On the evening of September 12th, the seventh episode of the fifth season of Guanhuo Langya List was broadcast. Former chief engineer of the Internet Laboratory of the Institute of Software, Chinese Academy of Sciences), the guest of interview in this issue is Professor Li Guoquan, vice chairman of the Singapore Economic Association and professor of Singapore University of Social Sciences.
Singapore is the strategic highland of global Web3. In the battle for the global Web3 bridgehead , Singapore has successfully attracted Web3 projects, capital, information, and talents by virtue of its own advantages. Head Web3 companies such as Coinbase, FTX, and A16z will choose to set up regions in Singapore Headquarters and development center , many Chinese Web3 entrepreneurs have gone or are planning to go to Singapore for development . Some media said , "Web3 is the street code for Chinese adventurers in Singapore . "
As a well-known university scholar and industry practitioner in Singapore, Professor Li Guoquan has made many contributions to the development of Web3 connecting Singapore and China. Professor Li has many years of experience in the cryptocurrency field, and he has currently invested and served as an advisor in financial inclusion, privacy protection, and digital custody companies. He also holds directorships in several listed companies in Singapore and China, professorships in several universities, and serves as a blockchain consultant for international organizations. He founded the Global FinTech Institute, co-founded Blockchain Association Singapore (BAS), and also serves on the UK Blockchain Association Council .
Listen to the conversation between the two big coffees, and feel their peaceful and elegant temperament, like a spring breeze. The topic of their conversation is "Why Singapore can stand out in the global "Web3 bridgehead battle"? ", to interpret Singapore's relevant policies, opportunities and industry dynamic observations on Web3, Metaverse, NFT and other fields. From the regulatory differences between China and Singapore to the discussion and reflection on the merger of Ethereum and the new public chain, they told us that the development of blockchain cannot lack the care of humanism and the calmness of technology, and at the same time, they are full of the real Web3 era. Unlimited longing.
Highlights of this issue:
1. What competitive advantages and development experience does Singapore have in the Web3 field?
2. What suggestions do you have for Chinese Web3 entrepreneurs who have gone or plan to develop in Singapore?
3. What are the special features of Singapore's research and education in the direction of Web3 and Metaverse?
4. What important opportunities does China have in the field of Web3?
5. What is Web3 to Web2, and what is Web2 to Web3?
6. What are the opportunities for cooperation between China and Singapore in the field of Web3 in the future?
7. Why "after October, this winter will be the spring of Web3"?
8. What impact will the merger of Ethereum have on the industry?
9. Is NFT fragmentation a Ponzi scheme?
The full version of the interview video of this issue can be viewed on the video account "Huoxun Finance" by clicking "Live Playback".
Interview Record:
Section 1: Singapore and Web3
Shi Xingguo :
Hello Professor Li! The first topic I want to discuss with you today is Singapore and Web 3. In the battle for the global Web3 bridgehead, Singapore has successfully attracted Web3 projects, capital, information, and talents by virtue of its own advantages. Head Web3 companies such as Coinbase, FTX, and A16z will choose to set up regional headquarters and development centers in Singapore. There are many Chinese companies. Web3 entrepreneurs have gone or are planning to go to Singapore for development. Some media said, "Web3 is the street code for Chinese adventurers in Singapore." Would like to ask Professor Li to share with us Singapore's competitive advantages and development experience in the Web3 field? For Chinese Web3 entrepreneurs who have gone or plan to go to Singapore for development, can Professor Li share some advice with them?
Li Guoquan :
It is a great honor to have a dialogue with Mr. Shi today. Just now you mentioned that in the development of Web3 in Singapore, especially in terms of financial innovation, we do have certain advantages. In many other relatively large countries, the regulatory departments are relatively columnar, that is, the laws and regulations outside the management need to be understood by the leaders of many different departments to ensure their comprehensiveness before entering the formulation process. Such an environment attracts Web3. industry is a challenge.
However, Singapore is a small country, so it does have relative advantages in terms of innovation. Although we also need to promote the innovation of laws and regulations from a comprehensive perspective, we also have different regulatory departments, but they are often able to implement laws and regulations in a short period of time. Innovation and application in the market.
Another point is that there is a department in the Singapore regulatory authority that focuses on financial technology innovation. This department will provide regulatory advice from the perspective of business, enterprise and innovation, and directly discuss the formulation of regulations with representatives of Singapore companies. This is Singapore’s financial regulation. A bit more innovative. In addition, Singapore's financial expenditure includes education projects. Enterprises or individuals who have education or further training needs only need to pay 10% of the education expenses, and the rest is paid by the Singapore government. So from this point of view, whether it is legal and regulatory environment, education or life, Singapore provides a good environment for Web3 talents. Singapore's support for fintech innovation is comprehensive, not only in regulations, but also in terms of talents and funding. And its supervision will not go ahead of innovation, let alone lag behind, but will keep pace with reliable innovations that have been tested in practice.
Because of this, investors and entrepreneurs from all over the world will feel more at ease when doing business in Singapore, and there will be no overnight one-size-fits-all, or what you did before was legal, but it will become illegal tomorrow. .
Shi Xingguo :
Yes, I do understand that the Singaporean government can quickly cater to the fast-paced development of the world's science and technology industry in this streamlined way, allowing many emerging technologies to find their own foothold in Singapore's policies. At the same time, as you said, Singapore’s own infrastructure, including innovation facilities, is very complete. Even if enterprises do not engage in Web3 innovation, it still has a good environment to promote other businesses. These laws, regulations and basic conditions make the Web3 field easier. Rapid development. Since 2020, the Singapore government has planned to become the central hub of global digital assets, and has gradually become a stable jurisdiction for the Web3 industry. For example, in January 2020, Singapore's "Payment Services Act" came into effect. It introduces the concept of "digital payment service provider", which usually refers to a digital asset trading platform, and gives the definition of "electronic wallet" and digital financial assets. However, so far as of July 2022, only a handful of companies — 14 out of nearly 200 applicants — have obtained licenses, which has led to the recent relocation of many exchanges and Web3 financial projects to the Middle East. How does Professor Li view this phenomenon? Do you think this reflects a change in the attitude of the Singapore government towards digital finance?
