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The theme of the second roundtable forum is "Under Web3.0, how does DeFi connect to the real world?" ", six guests were invited to participate in the discussion, namely: Ray Xiao, investment director of IOSG Ventures, James Tang, investment manager of Fenbushi Capital, Qinwen, head of the Chinese community of Web3 Foundation, Guo Tao, head of Zenlink China, and Lilith Li, market consultant of Aave And Lianwen Research Director Pan Zhixiong.
Pan Zhixiong said that one of the biggest features of Web3.0 is "reducing involution". In the era of Web3.0, financial construction can be built like building blocks, which are hierarchical; projects of the same type may have some competition, but eventually they will go in different directions due to their respective advantages and differences.
James Tang believes that the core of Web3.0 is the organic unification and privatization of network data, breaking the monopoly of existing centralized institutions on data, and allowing users to have independent management rights over data. In the Web2.0 era, user data is stored on the platform. On the one hand, user privacy is challenged. On the other hand, users have no real ownership of their own data and lack of interactivity. Web3.0 will subvert the existing model in this regard. Users will regain ownership of data, and fair value distribution can be achieved through algorithms and open and transparent mechanisms.
Lilith Li said that the Web1.0 era is one-way information transmission, and users can only search and browse information; the Web2.0 era has increased interaction, and Web3.0 returns to the user itself again, and has no borders, and information is more fair. Lilith Li added Aave's next three visions and plans: one is to develop the Aave version of Twitter; the other is to increase NFT as collateral for lending; the third is to launch AavePro, which pays more attention to compliance.
Regarding how DeFi attracts new external funds to enter the market, Pan Zhixiong believes that we can start from two directions: from the asset level, we can improve the chain of physical assets into the DeFi world, making it more composable and divisible; Music and digital art can also go to the chain through NFT, thereby increasing the scale of DeFi funds. From the business level, it can provide easy-to-use and competitive products to attract traditional financial users, such as providing some high-yield financial products.
Regarding the development direction of DeFi, Ray Xiao admitted that he is not optimistic about "DeFi + supply chain finance". He explained that traditional mortgages require collateral to be provided, and the entire process of obtaining a compliance license through a centralized institution, auditing, and collateral valuation is very complicated, which cannot be solved by blockchain. Ray Xiao emphasized that in the development of future DeFi projects, compliance issues are crucial. "I think there is a demand for DeFi, whether in the physical or virtual world, and the long-term value will still be verified."
Regarding the combination of traditional assets and DeFi, Qinwen mentioned that compliance and regulatory issues must be paid attention to, and at the same time expressed that he is more optimistic about the art market. "I think the more interesting idea is that all physical things enter a completely virtual dimension and do various assets or activities. It is natively generated in the encrypted world, which will generate various economic activities and thus generate various assets. .”
The following is the content of the round table, edited and organized by Odaily, enjoy~
The following is the content of the round table, edited and organized by Odaily, enjoy~
Pan Zhixiong:
Pan Zhixiong:Hello everyone, I am Pan Zhixiong from Lianwen. My usual research direction is public chain, Layer2, DeFi and Web3.
James Tang：Hello everyone, I am James from Fenbushi Capital. I am currently in charge of all kinds of DeFi financing in the company.
Lilith Li：Hello everyone, I'm Lilith, and I'm usually based in Tokyo. I'm very happy to represent the Aave team in this event today. I'm currently in charge of the Asian market and community.
Ray Xiao：Hello everyone, I am from IOSG Ventures. I am mainly responsible for primary market investment, focusing on tracks including DeFi, NFT and Polkadot ecology.
Qinwen：Guo Tao:
Guo Tao:Hello everyone, I am Guo Tao, from the project party Zenlink. Zenlink has made the underlying DEX protocol based on Polkadot. In the early stage, it will cooperate with two parachains in the Polkadot ecosystem: one is Moonbeam, which is an EVM parachain; the other is Bifrost, and we will also deploy our version.
Q1
Pan Zhixiong:
Pan Zhixiong:To use a more fashionable word to talk about Web3.0, I think it has no "involution". Of course, this may not be its final form, but it is still different from the competitive form of Web2.0. The first relatively large application of Web3.0, I think it is DeFi.
In the era of Web 3.0, financial structures can be built like building blocks, which are hierarchical and stacked. So we don't have so much competition, and there may be some differences at the same level. For example, Uniswap and other DEXs, they still had competition in the early days, and they all wanted to try trading-related AMMs (automated market makers). But in the end they went in different directions because they have different strengths; Uniswap is more focused on providing liquidity, and they are more resource efficient in this regard. One of the great features of Web3.0 is to reduce involution.
In addition, Web3.0 is very different from Web2.0 in terms of data ownership, privacy and charging models, so I won't go into details.
