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Liang Xinjun, co-founder of Fosun Group: 20 years of blockchain and data economy

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Based on last year's Luohan Hall speech, this speech integrated the latest development trends and investment hotspots in the current blockchain industry, bringing a wonderful feast of ideas to the audience.

Original title: "Liang Xinjun: The Future Has Come—Twenty Years of Blockchain and Data Economy"

Original source: Hash Global, Langwen Capital

In December last year, we posted on this public account platform The co-founder of Fosun Group, Mr. Liang Xinjun, published the keynote speech "Blockchain - Breeding Future Wealth" at Alibaba Luohan Hall, which was deeply loved by readers and aroused widespread heated discussions and comments. On April 30 this year, Mr. Liang Xinjun gave a keynote speech "The Future Has Come—Twenty Years of Blockchain and Data Economy" at the Technology Entrepreneurship Center of Nanyang Technological University in Singapore. , integrating the latest development trends and investment hotspots in the current blockchain industry, bringing a wonderful thought feast to the audience. With the consent of Mr. Liang Xinjun, we have compiled the content of this speech into text and shared it with readers.

The speech is divided into four Sections:

1 . The global currency flood in response to the epidemic has greatly promoted the growth of encrypted assets

2. Long-term social interaction in response to the epidemic Quarantine and home measures have accelerated the data economy and promoted the rapid formation of the digital earth

3. The largest-scale area that grows arbitrarily Blockchain application: DeFi

4. Investment in encrypted assets

Part 1: The global currency flood in response to the epidemic has greatly promoted the growth of encrypted assets

The boom in encrypted assets from the fourth quarter of 2020 to now has a lot to do with the unrestrained currency issuance in many countries in the past period of time. I don't think this situation will improve for some time to come. In this case, global residents will definitely look for new assets to cope with this shock, which has given birth to the recent rapid growth of encrypted assets. We can also find through the "Overview of the Performance of Major Global Assets in the First Quarter of 2021" that Bitcoin's growth rate in the first quarter was close to 100%, ranking first among all major asset classes.

Why did many countries issue currency without restraint for a long time in the past? We can see from historical data: From 1932 to 2019, the GDP growth rate of the UK was 2.5%, but the growth rate of M2 was 8%, far exceeding the GDP growth rate. The same is true for the U.S. dollar. From 1934 to 2019, the U.S. GDP growth rate was 3.7%, but the growth rate of M2 was 7.4%, which also led to an average annual increase of 4.9% for gold against the U.S. dollar.

As a result of the epidemic relief In 2020, the M2 of the United States will increase by 24.9% year-on-year, which is close to 27% during World War II; the M2 of the euro will increase by 11% year-on-year; the M2 of Japan will increase by 14.7% year-on-year. high growth rate. We can intuitively feel the impact of high-speed currency issuance on residents through an example: In terms of purchasing power, $100 in 1913 will only be $3.87 in 2019. If you keep cash, it will depreciate to 0 in just four generations. The average annual depreciation is 3.4%.

So, I suggest you make some value investments instead of holding cash Wait for depreciation, and the benchmark for investment should not be CPI, but the average M2 growth rate of 8% over the past 80 years.

Here we also look Consider the situation in China. In 2020, China's M2 will grow by 18.1% year-on-year, which is a new high since 2011. This growth rate is very powerful. Similarly, we can also see: in terms of purchasing power, 100 yuan in 1987 will only be 22.7 yuan in 2019, with an average annual depreciation of 5%.

Compared with countries that issue currency without restraint, the issuance of encrypted assets is relatively restrained. The current issuance speed of BTC is 2%-3%, and the issuance growth rate will be halved in three years; the current issuance speed of ETH is about 4%, and it is expected to be 1%-2% after switching to the POS consensus mechanism in the next year. Therefore, compared with the growth rate of CPI, BTC and ETH will be deflationary assets in the future. The annual increase in gold production is about 2.2%, which is also deflationary. Similarly, we can see that due to the destruction mechanism of BNB, it is also a deflationary encrypted asset. However, there are also inflationary assets in the field of encrypted assets, such as EOS. You can also see that the price performance of EOS is very weak.