Li Guoquan :
I don't think the HKMA's attitude towards digital finance has changed. If you have been in Singapore for more than 20 or 30 years, you will understand that their attitude is very simple-Singapore's finance can maintain sustainable and healthy growth, and internal to steady growth is what we need most. When we are very successful in attracting so many countries, but only 14 companies can get licenses, the main reason is that the current unemployment rate in Singapore is 2.2%, which means that our job opportunities are very good, and our talent Demand is very tight, and that's something we need to maintain. If too many licenses are issued, the expansion of the talent gap will lead to a series of gaps, including the needs of enterprise registration, school education, etc. If not fully considered, it will cause a very tense situation.
I don't think the HKMA hopes that our financial market will be overgrown with weeds all of a sudden, but that a hundred flowers will bloom. The needs of various resources such as employment rate and talent demand are all under consideration.
The second point is that during the process of issuing licenses, the HKMA communicated very closely with the 200 companies that submitted applications. It has a very good understanding of the internal situation of each company, including management, past history and even everything. This is also my own opinion. Some companies may have higher leverage and take higher risks. Therefore, during this process, it may internally discuss and decide that companies that are helpful to Singapore should be leveraged, low-risk, and whose institutional services have a long-term empowering effect on Singapore. Because the wealth management environment in Singapore has attracted top-ranked banks from all over the world, if the income of enterprises applying for licenses mainly depends on retail investors, the supervisory authority may not include them in the scope of primary development.
The Monetary Authority hopes that more reliable and risk-sensitive licensed companies will enter Singapore, and its high-value-added cryptocurrency sector will be particularly popular. However, if investors who specialize in retail investors and have no experience in high-risk investment products, the Financial Management The Bureau believes that this will not be of much help to Singapore's long-term development. This is also true in other countries.
So based on this, I think the slowdown of the HKMA does not mean that more companies will not get licenses, but that these companies must understand what the HKMA wants to develop. If you are within the scope of their development, you will feel that Singapore is a development destination, but if you only focus on relatively high speculation and only target those retail investors with little investment experience, then it will be more difficult for you to develop in Singapore.
Shi Xingguo :
I understand that Singapore’s attitude towards digital finance has not changed. It’s just that the Monetary Authority does not take more as a target, but targets companies or institutions that really have long-term development goals. So in the selection, we will see that 200 applicants applied and 14 were awarded.
This also shows that the industry may be relatively impetuous at present, and the proportion of long-term development enterprises and institutions is relatively small, which is also intuitively reflected in the results of obtaining licenses that we have seen. Enterprises that have obtained licenses must be professional and very responsible to serve retail investors, not just focus on the number of retail investors, conduct market education for retail investors through responsible intermediary agencies, and then screen those who are more sensitive to investment risks Retail investors invest in this service through them.
So go ahead and say something very relevant to your industry and the education industry. Recently, a number of well-known universities around the world have launched the allocation of educational resources related to the Metaverse. For example, the Wharton School of Business launched a 6-week course "Business in the Metaverse Economy", and the Hong Kong University of Science and Technology launched the first metaverse extension practice According to MetaHKUST of Environmental University, in the future construction of Metaverse, talent cultivation should be the top priority.
I learned that in 2016, Professor Li led the professors of the Singapore University of Social Sciences Business School to form the Singapore University of Social Sciences Inclusive Financial Technology Node (SUSS NiFT), and established the Metaverse Laboratory in October last year. I would like to hear from you, what research results and educational practices have SUSS NiFT and the laboratory achieved in the direction of Web3 and Metaverse? What are your plans for the future?
Li Guoquan :
Our Singapore University of Social Sciences has convened many professors from different fields in the business school. In addition to the professors of the business school, it also includes professors of computer science, engineering and other disciplines. The main purpose is to hope that these professors can promote economic development from the fields of ABCDEFGQ , where A refers to artificial intelligence AI; B refers to blockchain blockchain; C refers to cloud computing; D refers to big data data; E refers to environment friendly technology; F refers to financialion and inclusive finance; G refers to communication technologies such as 5G4G3G; The last Q refers to the quantum computer quantum computer.
Professors in various fields have participated in the projects of our business school, because the development of blockchain used to be dominated by computer technology, and business schools could not play an important role in it. However, in today's Web3 era, the role played by business schools It is especially important, but business schools are completely insensitive to these technological design ideas. So in 2010, we began to recruit many professors with in-depth research on technology into social science universities. Let's figure out the technology first, and then think about the combination of technology and social science. Including the integration of smart contract laws, as well as the integration of various software and hardware, etc. Finally, I looked at behavioral science, finance and laws and regulations from the perspective of business schools.
On top of this, we set up a fintech node. The full-scale explosion of the metaverse last year has drawn a vision for the integration of different technologies, and it has also brought greater challenges. Just like the columnar structure I mentioned before, if the professors at the fintech node don’t have a comprehensive understanding of technology design thinking like the financial management authority, then it will be difficult for them in subsequent financing, regulations, design thinking, etc. Big mistakes could be made, even breaking the law and so on. Therefore, we established the Metaverse Lab to summarize and integrate the latest technological innovations, whether it is internal technological innovation within the enterprise or the Web2 Metaverse, and let these dominate the teaching of our teachers. The industry creates courses for teachers and our students, from which we learn all the essence of the industry.
