure for new business activities.

RWA: The Tokenization Process of Real World Assets

RWA (Real World Assets) is essentially the tokenization process of assets, transforming off-chain assets into standardized, shareable, and securitized forms on-chain. As early as ten years ago, stablecoins like USDT and USDC had already achieved the tokenization of fiat currencies, which can be seen as the starting point for RWA.

From a developmental stage perspective, RWA can be divided into three phases:

Phase 1 (2015): The tokenization of fiat currencies represented by USDT. Due to the strong credit backing of sovereign currencies, there is low reliance on oracle systems; it only requires a custodial bank to issue a receipt, and the market can trust it.

Phase 2 (2024): Represented by BlackRock's Build, promoting the on-chainization of financial assets such as short-term treasury bond funds. Such assets provide credit guarantees through licensed financial institutions, securities regulation, custodial banks, and law firm audits.

Phase 3 (Future): The tokenization of physical assets. This phase is the most challenging, with the core difficulty lying in verifying the authenticity of off-chain assets and proving ownership, making oracles a key bottleneck.

Currently, there are mainly three types of oracle solutions:

1) Crypto-native oracles like Chainlink: have already achieved on-chain pricing and data for the crypto market.

2) DePIN (Decentralized Physical Infrastructure Network): is a key oracle for future machine data on-chain, such as real-world data generated by autonomous driving and humanoid robots. With the development of AI and hardware, its importance will significantly increase.

3) Financial institution oracles: provide on-chain data endorsement through regulated financial institutions via custodianship. For example, banks as custodians confirm changes in token quantities to ensure the trustworthiness of on-chain assets.

The mapping of physical assets on-chain still faces enormous challenges, and there is currently no mature and reliable credit guarantee mechanism. However, the continuous development of oracle systems in the future is expected to solve this problem.

When discussing RWA (real-world assets), if one thinks "everything can be RWA," that is certainly overly idealistic. To do RWA, two core issues must first be addressed:

First, how to get on-chain. That is, how to ensure that the data is real, immutable, and traceable. This usually relies on oracle systems, but oracles themselves also face issues of trust and accuracy.

Second, compliance issues. Certain financial products need to obtain approval from securities regulatory agencies before tokenization. For example, tokenizing a money market fund in Hong Kong must be approved by the Securities and Futures Commission before implementation.

Moreover, tokenization cannot be just for the sake of tokenization. For ordinary investors, the returns from purchasing a dollar money market fund are essentially no different from purchasing its tokenized version, which instead increases the complexity of wallet management and private key security. In reality, money market funds can be purchased anywhere, with no barriers.

Therefore, for RWA to be established, it must have its unique use and added value. Otherwise, the securitization of real-world assets is already mature enough, and there is no need to add another layer of tokenization. In other words, tokenization must solve problems that traditional finance cannot meet.

A typical scenario is to combine with DeFi. For example, the annualized yield of dollar money market funds is currently between 4.5% and 4.9%. If it is tokenized and continues to enjoy that yield while also obtaining an additional return of around 5% through DeFi lending, this is a way to add value "without increasing risk." Such returns come from improved capital efficiency rather than leveraging, which is a commendable innovation. We are currently communicating with regulatory agencies, but have not yet received approval to formally use tokenized money market funds for DeFi lending.

Another example of gold RWA: It is commonly believed that gold is naturally suitable for being made into ETFs or RWAs, but this depends on the specific executing entity. If a gold mining company or smelting enterprise claims to produce gold daily and wishes to tokenize it, that is not feasible. The outside world cannot verify the ownership, purity, or safety of the gold. However, if a licensed financial institution issues a gold ETF, approved by securities regulation, and has a bank as a custodian, such as a Hong Kong issuer storing gold in HSBC's vault, with HSBC as the custodian, then this gold ETF can be converted into an RWA Token, which is credible. In other words, the market trusts not the miner but HSBC.

In summary, not all assets are suitable for direct tokenization as RWA. Typically, they need to first be converted into compliant financial products before tokenization. This is a reality that the industry must face at this stage.

The Combination of AGI (Artificial General Intelligence) and Blockchain

When discussing the combination of AGI (Artificial General Intelligence) and blockchain, I want to share a small anecdote first. Three weeks ago, I met with Shen Xiangyang in Hong Kong, and he also expressed that AI and crypto are naturally compatible fields, and we are exploring ways to combine the two.