Part II: The long-term social isolation and home measures in response to the epidemic have accelerated the ripening of the data economy and promoted the rapid formation of the digital earth

million Xiao Feng, chairman of Xiang Blockchain Holdings, believes that there is a parallel digital earth above the physical earth. With the rise of the Internet of Things, every object or most objects on the physical earth will also have a corresponding identity on the digital earth. Business activities, social activities, and government affairs activities on the physical earth also have counterparts on the digital earth. And affected by the epidemic, the digital economy has grown rapidly in the past year or so.

In the past period of time Here, we often say that the Internet digitizes all content, and the mobile Internet digitizes goods and services. I think the future of blockchain is to digitize all types of assets. There are no digital things around us now, and the blockchain will find a way to become digital in the future. The blockchain will definitely become a technology that completely connects the physical earth with the digital earth, making the data economy the main driving force of the economy in the next 20 years.

The core driving force of the economy in every big era will always easily outperform M2. For example, if we look at the top five market capitalization in the past 100 years in the United States, you will find that in 1917, it dominated and outperformed The market is dominated by energy, minerals, and basic raw materials. By 1982, it was advanced industrial manufacturing; by 1998, it was IT; in 2017, Qingyishui was all about mobile Internet; so what will be the next twenty years? I can tell you with certainty that it is the data economy. Of course, the development of the Internet of Things and blockchain technology will redefine who is a company with data assets.

Then, back to On the topic of investment, what should we invest in? Recently, we have often heard many people say that the stock price is overvalued, and the market should pull back. But we can see from the following data that these people are wrong. At the end of 2020, the market value of FAANG accounted for 29% of the total market value of the Nasdaq Composite Index, but net profit accounted for 43%. Moreover, the increase in the proportion of net profit exceeded the increase in the proportion of market value. Therefore, it is difficult to say that the market value of mobile Internet companies, which are the main driving force of the current economy, is overvalued.

Let’s take a look at several well-known listed Internet companies in China and compare them with the CSI 300 Index. We can find that the market value of “BAT+Meituan+JD+Pinduoduo” accounts for 60% of the total market value of the CSI 300 Index. %, but net profit accounted for only 26%. Therefore, objectively speaking, the largest technology companies in the United States are still cheaper than Chinese Internet companies. But we also need to see that, including China, more and more profits are being concentrated in Internet companies throughout economic activities. Therefore, when we make investments, we must figure out where the future economic power lies.

Next, let's go back to the data economy. If the data economy is a blockchain-based data economy, technically speaking, it actually consists of the following three parts or elements. If there is only technology without "coin", it will also lead to the inability to achieve the best effect of blockchain technology.

Blockchain account

A blockchain account is a smarter account, which can deploy smart contracts functions, and can have all transaction record functions, these are mailboxes in the PC Internet era, and communities in the mobile Internet era do not have them.

Token< /p>

Token can not only carry information, but also carry value and carry contracts. The form of Token is generally stable currency and community currency, etc., such as the digital renminbi DCEP issued by China is also a type.

Assets (STO+Data assetization)

Currently, the total amount of encrypted assets is about 1.5 trillion US dollars , while the assets in the real world are about 200-300 trillion US dollars. In the future, a large number of traditional financial assets will enter the entire data economy, which is a sign of whether the data economy will explode, and is also a blue ocean for the future development of the data economy. At the same time, in the future, data assets that were originally off-balance sheet will be valued and then enter the balance sheet.

Moreover, the economy of the blockchain includes the data The economy must be regulated. I think in the next 3-5 years we may see two (blockchain) worlds, one is the regulated world after KYC, which may account for 80%; the other is the anonymous, unregulated world , may account for 20%. In the current encrypted asset world, the ratio of the two is opposite. Therefore, in the future, if we want to start a business or invest, we should focus on the regulated KYC world with huge growth potential.

I think like Singapore Such a country should promote the development of the digital economy in three steps: the first step is to promote the tokenization of payment, the second step is to promote the tokenization of assets, and the third step is to promote the assetization of data.

1) Tokenization of payment

< p align="justify" line="PdD2" linespacing="150">Comprehensively realize commercial and personal digital payments, promote the circulation of digital legal currency, encourage the development of more stable coins based on public chains, sovereign digital currencies of more countries and The seamless exchange of community digital currency realizes global payment circulation.

In the era of IoT + blockchain, Tokenized legal currency or highly credible stable currency , is the core basis for the development of data finance; realizing the seamless exchange of more countries' sovereign digital currencies and community digital currencies, and then realizing global payment circulation is a financial solution to "one world, two systems".