Then there is the educational output of textbooks, research reports and courses, a clear understanding of the pros and cons of cutting-edge innovation, etc., and in-depth research on the design ideas and business models of the project. Only in this way can we have certain research results. We also cooperate with Babbitt to bring companies willing to deeply cultivate Web3 to Singapore, communicate with our new industries and professors, and provide students with educational practice instead of doing research behind closed doors.
Many of the doctoral degree recipients of our business school are bosses in our Web3, currency circle, and chain circle blockchain industries. We communicate with these boss-level figures academically, and everyone learns from each other. Our teachers will teach them systematic theoretical knowledge and compile their practical experience into textbooks, and they will become our doctoral students and alumni, and our undergraduate and master students will also be employed in their companies in the future. These are some of the results we hope to achieve as a metaverse laboratory and a financial technology node.
Shi Xingguo :
This is really great. We did find that in the field of Web3 or blockchain, he has very high requirements for the comprehensive knowledge of talents. Usually, many of us are experts in a certain field, but once it involves other fields, whether it is finance, business, or specific computer technology, it is actually very difficult to comprehensively apply these knowledge.
I feel that the educational attempt that you and your college have made is actually cultivating such comprehensive talents.
Li Guoquan :
Mr. Shi, you have a lot of experience in the blockchain industry, and you have made a lot of contributions in government departments. As a well-known expert in the field of blockchain technology, do you intend to participate in relevant educational practices in the future? If you enter the education field, what kind of talents will you focus on training?
Shi Xingguo :
In fact, I am not far from the education industry, because I worked at the Software Institute of the Chinese Academy of Sciences before starting a blockchain business. The Software Institute itself is actually a comprehensive institution, including comprehensive research institutes in education and research. The laboratory I was in charge of at that time had to train a lot of graduate students every year? So in terms of talent cultivation, I do have a lot of feelings.
Of course, I've now ventured into the corporate world. However, if there is such an opportunity in the future to participate in relevant educational practices, I am not only very willing to participate, but with my previous experience in the field of education, there may be more and more specific educational programs that can help Students and educational institutions to advance their educational methods.
In my opinion, the IT industry itself has developed into a very comprehensive discipline, and the blockchain also clearly shows this characteristic. In fact, in many scientific research fields, when it comes to the boundary between theory and technology, it will involve philosophical issues . This may not be obvious when doing engineering research, but it will often be highlighted when doing some particularly in-depth research. . For example, in modern times, the discoveries of many purely scientific research, whether it is physics, mathematics, chemistry, or even bioart research, are likely to fundamentally change human perception of the world. This is also the state of IT at present. No matter software or hardware, everyone has researched to the extreme and began to touch the boundary of cognition.
For example, in the field of chips, they have been challenging some things on the atomic scale; quantum computing is challenging quantum effects; artificial intelligence is challenging the ethics of consciousness; blockchain, as a new information technology, is challenging the expression of human credit. In this way, it means that we may need more comprehensive knowledge in order to dig out many possible breakthrough points or areas where development is lacking and make breakthroughs.
The synthesis of multiple disciplines is definitely a sharp weapon, allowing people to quickly break through these points that are not easy to break through in professional disciplines. Specific to our situation in China, I think there is a phenomenon that is particularly obvious. In the early years, there were very few IT engineers in China. When I entered the Institute of Software, Chinese Academy of Sciences in 1998, our slogan was to catch up with Brazil and India. With the unremitting efforts of practitioners, we surpassed India around 2005, and China has now become the leading country in the IT field. But there is another phenomenon behind this trend, that is, we find that there is a big disconnect between our domestic engineers and researchers. In fact, I feel that there is a lack of this comprehensive nurturing process like you said.
Our engineering staff can quickly master emerging technologies and adapt to the fast pace of the IT industry. But these engineers are only good at building a delicate or grand system based on the examples and documents given by the designer, but they are not very good at innovating and building a new architecture, or solving breakthrough problems.
Another group of my colleagues in the software institute are particularly good at doing theoretical research. They can find out the problem in a logical and formal way in a bunch of particularly boring and messy symbols, perfect the theory of calculation and publish very heavyweight papers, but in the specific engineering field, they I found it difficult for them to play their part. So what we need most is the combination of these two kinds of talents. And the solution is actually what you are doing now, integrating the enterprise and the university deeply enough.
Because many cutting-edge needs and data are now the first-hand recipients of enterprises, and IT is the technology of information processing, without data is equivalent to cooking without rice. From this point of view, I think China is still far from reaching that step. Professor Li, your practice actually gave a very good example, let us see how we should arrange in the field of education to cultivate such talents.
Li Guoquan :
Mr. Shi, you speak very well. In the early years, I was engaged in the investment industry. In the 1990s, many PhDs from Silicon Valley returned to Hsinchu , Taiwan, China to engage in chip development. Many testing procedures and standards were established at that time. Those doctoral students in Taiwan at that time , as you said, they were developing in the industry, and they were very sensitive to corporate and cutting-edge needs.
I have great respect for universities in Singapore and China, and their research is very in-depth. I myself also graduated from a doctoral school in these research departments, and I know their mentality very well. It is necessary to produce papers, but in the long run, it will not be of great benefit to the sustainable growth of the entire industry and the country.
Mr. Shi is very welcome to our school, our school welcomes you very much. This is also the reason for the establishment of our Fintech Academy, to bring together like-minded professors in various fields from all schools, so that they can participate in the construction of our Global Fintech Academy and serve the world.
Only in this way can we put into practice the profound theoretical knowledge we have learned from college in a very short period of time. The reality is that many studies may have to wait 30 years before they can see the results of its practice. The world needs to create job opportunities, the world is gradually recovering from the downturn, and the integration of industry and academia is the responsibility of our universities. I feel that President Shi and I share this sense of mission. I very much welcome you to our School of Financial Technology of the Singapore University of Social Sciences to complete this matter together.
