Author:
@LiamWang 88
Independent Researcher in Web3
My first encounter and involvement with blockchain was around the end of 2017 and the beginning of 2018. At that time, I was working at a major internet company, which gave me the opportunity to be exposed to blockchain technology early on due to the company’s inherent advantages in trying out new technologies and its programmer-friendly environment. I used to hang out with a group of programmer friends, and the most talked-about topics were “Bitcoin,” “mining,” “ICO,” “air coins,” and so on.
I didn’t come from a technical background, so what they were talking about was completely confusing to me at the time. But because I came from a content background, my intuition told me that blockchain was a very different kind of technology.
So, I started reading the Bitcoin whitepaper and the Ethereum whitepaper. I distinctly remember one night when I read the Bitcoin whitepaper in English ten times and still couldn’t understand it. The only thing I remembered was the title: “Bitcoin: A Peer-to-Peer Electronic Cash System.” That title was deeply ingrained in my mind, and my intuitive feeling was just three words: it’s amazing!
And that’s where it all began. Or to use a popular phrase on the internet now, the gears of destiny started turning.
Interestingly, even though I first learned about blockchain through Bitcoin, I actually followed my friends’ advice and started playing with air coins, and as you can imagine, I didn’t escape the fate of being a “leek.”
So, at that time, my attitude towards blockchain was contradictory. On the one hand, like many others, I thought it was a new scam to cut leeks – and indeed, at that time, such situations did exist. On the other hand, I thought at least the concept of Bitcoin was very innovative and hinted at some possibilities for the future.
In the years 2019-2020, I didn’t actively participate in this industry. I was more of a learner and observer, trying to understand the development of this industry. Even now, I still consider myself a “learner” and an “observer” as the most suitable labels for myself.
2021: Immersing in the Beauty of Web3
If 2017-2018 was a superficial experience with blockchain, then 2021 can be described as a year of “deep immersion.”
In that year, I was working at a dollar-based fund, which gave me more opportunities to learn about cutting-edge technologies and emerging fields. Coincidentally, it was also the year when the crypto market experienced a bull run, and “Web3” started to replace blockchain as a new narrative.
When I look back on that bull market, what immediately comes to mind? There are several things that left a deep impression on me:
– In early 2021, Bitcoin reached a market capitalization of one trillion dollars for the first time.
– Major companies like Tesla publicly disclosed their holdings of Bitcoin.
– Artist Beeple sold an NFT artwork titled “Everydays: The first 5000 days” for $69 million.
– Basketball superstar Stephen Curry spent $180,000 to buy an NFT from Bored Ape Yacht Club (BAYC). Yes, you read that right, $180,000.
– El Salvador passed a law to make Bitcoin a legal tender.
– DAOs – a new form of social organization in Web3 – began to emerge.
Looking back, the sentiment in the Web3 industry in 2021 was extremely high. This enthusiasm was reflected in several aspects:
1. Hot investments and entrepreneurship: As someone in the VC industry, I had many opportunities to interact with investors and entrepreneur friends, and Web3 was always a topic that couldn’t be ignored. During that time, I saw many investors leaving traditional investment fields and transitioning into Web3. The same was true for entrepreneurs. In traditional VC investments, top talents from major companies were often the preferred targets. However, in that year, I also saw many outstanding talents leaving major companies to start businesses in the Web3 field. When I asked these investor and entrepreneur friends why they chose Web3, a common answer was that the Web3 industry was like the 1990s internet, a vast blue ocean where occupying an ecological niche early would yield industry dividends.
2. Speculative frenzy: In Web3, speculation is a common verb. Especially during a bull market, speculation becomes even more prevalent. Speculating on coins, especially on contract prices, was a common activity. Looking purely at the price charts, the crypto market in 2021 saw significant gains. So, on social media, you would always see people flaunting their huge profits and sharing their experiences on how to easily make money in the crypto market. Such information was abundant every day, and if you consumed too much of it, you would get the illusion that making money in this industry was extremely easy, regardless of your professional background or education. Just leverage up during the bull market, have enough courage, and anyone could easily make money.
Speculating on NFTs: In 2021, NFTs were undoubtedly the most talked-about topic. Especially with Bored Ape Yacht Club (BAYC) gaining popularity and attracting users from Web2. At that time, besides the speculative value of NFTs, they were also used as avatars. If your social media avatar was a bored ape or a CryptoPunk, congratulations, many people would consider you an OG or someone extraordinary because usually, people who own such NFTs either have a high net worth or have a great reputation. NFTs catered to the human desire for showmanship. So, many people around me were speculating on NFTs, especially young friends. Since the minting of many NFTs was not based on East Eight time, if you wanted to mint an NFT that you liked and had high speculative value, you had to stay up late to wait for it. At that time, people in the industry jokingly referred to NFTs as “small pictures,” and the act of speculating on NFTs was summed up in one industry slang phrase: “Did you stay up all night for it?”