Blockchain application: cross-border transfer

Through the rapid rise of usdc and usdt with a total stock of only 60 billion US dollars, the daily cross-border transfer has reached 130 It has begun to pose a substantial challenge to SWIFT. The key is that the cost of remittance is extremely low, the time is extremely fast, and the process is more monitored and safer.

I think if Singapore The issuance of a national digital currency will not affect the stability of the Singapore dollar. Because the current total issuance of Singapore dollars is 537.3 billion (US dollars). Assuming that 2% of the total new issuance by the Singapore government is used as digital currency, that is the size of a USDC. The total M2 issuance in many countries exceeds 2% every year, so it will not have a major impact on the stability of the Singapore dollar. Singapore The government could try to issue a national digital currency.

We pass some cases It can be seen that digital currency also has some typical progress in the payment link:

In March 2021, The international credit card payment network Visa officially announced that it will gradually allow users to use the stable currency USDC to directly settle transactions on the Visa payment network. In March 2021, Tesla CEO Elon Musk announced that Bitcoin can be used to pay for the purchase of Tesla cars in the United States (Tesla recently sold some Bitcoins and made $150 million). In February 2021, the credit card giant MasterCard Group stated that it plans to start supporting direct payments in cryptocurrencies this year. In October 2020, payment giant PayPal announced its entry into the cryptocurrency market, allowing customers to buy, sell and hold bitcoin and other cryptocurrencies using the company's online wallet. Starting in early 2021, PayPal users will also be able to use cryptocurrencies to shop at 26 million merchants on its network, the company said in a statement. Prior to this, mobile payment provider Square Inc. and stock trading brokerage RobinhoodMarkets Inc. have also announced that they will allow users to buy and sell cryptocurrencies. In terms of the central bank's digital currency, the digital currency of the central bank of China (DCEP) has entered the testing stage. The central bank's digital currency research institute has cooperated with major cities, banks and Internet giants across the country, and the test scenarios have been continuously enriched.

Unfortunately, Haven't seen support for payment institutions on the Singapore side yet, but I'm sure will soon.

2) Tokenization of assets (STO of statutory securities assets is a blue ocean)

The current total scale of global digital currency is about 2 trillion US dollars, Bitcoin is 1 trillion US dollars, Ethereum is about 300 billion US dollars, Binance 8, 9 billion 100 million US dollars, so overall, it is relatively concentrated and the scale is not large. If part of the 2,3 trillion US dollars of traditional financial assets is transferred to the blockchain, the blockchain data economy has a lot of room for growth.

Traditional commercial banks , investment banks, and asset management exchanges can all benefit from sto. In the past, investment banks could make a fortune by issuing stocks and bonds, and now they can make another fortune by tokenizing stock and bond assets again. When new assets are issued in the future, can part of the issuance be completed through token issuance?

We can see Tokenization efforts of some traditional financial assets:

In April 2021, Binance announced that investors Tesla share tokens and Coinbase equity tokens can be bought and sold on Binance Crypto Exchange. In October 2018, the American banking giant JPMorgan Chase announced that it would use its blockchain platform Quorum to "tokenize" gold bars. In October 2020, DBS Bank (DBS), Singapore's largest commercial bank, announced the launch of DBS Digital Exchange, a digital trading platform. In addition, DBS will also announce the issuance of a Token bond in the near future. In November 2019, HSBC Singapore announced the issuance of a 5.5-year public bond worth S$400 million (approximately US$294 million) with the Singapore Stock Exchange (SGX) and Singapore sovereign investment fund Temasek. Among them, S$100 million (approximately US$74 million) is tokenized bonds.

3) Assetization of data—an epoch-making value of off-balance sheet assets

What is truly epoch-making is the capitalization of data. The current Internet of Things technology, such as Molian Technology's BoAT SDK, can ensure that the data is real from the collection side, and then upload the trusted data to the chain, which cannot be tampered with after being uploaded. The credibility of data is the foundation of the entire digital economy. If the data is not credible, how can we talk about the data economy? There are also technical issues related to the establishment of data privacy laws and the implementation of data privacy calculations. With the help of blockchain technology, we can adopt a privacy protection technology similar to PlatON, which can confirm and calculate asset rights and calculations for those who own data while complying with the privacy protection regulations of various countries.