James Tang：Regarding the composability of Web3.0, I very much agree with what Teacher Pan just said. In my opinion, the core of Web3.0 is the organic unification and privatization of network data, breaking the monopoly of existing centralized institutions on data, and allowing users to have independent management rights over data.
In terms of purpose, I think Web3.0 achieves absolute fairness through technology. In the Web2.0 era, user data is stored on the platform, and the value of various advertising information pushed based on big data algorithms is triggered by the user's own behavior. However, this part of the value is currently controlled by centralized institutions and platforms. On the one hand, user privacy is challenged, on the other hand, users have no real ownership of their own data and lack of interactivity. Web3.0 will subvert the existing model in this regard. Users will regain ownership of data, and fair value distribution can be achieved through algorithms and open and transparent mechanisms.
Lilith Li：The Web 1.0 era is one-way information transmission, and users can only search and browse information; the Web 2.0 era has increased interaction, and Web 3.0 returns to the user itself, which has a certain relationship with the blockchain we are talking about now. For example, big companies like Ali are now more concerned about the development prospects of Web3.0.
I personally don't have much feeling for AI and machine learning, but I think that Web3.0 is more borderless, will attract more users, and make information fairer. For example, we now say that we want to create a Twitter on Aave, and we will launch some Web3.0-related trends, so you can pay more attention to it.
Ray Xiao：From the perspective of business logic and smart contracts, the traditional Web2.0 is built on stand-alone machines and cloud computing (computing clusters), which are essentially centralized systems. Although the blockchain sacrifices performance, it is a decentralized system. It pays more attention to the fact that the entire computer system is not controlled by any party, and the business logic on the chain can be completed without being tampered with. Even if most systems are attacked, the logic on the chain will continue to run. I think this is the most interesting point of Web3.0.
Qinwen：In fact, the word Web3.0 has a special meaning for us. As we all know, Gavin (the founder of Polkadot) is the first person to propose the concept of Web3.0 in the blockchain world, including our own foundation Web3, we all have a mission: to protect the privacy of personal data. What we are currently doing, including various protocols, applications, and tools, are very important to the next generation of the Internet, especially user privacy and data.
Guo Tao:
Guo Tao:Several guests spoke very well, and there are many key words worth thinking about.
Just now James mentioned a word "organic unity". I think this is the more prominent point of Web2.0 and Web3.0. Web3.0, whether it is personal identity, data or assets, their circulation should be completed in one system.
There is another key word "decentralization". What we are running now, whether it is the system or the interaction between people and the system, the bottom layer is determined by the decentralization and blockchain system. I think this is the biggest difference between Web3.0 and Web2.0. When individuals interact with these chains, your identities may be on different platforms and different chains, but they can all be unified, and your data can be freely circulated and unified. This is the first point.
The second point is that the subjects of individuals and data will change under Web3.0. In Web2.0 and traditional Internet companies, we can clearly feel that the ownership of data is not in the hands of individuals. Individuals can create data, but we cannot use data directly. Those who use data are those centralized companies.
The third point is that I think the subjects who use data will become individuals, and we can transfer and interact with our data in some form. It is also possible that some data service companies will be born. They may process or apply these data, but the final confirmation and authorized use of these data are determined by the individual. I think these are some of the more obvious aspects of Web3.0. feature.
Q2:
Winny (host): After a year of explosive growth, the growth rate of the current DeFi market has slowed down to a certain extent. In your opinion, does DeFi need some new funding channels or business models to attract more external capital inflows? Can you make some simple imaginations about the specific forms of these channels or businesses?
Pan Zhixiong: From the perspective of the growth of DeFi, you can start from the asset level, and you can do more things with assets. There are mainly two paths: one is to only look for native assets on the chain, such as NFT. Thousands or tens of thousands of assets are born in the digital native world, which has a scale effect; Or put large-scale physical assets on the chain and enter the DeFi world to make it more composable and divisible. There are also some music and digital art, which can also go to the world on the chain through the form of NFT, so that the scale of funds in the entire market continues to grow.
In terms of channels and business, I think we should start with the simplest and most competitive products, such as providing some financial products with higher returns than traditional ones. If these products can continue to be provided, funds will come in slowly, and I think this is also a direction worth trying.
James Tang：I don't think the growth rate of the DeFi market is a particularly big problem. From the perspective of the blockchain industry cycle, the stock technology explosion that lasted from the previous cycle has basically landed; with the slowdown of technological innovation, the slowdown of DeFi increment is completely understandable. Even if the growth rate slows down, we can still see some positive and healthy signals. For example, the TVL of Solana and Layer2 keeps rising, and the infrastructure of DeFi is getting more and more perfect. The whole industry keeps moving forward, but it takes a little more time.
