Author:
@LiamWang 88
Independent Web3 Researcher
I first heard about and got involved in blockchain around late 2017 and early 2018. At that time, I was working at a major internet company, which gave me the opportunity to be exposed to blockchain early on due to the company’s advantage in trying out new technologies and the programmer-friendly atmosphere. I used to hang out with a group of programmer friends, and the topics they talked about the most were “Bitcoin”, “mining”, “ICO”, “aircoins”, and so on.
I don’t come from a technical background, so what they were saying was completely confusing to me at the time. However, because I come from a content background, my intuition told me that blockchain was a very different technology.
So, I started reading the Bitcoin whitepaper and the Ethereum whitepaper. I remember very clearly that one night I read the Bitcoin whitepaper in English ten times and still didn’t understand it. The only thing I remembered was the title: “Bitcoin: A Peer-to-Peer Electronic Cash System”. This title was deeply imprinted in my mind, and my immediate reaction was: it’s amazing!
That was the beginning of everything. Or using a popular phrase on the internet now, the gears of fate began to turn.
Interestingly, although I first learned about blockchain through Bitcoin, I actually listened to my friends’ advice and started with aircoins. As you can imagine, I couldn’t escape the fate of being a newbie investor.
So at that time, my attitude towards blockchain was contradictory. On the one hand, like many others, I thought it was a new scam for cutting leeks. In fact, at that time, there were indeed such situations. On the other hand, I felt that at least the concept of Bitcoin was very new and heralded some possibilities for the future.
In the following years, 2019-2020, I didn’t participate much in this industry. I was just a learner and observer, trying to understand the development of this industry. Even now, I still consider myself a learner and observer as the most suitable labels for myself.
2021: Immersed in the Beauty of Web3
If 2017-2018 was a superficial experience of blockchain, then 2021 can be said to be a year of deep immersion.
That year, I was working at a dollar fund, and thanks to the platform advantages of VC work, I had more opportunities to understand the development of cutting-edge technology and emerging areas. Coincidentally, it was also the year when the crypto market entered a bull market, and “Web3” began to replace blockchain as a new narrative.
If I recall 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 value of 1 trillion dollars for the first time.
Big companies like Tesla 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 a Bored Ape Yacht Club (BAYC) NFT. Yes, you read that right, $180,000.
El Salvador passed a law making Bitcoin legal tender.
DAO – a new form of social organization in Web3 – began to emerge.
Looking back now, the entire sentiment of the Web3 industry in 2021 was very high. This enthusiasm was reflected in:
1. Hot investment and entrepreneurship: Being in the VC industry, I had many opportunities to interact with investors and entrepreneurial friends, and throughout the process, Web3 was always a topic that couldn’t be missed. At that time, I saw many investors leaving traditional investment fields and transitioning into Web3. It was the same for entrepreneurs. In traditional VC investments, top talent from big companies is often the preferred target. But in that year, I also saw many outstanding talents from big companies entering the Web3 field for entrepreneurship.
When I asked these investor and entrepreneur friends about the reasons for choosing Web3, a common answer was that the Web3 industry was like the internet in the 90s, a blue ocean where occupying an ecological niche early could reap industry dividends.
2. Frenzy: In Web3, speculation is a common verb. Especially in a bull market, speculation becomes even more prevalent.
Speculating on coins, especially on contracts. Looking at the candlestick charts, the overall rise of the crypto market in 2021 was very sharp. So, during that time on social media, there were always people showing off their huge profits and sharing their experiences on how to easily make money in the crypto market. Such information was almost daily, and if you saw it too often, it would give you an illusion – that this industry is incredibly easy to make money in, regardless of your professional background or education. In a bull market with leverage, as long as you have the guts, anyone can easily make money.
Speculating on NFTs. In 2021, there was no doubt that NFTs were the most talked-about topic. Especially with Bored Ape Yacht Club (BAYC) going viral and attracting a wave of Web2 users. At that time, the biggest value of NFTs, besides speculation, was using them as avatars. If your social media avatar is a bored ape or a CryptoPunk, congratulations, many people will consider you an OG or someone exceptional because usually people who own these NFTs are either wealthy or prestigious. NFTs satisfied the human desire for showing off. So, at that time, many people around me were speculating on NFTs, especially young friends. Since the minting of many NFTs was not based on the Beijing time zone, if you wanted to mint an NFT you liked and with a high speculative price, you had to stay up late. At that time, NFTs were jokingly referred to as “little pictures” in the industry, and the act of speculating on NFTs was summed up with the industry slang: Did you “liver” today?