The practice of data capitalization: PlatON "Distributed AI" Platform

Data is the core factor of contemporary production. Unprocessed and unprotected raw data is difficult to generate value because of data portability and easy replication. Similarly, AI algorithms can also be regarded as a special kind of data that requires privacy to protect its due value.

We currently do not have The ability of general AI, the vast majority of AI and big data applications are similar to local area networks, and can only use fragmented, separated, local, and local data; only with the blessing of privacy computing can aggregate global data to do Cross-cloud, cross-platform, cross-account, cross-terminal, large-scale AI computing, giving model training results and various application scenarios. Compared with the original AI model, the empowerment provided by distributed AI is like the difference between the online version of the game and the stand-alone version of the game.

Initiated locally in Singapore The main network of the PlatON network has been launched, and they have started cooperation in the field of "openbanking-data open banking" for one of the top three banks in the United States and one of the top ten banks in China. The privacy computing network they are committed to building is essentially based on privacy computing capabilities to support large-scale, distributed AI computing in the future, which is embodied in the data trading market and model trading market, and can also be various individual applications.

Crazy NFT

Since the beginning of this year, the trading volume of the NFT market has shown state of explosive growth. Take OpenSea, the world's largest NFT trading platform, as an example. In January 2021, the platform's transaction volume was close to US$8 million, increased to US$90 million in February, and exceeded US$100 million in March. The most famous transaction was on March 11, 2021, when the BeepleNFT work "Everydays" was sold for $69.3 million.

Sotheby's will hold a special [Contemporary Art Evening Auction] on the 12th of this month, accepting buyers of the work "Love is in the Air" to pay the hammer price in Bitcoin or ETH. The decision makes Sotheby's the first major international auction house to accept virtual currencies as payment for physical artwork.

I think the NFT model is worthy of recognition. It can mark the original source of any work, and the smart wallet of NFT can help the owner of the work to monitor whether there is any abuse. In the future The gameplay of the NFT ecosystem will be very diverse and interesting, but the super hot state of the past two months may not be sustainable for a long time.

Recently, Binance announced that it will launch an NFT platform. I believe that the development of this area will be very fast in the short term. But NFT is just an application on the blockchain, and it is on the front page of entertainment. It does not represent the real large-scale application of the blockchain. I think the real large-scale application of the blockchain is DeFi.

Part III: The largest blockchain application with arbitrary growth: DeFi

At present, DeFi can be considered as a technology represented by two projects, Uniswap and Compound.

Uniswap is A decentralized trading platform (protocol) on the Ethereum blockchain, which mainly provides liquidity trading services for ETH and ERC-20 tokens. With only 500 lines of code, the protocol is currently the DeFi application with the largest number of users. The biggest feature of Uniswap is that it uses the Automated Market Maker algorithm (Automated Market Maker, referred to as AMM) to replace the order book model of traditional exchanges to achieve automated trading needs. In September 2020, Uniswap issued digital currency to reward users who participate in Uniswap protocol transactions (ie "liquidity mining").

Compound is on the Ethereum blockchain A decentralized lending platform (protocol), which mainly provides over-collateralized lending services for ETH and ERC-20 tokens, known as a "decentralized algorithmic bank". Depositors contribute their capital to the Compound protocol in exchange for the interest Compound generates by investing their capital in loans. The borrower over-mortgages the specified digital currency into the Compound smart contract to lend the digital currency supported by the Compound protocol. When the borrower needs to get back the mortgage assets, he needs to return the loaned principal and the agreed interest. In June 2020, Compound issued digital currency to encourage users to participate in Compound protocol lending users and provide governance voting rights.

If we use a Comparing the 500-line code of Uniswap with a securities trading system, and Compoud with a bank's credit system, you will find that the blockchain is very efficient and simple, and sofa so good. The operation so far has also proved that the system is safe and reliable. . Of course, compared with the reliability of BTC's 12-year verification, DeFi still needs to undergo more severe tests and strict doubts, but I believe that DeFi will pass the test in the end.

These two techniques Catalyzed the rapid growth of the DeFi market. As of April 24, 2021, the total size of the DeFi capital pool has reached 61.1 billion US dollars, the daily transaction volume is nearly 10 billion US dollars, and the daily transaction fee income is nearly 30 million US dollars . In fact, in the process of my PPT, this number has been being refreshed. When I counted these figures a month ago, the size of the DeFi fund pool was 43.5 billion US dollars, and it was 61.1 billion US dollars a week ago. The locked-up volume is 103.4 billion US dollars, and the net locked-up volume may be about 70 billion. Therefore, I think that according to the current development trend, it is estimated that the total size of the DeFi fund pool will reach 500 billion US dollars by the end of 2021, and may even have the opportunity to hit 1 trillion US dollars .