Shi Xingguo :
I am very honored to have such an opportunity. I think the example of Taiwan's chip industry you mentioned just now is indeed very typical. The center of the semiconductor industry has developed from the United States, Japan and other places to Taiwan, China , and even allowed Taiwan to occupy a place in the world. In fact, this combination of technology and business was triggered. The current Web3 may be in the state of the chip industry at that time. I feel that the hot state of Singapore recently is like a mixture of Beijing, Hangzhou, and Shenzhen in the Web1 and Web2 eras. However, in the first half of this year, there was a domestic debate about whether China was related to Web3, and the policy orientation changed from time to time, and the media kept secret about this. May I ask Professor Li, in your opinion, in what ways can New Zealand and China promote interoperability, exchange and cooperation in the field of Web3? What important opportunities do you think China has in the field of Web3?
Li Guoquan :
I can be sure that China will be the country with the most blockchain applications, and the blockchain will definitely be able to flex its muscles in China. But we can't underestimate the combination of Web2 and metaverse. I think that in the short term, the development of Web2 and Metaverse will be much faster than the progress of Web3. are world-leading. Any emerging technology will be commercialized and applied at an astonishing speed in China. Therefore, investors all over the world, including me, will pay great attention to the investment in the metaverse during China's Web2.0 to Web3.0.
But in other countries, like Singapore, we are gradually transitioning from Web2.1 and Web2.2 to web3 under the guidance of Web3 thinking. Because true distributed trust is temporarily impossible, in the development of the entire industry, we must have a trusted third party, and then continue to distribute task is Continue to reduce the cost of this trusted third party uniformly, or continue to distribute trusted third parties . The online part of Web3 is borderless, but when combined with the real economy, there will be boundaries, domains , and regulations .
From my point of view, Singapore will develop from Web3 to web2, and China will move from Web2 to Web3. If there is not a large enough market, its development will start from Web3, otherwise it will start from Web2. Compared with Singapore, China's advantage lies in having a sufficiently broad market. So the opportunity between China and Singapore is that if a company is temporarily unable to directly develop Web3 business in China, you can come to Singapore to develop first, and we will meet at the end of Web3. Because the development from Web2 to Web3 has always been unable to avoid the disadvantages of privacy violations and monopoly issues, even if it enters the Metaverse, there will still be a certain central point.
Moreover, the current Web3 industry is not yet mature, and many people will use the name of Web3 to speculate. In small countries, it is very simple to control such speculative behavior. In China, regional development is required. It may be Hainan Island, or Web3 activities may be carried out on some small islands outside the mainland. This controls risk. As long as China can find a certain area and control the risks brought by the development of Web3 itself, I suggest that China should not give up on the development of Web3. Singapore also has no way to fully accept the top technicians and engineers from China's Web3 industry.
Therefore, I still suggest that China can find a time when some regions are combined with the real economy in terms of technology, so that they can develop a decentralized economy and technology under controllable circumstances. Online decentralization does not mean offline decentralization. Offline governance can also be decentralized. But never give up. Web3-related education must also teach the development of blockchain technology, because technology and even Bitcoin itself are not speculative. As a technology, it is worth studying. All coins must be researched, but we do not encourage speculation.
So under control. China must also develop Web3 technology in a certain area, and can designate certain schools or areas to vigorously support research in this area. Only in-depth supervision and an in-depth understanding of web3 and speculation can it be fully supervised.
The technical level of supervision can also be developed, because in the end we are all on the road of Web3, so in-depth research in this area is essential, and there must be geeks in government departments, and there are many geeks in government departments in Singapore Yes, they look at the price of Bitcoin and Ethereum every day. If the supervision does not pay attention to this aspect, how can he supervise it? When it comes to government tech, we have to accept that these geeks work in regulatory agencies. This is a different approach between Singapore and China, but I think everyone's goal is the same in the end, which is to ensure the stability of Web3 development and minimize speculation.
Shi Xingguo :
Yes, I think your interpretation of Web2 and Web3 is both fresh and very relevant. You mean that although the Web3 field is currently immature, it has to gradually accept secularized regulations and management, as well as what people need to achieve in their secularized business support. Web2 also needs to get rid of many of the current disadvantages and develop towards Web3. One of the two sides develops from 2 to 3, and the other is that 3 has to learn to adapt to 2. In fact, this is an evolutionary process from the two ends to the center.
Singapore and China have their own advantages in these two aspects, so they can coordinate and cooperate well in this aspect. Judging from what you have just summarized, Singapore can serve as a frontier for business innovation of many Web3 start-ups in China. Taking advantage of Singapore's developed financial infrastructure, Singapore's integration and inclusiveness on the international stage, and fully combining the high speed and efficiency of application innovation in China you mentioned just now. In this way, we can use China's relatively abundant IT engineering technology resources to complete small-scale trial and error relatively quickly. Once it passes small-scale trial and error, it can be promoted on a large scale, and it is easy to get a head start in the development of Web3.
Li Guoquan :
Mr. Shi, I also want to hear your views on exchanges and cooperation, in terms of more specific university cooperation, business cooperation and even supervision.
Shi Xingguo :
China is very concerned about many of Singapore's successful experiences, and is also considering how to copy these successful things to China. The Suzhou Industrial Park, where our Hyperchain headquarters is located, is the first science and technology park established by the Chinese government and the Singapore government in China. This park has a lot of advanced experience copied directly from Singapore, and it also showed its special advantages in the subsequent development process. Because the atmosphere or way of thinking of the main Chinese group in Singapore is actually somewhat similar to the model in mainland China. It is equivalent to Singapore conducting experiments in a new model for us and summing up advanced experience. Then we choose a development path that suits us according to China's own characteristics, and then let China's technological innovation avoid detours and develop faster.