3. The popularity of DAOs: To this day, I still believe that the emergence of the term “DAO” in 2021 is a very valuable thing. Because DAO stands for decentralized autonomous organization, compared to the speculative behaviors of trading coins and NFTs, the tokenization speculation of DAOs was relatively less. More importantly, DAOs explore a completely different organizational form compared to traditional models. These organizational forms have three important characteristics: decentralization, no hierarchical structure, consensus-based decision-making, and remote work through online collaboration.
Of course, like many emerging phenomena, DAOs first gained popularity abroad. Well-known DAOs at the time included Bankless DAO (aiming to promote the widespread application and social consensus of a truly bankless financial system), Pleasr DAO (composed of digital artists and collectors aiming to acquire culturally significant works), and ConstitutionDAO (raising funds to bid for a copy of the U.S. Constitution). Later, DAO organizations took root and emerged in China, giving rise to some experimental DAO projects.
Like speculating on NFTs, young people were the main participants in DAO organizations. They were more receptive to novel things, and at that time, many young people referred to themselves as “digital nomads.” Organizational forms like DAOs were more suitable for their digital nomadic lifestyle.
Looking back on 2021, I was inevitably influenced by the hype of the Web3 bull market. The word I would use to describe my feelings towards Web3 in 2021 is “immersive admiration.” This immersive admiration stemmed from the grandeur of the technology represented by this industry – Web3 integrates cryptography, distributed ledgers, smart contracts, and other new technologies. It also stemmed from the perception that this industry seemed to offer easier ways to make money compared to other industries. Additionally, the emergence of new organizational forms like DAOs further explored the possibilities for new forms of social organization and collaboration in the future.
If I were to summarize it in one sentence, it would be: Everything is wonderful during a bull market.
2022: From Admiration to Calmness, Change Happens in the Blink of an Eye
If, in 2021’s bull market, everything was wonderful, then 2022 was a year of shattered dreams for the crypto market.
This year witnessed too many historic events that will be remembered in the crypto industry:
– In May 2022, the public blockchain Terra collapsed, and the Luna token became worthless overnight.
– In July 2022, prominent investment fund Three Arrows Capital filed for bankruptcy protection.
– In November 2022, leading exchange FTX was exposed for misappropriating user funds, and from the discovery of the problem to the announcement of bankruptcy, the whole process took only a few days.
Although there were some positive events in this year that brought comfort, such as the completion of the transition from PoW to PoS in the Ethereum consensus mechanism, the occurrence of the above events can be considered the darkest moment in the history of the crypto industry. It directly set the tone of “depression” for the Web3 industry in 2022.
Instead of hearing inspiring and upbeat news, I started hearing more voices of disappointment and utter failure: people suffering heavy losses from trading coins, people leaving the industry, projects ceasing operations due to a lack of funding, crypto funds no longer investing. No one was discussing which coin was worth speculating on, no one was discussing whether NFTs would continue to rise (on the contrary, everyone was selling, but due to the illiquidity of NFTs, many of them ended up worthless in people’s hands), no one was discussing what DAOs should do next, and no one was discussing mass adoption in the industry. The industry became quiet, or to use the word I mentioned earlier, it fell into a depression.
Like many others, after witnessing and experiencing so many thrilling and tumultuous events in the industry, I started to detach from the admiration I had for Web3 in 2021 and gradually became calm:
On one hand, the huge volatility in the crypto market made me realize that those who enter this field will not only experience the ecstasy of overnight wealth but also the regret of overnight losses. Especially for those who use high leverage and treat contracts as spot trading, they are destined to face the fate of “betting on a bicycle and turning it into a motorcycle.”
On the other hand, the issues of opaque fund usage and lack of effective regulation exposed by this industry have severely undermined people’s confidence in this industry. Although it is a good thing for long-term development to encounter such problems early on, it did pour cold water on the exuberant sentiment and made everyone start to objectively and calmly look at Web3.
Lastly, for those experiments that I believe have more social value, such as further exploration and discussion of the DAO model, and the promotion of charity and environmental protection through tokenization, they did not make significant progress in this year. Instead, they fell into silence along with the industry’s direction.