3. Hot pursuit of DAOs: Even now, I still think that the emergence of the term “DAO” in 2021 was a very valuable thing. Because DAO stands for decentralized autonomous organization, compared to the speculative behavior of coins and NFTs, DAO tokenization was relatively less prevalent. It focused more on exploring a completely different organizational form from traditional models. This organizational model has three important features: 1) Decentralization, no distinction between leaders and subordinates; 2) Collaborative work based on consensus and democratic decision-making rules; 3) Remote work, with tasks completed through online collaboration.
Of course, like many things that rise, DAOs first became popular abroad. Well-known DAOs at that time included Bankless DAO (aiming to promote the mass application and social consensus of truly bankless financial systems), Pleasr DAO (composed of digital artists and collectors aimed at acquiring culturally significant works), ConstitutionDAO (crowdfunding an auction for a copy of the US Constitution), and so on. Later, DAO organizations took root and emerged in China with some experimental DAO projects.
Just like speculating on NFTs, young people were the main participants in DAO organizations. They were more open to novel things, and many young people at the time called themselves “digital nomads”. The organizational form of DAOs was also more suitable for their digital nomadic lifestyle.
Looking back at 2021, I couldn’t avoid being influenced by the Web3 bull market frenzy. The word that best describes my feelings towards Web3 in 2021 is – immersive admiration. This immersive admiration came from the technological grandeur represented by this industry – Web3 combines cryptography, distributed ledgers, smart contracts, and other new technologies. It also came from the fact that this industry seemed to have easier ways to make money compared to other industries. Furthermore, the emergence of new organizational forms like DAOs, exploring new forms of human social organization and collaboration.
To sum it up, in a bull market, everything is beautiful.
2022: From Admiration to Sobriety, Change Happens in the Blink of an Eye
If in 2021’s bull market everything was beautiful, then 2022 was the year when the beauty of the crypto market was shattered.
This year witnessed too many historic events that can be remembered in the crypto industry:
In May 2022, the public blockchain Terra collapsed, and the Luna token became worthless overnight.
In July 2022, leading investment fund Three Arrows Capital applied for bankruptcy protection.
In November 2022, leading exchange FTX was exposed for misappropriating user funds and declared bankruptcy within a few days of the problem being discovered.
Although there were still some positive events in this year that could bring solace, such as the completion of Ethereum’s consensus mechanism transition from PoW to PoS. The occurrence of the above events can be said to be the darkest moment in the history of the crypto industry, directly setting 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 disaster: XXX suffered heavy losses from speculative trading, XXX left the industry, XXX projects stopped operations due to lack of funding, XXX crypto funds stopped investing. Nobody was discussing which coin was worth speculating on, nobody was discussing whether NFTs would continue to rise (on the contrary, everyone was selling, but because NFTs have poor liquidity, many NFTs ended up at zero). Nobody was discussing what DAOs should do next, and nobody was discussing how this industry would achieve mass adoption. The entire industry quieted down, or to use the word I mentioned above, the entire industry fell into a depression.
Like many others, after witnessing and experiencing so many thrilling and tumultuous industry events, I started to gradually detach myself from the admiration I had for Web3 in 2021 and become calm:
On the one hand, the huge volatility of the crypto market made me realize that entering this field doesn’t only bring overnight wealth but also regrets from huge overnight losses. Especially for those who used high leverage and treated contracts as spot trading, they regarded Web3 as a gambling field where one can go from riding a bicycle to driving a motorcycle.
On the other hand, the issues of opaque capital usage and lack of effective regulation exposed by this industry have truly shaken people’s confidence in this industry. Although such problems are good for the long-term development of something, it did pour a bucket of cold water on the frenzied sentiment, making everyone begin to objectively and calmly look at Web3.
Lastly, for those attempts that I see as having more social value, such as further exploring and discussing the DAO model, using tokenization to promote charity and environmental protection, there has not been significant development in this year. Instead, they have fallen silent along with the direction of the crypto market.