China has the advantage of scale, but China does have some limitations in innovation. Because from all aspects, China may not be willing to bear trial and error and failure, or the cost of failure and trial and error is very high. But we can look for advanced experience from an environment similar to ours and the direction we expect. I think Singapore is a very good model in this regard, which can allow China to quickly understand how poor it is in the field of innovation. Deep, how far should we go. In this regard, I think there are many opportunities for further cooperation between the Chinese government and Singapore.
Li Guoquan :
Indeed, I think that China and New Zealand can learn a lot from each other. Although the different national conditions lead to many different considerations in everything the two sides do, I don’t think there is anything that China and New Zealand cannot cooperate with. In the short term, there are some things that China cannot do, which can be done in Singapore. In the long run, the large-scale market is still in China, and everyone is looking at the Chinese market. Only short-term business opportunities can be tested in Singapore. From the perspective of Singapore’s national conditions, we mostly look at which place can make us get more benefits from the perspective of investment. Our supervision also focuses on creating job opportunities and minimizing market losses. I think whether it is China or Singapore, their goals are the same, but the national conditions are different, so the methods are different, but this creates a lot of opportunities for mutual cooperation.
Section Two: Encryption Market and Public Chain
Shi Xingguo :
Yes. Then let's talk about the encryption market and the public chain.
The collapse of Three Arrows Capital and Celsius in the middle of this year has caused the encryption industry to encounter a "Lehman moment". In response to this crisis, you have publicly emphasized the importance of university education, saying that "universities must have courses on cryptocurrency, asset allocation, risk assessment, complexity analysis, design thinking, and human ethics and social responsibility."
What enlightenment or lessons do you think the "Lehman crisis" in the encryption industry has brought us? What actions can be taken to avoid similar crises in the future?
In July of this year, you posted on your Moments that it is expected that "after October, this winter will be the spring of Web3." I would like to hear what factors you share based on this judgment?
Li Guoquan :
The reason why we mention university education is because we must pay attention to the relationship between human ethics and social responsibility. Many times we think that universities only impart technology or the knowledge we have learned to students, but whether it is from design ideas, investment, asset allocation, risk management, etc., we must be people-oriented, and we must be proactive. A sense of social service and responsibility, and the university is the best place to impart this awareness. But if the university itself has no understanding of cryptocurrency at all, many students have no idea of the past Lehman moment.
The collapse of Three Arrows Capital and Celsius tells us that we must add a course to our schools, telling students that "we are not much different from Lehman", that is, high leverage leads to the separation of price and value fundamentals . In our subsequent crypto courses, students are taught how to assess the fundamental . As scholars, we must study how the market price comes about. Not having an equation to identify its price does not mean that we will not have an equation to determine it in the future, but scholars have not yet studied this equation .
From the perspective of asset allocation, cryptocurrency is an important investment product. From the perspective of international investment, we promote the rational allocation of assets, so how to allocate it? Whether it is configured from the perspective of correlation or risk, it must be reasonably configured. If there is no allocation, from the perspective of fund management, your asset performance will be worse than other fund managers. Since the market value of cryptocurrencies rose in 2008, your income must be lower than others. From the perspective of national investment, your income will be relatively lower than other countries. This is unacceptable in finance. Therefore, universities must conduct research from this perspective, and must also look at how much risk we have taken to obtain this benefit, whether it is beneficial to human beings, and what harm it has caused from the perspective of risk assessment. From the perspective of social roles, what are the social responsibilities of investors and regulators? Universities must teach these subjects.
From a scholar’s point of view, it is also a project guided by DAO’s ideology. Why one collapses but one does not, one collapses but one does not collapse, these are all things that our school must study. These revelations and lessons must be understood by our students. Many of our students are relevant regulators in Singapore. Every year, about 50 to 100 regulators in the field come to the class, and this is what they learn. We must turn these into key studies and let them know that they must be especially careful when encountering such situations in the future. Otherwise, we will not be able to pass on our experience to supervise and avoid similar crises in the future.
I said in July this year that the Web3 winter will end after October. This is because we have recently done academic research, which shows that the current cryptocurrency is a very important investment asset. If all large investment institutions do not In the case of encrypted assets, his chances of surviving in this industry in the future will be threatened. Whether it is a public fund or a private equity fund, its investment in the encryption field requires practical and reliable strategic support. Through research, we found that when an institution enters the field of encryption investment, it must make a report with the final investor, and make a regular report to account for the investor's income. Usually, May is the time when managers invest all their funds. January is the first investment of the year. At the end of January, as long as the asset valuation is higher than when the investment was made, the managers will increase investment. Institutions already have a lot of money. Big money is ready to enter the market, which also leads to the peak of cryptocurrency prices in December at the end of the year.
And these managers started to prepare for "annual leave" in May, so there was "sell in may, go away". After June, they start working on the mid-year report, which they don’t pay as much attention to as the annual report. Therefore, as long as the assets can be sold short, they start to plan to sell short in July, and then cover their positions and buy them back in August. As a result, not only buying it will make money, but selling it short will also make money, and retail investors don't understand this kind of operation. Retail investors only know how to buy but not how to sell, so they will make wrong decisions and suffer losses in the large-scale in and out of capital.
From this point of view, risk management is very necessary, and its responsibility lies in controlling risks. Usually we can see the fund after the September report. You may receive a letter from the management saying that the money will be withdrawn in December. So in October fund managers began to sell. Whether it is bonds or stocks, October is a month with very high risks. However, a large amount of capital has been withdrawn in May before, and the winter has passed ahead of schedule.
This also shows that cryptocurrency is already an asset invested by institutions, so its price change cycle is highly correlated with the cycle of institutional investment. This is why I say October is spring.