In terms of the number of users, it also surged from 93,061 addresses at the beginning of 2020 to 1,172,208 addresses, an increase of 1,159%. A further surge to 1,757,583 addresses by the end of Q1 2021 represents another nearly 50% increase in users.

We take Compound as an example to understand the lending and risk control model of DeFi. First, let me talk about why we should be interested in this matter? Because I want to make a profit, but the annualized income of current deposits in the bank may be less than 0.1%, but if I put the money in Compound, I can get an annualized income of 2.8%-7%. It is reasonable to expect that it should be in Annualized return of 5%-7%. But we will not be so stupid as to think that the pie in the sky is real, we must first see if there are any traps under our feet. Therefore, we must first study the operating mechanism of DeFi. Is its underlying assets safe? So let’s start with Compound’s risk control.

If a person wants To borrow from Compound's pool, the current reasonable loan expectation is an annualized interest rate of 5%-8%, but this is a current term, which can be borrowed and repaid at any time, and even calculated by the second. But users must first pledge to the pool, and the money that can be loaned out is generally 23%-64% of the pledged amount. Currently, only highly liquid assets can be accepted as pledges, such as ETH, BTC, etc. In the 24 hours before now, the transaction volume of BTC is 110 billion US dollars, and ETH is 80 billion, which is comparable to any highly liquid asset in the world.

In Compound interest rate model Among them, the loan annual interest rate is affected by the following factors: base rate, utilization rate and multiplier.

Loan annualized interest rate = base interest rate + (utilization rate x added interest rate).

Deposit annualized interest rate = loan annual interest rate x utilization rate x (1–retention ratio)

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The change in the update frequency of deposit/loan interest rates will directly affect the loan interest rate and thus indirectly affect the deposit interest rate. As long as there is a change in the usage rate, the Compound interest rate will be updated immediately, and the smallest unit of interest rate update is the time of a block (block) generated by mining on Ethereum: an average of 15 seconds.

Loan/Pledge Rate: 23%-64%

First of all, is there or not in the Compound pool For example, in a fund pool of 10 billion, there is usually 1 billion of funds that are not used and are used as risk reserves. The utilization rate refers to the proportion of the actual loaned funds. For example, if the 9 billion funds in the aforementioned pool are 0, the utilization rate is 0%. If all 9 billion are released, the utilization rate is 100%. When the utilization rate is 0%, the current base interest rate is 2.8%. When the utilization rate is close to 100%, the loan and deposit interest rates will rise sharply, so as to curb the loan demand of users and attract deposit users at the same time. Very well set up. When the market price of collateral fluctuates downwards and hits the liquidation line, it will no longer be like someone calling you in traditional finance to ask you to cover the position, but will automatically close the position in time, repay the deposit and interest first, and the balance will be returned to the lender's account. As mentioned just now, the collateral is extremely liquid and easy to realize.

If a certain The actual bad debt loss caused by the loan is shared by all depositors. This is a bit like mutual insurance in the insurance industry. Some DeFi pools will also use 10% of the interest on each loan as a bad debt provision. This mechanism is very similar to that of traditional banks: mortgage loans, capital adequacy ratio, deposit guarantee, and the national guarantee system for small deposits of small depositors , provisions, real-time second-level automatic liquidation, and ultra-high liquidity asset pledges are far superior to traditional finance.

At present, the mortgage loan can There are not many types of pledges accepted, mainly mainstream coins ETH, BTC, and some stable coins. Judging from Compound’s current latest asset pool, the top five types of collateral account for more than 90% of the scale.

The types of pledges in the future will definitely be more abundant and diversified. However, due to the fact that the Tokenization of traditional assets has not been completed, the assets that can be pledged are all on-chain assets native to the blockchain. In the future, tokenized treasury bonds and high-security stocks, such as U.S., Germany, Japan, and China bonds, and Apple and Tencent stocks, will definitely become one of the acceptable collaterals.

We can see Although the DeFi ecosystem is thriving, what are its problems? What are the differences compared with traditional finance?