For a while, I kept thinking about one question: why did so many newcomers enter the industry in 2021? I think mediums like NFTsPlayed a significant role in expanding the application scenarios of Web3 (even just as avatars), allowing more Web2 users to intuitively experience NFTs and Web3. However, the problem is that once people come into contact with NFTs, they immediately realize that it is an investment/speculative product. Overall, the integration of Web3 with real-life scenarios is weak, and the core still lies in asset attributes or financial attributes, creating more tokenized financial derivatives to attract and enhance capital liquidity, and generating more investment and speculation possibilities. Therefore, at that time, I believed that if Web3 wanted 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 in 2022, 2023 can be said to be a year of self-healing for the crypto community. During this year, the price of Bitcoin slowly climbed from $16,000 per coin at the end of 2022, and mainstream exchanges such as Binance increased their investment to promote compliance operations. However, when I talked to some friends who invested in first-tier projects, they chose to allocate to second-tier projects or continue to wait and see. As a friend said, “Now that the prices of mainstream coins in the secondary market are so low, why should we invest in first-tier projects with high uncertainty?”
At the same time, I originally thought that as the market slowly recovered, there would be a renewed discussion of Web3 on social media. I remember during the bull market in 2021, a small social platform called Instant gathered a large number of people interested in Web3. In the circle of the Web3 Research Institute, if you post something, you will receive a lot of likes. But in 2023, when I opened this social software again, I found that some of the previously active people or project parties no longer posted updates, and new posts received almost zero likes and comments. Everything seemed unable to return to the past.
So in this year, I started to consciously communicate with many people, including those outside the circle, those who had just entered the circle, and players who had gained experience in DEFI and MEME. When I asked them about their views on Web3, I received a unanimous answer: Web3 is a casino for harvesting retail investors, and the key is who the retail investors are.
Based on the feedback I received from these exchanges, I started to have the idea of writing a book, hoping to objectively introduce the development of Web3 at that time to more people. Myself and more than a dozen friends in the circle, who have deep professional backgrounds and knowledge accumulation in their respective fields, jointly published a Web3 popular science book called “From Technology to Application: A Handbook for Ordinary People to Learn Web3”, which was officially published at the end of 2023 and received many positive reviews. Looking back now, although it has only been half a year, the chapter system and framework in the book are far from enough to cover the current development of Web3. I admit that my attitude towards this industry has undergone significant changes, but what remains unchanged is that this industry is still developing rapidly according to its unique rhythm.
2024: Bull Market Returns, Is Mass Adoption Far Away?
Currently, the bull market in 2024 is a certainty. In this year, two major events have become catalysts for the continuous increase in the prices of crypto assets: the approval of the Bitcoin spot ETF by the U.S. SEC, which means that more funds from Wall Street will flow into Bitcoin and directly drive up the prices of Bitcoin and other crypto assets; and Bitcoin will go through another halving cycle, and from historical experience, each halving of Bitcoin will trigger a bull market, and this year is likely to be no exception.
Based on my own observations, I compared this bull market with the one in 2021 to see what remains unchanged and what has changed.
What remains unchanged is:
The bull market amplifies the power of speculation. In 2021, NFTs were a speculative product, and in 2024, MEME coins became a unique speculative product. In my opinion, there is no right or wrong in speculation related to assets, as traditional stock markets also have short and long positions. However, the volatility of the crypto market is too high and lacks effective regulation. Therefore, in a bull market, when the speculative games of each participant are summed up into candlestick charts, they are infinitely magnified.
Tokens still need better liquidity and the ability to make money. In the bull market of 2021, in addition to NFTs, GameFi and SocialFi were also noteworthy tracks. The tokenization attribute unique to Web3 needs to rely on specific tracks or businesses to better achieve the liquidity of tokens and create more assets. The same is true for 2024. On the one hand, the Bitcoin ecosystem is being continuously hyped, experiencing almost the same processes as Ethereum, from inscriptions to runes, to Bitcoin Layer 2, and Bitcoin re-staking protocols. On the other hand, Ethereum-based re-staking projects have become a hot topic. Since Ethereum transitioned from POW to POS and introduced staking in 2022, what everyone wants today is not just staking returns, but how to continue to improve capital utilization efficiency and achieve higher returns based on staking.
