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Discussion on second-level bargain targets and strategies in bear market.

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First is a good project, second is a good price...

Original Title: "The Right Time to Buy: Discussion on Secondary Bear Market Targets and Strategies"

Source: MInt Ventures

Editor's note: Mint Ventures interviewed Xin, founder of Old Fashion Research, Zheng Siwei, head of first-class cabin research, and Lawrence, a researcher at Mint Ventures, to discuss bear market bottom-fishing strategies.

Hello everyone, welcome to WEB3 Mint To Be initiated by Mint Ventures. Here, we continue to ask questions and think deeply, clarify facts, explore reality, and seek consensus in the WEB3 world. I am Alex, a research partner at Mint Ventures. Today, we have invited three teachers to discuss the topic of buying the dip in a bear market.

Disclaimer: The content discussed in this podcast does not represent the views of the guests' respective organizations, and the mentioned projects do not constitute any investment advice.

Alex: In this episode of the podcast, we have invited three Web3 investors, all of whom have extensive experience in primary and secondary market investments. One is Teacher Xin, who previously worked in Distributed Capital and Binance Labs and is now the founder of Old Fashion Research. Another is Teacher Zheng Siwei, who is the head of investment research at First Warehouse. And the third is Lawrence, a researcher at Mint Ventures. Let's have the three of them say hello and introduce themselves and their respective business areas.

Xin: Hello everyone, we are Old Fashion Research, a multi-strategy fund. We have previously done some mergers and acquisitions and primarily invest in the primary market. Recently, we have also started to make investments and allocations in the secondary market.

Zheng Siwei: Hello everyone, the first-class cabin mainly conducts project research and output of research reports for the public, and I am responsible for the management of investment research business in it.

Lawrence: I work in research at Mint Ventures and I focus mainly on the DeFi sector, stablecoins, derivatives, and innovative on-chain projects.

Market Cycle Analysis

Alex: The first question is about cycles. Some people believe that we are still in a bear market cycle or at the end of it, and there may be a long bear market in the future. Others believe that we are already in the early stages of a bull market, and there may not be a very long or deep bear market cycle in the future. What are the three of you's criteria for judging cycles?

Xin: Let me share my personal understanding. In terms of liquidity, it cannot be said that it is a complete bear market. Of course, the signs of liquidity overflow from the bull market are still far away, but we can already see some liquidity gradually returning. I personally tend to understand it as the end of a bear market or the late stage of a bear market. We can see that yesterday, SOL's trading volume was about 3 to 4 billion, and its Market Cap was 16 billion, including the trading volume of Ethereum and Bitcoin, which are currently in a stage of rebound. Yesterday, Bitcoin was about 34 billion, and Ethereum was 13.9 billion. This number has basically increased by 30% to 40% compared to the end of last year. So in terms of trading volume, I think it is gradually coming out of the state of liquidity exhaustion. Especially at the end of 2022, when liquidity was extremely exhausted, there were some abnormal price fluctuations. Therefore, I think it will slowly come out. In addition, from an emotional point of view, there are some thematic rotations, or people are starting to pay attention to the characteristics of sector rotation. This logic is not yet very clear, but it is gradually being felt, including some strong currencies, where there are signs of major positions being established. Bitcoin has also broken through a long-standing sideways trend, and overall, I feel that it is in a warming state.

Zheng Siwei: I'll give my personal opinion, which doesn't represent the institution's view and isn't investment advice. Let me start with the conclusion. I tend to agree with Teacher Xin's view that we haven't reached the early stage of a bull market where we need to fire all our bullets. I used to divide the bull-bear cycle into two stages, a bear market and a bull market. Now I think it's more appropriate to divide it into three stages. One is a bull market with a unilateral upward trend, and the other is a bear market with a unilateral downward trend, both of which are more obvious. From the previous cycle, it was probably from March 2012 to November 2021, which was a unilateral upward trend of a bull market. Then from November 2021 to November 2022 is a unilateral downward trend of a bear market. I think the most subtle part is the middle part, from November 2022 to now, and some time in the future. I would think of it as the third stage. The reason why there is a third stage is that I mainly do altcoins, and I found that Bitcoin and altcoins are not so synchronous in the third stage, and even among altcoins, they are not synchronous. If I were to divide it into the previous two stages, there would be some contradictions in guiding myself to invest in Bitcoin and altcoins. I now feel like I'm in a certain moment in 2019 of the previous cycle. The low point of Bitcoin probably came out in November last year, but many altcoins are still in the process of finding the bottom, and some altcoins have already shown signs of the bottom, while others are still searching for the bottom. I haven't fired all my bullets yet, and I don't think it's a stage where a bull market has completely opened up.