Shi Xingguo :
Yes yes, I find this statement of yours corroborated. Whether it is experience or data obtained from the industry, it is very convincing. The point of view you just mentioned also represents a characteristic of the academic world—that is, when something appears, the academic world Don't look at whether it is good or bad, but to find out why. For example, speculation in Bitcoin or its price, we don't judge whether it is good or bad, but why it is like this. From this point of view, I think the ideas and suggestions you just gave, Professor Li, are really worthy of your careful reference and consideration. Then we also hope to look at another question from Professor Li's very neutral and objective perspective.
A topic worthy of attention in the second half of this year is the "merge" (The Merge) of ETH1 and ETH2. For ETH from the POW mechanism to the POS mechanism, the industry is very divided: some supporters praised the merger of Ethereum as one of the most powerful catalysts in the history of encryption and one of the most impressive engineering feats in the history of the blockchain ; Some opponents claim that POS has no value and must be a dead end, which will only make the ETH ecological division.
How does Professor Li view the merger of Ethereum? What are its potential impacts on the encryption industry, and in the long run, will it do more good than harm, or do more harm than good?
Li Guoquan :
First of all, if you look at it from the perspective of humanities, institutions, and finance, the community is the most important. If the community has many volunteers and supporters to update the code, of course the community will continue to grow, but this does not mean it There is no great risk in the short term. From a financial point of view, the first thing to pay attention to is transparency. Transparency in the community may be reduced from POW to POS, although POS allows participants to easily become nodes and review the ledger. Its transparency is actually not higher than that of POW, because the POW mechanism may have the transparency of the real economy. You can see where its mining rigs are.
So in the transition from POW to POS, you can find that its transparency is a little lower. Of course, this has advantages and disadvantages. The advantage is that POS can solve more problems, such as green finance, and the relative power consumption is lower than that of the POW mechanism. As a result, the overall speed and efficiency can be improved. From a financial point of view, two factors are missing in its risk assessment content. One is that the correlation between the POS mechanism and the chip has been reduced, so that it will not be greatly affected by the chip production cycle or price fluctuations; in addition, the higher transparency mentioned earlier is also a financial aspect. Risk, because from the perspective of finance, assets that are easier to predict and predict are relatively safer.
Of course, the Ethereum community will find ways to solve these problems in the future, but in the short term, POS does have certain risks. For many people, the currency circle has advantages and disadvantages because the currency circle is open source, and you can mine new currencies at any time. As long as the community is built and supported, the currency will do better. We currently cannot judge which coins will do better, but at least we know the pros and cons of the two mechanisms. People who like the POW mechanism prefer its security. , People who like the POS mechanism like its diversification. From the investor's point of view, they value risks, benefits, and returns, and they decide the assets to invest in and are responsible for themselves.
Therefore, in terms of investor education, we will clarify the complexity of investment from the comparison of risks and benefits. If he likes to preserve value in investment, he will definitely prefer Bitcoin, because Bitcoin itself has only one ledger, which is a POW mechanism. The purpose of investment is not for transactions but for its value preservation, that is, security. But if you want it has an unlimited supply. Then when you have an unlimited supply area for market transactions, you need to create demand, and a ledger is far from enough. For example, Ethereum has three ledgers, one of which is the code ledger, which is used to increase demand during ICO. The demand and supply of currency determine the price, and the risk return and complexity of it are also taught in school, that is, no matter what currency it is, it is essentially an investment product, and holders must be well aware of it and other risk factors. More attention.
What are the pros and cons for the industry as a whole depends on the community. This may also be one of the charms of the encryption field, that is, it is up to the community to decide who is right. It is a very democratic system. Therefore, when you start investing in a coin or a blockchain, you must see where its promoters and their people are. This is very important to finance, not just mathematical numbers. The calculation method and the promoter's theory also determine your income.
Shi Xingguo :
This kind of theory that cannot be calculated by formulas happens to provide a randomness for the benefits that can be calculated by formulas, and provides a space to look forward to.
Li Guoquan :
Mr. Shi, you are a master of public chain technology. Regarding the topic of Ethereum merger, I would also like to hear your talk from a technical point of view. How do you think about the impact of this merger?
Shi Xingguo :
Just now you discussed this issue from the aspects of finance, sociology, psychology, community, etc. I think it is very good and very inspiring to me. I will talk about it from a technical point of view.
Fundamentally speaking, I think the difference between POW and POS itself may cause more changes in the business ecology, which is far greater than the changes brought about by the technical level. Vitalik pointed out the problems of POS very early on. To put it simply, POS may have some problems of collusion and too few decision makers, and POS can solve some energy consumption and performance problems, because it converges the decision-making power of community members to a certain extent, and converges the ledger generation. right. This will allow for faster speeds and lower costs for the store.
But from my technical point of view, I think the current congestion and high costs of Ethereum are not actually a problem of POW and POS. If this is the case, we know that there was another chain called EOS that competed with Ethereum at that time , and it adopted the POS method to increase its performance and on-chain capacity. If POS is the only correct solution, then EOS will not be what it is today.
From a technical point of view, it should be said that Ethereum essentially wants to solve cost and performance problems through POS, but in essence POS cannot give a satisfactory answer. The main reason is that it cannot change the scalability problems of Ethereum itself. This scalability refers to the Ethereum we see now. Its transaction volume seems to be satisfactory, or the cryptocurrency industry is basically satisfied, but we put it in the future Web3 scene, or put it in a more In large scenarios that can support Internet-level applications, we found that its scalability is far from enough.
The root of this problem is that it is a serial architecture in architecture. In essence, as long as it is a serial architecture, all serial blockchains face the contradiction between the number of nodes, consensus contradictions, and consensus efficiency. These two factors are inversely proportional. The larger the number of nodes. The lower the efficiency of consensus, the higher the cost of consensus. As long as the architecture is not changed, this problem cannot be solved. We must start from the bottom layer, such as changing to a parallel architecture. At that time, the number of nodes and consensus efficiency are no longer two strongly correlated indicators. In this way, the current scalability problem can be solved relatively well.