In the past year, I have been looking for truly valuable AI + Crypto projects. It is not just about creating a chain, issuing a coin, or slapping an AI label on it; it is about solving real problems and doing real engineering. For example, distributed inference networks are a direction we have been investing in for a long time. We hope to build a system that can support 200, 2,000, or even 20,000 devices to collaboratively complete AI inference tasks. This is not just a slogan; it is deep engineering on the hardware and network levels. Currently, our system is expected to launch its TGE (Token Generation Event) within two months.

We firmly believe that a deep integration of AI and blockchain will definitely happen, and we are actively looking for entrepreneurial projects with practical implementation capabilities. I know that many entrepreneurs in the Wanwu Creation Camp S5 are also making similar attempts, and everyone is welcome to discuss together.

In fact, as early as February last year, I reached out to the CSDN team, hoping they could mobilize developers to run large models in a distributed manner. This project has been advancing for over a year, and because everyone is serious and grounded in their work, we feel it is worthwhile.

We are also collaborating with Shen Xiangyang's team, Hong Kong University of Science and Technology, and Hong Kong Polytechnic University. For example, they have already compressed AI models to run on mobile devices. We are discussing: if we cannot pre-install the models, can we cooperate with mobile distribution channels to pre-install the models during the sales process and activate them after user authorization? Our tests show that 90% of users are unlikely to uninstall them and are willing to keep them.

And this decentralized edge computing node network can allow users to earn tokens as rewards for sharing computing power, thereby activating the entire ecosystem. This is not an easy task, but precisely because it is difficult, it means there is an opportunity. Truly valuable innovations are never things that "everyone is doing."

Regarding AGI, OpenAI has proposed five stages: Conversationalist, Reasoner, Agent, Innovator, Organizer.

Currently, ChatGPT has achieved the first stage; the Reasoner (such as DeepMind's Alpha series or OpenAI's O1) is also gradually taking shape. The third stage------Agent is in the process of advancement. Musk's autonomous driving systems and humanoid robots fall into this stage. It is expected that autonomous driving will mature within two years, and the application of humanoid robots in factories is also accelerating. As for comprehensive applications in household scenarios, it may take another five years or even longer. The more complex two stages are Innovator and Organizer. Innovators create from 0 to 1, while Organizers need to standardize, systematize, and scale the innovative results, which is more challenging. Once all five stages are connected, AGI will be realized. Optimistically, AGI will arrive by 2027, while conservative predictions suggest 2030.

After AGI, we will enter the era of ASI (Artificial Super Intelligence). The key question in this stage is: How will the immense social wealth created by AI be distributed? This raises an ancient yet important proposition: Universal Basic Income (UBI). Economists have long proposed UBI models to ensure that humans can still receive reasonable distributions in the AI era. I saw a news report where someone asked a tech mogul what the ultimate destination of AGI is, and he replied: Socialism. In a sense, this is correct------ AI does not consume or waste; the wealth it creates needs to be redistributed. The idea of UBI is not to distribute according to labor but to distribute according to "people."

The next stage is UHI (Universal High Income), matching the exponentially growing wealth created by ASI. In the future, perhaps you plan to travel to Antarctica, the Arctic, or outer space; the systems in the AI era may support you, and this is no longer a fantasy.

We still remember Andrew Yang, who ran for US president in 2020, right? His core platform was UBI, providing every American with $2,000 a month. He spoke too early about the inevitable trend of the AI era. Why is Sam Altman of OpenAI working on Worldcoin? It is to build a global identity verification system (World ID) and a super-sovereign currency system, laying the foundation for future UBI. Because the wealth of the AGI era no longer belongs to a specific country; it must be fairly distributed through super-sovereign currencies and multinational platforms.

Musk is also exploring similar avenues. The identity verification and economic behaviors of AI machines must be based on blockchain. Otherwise, we cannot verify the interactive relationships between devices. Moreover, payments and settlements between machines inherently require smart contracts, and therefore must be based on programmable currencies and decentralized ledgers.

Thus, the combination of AGI and blockchain will manifest in two layers:

1) A decentralized collaborative network at the level of computing power and tasks, such as distributed inference;

2) A global identity and settlement system for wealth distribution, such as the UBI framework constructed by Worldcoin.

This is a question that must be thought of in a future-oriented manner------ When the means of production in human society are completely taken over by agents, our value system, distribution mechanism, and incentive system must also be restructured. And blockchain may be the infrastructure closest to this answer.

Alright, that's all for my sharing today. Thank you, everyone!