Lawrence: I am closer to the views of two teachers. I also think that currently, unless it is the end of the bear market, it may also be in the middle and later stages of the bear market. There may still be a decline, but if you buy now, as long as the target is not selected particularly outrageous, it should be a state of only losing time and not losing money. I think that no matter from which aspect of the data, there is still a certain distance from the bull market. Whether it is from the on-chain data or the total amount of stablecoins, various data seems to still be in the oscillation stage of the middle and later stages of the bear market.

Alex: We have been discussing cyclical issues with some friends. One question is the transition from bear market to bull market, including the timing of the arrival of the bull market cycle, which seems to have a strong consensus. Of course, this may be because our research or discussion scope is not broad enough. But overall, everyone is more inclined to believe that there may be a formal bull market cycle from the second half of 2024 to 2025. Do you think there will be a reverse situation for this consensus? Maybe if everyone thinks the same, the bull market will not come as scheduled. Does Professor Zheng think this is a problem? Do you think that consensus is just what people around us think, and most people may not think so?

Zheng Siwei: Let me first talk about the small sample I collected. You just mentioned that the second half of next year, or even the end of next year, is the beginning of a bull market. Indeed, some people around me think so. But I have also come into contact with some market voices that are more optimistic. Some people felt that the bottom had already been reached some time ago and the bull market had begun. However, the transition from bear to bull is not so certain. Some people are more optimistic and feel that we are currently in the middle. Some people believe that the expectation of ETF and the halving around April next year may constitute a fuse. Therefore, in the small sample group that I know, there is not such a consensus. Of course, if most of the voices are predicting the second half of next year or the end of next year, then I think it will definitely lead to the reflexivity you mentioned. Since predicting the next quarter as a bull market, many people will definitely go to buy low and ambush in advance, which will affect the occurrence of the entire timeline.

Alex: Xin is currently overseas and has many friends, project parties, and investment institutions that he has been in contact with. Please ask Xin to share his views.

Xin: Yes, I think you said it very well. The expected outcome is certain. I think this also applies to the US stock market or macro cycles, because everyone's predictions about interest rates, including the US stock market, are likely not to cut interest rates this year, and when will they start cutting interest rates next year, which actually has a reflexive existence. In fact, I still think that the phenomenon in the currency circle is not as strong as that in the traditional market. You will find that when crypto is compared with the macro or US stock market, there is a period of time when it is very tight, I remember it was at the beginning of the year. In fact, during this period, it was slightly decoupled. While the US stock market was pulling back, crypto was still rising strongly, so I think crypto has its own growth characteristics. The first is the macro cycle, and everyone will be influenced by this to predict, for example, when will interest rates start to cut next year, and then a bull market may start. In the middle, I think it may be combined with some of the industry characteristics of crypto itself, because the market capacity is relatively small. One is the expectation of ETF, which depends on when it will be launched. The second is that I think the overall regulatory environment in the United States is still very negative. In the previous cycle, there were some overdrawn regulatory benefits. When can it be repaired, including the conclusion of the SBF case, whether the mainstream population in the United States can turn their views on crypto into positive, I think there will be some changes in industry characteristics that will affect the rhythm of the industry. This may be the reason why simply looking at the macro may not be able to fully grasp the rhythm of crypto.

Alex: Have you ever encountered someone around you who has a different view from us, thinking that the bear market may not come until 2025, and even believing that the bear market will last for a very long time, and the logic behind this conclusion is somewhat reasonable? Can you share it with us?

Xin: Your question is very good. I have heard that some people are pessimistic about the market and believe that the bull market may not reach the height of 69,000. I will give you some arguments, but I do not completely agree. One reason is that the positive regulation in the United States has been overdrawn. In the last bull market, almost all mainstream institutions in the United States, including retail investors through various channels, entered the market. At that time, there were also channels such as Silver Bank, PayPal, Robin Hood, etc. The recognition and pace of mainstream markets were very crazy, and the entire path was relatively smooth. I still remember that FTX's deposits and withdrawals were very convenient in the United States at that time, and the entry of on-chain DeFi, including the image of adding leverage, through SBF, and the continuous leverage of funds such as Three Arrows, actually caused the inflated prices in the market. This situation is difficult to replicate in a strong regulatory environment. The market's overall capacity is also relatively high now. Today, Bitcoin's market value is about 600 billion US dollars. If the market value doubles or triples, it will be about 12,000 to 15,000 US dollars. For the application of Bitcoin, many people feel that this application cannot support such a narrative. Of course, I may be a little more optimistic.