What has changed is:
The path to Mass Adoption has become more diverse. In 2021, people placed the mission of Web3’s Mass Adoption on games, social projects, and other initiatives, but the results did not meet expectations. In 2024, Web3 is increasingly integrating with AI and also starting to integrate with offline physical infrastructure, shaping another narrative called DePin, hoping that “curve salvation” can achieve the goal of Mass Adoption. From this perspective, Web3 needs AI or the Internet of Things, rather than AI and the Internet of Things needing Web3. In addition, in my opinion, the approval of the Bitcoin spot ETF and the acceptance of cryptocurrency donations in the U.S. presidential election have already indicated that crypto assets have become mainstream. However, this is a Mass Adoption that everyone can have, rather than a Mass Adoption that everyone 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 core spirit, and I believe that MEMEs are the direct expression of the native spirit of Web3. This also explains why the price increase of MEME coins has outperformed other altcoins in this bull market.
After experiencing the two bull markets from 2021 to 2024, as I mentioned earlier, my view of Web3 has changed from looking up to now looking at it on an equal footing. In my opinion, Web3 is a group of people “selling” an idea or vision and crowdfunding from the public. Those who agree and participate receive token incentives, and in order to make tokens effective and liquid, they are given financial attributes. In simple terms, it is a consensus of a group of people dressed in financial clothing, constantly seeking utility scenarios for token empowerment.
Conclusion: How to Establish a Foothold 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, in the process of deeply participating and experiencing this field over the past two years, I have had many opportunities to communicate with friends and practitioners in the industry. I have found that many people face a common problem, which is how to establish a better foothold in this field when we choose Web3 as the field for future development.
This question varies from person to person because everyone will come up with different answers based on their own experiences and feelings. I cannot call myself a “Crypto native” because my career experience is mostly in Web2, and I do not have long-term experience working in well-known Web3 projects or investment institutions, so it is difficult to boast of any notable achievements (although my personal investment returns are decent). However, over the past two years, I have had the opportunity to meet many practitioners in the industry and learn a lot from their experiences. Combining my own experiences with the experiences of my friends, I would like to share some comprehensive perspectives:
Do not enter this circle with a mindset of speculation. This industry seems to offer many opportunities to make money, but in reality, there aren’t as many as it seems. I have heard a saying before that this field has a pyramid model for making money. The first step is to participate in projects or create projects; the second step is to make VC investments; the third step is to engage in arbitrage and quantitative trading as a trader; the fourth step is to make investment decisions through research; and the fifth step is to hold tokens. In my experience, those who frequently speculate in coins may not have a high rate of return, while traders who engage in arbitrage and quantitative strategies and investors who simply hold mainstream coins tend to have stable returns. The former is due to their professional abilities, while the latter is because they believe that mainstream coins like Bitcoin have long-term value that can withstand bull and bear cycles. Therefore, in Web3, for most people, having a consistently stable rate of return is far superior to frequently speculating for high-risk, high-return opportunities.
Approach people with the utmost goodwill. Web3 is a relatively mixed field, and due to the different purposes of each person’s entry and the fact that much of the communication and collaboration is done virtually, the cost of trust in people or projects is relatively high. If you have found a team that you can work with in the long term, then congratulations, you are lucky. If you haven’t found one yet, that’s okay. In the process of interacting and trying with different people, although you may encounter some disappointments, you will find like-minded partners with whom you can do something meaningful. In fields with high liquidity and high trust costs, it is even more important to approach people with the utmost goodwill.
Do Your Own Research. This is the most widely circulated saying in Web3 and is recognized as a valuable piece of advice. Because this field has various people, opinions, and information, when we approach people with the utmost goodwill, we also need to form our own independent thinking and judgment in the dazzling environment, thus forming our own mindset and professional investment methodology. Please remember not to be hijacked by emotions or other people’s CX. Everything requires DYOR.
I wrote this article to some extent to summarize my own changing understanding of Web3 over a period of time. Because this field has provided me with better investment returns compared to other traditional investment types and has also allowed me to meet many different people, including real industry builders, amazing traders, and some speculative investors looking to make a quick profit. This is a very interesting thing. What is more important is that through my experience in this field, I have realized my ecological position in this field and how to adhere to some of my principles.
Of course, these are all based on my own personal experience and feelings and do not have universality. I believe that everyone in this field will have their own understanding, interpretation, and feelings about Web3. I wish everyone can make money and find their own ecological position in this field.