We have seen that Ethereum has been solving the so-called expansion and efficiency problems, and has also tried to use parallel methods to make design efforts, but the effect is not very good. On the one hand, it is because the historical technical burden of Ethereum itself is too heavy, and excessive modifications cause great incompatibility problems; on the other hand, it is difficult to change the chassis of a speeding car, for example, Ethereum is such a speeding car.
So this merger can indeed improve some performance and reduce some costs, which is beneficial to the business on the chain and some Dapps. But it wasn't enough to bring about a marked change. The POS mechanism will cause changes in the interest model, which will make the entire ecology take some time to re-establish its order, which is what you said, which is equivalent to using the community to decide who is right. It's just that these changes are far from enough for the Web3 and metaverse we are looking forward to.
It is precisely for this reason that the industry's current interest in various new public chains has not decreased but increased.
The three technical teams who left the Internet giant Meta this year are called the "troika", and together with top capital, they have recently set off another wave of competition for new public chains. On July 26, Aptos, a public chain project founded by former Meta employees, was revealed to be seeking a new round of financing at a valuation of US$2.75 billion. A few days before that, Mysten Labs, the developer of another public chain project Sui, was also revealed to be seeking US$2 billion Valuation raises at least $200 million in financing. At the beginning of July, Linera, a blockchain project built by former Facebook employees and aiming to introduce Web2 scalability and low latency into Web3, just received 6 million investment led by a16z. These actions of well-known institutions have brought a little vitality to the encryption market in the bear market.
What does Professor Li think of a16z, FTX, Coinbase and other institutions making big bets on these new public chains? In your eyes, what is the core competitiveness of the new public chain?
Li Guoquan :
Whether it is the second-layer technology or the POS mechanism, the way they solve the problem is to start from Web3 and move towards web2. As it grows more complex, layer 2 technology becomes more centralized and more concentrated in the hands of the wealthy. These are the directions from Web3 to Web2, making Web3 more complex but more centralized at the same time.
The current new public chain is moving from Web2 to Web3. The initiator believes that the development path of Web3 is limited, and he must solve the problems of everyone's trust in data and so on. Therefore, everyone has started to invest in Web3 infrastructure, especially many large Web2 investment companies and platforms will try their best to build these Web3 infrastructure and combine their Web2 business with Web3.
As mentioned before, we will see many transitional scenarios and applications such as Web2.5 in the past two or three years, all of which will make the entire blockchain community develop rapidly. Because Web2's assets and market are very large, they also hold quite complete access licenses. Finally, the core competitiveness of these public chains is that they can develop a special function and become a node in the entire ecosystem. Only by upholding this kind of inclusive and self-shrinking mentality can the initiator's concept and competitiveness be brought into full play.
If you complicate your concept and diversify the public chain, I think this is not the spirit of the blockchain. The core spirit of the blockchain is inclusiveness, no matter what your concept is, we can all work together. The public chain itself is to enable everyone to collaborate better. As the offline leader of the public chain, you must become a node and shrink yourself so that you can build up the entire community and jointly increase the community value. But if you turn your public chain into a center that can do everything, it will inevitably complicate your own ecosystem, and you will encounter many problems that cannot be solved. The sooner you give up the idea of centralization, the more inclusive and self-shrinking, the more you can realize the value of everyone, the greater your chance of success, this is inclusiveness and distributed trust. And the new public chain must also bring in Web2. Finally, I would also like to hear Mr. Shi's opinions on these two issues.
Shi Xingguo :
What you just said really gets to the heart of the matter. In fact, we don't talk about the blockchain itself, we talk about the future Web3, the core of which is to let everyone use the same incentive method to get together to do things, but the technical means of its realization is the blockchain.
In the process of getting together and using incentives to solve problems together, there must be survival of the fittest through technical means. If a good public chain can unify everyone's interests under the same incentive mechanism, it should indeed be a very pure, simple, but very inclusive thing.
Because I have been working on the underlying technology of the blockchain, and I think that the parallel architecture is the key to solving the current restrictive bottleneck problem of the blockchain, so I mainly look at this problem from the bottleneck of the chain itself.
The current performance bottleneck and expansion bottleneck of the serial chain are the biggest problems. It can be said that the scalability of the serial chain is now zero. In other words, once the new public chain is deployed, no matter how high its capacity space is at the time of deployment, it always has an upper limit and cannot be changed. This means that in future business development, one day we will encounter this limit.
This has also led to the emergence of many so-called side chains on Ethereum. In fact, the capacity and cost of Ethereum are unacceptable to many other projects, so these projects stand on their own, using Ethereum technology and making parameters. Adjust it to make it slightly higher in efficiency or capacity. The resulting new public chain is called a side chain in the industry, but in fact it is just a business chain derived from Ethereum. It is true that these sidechains solve some cost and speed problems, but it brings more problems when solving these problems.
Different side chains are separated from each other to form independent credit domains of different sizes, and there is no effective means to connect these credit domains, which has caused the split of the entire ecology or the entire encryption community. The industry is also trying to use cross-chain as a solution to this problem, which solves the problem of data or asset flow to a certain extent, but there is an important problem that it cannot solve. That is the cross-border interaction at the contract level. Due to different credit domains, contracts cannot be directly trusted or invoked, and cross-chain technology will never solve this problem.
And even if the cross-chain technology solves the flow of assets, we can see that it brings serious security problems. V God has also raised this issue, and the facts have proved that the combined losses caused by the security vulnerabilities caused by the two cross-chain bridges of Pologon and Solana alone have exceeded 1 billion US dollars. It is not difficult to see that the general direction in the technical field is already very clear, that is, neither the serial chain nor the cross-chain can be called a solution. The next breakthrough of the blockchain is to solve the scalability and integration.