Bear Market Bottom-Fishing Strategy

Alex: We just talked about the overall view of the cycle. Currently, we may still be in the end of the bear market and the beginning of the bull market. There is an investment saying that goes: "Bull markets are born in hesitation." When everyone's opinions are divided and chaotic, it is often the stage where the bull market may be brewing. Let's talk about a more specific issue. Regardless of whether the position is full or not, you have definitely started to plan and execute the plan to buy the dip. What is your dip-buying plan like? What is your general idea? This may include the selection of positions. We will discuss specific targets later. Lawrence, please go ahead and speak first.

Lawrence: I am currently in a state of almost full position, and I plan to reduce my position recently. I started buying the dip around the second half of last year and have been making regular investments until recently when I reached almost full position. The overall strategy was to start making regular investments after the FTX incident in November last year, when I felt that the market had reached an extremely pessimistic state, but I was not sure if it was the bottom yet. I was surprised by the rapid rise in prices earlier this year and felt a bit confused about how everything went up so quickly. However, I have mainly been making regular investments over the past year.

Alex: Let me also share. The time when our institution bought the dip was at two points last year. One was during the Luna incident, and the other was during the FTX incident. We did a lot of buying at both times when unexpected extreme events occurred in the market. Personally, I also increased my position at these two time points. Currently, my overall position is fully leveraged with a small amount of leverage. The small leverage refers to me using some collateral to borrow a small amount of funds to invest in some assets. However, I have reduced my position in some of the assets that have rebounded strongly recently, so now I am in a stage of being fully leveraged with a small amount of leverage. My general idea is similar to what Lawrence just mentioned. I feel that it is a good time to buy some high-quality assets now, and in the long run, I personally think that I may only lose time at most, but the returns should still be good. I don't do regular investments. I prefer to buy in large positions during extreme events. If there are still extreme events in the future, I will increase my leverage position a bit more. If not, this position may continue. If the short-term rise is too fast, I may reduce my position. In fact, I am betting that there may still be some downward fluctuations in the future or some unexpected events may occur. If not, the returns of this position in the bull market may be relatively low. This is my personal idea. Please let Teacher Zheng share some of your own or the first-class warehouse's dip buying strategies that can be referenced.

Zheng Siwei: Let me talk about myself first. I think specific bottom-fishing plans will vary due to different personal investment styles and strategies. My investment style tends to focus on three points. First, I mainly invest in altcoins and rarely invest in Bitcoin or Ethereum. Second, I mainly invest for the long term and rarely for the short or medium term. Third, I mainly invest on the left side and rarely on the right side. Under this premise, my current position may be slightly different from the other two. Overall, it will be relatively low. As for the specific bottom-fishing plan, I think it depends on the time period. Alex just mentioned that many bull markets are born during the hesitation phase. At the end of the bear market and the beginning of the bull market, I will first consider allocating some Bitcoin and Ethereum. On the one hand, I am afraid of missing out, and on the other hand, I am not sure if it is the beginning of the bull market. Holding Bitcoin and Ethereum can reduce the risk of missing out, and even if there is a pullback, the magnitude of the pullback will not be particularly large. I think the end of 2019 was actually a good stage in the last cycle. 312 was an extremely rare extreme market in ten or even twenty years. In the consideration of this cycle, I will not include this event with a relatively small basic probability, but there may be black swans at any time. When I think the market is turning more and more bullish, I will start to make some altcoin allocations. Bottom-fishing for altcoins is also done in batches. As I just mentioned, altcoins and altcoins are actually different frequencies. That is, in a certain period of time, if I have ten altcoins that I like, these three may have already bottomed out in the past two months, and the other six may not have even moved a part of the position. So this is the part that I think is more difficult, to judge the different bottom-finding intervals of the good targets in my hand, and see when and where it will happen. So I will consider picking different timing to bottom-fish according to different altcoin intervals. Then I will leave some flexible funds. Because in the last cycle, I think I was more confident, and some of the targets in my hand will have a higher increase. But later, it turned out that some coins that I couldn't understand would also achieve very exaggerated gains in the bull market, so I added a more right-leaning trading. Because of the stage of this market, I think it is relatively early, and there will be some special market conditions, so I will leave a small part to try those conditions. Of course, the left side is my backbone, and the right side is just a trial.

Alex: Earlier we talked about "Shanzhai coins". So, when buying "Shanzhai coins" during a bear market, what criteria would you prefer to use? Do you have a general idea?

