The Web3 industry is like the internet in the 1990s, a blue ocean where early occupancy of the ecosystem can lead to industry dividends. Everything is beautiful during a bull market. In 2024, the path to mass adoption becomes more diverse, and the importance of MEME culture in Web3 is further highlighted. This article is sourced from an article titled “From ‘Looking Up’ to ‘Looking Straight’, How I Demystified Web3 – A Personal Experience of an Ordinary Web3 Participant” written by a curious Crypto player and compiled, translated, and written by PANews.
Summary:
A confession from a gambler investor: Glad to see you again, it’s been two years.
Background:
ShenYuShenWen: How did someone make $100 million from a $1000 investment in the cryptocurrency market?
Table of Contents:
2021: Immersed in the beauty of Web3
Investment and entrepreneurship are hot
Trading is hot
DAO implementation is hot
2022: From looking up to sobering, change is always unexpected
2023: The market is recovering, but cannot return to the past
2024: The bull market returns, is Mass Adoption far away?
What remains the same:
What changes is:
Conclusion: How to better establish oneself in Web3
I first heard about and participated in blockchain around the end of 2017 and the beginning of 2018. At that time, I was working for a major internet company, which gave me the opportunity to be exposed to blockchain technology early due to the inherent advantages of internet companies in exploring new technologies and the rich programmer culture. I often hung out with a group of programmer friends, and the most common topics they talked about were “Bitcoin,” “mining,” “ICO,” “air coins,” etc.
I didn’t have a technical background, so what they were talking about was completely confusing to me. But because of my background in content creation, 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 English version of the Bitcoin whitepaper 10 times and still couldn’t understand it. I only remembered one title: “Bitcoin: A Peer-to-Peer Electronic Cash System.” This title was deeply imprinted in my mind, and my immediate feeling was: it’s amazing!
This was the beginning of everything. Or to use a popular phrase on the internet now, the gears of fate began to turn.
Interestingly, although I started to learn about blockchain from Bitcoin, I actually listened to my friends’ advice and started with playing air coins, and as you can imagine, I couldn’t escape the fate of being a “leek” (referring to inexperienced investors who often suffer losses).
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 fleece people. In fact, at that time, there were indeed such situations. On the other hand, I felt that at least the idea of Bitcoin was very innovative, indicating a certain possibility for the future.
From 2019 to 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 feel that “learner” and “observer” are the most suitable labels for myself.
If 2017-2018 was a superficial experience of blockchain, then 2021 can be described as an immersive experience.
That year, I worked for a USD fund, which gave me more opportunities to understand front-end technology and emerging fields. Coincidentally, it was also the year when the crypto market entered a bull market, and “Web3” replaced blockchain as a new narrative.
If I recall that bull market, what comes to mind immediately? There are several things that left a deep impression on me:
In early 2021, Bitcoin reached a market capitalization of 1 trillion USD 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 bill to make Bitcoin legal tender.
DAO – a new form of social organization in Web3 – began to emerge.
Looking back now, the emotions I experienced in the Web3 industry in 2021 were very high. This excitement manifested in several ways:
Because I work in the VC industry, I have many opportunities to exchange ideas with investors and entrepreneur friends. Throughout the process, Web3 has always been a topic that cannot be absent. At that time, I saw many investors starting to transition from traditional investment fields to Web3.
It was the same for entrepreneurs. In traditional VC investments, top talents from large companies are often the preferred targets for investment. But in that year, I also saw many excellent talents leaving large companies and entering the Web3 field to start their own businesses.
When I asked these investors and entrepreneur friends why they chose Web3, a common answer was that the Web3 industry is like the internet in the 90s, a blue ocean where early occupancy of the ecosystem can lead to industry dividends.
In Web3, trading is a common verb. Especially during a bull market, trading is even more prevalent.
Trading coins, especially trading contracts. If you look at the candlestick chart, the crypto market in 2021 had a sharp rise. So, on social media, you could always see many people showing off their huge profits and sharing their experiences on how to easily make money in the crypto market. This kind of information was available almost every day, and if you saw it too much, you would have the illusion that this industry is particularly easy to make money in. Regardless of your professional background or education, as long as you have the courage to take risks and leverage during a bull market, anyone can easily make money.