Layer0, which is currently highly regarded in the industry, is largely talking about this issue. If there will be Web3 and Metaverse in the future, then all the current serial chain architectures will be useless. The processing power and business data volume of the current serial chain are completely unseen in the Web2 world, not to mention the wider Web3.
Therefore, the future public chain, including Layer0, needs to solve the first problem of scalability, the second problem of compatibility, which is also the integration capability you mentioned, and the third problem of solving the problem of credit domain separation. Only by solving these three problems can the blockchain achieve the technology and capabilities sufficient to support Web3. Therefore, in the next step, any technical project that can make breakthroughs in any of these three aspects will become the next milestone in the industry.
The third section: NFT
Shi Xingguo :
Next is the last question on my side. In the field of NFT, in your keynote speech "Innovating NFT to NFT", you also put forward the idea of "NFTizing NFT", that is, a communication that supports divisible NFT. The certificate type is designed to allow hundreds of millions of Metaverse residents in the future to share ownership and use Metaverse items together. The fragmented NFT can break the shackles of the current high unit price of NFT and high barriers to entry, and provide ideas for solving liquidity problems.
However, the current NFT market is in the de-bubble stage, what challenges does the development of "fragmentation" of subdivided tracks face? What characteristics do NFTs suitable for fragmentation need to have?
In addition, YFI founder Andre Cronje (AC) once tweeted bluntly: The NFT fragmentation protocol is a Ponzi scheme. The token issuer converts any valuable meme NFT into fragmented tokens, and then distributes 10% to themselves to profit from it. Moreover, the division of encrypted artwork will directly destroy its artistic value, and the rights and interests carried by NFT will also be difficult to practice after fragmentation. May I ask Professor Li, what do you think of this point of view?
Li Guoquan :
I think what he said also makes sense. The reason lies in the different design ideas of NFT fragmentation. For example, if the issuer designs an NFT, 70% of which are blank, the blank part has no value, and if someone holds the key part and then combines it with other parts, it will be more valuable. value. So from this point of view, he was right. If the issuer takes the valuable part for itself and distributes the blank part to external collections, it will be completely meaningless. Therefore, the idea of "NFTizing NFTs" I put forward is intended to trigger thinking in the community-whether we have the corresponding spirit.
If the issuer writes some codes, and each code is valuable, but different codes can be merged into more valuable codes, just like when we write codes, we put more than a dozen lines of modus in the codes Code splitting, everyone owning a modus, and doing open source, that would be interesting.
Because NFT NFTization is actually an experiment to see if our community is just thinking about ourselves, or is it really an incentive method like Satoshi Nakamoto said, and everyone must serve the entire community and insist on people-oriented. So I put forward this point of view to test how the market reacts. What Andre Cronje said is absolutely correct. If our community does not have this spirit and just deceives each other under the cloak of consensus, it will be like our central bank telling our ministers Yes, if this technology is used to defraud, then the central bank and us scholars, including Mr. Shi, why do we support the community? It doesn't make sense at all.
We support the community because we feel that there are many problems that cannot be resolved, including the possible problems of the POS mechanism we mentioned-centralization, whoever has the money has the final say. Whether it is a scholar, a minister of supervision, or an industry leader like Mr. Shi, you have spent so much time supporting the community. What you want is to solve problems that could not be solved before, and what you want is a new economic system like more people. We should contribute to the neglected, discriminated, suppressed and unfairly treated groups to help them have a better life. If there is no such thinking, if the entire community only goes to speculative actions and exploiting the public, I fully agree with what our Singaporean minister and the central bank said.
I think Andre Cronje's proposal is exactly the answer I want to get. When we design the project, we must put good design ideas into it to ensure fairness. The spirit of the blockchain is to share a big thing with everyone, and share what only a few people have with more people to enjoy. After the wealth reaches a certain level, you will reach your consumption margin, and the money will be useless. One more dollar of assets for the rich will not produce one dollar of consumption, but one more dollar for the poor may generate more More consumption, such an internal cycle can enable the economy to have sustainable growth, so we engage in blockchain, bitcoin, and ether. We just want everyone to share this result. This is the most important point. I also want to know Mr. Shi's views on the fragmentation of NFT.
Shi Xingguo :
I think technically speaking, flexibility such as fragmentation itself gives digital assets more application possibilities. From a business point of view, this flexibility may indeed be abused, resulting in some negative effects. But I don't think the knife itself is wrong, it's the person holding the knife that's wrong. Fragmentation is just a tool, it depends on how you go about it, just like the once controversial asset securitization. After a business form appears, it needs to have corresponding business means to match it. When the business matching business means is not matched, it may be used by some attempters, but I think this is also a problem in essence. The process of trial and error in new industries.
NFT is actually a kind of equity, a digital representation of equity. It does not change its nature because of the number of holders. I really agree with your point of view that NFT distribution to more talents may inspire more business models. Of course, this multi-person holding method may not be suitable for some scenarios, and it will also bring some burden and trouble in management. But on the other hand, if there is no such multi-party holding model in the IT world, it will be the most boring.
So I believe that when the governance method keeps up, the NFTization of NFT will definitely bloom amazing flowers.
Li Guoquan :
I also agree with your point of view. We educators do have the responsibility to teach ethics and governance to students as the most important part. In our fintech academy, we have set up corresponding assessments, including professors and students. Regardless of technology or finance, if there is no ethics and governance, I think everything we do is in vain.
Shi Xingguo :
In fact, many people hope to achieve the state of ethics you mentioned to achieve a satisfactory result for everyone throughout their lives, which is also the purpose of dehumanizing the blockchain. He may not want to kill the center, but to let more people share something worth sharing in the world. Thank you, Professor Li, you spent so much time today, and many of the issues you talked about today really hit the soul.