Zheng Siwei: The general framework is very simple, two points: a good project and a good price. The framework is simple, but execution is particularly difficult. For a good project, the end result is a good target. I think a good target is either a very good project with less attractive prices, or a medium project with very attractive prices. For example, Uniswap, most people in the market think it is a good project from a fundamental perspective, but is the price attractive enough? In other words, how much can it rise in the next bull market, and how certain is the rise? Or simply calculated using mathematical expected value, I think the final good project may not necessarily be a very good target. This is my personal opinion. In addition, there are some projects that are definitely not as high-quality as blue-chip stocks or coins, and there are many uncertainties in the development process. They may get better or worse in the future. Generally, I will not consider such projects, but if its total market value FDV is less than 100 million US dollars today, I will give it a more tolerant standard because its market value is relatively low. Even if it is as low as one or two million US dollars, I will try a part of my position. If it goes wrong or withers, then I will admit it. But if it really goes in the expected direction, the rise it can bring is beyond the reach of blue-chip coins like Uni. Overall, when looking at projects, we need to consider both fundamentals and prices. Sometimes I feel that price fluctuations in our industry are too large. So I will at least have a 50-50 split, and sometimes a 60-40 split, with 60% allocated to price and 40% allocated to fundamentals.

Alex: Just now you talked about personal ideas. Are there any differences between your organization's ideas and your personal ideas?

Zheng Siwei: Institutions may differ in terms of fund size and operating style. First of all, our institution's funds are managed by multiple investment managers, and I am responsible for a portion of them. The part I am responsible for is more similar to my personal investment style. This is also what our boss requires, to follow our personal style, otherwise executing two different methods at the same time may not be effective. There are some differences, mainly in two areas. One is that because the institution has a larger fund size, it may not be as aggressive as my personal investments in some aspects. For example, when it comes to opportunities on the right side, I may try them out, but as a larger capital, we will only act when we are more certain. Second, because there are other investment managers besides me, some have similar styles, while others are quite different, which can also affect the capital. Our boss mainly adjusts the entire investment portfolio by allocating different positions to each investment manager. He may feel that the styles of these two investment managers are more suitable for the market rhythm in the next round, so he will allocate more positions to them accordingly.

Xin: My thoughts are similar to Teacher Zheng's. I didn't fully invest in my positions, and in fact, I was mostly empty before September. Then I bought some in September and sold some when the price rose in October. Now I'm basically at about half of my position. I personally don't know how to allocate Bitcoin because I'm really pursuing higher risk returns. I might fill up on Ethereum first, and I'm similar to Teacher Zheng in terms of other altcoins. I made a list of ten to twenty, but it's impossible to fill up on every single one because the funds would be too scattered. I'll also consider thematic rotation, so that's why I'm not fully invested yet. At least I'm not sure about this logic yet. Of course, I have a rough idea, but it's not as clear as it was in 2019 and 2020. Or maybe the targets back then were cheaper, but now even if there's a logical industry, I think the better targets in the industry are still a bit expensive, so I've been waiting. I'm waiting for two situations: the first is a fluctuation, an opportunity to buy low; the second is no fluctuation, and the price remains stable. If it doesn't come down, I might chase after it. So I'm still waiting for an opportunity to fluctuate.

Alex: When we are selecting targets, I feel that there are two ways of thinking, without saying which one is better. The first one is more focused on the business, looking at its business model, whether it has a moat, in fact, we are using fundamentals to evaluate this project, making it an important reference standard for a good target. The other one may be more focused on narrative and market trend sentiment, as well as our speculation on whether this theme will be popular in the next round. Both of these possibilities have had good investment records and less than ideal investment records. When Xin is selecting those projects that are more inclined to be copycats, which one do you think accounts for a larger proportion in your investment portfolio? Why?

Xin: I may prefer better fundamentals because we have more experience in the primary market, and the logic based on fundamental analysis will be more convincing to ourselves. We can also better evaluate whether the market price is cheap enough or within a reasonable range, and judge whether it is undervalued or overvalued. So at least it has some business and fundamentals, and we will also consider public opinion. For example, when Solona was mentioned before, I also said in September that there were some negative evaluations of public opinion before, and its business itself may be okay, which is what we prefer. As for hotspots, we find it difficult to judge. I think hotspots may be suitable for two types of people. One is those who can create hotspots themselves, such as some European and American funds that can write this narrative in the secondary market to promote their targets and create a hotspot. The other type requires a lot of diligence, like those who use the "crowd tactics" to monitor 24 hours a day, or use mechanization to monitor, such as trade news. These two types do not seem to fit us, and we still prefer to lay out some fundamentals in the long run. An institution in the primary market may have some advantages, that is, we can talk to the team and contact them to learn more about the situation of the fundamentals, including future plans and personnel configuration, so we will understand the fundamentals more.