For a while, I kept thinking about one question: Why did so many newcomers enter the industry in 2021? I think mediums like NFTs played a significant role in attracting them.Playing a significant role, Web3 has expanded the application scenarios of the internet (even if only as avatars), allowing more Web2 users to experience NFTs and Web3 in a more tangible way. However, once people are exposed to NFTs, they quickly realize that it is an investment/speculative asset. Overall, the integration of Web3 with real-life scenarios is weak, and the core focus remains on asset attributes or financial attributes. This has created more tokenized financial derivatives, attracting and enhancing capital liquidity, and generating more investment and speculation opportunities. Therefore, if Web3 is to truly become a long-term industry, it must balance financial speculation and application scenarios.
2023: Market Recovery, but Unable to Return to the Past
After experiencing the bear market of 2022, 2023 can be considered a year of self-healing for the cryptocurrency community. During this year, the price of Bitcoin slowly climbed from $16,000 per coin at the end of 2022. Mainstream exchanges such as Binance increased their investment to promote compliance operations. However, when I spoke to some friends who invested in first-tier projects, they chose to allocate their funds to second-tier projects or continue to observe. As one friend said, “Now that the prices of mainstream coins in the secondary market are so low, why invest in first-tier projects with high uncertainty?”
At the same time, I initially thought that as the market slowly recovered, there would be a resurgence of discussions about Web3 on social media. I remember during the bull market of 2021, a niche social platform called “IM Token” attracted a large number of people interested in Web3. In the circle of the Web3 research institute, if you posted an update, you would receive many likes. However, when I opened the app in 2023, I noticed that some of the previously active individuals or project teams had stopped posting updates, and the number of likes and comments on new posts was almost zero. Everything seemed unable to return to the past.
Therefore, in this year, I consciously communicated with many people, including those outside the circle, those who recently joined the circle, and players who had experience with DEFI and MEME. When I asked them about their views on Web3, I received a unanimous answer: Web3 is a gambling arena for cutting leeks, and it all depends on who the leeks are.
Based on the feedback I received from these conversations, I began to have the idea of writing a book, hoping to objectively introduce the development of Web3 at that time to more people. I wanted to provide a perspective on Web3 that is unbiased and not influenced by subjective opinions about the field. So, together with a dozen friends in the industry, who have deep professional backgrounds and knowledge, we collaborated to publish a Web3 popular science book called “From Technology to Application: A Beginner’s Guide to Web3”. It was officially released at the end of 2023 and received many positive reviews. Looking back now, although only half a year has passed, the chapters and framework of the book are no longer sufficient to cover the current development of Web3. I admit that my attitude towards this industry has changed significantly, but what remains unchanged is that this industry continues to develop rapidly at its own unique pace.
2024: Bull Market Returns, Is Mass Adoption Still Far Away?
Currently, the bull market in 2024 is a certainty. Two major events in this year have become catalysts for the continuous rise in the prices of crypto assets. Firstly, the US SEC approved the issuance of Bitcoin spot ETFs, which means that more funds from Wall Street will flow into Bitcoin, directly boosting the price of Bitcoin and other cryptocurrencies. Secondly, Bitcoin will go through another halving cycle, and based on historical experience, each halving event has driven a bull market. This year is likely to be no exception.
Based on my observations, I compared this bull market with the one in 2021 to see what remains unchanged and what has changed.
What remains unchanged is that the bull market amplifies the power of speculation. In 2021, NFTs were speculative assets, while in 2024, MEME coins have become unique speculative assets. In my opinion, speculative investments related to assets have no right or wrong, as traditional stock markets also have short selling and long positions. However, the volatile nature of the crypto market and the lack of effective regulation amplify the speculative games of each participant during a bull market, as evidenced by the fluctuations in price charts.
Tokens still need better liquidity and the ability to generate returns. In the 2021 bull market, besides NFTs, GameFi and SocialFi were also noteworthy areas. The tokenization attribute unique to Web3 requires specific fields or businesses to achieve better liquidity and create more assets. This remains the case in 2024. On the one hand, the Bitcoin ecosystem is constantly being hyped, from inscriptions to runes, and now Bitcoin Layer 2 and Bitcoin re-staking protocols, almost experiencing everything Ethereum has gone through. On the other hand, Ethereum-based re-staking projects have become a hot topic. Since Ethereum transitioned from POW to POS in 2022 and introduced staking, people are no longer interested in staking rewards; instead, they are focused on how to further improve capital utilization efficiency and achieve higher returns based on staking.