In addition, there are several issues that need to be paid attention to when external funds enter the market. The first is compliance with deposits and withdrawals and corporate internal audits; the second is that compared with traditional finance, the DeFi market is relatively small, and the market cannot fully absorb the influx of large funds; the third is security (hacking) and liquidity issues. These problems require joint efforts from inside and outside the DeFi world to solve them together.
Finally, let’s talk about the business model. In addition to traditional capital entering the market through trusts and ETFs, I think there is another relatively large channel to enter the market through the services of centralized exchanges. The exchange participates in DeFi, the user purchases the product, and the exchange assumes the risk control responsibility. Since the exchange itself has entities that can be held accountable, relatively speaking, traditional capital will be more at ease.
Lilith Li：My personal feeling is that the DeFi market is not actually slowing down. Take Aave as an example, the TVL has been constantly rising. During the market turmoil in May, Aave's lock-up volume fell to 16 billion US dollars, and now it is back to around 25 billion US dollars. We have also begun to seek diversified development, such as moving towards compliance and cooperating with some large institutions. In July this year, Aave applied for a license in the UK, and we should be regarded as the world's first compliant DeFi project. Since then, the number of users has exploded further, and the TVL has increased because we have built a good sense of trust.
With the funds and users, we also began to think about some new ways to play. There are three main ideas: one is to be an Aave version of Twitter; the other is to increase NFT as collateral for loans; users to cooperate.
I personally think that DeFi and the real estate industry can actually be combined. For example, real estate can be used as collateral, or real estate securities can be used as collateral, thereby enriching the asset types of the entire market.
Ray Xiao：In the past two years, "DeFi + supply chain finance" has appeared, but I think the development in this direction is relatively slow. In traditional finance, the fund demander needs to provide collateral, and the platform needs to obtain a compliance license through the central agency and do audits, as well as valuation of collateral... The whole process is very complicated, which cannot be solved by blockchain.
Therefore, the compliance issues mentioned by several guests just now are very important. There was an explosive project in 2020, which was later closed due to compliance issues-they mainly used DeFi to lend money to people who needed loans to buy cars in reality, which was risky.
In addition, the rate of return of the fund provider in DeFi may not be comparable to that of traditional lending; even the fund demander itself may not be interested in DeFi. I have introduced DeFi products to some small and medium-sized enterprises and self-employed people before, but they said that they don’t need it, because they already have a set of traditional international factoring models, the lending process is simpler and the interest rate is lower. Therefore, the direction that DeFi should really aim at should be a problem that the traditional world cannot solve.
Some people have always said that DeFi is an idling system that has nothing to do with the real economy and is separate. I don’t think so. DeFi is actually slowly breaking through the boundaries and combining empowerment with physical scenarios. I think there is a demand for DeFi in both the physical and virtual worlds, and the long-term value will still be verified.
Qinwen：Let me expand on Ray's answer. I have also learned about many companies that do supply chain finance. In order to have a stronger relationship with suppliers, these large companies will actually take the initiative to build a similar on-chain model, but they are also a centralized system of supply chain finance. Including asset tokenization, which was very hot in the past two years, everyone has the idea of building a blockchain, but they will face several problems: firstly, the cost is very high, and secondly, whether it is a real rigid demand. Including in the real world, because many people are already using some of the current solutions, its education cost is very high; in addition to the cost, there is also a layer of human relationship, for example, if a customer wants him to use the loan from a certain company, there will be Some such concerns.
How to increase assets in the DeFi world? On the one hand, it is necessary to bring traditional assets to the blockchain and choose some suitable methods. On the other hand, there are many native new assets that will be generated, such as popular Punks, and music. Music actually has many scenarios, including copyright, and there are many independent musicians now.
Guo Tao:
Guo Tao:As far as DeFi itself is concerned, we have also thought about what will come up in the next cycle and what will be short-lived. From the perspective of the next cycle of the blockchain, there must be a landmark event, and the number of users will jump by an order of magnitude. For example, DeFi may reach the million level.
In the next cycle, DeFi will definitely have an order of magnitude jump, but what kind of presentation method is required? The product side must not be what it is now. For ordinary users, it is difficult for the current DeFi products to grow by an order of magnitude, and it is difficult to reach a scale of 100 times.
In my opinion, there are two main possible paths: one is that there will be products that smooth the threshold; Stuff is hooked.
In the next cycle, HeFi will rise, but it has some prerequisites, such as compliance, security, and basic thresholds, which must be resolved. In the next cycle of the combination of DeFi and HeFi, the DeFi we play today will become a lower-level fund circulation channel or method, and should not become a product directly used by ordinary users at the application level. There will be products with lower thresholds. , the bottom layer is still supported by Uni and today's DeFi. This is my personal opinion.
Q3
Pan Zhixiong:
Pan Zhixiong:My conclusion is that as long as there is regulation, TradFi and DeFi are symbiotic; the line between them is mainly divided by regulation. DeFi is more of a digital native biased towards weak regulatory scenarios, while CeFi is a financial service under strong regulation.