Lawrence: Just now Alex mentioned two types, both of which I am working on. We may choose some projects with better fundamentals and familiarity, and do some trading based on their event-driven nature. On the other hand, we will try to combine with some market hotspots. Of course, these usually won't take up a large position. We may buy some tokens that are driven more by narratives and whose business models are not particularly clear, based on some market sentiment observed at that time. For me, the main goal of this is to earn excess returns compared to ETH.

抄底的赛道和标的

translates to

The Track and Targets of Bottom Fishing

Alex: We are getting into a more specific question. During the process of bottom-fishing, do any of you have any specific targets to share in terms of specific tracks and specific targets? For example, you may be more optimistic about Defi or the derivatives under Defi, and what projects will be in the derivatives. Let's discuss specific examples of targets and the logic of bottom-fishing. Our institution has just conducted some secondary screening, and some targets have been identified. Let's have Lawrence share first.

Lawrence: I usually focus on stablecoins and derivatives. Previously, I identified several projects, mainly DYDX, GAINS, SNX, and Liquity. In addition, there are some low market cap projects in stablecoins, such as Reflexer and OHM, which I am also paying attention to. I am bullish on derivatives mainly because the overall performance of on-chain derivatives in this bear market is stronger than the market as a whole, mainly from GMX, which basically contributed half of Arbitrum's TVL during its peak period, and also has high DAU. The fundamentals of the entire track are relatively good, and I have also seen many innovative products recently, such as Apollox, which provides higher leverage and more speculative products. From the overall fundamentals and the penetration of people around me, derivatives are gradually improving. Therefore, derivatives are a track that I am more optimistic about in the past year. Stablecoins are a different situation. Although this market is good and has a bright future, there are currently no particularly good targets for projects. The leading stablecoin projects each have their own problems. The current trend of stablecoins in this wave, in my opinion, is a state close to the end, which is this wave of RWA, from MakerDao to the recent Frax, which have all been officially launched. In the previous screening, I did not include these two. In addition, I am also interested in Staking. In fact, there are relatively few targets for Staking, which was a good target in the previous period, but overall, it has basically followed the trend of Ethereum recently, with not much excess returns. There have also been many changes in the overall track of Staking recently, and Vitalik also has some ideas. So, specifically for this issue, the tracks that I am bullish on are mainly derivatives, and the other two, stablecoins and Staking, are relatively average.

Xin: I think the overall industry logic is better suited for a style-switching model. So I think the first point, I agree more with Defi possibly taking off first. Because according to the hype logic of an industry, people like stories and themes, so first Bitcoin and Ethereum's price increases will drive Defi's TVL increase, which is a natural response to price. After the TVL increase, one of the most profound problems Defi faces now is the lack of funds coming in, especially in the high-interest rate of US bonds. There is a hedge in RWA, so I will allocate some RWA to hedge Defi's outflow of funds, which is like helping you allocate national debt. When the attractiveness of national debt is not as good as the attractiveness of Defi assets, such as during a bull market, I remember that annualized 10% and 20% were normal at that time. So when the bull market starts, when the entire Defi yield rises, there will definitely be funds coming in. From this perspective, I may first consider which ones are the first to have funds flowing in, at least I think I will consider configuring some Defi leaders that can store water, including lending, such as MakerDao, including RWA or some other Defi leaders, depending on their own chips and market value. But for Defi, I think I may at least allocate a little bit of each of the important leaders' stacks, including Dex, lending, and then Staking, as I just mentioned. I also like derivatives, but there is a very important problem in the derivatives market now, which is that there are many primary market projects. I didn't actively look at this track, but there will be one or two new perpdexes finding me every week. We may still allocate some heads on the secondary level first, but we will pay close attention to some new derivatives that have the opportunity to innovate. Old ones like DYDX, new ones like vertex, hyperliquid, I think all have opportunities. GMX is now lacking in innovation, but it is not ruled out that the team may have new improvements. Just mentioned the decentralized stablecoin track, I also agree with the guest's point just now, there is really no project that makes people feel bright, but I am looking forward to new gameplay in the bull market. Including prisma recently, which is quite popular, I'm not saying to buy this target, just case analysis. Similar to this kind of new liquid staking token as the underlying asset to do stablecoin, there may be a batch of them, including restaking tokens after restaking goes online, which may do stablecoin underlying assets. I think there may be some new gameplay. I may wait and see if there are new online projects of this kind. If the valuation is not too far-fetched, I think there is still an opportunity to participate. I think liquid staking may be a good time to settle down now. At the end of the year, I was very bearish on Lido and the like, but now everyone has realized this problem, that is, Lido's proportion is too high. Including centralization, when you realize that it is a problem, I think it may be a time when the secondary market can slowly consider building positions. So maybe I have to observe, before the end of the year and early next year, before the Ethereum Cancun upgrade, I think it is an opportunity. Ethereum is now relatively weak, giving the market a chance to breathe. When Bitcoin reaches a high point and stops, I think Ethereum's ecology will catch up. So I am optimistic about the overall Ethereum, although it has many problems now, but I think it is a good thing. When the problem is exposed and people start to discuss it, it is a good thing for the secondary market.