I think it is mainly The products currently developed by DeFi are mainly mortgage lending and spot trading. What is lacking compared with the traditional financial system are: credit lending, leveraged transactions and interest rate markets. Because the current DeFi cannot be real-named, there will be no credit market (the abandonment cost of an address is 0, which cannot play the role of credit endorsement), and the current DeFi has not yet been able to do leveraged transactions (similar to futures), so exchange The market and the interest rate market are completely separated. I think that the future prospect of DeFi will definitely not be limited to anonymous transactions. With more and more KYC and more and more traditional financial interventions, I believe that in the future, it will be regulated, subject to financial regulations, and at the same time do KYC DeFi will definitely come out (and in this case, markets such as credit lending will also develop).

Many people listen to it DeFi is called usury. I must say objectively that the interest of DeFi is actually not high. I have done business in the Chinese market. If someone in the Chinese asset market says that they can lend you money immediately, the annualized interest rate is only 7%-8%, I believe that most of the private enterprises in China will think it is very reasonable, even in Singapore, except for large enterprises, it is also reasonable for small and medium-sized enterprises. Not to mention Vietnam, India and other countries, loans with annualized interest rates of 7%-8% are simply pies in the sky. But DeFi has no borders. Americans, Chinese, Vietnamese, and Indians all borrow at the same interest rate, so I think this loan interest rate It is very reasonable. Of course, if large funds enter the DeFi lending field in the future, it is still possible to further lower the interest rate, and I think it will also be in -weight: bold;">5%-8% this level.

Compared with traditional finance, DeFi has significant differences in the following two aspects:

The pledge rate of DeFi is very high, and the security is higher than traditional finance.

Automatic liquidation: When liquidation conditions are triggered, asset liquidation is completed in seconds rather than days, which greatly reduces the risk of counterparties. In the DeFi field, no one will call to tell you that you need compensation. Everything is done automatically on the chain, and it performs liquidation in units of 15 seconds. The guarantee of liquidation is much higher than that of traditional banks.

Currently There are many pools doing lending. I think everyone should choose pools with large deposits and long project operation time to participate, instead of simply choosing products with high interest rates.

For traditional financial institutions These differences above are not necessarily threats, and traditional financial institutions can also develop and benefit from encrypted asset business:
< /p>
Insurance companies: Create DeFi principal preservation insurance products to broaden the sources of deposits in DeFi pools. I think the annual fee for the insurance premium could even be higher. Because traditional financial institutions only have an annualized income of 0.1%, DeFi can achieve 5%. I believe users are willing to pay 1% of the insurance premium, or even 1.5%, because no matter what, the income users get from DeFi will be far higher than 0.1%.

Commercial banks: Provide customers with KYC deposits, fee-based depository services, and graft blockchain transaction services; relying on DeFi principal insurance, docking with partners willing to do KYC It is a standardized DeFi pool that provides off-balance-sheet asset services for bank customers' DeFi deposits and loans. For example: 0.3% of the intermediary business fee for docking DeFi is charged to users who want to deposit. I believe users are willing to pay this fee ratio, because users can get 4% of the income from the DeFi world. In addition, new users can also have KYC, the source of fees for transferring legal currency to Token. I believe that the first banks to embrace DeFi will quickly leave those traditional banks behind.

Investment Bank: STO to develop a large number of compliant financial assets, similar to traditional The secondary circulation service of liquid financial assets in the blockchain financial world, obtains STO service fees, and helps enrich the types of pledged assets in DeFi pools;

Exchanges, Retail brokerages: open transaction prices and matching data to DeFi oracle machines, help improve the liquidity of DeFi pledged assets, and promote the prosperity of the STO market;

Wholesale banks (interbank) : Vigorously develop interbank loans of blockchain financial institutions pledged by Token;

Central Bank: Issue digital legal currency and stable currency, and vigorously promote KYC transactions and blockchain universal ID infrastructure.

We We can take the interbank business of financial institutions on the blockchain as an example to further explore whether traditional financial institutions can develop encrypted asset business.

current blockchain The largest wholesale bank is Genesis, with $3.8 billion in loans. The scale of all digital currency wholesale banks in the world, as of December 31, 2020, the loan volume is 10.6 billion US dollars, the pledge amount is 14.7 billion US dollars, and the pledge rate is 72 % (the aforementioned retail business pledge rate is 24%-64%), in this case, the current interest rate can still reach 5.7%, which must It will be a business that traditional financial institutions like.