DeFi is the underlying protocol, and the protocol does not have the ability to screen, or it should not do this, but let the upper-layer applications screen users and provide services. Compared with more complicated traditional financial scenarios, DeFi can improve overall financial efficiency and reduce costs, so I think the two should continue to coexist in some form, and supervision may be the most concerned and clear line for everyone .
James Tang：I very much agree with Mr. Pan’s point of view. In the future, CeFi and DeFi will have their own strengths, healthy competition, and business integration.
CeFi itself is the transfer of trust between people or institutions, and there are thresholds for retail investors; on the other hand, DeFi exists based on agreements, which is more fair and treats everyone equally. You usually see that certain currencies have a competitive relationship in the transaction volume on DEX, and we may ignore the potential future cooperation between CeFi and DeFi.
On the one hand, DeFi as a whole lacks a sound risk control system and capital utilization efficiency compared to CeFi; from the perspective of the upstream and downstream logic of the investment chain, CeFi continues to open up some capital channels, providing more ammunition for DeFi in the future, such as ETFs, trusts, etc. is constantly evolving.
To give a few examples, I have also seen some credit products recently. By accessing the API of real-world banks, users can carry out unsecured credit loans based on bank behavior. I think this is a very good way for CeFi to empower DeFi. Another case is a real estate company in California, USA, which helps users realize real estate property rights confirmation on the chain under the premise of compliance. Whoever owns the NFT has the ownership of the land. A user recently turned his land into NFT through this platform, and completed a loan on the NFT mortgage lending platform on the chain, which is very similar to Centrifuge's vision. I think that in the future, more and more real-world assets will be on the chain, and the pattern will become bigger and bigger.
Lilith Li：Aave has also made attempts related to traditional finance before, such as launching credit loans in 2020. You can authorize your credit to others for loans, and this can be done between acquaintances and between institutions. Now that Aave has also obtained a compliance license, we are also qualified to discuss cooperation with traditional finance in this area.
Regarding compliance issues, I would like to emphasize again. For example, in Japan, they have very strict restrictions on cryptocurrencies, you need to pay taxes, audits, etc. We also communicated with the company over there, and finally found that compliance issues are the top priority. If you don't have a license, they won't cooperate with you, because he has to explain to his shareholders.
After dealing with traditional finance, we feel that it is very difficult and the threshold is very high. We consider that if the threshold can be lowered so that more traditional financial funds can come in, this will be beneficial to the entire market, so we also launched AavePro this year to solve this problem.
Ray Xiao：I don't think DeFi will die. Although it is relatively small, this is the charm of Web3.0. Its business logic is in the decentralized computer network, it can run forever, and no one can shut it down.
Centrifuge is not easy. It is considered a boss level in this track. It is not easy to do this, but they have been insisting on doing it. After a long time, I think it will have certain advantages. Of course, I suggest that it is best to have an agreement that can help deal with off-chain matters, such as auditing funds, assets and valuation. Centrifuge focuses on providing liquidity for these physical assets. Compared with other DeFi pools, the amount of Centrifuge is not so much TVL, but this round it is indeed very valuable, and it has been doing this, and its agreement matching value is very high.
Qinwen：If there is a combination of inside and outside the circle, and the combination of CeFi and DeFi, there must be an opportunity. The supervision you talked about just now is necessary, but I think NFT is more optimistic.
Guo Tao:
Guo Tao:I think this question can be viewed from two aspects.
From within the industry, you can see that whether it is a leading exchange, or a team at the application layer or protocol layer, it depends on how they think about this issue. Because sometimes the development of the industry depends on the specific developers in this industry, or the development of these projects. Whether it is leading the industry or deviates from the industry, it is created by these people. It has been more than a year since DeFi developed to today, but many people are actually thinking about the breakthrough and growth of DeFi.
We often say that the most important tracks occupied by DeFi, such as transactions, mortgages and other related businesses, will naturally think about unsecured lending in the real world. I think these business models must break through. In the process of breakthrough, whether it is regulation or integration with the real world, is this integration the general trend?
From an external point of view, the capital needs to be large, and there must be more people playing. How do the countries that can decide the track and the people in the real world behind it view this issue? At present, regulation is still the general trend. Including the top exchange Binance, or other exchanges, those without supervision will be regulated. There will be integration under supervision, so I think integration is a big trend. In the process of differentiation after integration, it is possible that as James just said, the original will have its place, and the traditional will also have its place. This is possible.
But in the longer term, we may really enter a completely virtual world created by blockchain or similar concepts. Whether it is assets, applications, or your basic necessities of life, in that virtual world, it is possible to be completely like a wild horse out of Xinjiang. This is very possible.
winny (round table host): Thank you very much for your wonderful answers. The above is the whole content of this round table. Thank you again for your participation.