Trading NFTs. In 2021, NFTs were undoubtedly the most talked-about topic. Especially with the rise of Bored Ape Yacht Club (BAYC), it attracted a wave of users from Web2. At that time, the biggest value of NFTs, besides speculation, was as avatars. If your social media avatar was a bored ape or a CryptoPunk, congratulations, many people would see you as an OG or someone remarkable because usually, those who own these kinds of NFTs are either wealthy or have a strong reputation. NFTs fulfilled the human desire to show off. So at that time, many people around me were trading NFTs, especially young friends. As many NFT mintings were not based on Eastern Time, if you wanted to mint an NFT you liked with a high speculative value, you had to stay up late. At that time, the industry jokingly referred to NFTs as “small pictures,” and the act of trading NFTs was described by an industry term: “Have you livered today?” (referring to the physical and mental exhaustion caused by staying up late).
Even now, I still believe that the emergence of the term DAO in 2021 is very valuable. Because DAO means decentralized autonomous organization, compared to the speculation and trading of assets, the tokenization of DAOs is relatively less, and it focuses more on exploring a completely different organizational form from traditional organizations. This organizational form has three important characteristics: 1. Decentralization, with no hierarchy of leadership and subordinates; 2. Collaboration based on consensus and democratic decision-making rules; 3. Remote work, with tasks completed through online collaboration.
Of course, like many emerging things, DAOs first gained popularity abroad. Well-known DAOs at that time included Bankless DAO (aiming to promote the large-scale 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 (crowdfunding to bid for a copy of the U.S. Constitution), etc. Later, DAO organizations also took root in China and some experimental DAO projects emerged.
Like trading NFTs, young people were the main participants in DAO organizations. They were more open to new things, and at that time, many young people called themselves “digital nomads.” The organizational form of DAOs was more suitable for their digital nomad lifestyle.
Looking back at 2021, I was inevitably influenced by the Web3 bull market frenzy. My feeling towards Web3 in 2021 can be described as immersive admiration. This immersive admiration stems from the technology represented by this industry – Web3 integrates cryptography, distributed ledgers, smart contracts, and other new technologies. It also stems from the perception that this industry seems to have easier ways to make money compared to other industries. It also stems from the emergence of new organizational forms like DAOs, exploring the possible future social and collaborative forms for humanity.
In summary, everything is beautiful during a bull market.
If 2021 was a time of beauty during the bull market, then 2022 was a year of shattered beauty for the crypto market.
Too many historic events happened in this year that can be remembered in the history of the crypto industry:
In May 2022, the public blockchain Terra experienced a major collapse, and the Luna token went to zero overnight.
In July 2022, top-tier investment fund Three Arrows Capital filed for bankruptcy protection.
In November 2022, the top exchange FTX was exposed for misappropriation of 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 still some positive events in this year that could bring comfort, such as Ethereum’s 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 and directly set the tone of “depression” for the Web3 industry in 2022.
Instead of hearing inspiring and emotionally charged news, I heard more voices of disappointment and utter despair: People losing heavily on trading coins, projects quitting, projects ceasing operations due to a lack of funding, crypto funds no longer investing. No one is discussing which coins are worth trading, no one is discussing whether NFTs will continue to rise (on the contrary, everyone is dumping as many NFTs had become worthless due to poor liquidity), no one is discussing what DAOs should do next, and no one is discussing how this industry can achieve mass adoption. The whole industry has become quiet, or to use the word I mentioned above, the whole industry has become depressed.
Like many others, after witnessing and experiencing so many thrilling and ups and downs in the industry, I started to detach myself from the admiration I had for Web3 in 2021 and gradually became calm:
On the one hand, the huge volatility of the crypto market showed me that people who enter this field not only experience the ecstasy of overnight riches but also the regret of huge losses. Especially for those who treat Web3 as a gambling fate by trading contracts like spot trading, they face a risky destiny.
On the other hand, the problems of opaque capital utilization and a lack of effective regulation exposed by this industry have dealt a blow to people’s confidence in this industry. Although it is a good thing for a long-term development, it did pour cold water on the frenzied mood and made everyone start to objectively and rationally look at Web3.