The latest refresh is , Genesis saw another surge in crypto lending in the first quarter, with more than $20 billion in new loans compared to just At $7.6 billion, outstanding active loans increased to $9.0 billion, an increase of 136.4% from $3.8 billion at the end of 2020. Cumulative loans totaled $40 billion since launching lending services in March 2018, up year-over-year 94.8%.

Part Four: Investment in Encrypted Assets

BTC、ETH Etc. cryptocurrency is not a currency, because a system that can only support a few, dozens, or even 1,000 transactions per minute cannot be used as a payment currency! These cryptocurrencies, to be more precise, are encrypted assets, just with the word currency in their names.

Look at the two groups first Data: 1) As of October 2020, the global digital fund management scale is about US$25.1 billion; 2) As of April 23, 2021, Greyscale Bitcoin The scale of trust products has reached US$35.3 billion. With the addition of ETH funds, the light grayscale is close to 50 billion. The speed and scale of traditional funds entering the encrypted asset market are amazing. Therefore, the rapid growth of encrypted assets in recent months is quite amazing.

1. Currently issued ETFs Fund products

We have counted the currently listed ETF products are found to be Canadian. Although Canada is relatively low-key, it should be more open to encrypted assets like Singapore.

2. High Liquidity

Bitcoin April 2020 The market value of the Hong Kong Stock Exchange was 158.9 billion US dollars, and the market value of the Hong Kong Stock Exchange at that time was 4,517.9 billion. So at that moment, the market value of Bitcoin was only equivalent to 3.5% of the Hong Kong Stock Exchange. Bitcoin is equivalent to an asset, which can be understood as a stock, but its trading volume is the blue column, equivalent to Hong Kong three times that of the stock exchange. There are more than 1,800 stocks on the Hong Kong Stock Exchange, and the total trading volume is only 1/3 of a Bitcoin stock.

Similarly, we see At that time, the market value of ETH was 51.9 billion US dollars, and the 24-hour trading volume was 31.5 billion US dollars. Its liquidity was also very high.

3. High Volatility

Bitcoin’s daily performance in 2020 The average price fluctuation reached 3.8%, and ETH reached 5.27%. If you look at three years, the average daily volatility of Bitcoin is about 3.9%, the average daily volatility of ETH is 6.5%, and the volatility of stocks is far less than this figure. For example, taking a one-year period as an example, the average daily volatility of stocks in the Hang Seng Index is 0.2%, that of the Shanghai Stock Exchange is also 0.2%, and that of the Shenzhen Component Index is about 0.3%. If you look at a single stock, such as Apple, Apple is about 1.04%, and Alibaba has a daily average volatility of 0.7%. So be very careful when investing in digital currencies.

4. Bitcoin mining cost

When we discuss a When deciding whether to buy a coin, we should consider that the price of the coin is affected by both supply and demand. Recently, the market is very hot and the demand is strong. Recently, the prices of BTC and ETH should be driven by the demand side, especially the entry of institutional investors. But when the price of encrypted assets plummets, we should pay attention to the cost on the supply side. If the price deviates (below) the cost too much, miners in the market will stop mining.

For now , the mining cost of each BTC is about 22,000 US dollars. We can see from the picture below that due to the large increase in the price of BTC recently, the price of mining machines has also increased significantly. In the past (bear market), the main cost of Bitcoin mining was electricity, accounting for about 60%. But now the mining machine cost is the biggest cost, accounting for about 53%. Therefore, this time point is actually not a good time to participate in mining investment. In the bull market, it is the most expensive time to buy mining machines, and the best opportunity to participate in mining should be in the bear market.

5. User Growth

Now there are 71.68 million wallets Holding Bitcoin, Ethereum has 148 million, and Binance Smart Chain has more than 65 million.

If Facebook's Diem is successful, it will be able to import some of the 2.7 billion Facebook users in traditional social media, for example 300 million users, into a wallet with a blockchain. Blockchain wallets are universal. If it is Libra’s blockchain wallet, with a little technical adjustment, it can completely receive, send, buy, and sell Bitcoin and Ethereum, so the growth of users will undoubtedly increase. Bring the vigorous development of the entire network.