What has changed is that the path to mass adoption has become more diverse. In 2021, the mission of achieving mass adoption in Web3 was placed on games, social platforms, and other projects, but the results did not meet expectations. In 2024, Web3 is increasingly integrating with AI and also starting to merge with offline physical infrastructure, thereby creating another narrative called DePin, hoping to achieve mass adoption through unconventional means. From this perspective, Web3 needs AI or the Internet of Things, rather than AI and the Internet of Things needing Web3. Additionally, in my opinion, the approval of a Bitcoin spot ETF and the acceptance of cryptocurrency donations in the US presidential election have already indicated that cryptocurrency has become mainstream. However, this is a mass adoption that everyone can have, not one that everyone necessarily needs.
The importance of meme culture in Web3 is further highlighted. In the decentralized world of Web3, believing in and supporting what you believe in is a spiritual core, and I believe that memes are a direct expression of the native spiritual core of Web3. This also explains why meme coins have outperformed other altcoins in this bull market.
After experiencing two bull markets from 2021 to 2024, as I mentioned earlier, my perspective on Web3 has shifted from looking up to now looking straight ahead. In my view, Web3 is a group of people “selling” an idea or vision and crowdfunding from the public. Those who agree and participate are rewarded with tokens, and to make tokens effective and liquid, they are given financial attributes. In simple terms, it is a consensus among a group of people dressed in financial clothing, constantly seeking utility scenarios for token empowerment.
Conclusion: How to Establish a Strong Presence in Web3
The above is my understanding of Web3. As I mentioned at the beginning, I consider myself a learner and observer in this field. Therefore, during my deep involvement and firsthand experience in the past two years, I had many opportunities to communicate with friends and professionals in the industry. I found that many people face a common question when choosing Web3 as their future development field: How can we establish a strong presence in this field?
This question varies from person to person, as everyone will come up with different answers based on their own experiences and perceptions. I cannot call myself a “crypto native” because most of my professional experience lies in Web2, and I have not had long-term experience in well-known Web3 projects or investment institutions. Therefore, it is difficult to showcase significant achievements (although my personal investment returns have been satisfactory). However, over the past two years, I have had the opportunity to meet many professionals in the industry and learn from their experiences. Combining my own experience with theirs, I would like to share some comprehensive perspectives:
Do not approach this field with a speculative mindset. Although this industry offers many opportunities to make money, it is not as abundant as it seems. I have heard a saying that there is a pyramid structure in this field, where the first tier involves project planning and execution; the second tier involves VC investments; the third tier involves arbitrage and quantitative trading; the fourth tier involves investment research; and the fifth tier involves hodling. From my experience, those who frequently speculate on coins may not have high returns. On the other hand, traders who engage in arbitrage and quantitative strategies and investors who hold mainstream coins tend to have stable returns. The former is due to their professional abilities, while the latter is because they believe in the long-term value of mainstream coins like Bitcoin that can withstand market cycles. Therefore, in Web3, for most people, having a consistently stable return is far superior to speculating frequently for high-risk high returns.
Assume the best intentions of others. Web3 is a relatively mixed field, and due to different motivations for entering the industry and the reliance on virtual online communication, the trust cost for individuals or projects is relatively high. If you have found a team that you can work with for the long term, then congratulations, you are lucky. If you haven’t found one, it’s okay. In the process of interacting and trying with different people, although you may encounter some disappointments, you will eventually find like-minded partners to work on something together. The more liquid and trust-costly the field, the more important it is to assume the best intentions of others.
Do Your Own Research (DYOR). This is the most widely spread phrase in Web3 and is recognized as valuable advice. This field has various people, opinions, and information, so when we assume the best intentions of others, we also need to form our own independent thinking and judgment in the dazzling environment to develop our own mindset and professional investment methodology. Remember not to be swayed by emotions or others’ CX. Everything requires DYOR.
I wrote this article partly to summarize my own changing understanding of Web3 during a certain period of time. This field has provided me with better investment returns compared to other traditional investment assets, and it has also allowed me to meet many different people, including true industry builders, talented traders, and some speculative investors looking for short-term gains. It has been an interesting journey. More importantly, through experiencing this field firsthand, I have realized my own ecological position in this field and how to adhere to my principles.
Of course, these insights are based on my personal experiences and perceptions and may not be universally applicable. I believe that everyone in this field will have their own understanding, interpretations, and feelings about Web3. I wish everyone can not only make money but also find their suitable role in this ecosystem.