Finally, for those attempts that I believe have more social value, such as the DAO model, it is undoubtedly a valuable thing for DAOs to emerge. Because DAO means decentralized autonomous organizations, compared to the speculation and trading of assets, the tokenization of DAOs is relatively less. Instead, DAOs explore a completely different organizational form and collaborative form from traditional ones. This industry’s path to mass adoption is still full of challenges, but I believe that as long as we adhere to the original intention and explore together, we will find a way to better establish ourselves in Web3.Further exploration and discussion, such as promoting charity and environmental protection through tokenization, did not make significant progress this year, but instead followed the trend of the cryptocurrency market and fell into silence.
For some time, I have been wondering why there are so many newcomers entering the industry in 2021. I believe that mediums like NFTs have played a significant role as they have expanded the application scenarios of Web3 (even if it’s just for avatars), allowing more people from Web2 to intuitively experience NFTs and Web3. However, the problem is that once people are exposed to NFTs, they immediately realize it is an investment/speculation product. Overall, the integration of Web3 with real-life scenarios is weak, and the core still lies in asset attributes or financial attributes, which have created more tokenized financial derivatives and attracted and enhanced capital liquidity, resulting in more investment and speculation opportunities. Therefore, at that time, I believed that if Web3 wants to have long-term development as an industry, it must balance financial speculation and application scenarios.
After experiencing the bear market in 2022, 2023 can be said to be a year of self-healing for the crypto industry. During this year, the price of Bitcoin gradually climbed from $16,000 per coin at the end of 2022, and mainstream exchanges such as Binance increased their investments to promote compliant operations. However, when I discussed with friends who invest in first-tier projects, they chose to allocate funds to second-tier projects or continue to observe. As one friend said, “The prices of mainstream coins in the second-tier market are so low now, why should I invest in first-tier projects with high uncertainty?”
At the same time, I initially thought that with the market slowly recovering, there would be a resurgence of discussions about Web3 on social media. I remember during the bull market in 2021, there was a large gathering of people interested in Web3 on a niche social platform called Kuaishou. In the circle of Web3 Institute, if you posted something, you would receive a lot of likes. However, when I opened this social platform in 2023, I found that those who used to be active no longer posted updates, and the number of likes and comments on new posts was almost zero. Everything seemed unable to return to the past.
So in this year, I started consciously communicating with many people, including those outside the industry, those who recently entered the industry, and players who have had experiences 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 the key is who the leeks are.
Based on the feedback I received from these conversations, I had the idea of writing a book, hoping to objectively introduce the development of Web3 at that time to more people, allowing myself and those who want to understand and enter this field to view Web3 from a neutral perspective, rather than applying subjective biases to this field. So, I collaborated with more than a dozen friends in the industry, who have deep professional backgrounds and knowledge accumulation in their respective fields, to publish a Web3 popular science book called “From Technology to Applications: A Handbook for Ordinary People’s Web3 Learning.” It was officially published at the end of 2023 and received a lot of positive feedback. Looking back now, although only half a year has passed, the chapter system and framework in the book are far from covering 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.
Currently, it is certain that there will be a bull market in 2024. In this year, two major events will serve as catalysts for the continuous rise in cryptocurrency prices. The first is the approval of Bitcoin spot ETF by the U.S. SEC, which means that more Wall Street funds will flow into Bitcoin, directly driving up the price of Bitcoin and other cryptocurrencies. The second is the halving of Bitcoin, which, based on historical experience, will drive another bull market. This year is likely no exception.
Based on my observations, I have compared this bull market with the one in 2021 to see what remains unchanged and what has changed.
Bull markets amplify the power of speculation:
In 2021, NFTs were speculative assets, and in 2024, MEME coins have become a unique speculative asset. In my opinion, there is no right or wrong when it comes to asset-related speculation in this industry since traditional stock markets also involve long and short positions. The difference is that the cryptocurrency market is highly volatile and lacks effective regulation, so in a bull market, the speculative game of each participant is magnified infinitely when summarized into candlestick charts.