6. How much electricity does the Bitcoin system consume in a year?

Bitcoin is about a year To consume 31.5 billion kilowatt-hours of electricity, the annual power generation of the entire Three Gorges plant on the Yangtze River is about 100 billion kilowatt-hours, so it will consume about 0.3 Three Gorges of electricity. If you consider that thermal power plants in the city are used to generate electricity, it is equivalent to a thermal power plant with an installed capacity of 3.6 million kilowatts, and 100% of the production capacity can be satisfied. A thermal power plant with more than 3 million kilowatts is not a large thermal power plant, so it is not everyone It is a rumor that it is an astronomical figure that will impoverish the country.

BTC, ETH The so-called mining means that the computing power of volunteers undertakes the bookkeeping, settlement, and liquidation functions of the entire system. For these effective work, they are rewarded with coins automatically issued and issued by the system; in fact, all legal currencies and all securities transactions have huge The bookkeeping settlement system and disaster recovery also consume electricity every second; what's more, BTC and ETH mining generally consume the so-called "garbage" in the industrial and civilian consumer markets with inconvenient transportation, abundant energy, and no energy around them. Electricity”, only this kind of electricity is cheap. To transport this electricity to densely populated and industrial areas, the loss and line cost per thousand kilometers will reach 8 cents per kilowatt-hour of electricity. For so many years, those garbage electricity cannot be transported out for the economy. There are profound reasons for the use of important towns. Now it is mined by BTC and ETH, and it is used locally, and it serves the world and earns foreign exchange. To some extent, isn’t it very green and humane?

7. Talk about Ethereum

The price change of ETH depends directly on supply and demand. On the supply side, after Ethereum is converted to a POS mechanism, the currency issuance rate is expected to increase from the current 4% to 1%. From the perspective of demand, more and more DeFi businesses need to mortgage ETH, that is to say, the more applications of ETH, the more it is mortgaged and locked. So from a logical point of view, the supply will gradually decrease, and its demand and lock-up will gradually increase. If ordinary financial knowledge can also be applied in the blockchain field, we can understand that supply and demand will become more and more tense. If you believe that DeFi will continue to grow, then ETH will definitely rise again.

About including ETH in In fact, we can use the traditional Internet VC valuation method to look at the valuation of the blockchain platform within the platform. We will look at the number of APPs (called Dapps on the blockchain) on the platform, and the platform brought by these Dapps. The total number of users and the growth rate depend on the activity of these users. Most importantly, the blockchain is different from the Internet. We must first attach great importance to the total economic creation of the platform, which is GMV. The larger the platform ( The blockchain is generally referred to as the public chain) The greater the space for sharing a small commission from GMV in the future. For example, when we evaluate Youtube, we will look at how many anchors there are on the platform. When we evaluate WeChat, we will definitely pay attention to how many WeChat Mini Programs there are. The same is true for Ethereum.

We can pass Observe the economic aggregate (GMV) of the entire Ethereum network or Dapp-related data to evaluate ETH. At present, there are more than 2,500 Dapps on Ethereum. If ETH is understood as an Internet platform company, then there are 2,500 APPs running on it. At present, the number of users is still very small, but the growth should be very considerable.

8. Talk about BNB

In addition to ETH, there are also There is a similar coin, BNB. BNB can also be used to participate in DeFi. You can also use similar logic to evaluate BNB.

BNB is Binance The ecological native token is the embodiment of Binance’s ecological and economic value, which can be divided into two parts: the centralized exchange and the decentralized Binance Smart Chain economic ecology.

Binance Centralized Exchange ranks first in the world with an average daily trading volume of 51.1 billion US dollars

Binance Smart Chain has more than 400 Dapp agreements, and a total of about 34 billion US dollars worth of assets have been locked on the chain.

In addition, Binance The management team of BNB has also done a good job in the mechanism design of BNB, making BNB a deflationary encrypted asset. Binance Centralized Exchange will spend 20% of its profits on burning BNB every quarter. In the first quarter of 2021, Binance Exchange will destroy a total of 1.1 million BNB, worth about 600 million US dollars. The total BNB supply has been reduced from 200 million when Binance launched to 169 million. At the same time, the destruction also reflects that the Binance Centralized Exchange’s profit in the first quarter was approximately US$3 billion, while Coinbase achieved a net profit of US$800 million during the same period.

If Coinbase is The largest exchange in the world, then Binance is the largest exchange in the universe.

Finally, I would like to give you a pertinent suggestion, I hope you will not If you are only obsessed with speculating on coins, you still have to pay attention to the application of blockchain seriously. There are still very broad application scenarios waiting to be developed.