Zheng Siwei: In the early stages of the bear market, my idea was to try to find one or two relatively large tracks that had not yet been noticed in this round, or even had not yet appeared in this round, but would emerge in the next round. It's a bit like standing in 2018 and 2019 and seeing the GameFi or NFT scenes that were shocked in 2020 and 2021. What makes me personally disappointed is that after looking for almost two years and seeing many projects, I haven't found a track that will explode in growth in the next round. This represents a huge investment opportunity, but I haven't found it. I think there may be two reasons for this. One is that I may be wrong. Some narratives keep coming out, but I can't accept them. Maybe I lack imagination and don't have such a long-term vision. The second is that I am more focused on secondary market investments, so I mainly look at projects in the secondary market, and my experience with primary market investments is much less. It is possible that the truly innovative and cutting-edge projects are happening in the primary market. So I gave up this goal in the middle and later stages and started to look at the existing tracks to see which ones have bigger opportunities. The ones I am currently looking at more are L2 and NFT. Let me briefly explain why these two are important. First of all, I think L2 will be like L1 in the previous round. In fact, in each round, there are some public chains, platforms, or infrastructure that many people want to do something similar to Bitcoin in 2015 and 2016, but with improvements, such as better throughput or privacy. By 2020 and 2021, it was the Ethereum killer story. I think now is the time, and this may be a wrong view, if I want to start a business and create a chain, I won't go and do something like an Ethereum killer or a Bitcoin killer. Because now I think the trend is to focus on Ethereum and develop those L2 or even L3 around it. So I feel that the next round may shift the battlefield to L2 itself, in addition to the well-known Optimism, Arbitrum, Zksync, and Starknet, there will be others that emerge. If we learn from the experience of the previous round, L1 will emerge one after another, and almost every powerful one will prosper once, leaving some sediment after prosperity. For example, we see that BNB Chain today may have left more users in the sinking market, mainly for games. Solana will have its own unique story and will have its own rhythm after being tied to some strong capital and strong exchanges and then rug. I am thinking whether the next round of L2 will be like this, something will happen to it, and then its own tokens or stacks on it will have a period of wealth effect, attracting a wave of people to come over. After this wave of people harvests here, they will be attracted to another L2. In the end, some L2 may have more users and ecological projects that can settle down after the next round, and some may end after a wave of games. I think this is an opportunity. The second is NFT. To be honest, in 2018 and 2019, I considered ideas such as Defi and games, but I think I still lack imagination. NFT is something I never thought of at the time, so when it exploded, the way it appeared in front of me was something I couldn't get for a while. So there were many investment opportunities in the early days of NFT that I missed. Now I think although it has gone through a round of explosion, it is still in a relatively early stage. I agree more with the founder of Shima Token Labs. His point is that if the tokens we are talking about are tokens or money, and ERC20 represents these, then NFT represents things. We are also issuing these more trustworthy and solid assets on the net woven by the blockchain, and some things and objects correspond to the money and things in our real world. I agree with this view more. Today's NFT is still mainly PFP, and it has not yet reached the situation of being diverse. Now PFP also has its own problems. I think it is a good model, but many projects have opened up in the wrong way, so I think the overall NFT is still in an early stage, and most of these projects are mainly trial and error. So I think there is still some room for growth, and I think these two will have more opportunities. As for the specific targets, it's a bit of a headache. Just talking about good projects and good prices, some projects that I think are good are not cheap, and some prices that are cheap, I don't seem to be interested in.

Alex: You just mentioned NFT. Would you prefer to invest in specific NFT assets or in NFT-related projects such as NFT lending and NFT perp?