Tokens still need better liquidity and the ability to generate returns:
In the 2021 bull market, besides NFTs, GameFi and SocialFi also attracted attention. The tokenization attribute unique to Web3 requires specific tracks or businesses to achieve better token liquidity and create more assets. The same applies to 2024. On the one hand, the Bitcoin ecosystem is being hyped, with Bitcoin experiencing almost all the processes Ethereum has gone through, from inscriptions to runes, and from Bitcoin Layer2 to Bitcoin re-collateralization protocols. On the other hand, Ethereum-based re-collateralization projects have become a hot topic. Since Ethereum transitioned from POW to POS and introduced collateralization in 2022, what people want today is not just the return from collateralization but how to continue improving capital utilization efficiency to achieve higher returns.
The path to mass adoption becomes diversified. In 2021, mass adoption of Web3 was expected to be achieved through gaming and social projects, but the results did not meet expectations. In 2024, Web3 is increasingly integrating with AI and also starting to integrate with offline physical infrastructure, creating another narrative, DePin, hoping to achieve mass adoption through “curve saving the country.” From this perspective, Web3 needs AI or the Internet of Things more than AI and the Internet of Things need Web3. In addition, in my opinion, the approval of Bitcoin spot ETF and the acceptance of cryptocurrency donations in the U.S. presidential election have already indicated that cryptocurrency has become mainstream. However, this is a mass adoption that everyone can have, not one that everyone must have.
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 the spiritual core, and I believe that MEMEs are the direct expression of the native spiritual core 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 perspective on Web3 has shifted from admiration to neutrality. In my opinion, Web3 is about individuals or groups “selling” an idea or vision and crowdfunding from the public. Those who agree and participate receive token incentives, which give financial attributes to the consensus of a group of people. In simple terms, it is the consensus of a group of people wearing a financial coat, constantly seeking utility scenarios for tokens.
This is my understanding of Web3. As I mentioned from the beginning, I consider myself a learner and observer in this field. Therefore, in the past two years of deep involvement and personal experience, I have had many opportunities to communicate with friends and professionals in the industry. I found that many people face a common question: how can we better establish ourselves in this field when we choose Web3 as our future development direction?
This question varies from person to person because everyone will come up with different answers based on their experiences and feelings. I cannot call myself a Crypto native because most of my work experience is in Web2, and I haven’t had long-term employment in well-known Web3 projects or investment institutions, so it is difficult to present any notable achievements (although my personal investment returns are acceptable). However, over the past two years, I have had the opportunity to meet many professionals in the industry and learned a lot from them. Combining my own experiences with theirs, I would like to share some comprehensive perspectives:
Don’t enter this field with a speculative mindset.
There are indeed many opportunities to make money in this industry, but not as many as people think. I have heard a saying before that there is a pyramid model when it comes to making money in this field. The first step is to create projects or portfolios; the second is to make VC investments; the third is to do arbitrage and quantitative trading; the fourth is to invest based on research; and the fifth is to hold coins. From my experience, participants who frequently speculate on coins may not have high returns, while traders who do arbitrage and quantitative strategies and investors who simply hold mainstream coins tend to have stable returns. The former is because of 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, for most people in Web3, having a consistently stable return is far better than frequently speculating to pursue high-risk high returns.
Assume the best intentions when dealing with people.
Web3 is a relatively mixed field, and trust in people or projects comes at a higher cost due to the different purposes people have when entering the industry and the fact that much of the communication and collaboration occurs virtually. 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 disappointments, you will eventually find like-minded partners to do something together. In fields with high liquidity and high trust costs, it is important to assume the best intentions when dealing with people.
Do Your Own Research (DYOR).
This is the most widely spread advice in Web3 and is recognized as highly valuable. This industry 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 thinking patterns and professional investment methodologies. Remember not to be swayed by emotions or other people’s CX (crypto experience); everything requires DYOR.
I wrote this article to a certain extent to summarize the changes in my understanding of Web3 over a period of time. This field has provided me with better investment returns compared to other traditional investment options, and it has also allowed me to meet many different people. There are true industry builders, impressive traders, and some speculators who want to make a quick profit. It’s an interesting thing. More importantly, going through this field has made me realize my ecological position and how to uphold some principles.
Of course, these are based on my personal experiences and feelings and may not be universally applicable. 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 suitable ecological position in this field.