Zheng Siwei: If it's a large position, my first choice is always the tokens of those projects. Because in terms of liquidity and certainty, the underlying assets of those project infrastructures are better. The advantage of NFT assets is that the potential for increase is very high. Even without situations like Punk and BAYC, I think there will be more than one hundred-fold increase in the next round, calculated in U. But I think the certainty is relatively low, that is, the rate of high-quality NFT assets is very low. In the bull market, there may be tens of thousands of projects, some doing PFP, some doing metaverse, some doing land, some doing arts, but at least I personally don't have the confidence to grasp a few. It is possible that I have to invest in 20 of them to cover one. Based on this calculation, even if I cover a hundred-fold increase, I have invested in 20, and the overall return on investment is not high. So my overall assets will still prioritize those infrastructures. When observing those PFPs or art-related projects, if I really have confidence in them and can see the shadows of the factors I want on them, I will also buy them, but this position will not be large. Because unlike tokens, there is an eternal liquidity on AMM today, and I can directly sell them. Once they don't perform well, it is very difficult for me to sell those positions.

Alex: I'll also share my personal thoughts. I agree with the founder of Bankless who proposed a strategy called the so-called barbell strategy. He believes that assets should be placed on both ends, either on one end where you feel that the asset is relatively stable and has a strong sense of certainty, represented by Bitcoin and Ethereum, or on the other end where you feel that the fundamentals are solid and the moat is wide, such as blue-chip projects like AAVE for lending and dex Uni, etc. I think on the left side of the barbell, our institution has chosen quite a few targets, including some derivatives that were just mentioned, and some more top-tier derivatives can also be included in this category. The certainty is still relatively strong.

But the problem with it is, as Mr. Zheng just mentioned, the elasticity may not be very high. For example, Uni may already have a market value of a few tens of billions, and if it rises 5 or 6 times in the next round, a market value of one or two hundred billion is actually very scary. In addition, it is a business-oriented project, and its gravitational pull is being pulled down by business indicators, which may not be as good as some purely narrative projects. It is difficult to prove or disprove its true value. Now my situation is that the projects with relatively strong certainty on the left side of the barbell have basically been selected, and some configurations have been made, including Aave, Uni, and some Ethereum and Lido. The most headache now is what to choose on the right side. As Mr. Zheng just mentioned, I have been looking for projects that may have hundreds of times of returns in the next cycle, similar to NFT, GameFi, or projects that exploded during the Defi summer. These targets are really difficult to choose. But there are some alternatives that I haven't bought yet and are still in the process of thinking.

One of the options is related to the concepts of blockchain and AI. We have heard some narrative logic, including the speech given by the former strategic director of Alibaba, Ming Zeng, at a conference held by Wanxiang. He is optimistic about the combination of AI and Web3. The core logic is that the proportion of AI in the entire production system and society will become higher and higher in the future, and it is based on machines and code to operate and execute. The cooperation, transaction, and economic settlement between these machines can be based on transparent and trustworthy blockchain. In addition, many AI-driven service projects require an economic system and token system for incentive distribution, settlement, and allocation. He believes that the combination of these two has great prospects. Of course, imagination is really needed for this thing, and there are not many projects that have been successfully implemented so far. I have heard a logic that is quite inspiring, which is that there have been three technological miracle years in human history. One was in 1666, when modern scientists such as Newton joined the Royal Society of Science in England. That year, he made a lot of discoveries about basic physics and mathematics, including calculus, the law of universal gravitation, and so on. Another one was in 1905, when Einstein published four papers in a row, including the photoelectric effect and relativity, becoming a large number of basic theories in the new stage of the physics world.

In 2023, which is the year we are currently in, we will look back and consider it as the year of the next big miracle. AI had a strong emergence effect that year, resulting in significant improvements in productivity and the emergence of content and algorithms. Looking back, we will find that 2023 was a representative year, where AI played a significant role in our production processes and daily lives, far beyond our imagination. Based on this significant extrapolation, AI may be combined with blockchain. Although there are no particularly smooth commercial cases at present, many people are still skeptical about this story. It may be similar to the situation we saw with NFT in 2018 and 2019, or the discussion of Defi in 2016 and 2017, where we felt that there seemed to be some truth, but it was difficult to verify. Another potential target option is the TG ecosystem, which currently has a user base that is no less than that of WeChat or many traditional Web2 social ecosystems. It is now actively trying to combine Web3 products, including its own blockchain mainnet and many TG bots at the application layer. I think there are many commercial opportunities to import this user base. In fact, many TG bots have already implemented Dex transactions, and I recently saw one that started doing derivatives. I think there are still many opportunities for application layer development from zero to one, from one to ten, but the target selection is still under consideration.

Selection of ballast stones

Alex: We mentioned the left side of the barbell strategy, which is the deterministic asset. What kind of asset would you choose as a ballast position?

Xin: I may be more inclined to pair some Ethereum-based assets as a hedge during this cycle, such as Bit, Arbitrum, Optimism, and Lido. I consider them all to be within the Ethereum ecosystem, and I may not touch them much after buying. In addition, there was a point in the industry that I didn't mention earlier, which is Bitcoin ecological projects. We have invested in some projects in the primary market, and I think there are also some targets in the secondary market that can be observed, including stacks, thorchain, and some others. It's not necessarily a good time to buy now, but I think it's interesting to pay attention to some Bitcoin ecological projects and see if there are opportunities for innovation.

Lawrence: I chose Ethereum because I believe that in the future, Ethereum will definitely flip Bitcoin. Therefore, I will choose Ethereum. Maybe after some short-term narrative positions have been profitably closed or exited with losses, I will still switch back to Ethereum. I am Ethereum-centric.

Zheng Siwei: I think the concept of "ballast stone" is particularly good, which is something I lacked in the last round. It not only affects the ratio of returns and risks in an entire investment portfolio, but also provides a psychological guarantee in many cases. I think most people want to make big money in a bull market, but if they allocate too much to aggressive investments, the volatility can be unbearable and affect their investment decisions. For my own ballast stone, I would choose those with relatively high certainty and lower multiples, because I must meet some life needs or set some small goals for myself. The more suitable targets may be those like L2, such as the more legitimate white horse L2, like Optimism.

Like Xin mentioned earlier about the Ethereum ecosystem, I believe the entire industry will revolve around the growth of Ethereum, so I think L2 is a more obvious opportunity. In terms of quality, these four are also more certain than others. Although the increase may not be as high as others, I think what I am pursuing with these anchors is certainty. That is to say, even if the underlying assets in other combinations outside fluctuate wildly, I don't think this bull market will be bad for me, which will actually be helpful for other investments and make me more calm. As for Bitcoin and Ethereum, I won't be allocating during most of the bull market process.

However, there will be two time periods that I will consider. One is from the bear market to the bull market, when emotions are mixed and there is not much consensus in the market. In order to prevent falling into a trap and with a small retracement, I will choose Bitcoin or Ethereum. The second is when the overall bull market has been rising for some time and I feel that it will continue to rise, but it may be close to the end. At this point, I may consider exchanging all my altcoins for Bitcoin or Ethereum. In the cryptocurrency market, the bull market is short and the bear market is long, especially at the top of the bull market, which has a very short time period. When the short-lived bubble bursts, the retracement of Bitcoin and Ethereum will be much smaller than that of altcoins, and they may even have a second rebound, giving me the opportunity to sell. Therefore, in the later stage, in order to avoid the risk of a significant asset retracement, I will consider transferring my position back to Bitcoin and Ethereum.

Alex: You mentioned that the L2 project will be a cornerstone choice. Currently, the competition among the top L2 projects is the most intense, including Optimism and Arbitrum, which have relatively high market values. If you or the first-class cabin need to choose a heavier position, which one would you prefer?

Zheng Siwei: I have discussed this issue with some colleagues, but everyone has different opinions. Internally, we call them the "Four Heavenly Kings," referring to the four highest-funded projects with top VC support and outstanding teams from either 2020 or 2021. When I classify them myself, I use two dimensions to divide them into four quadrants: long-term and short-term. It is clear that projects like ZKSync and StarkNet belong to the long-term quadrant. Technically, they represent the ultimate type of L2, relying on code rather than people to complete the entire L2 work. However, this requires technological progress and lengthy iterations. Therefore, we can see that, regardless of the factors of airdrops, Optimism and Arbitrum are indeed more advanced in terms of ecological project activity and TVL, which is the long and short of it.

Another dimension, this word is not easy to find, I don't know which word to use. It's not about legitimacy or capital, but I do feel that Optimism is more community-driven compared to Arbitrum. The advantage of Optimism is that its core team has a higher status in the entire Ethereum developer community because it has been in the Ethereum community for a long time and has good relationships with various capital sources. Therefore, we see many reputable institutions and exchanges choosing to use Optimism. I don't know what adjective to use for this. ZKsync and StarkNet also give me the same feeling, and they happen to fall into four different quadrants. It's really hard to say which one has a heavier position between Optimism and Arbitrum. To be honest, I mainly look at the price. I think their TVL and final valuation may be difficult to have a very large gap in the next round, so I will look at the price at this time.

Next wave of narrative speculation

Alex: Earlier, Teacher Zheng mentioned that in the past one or two years, people have been searching for opportunities similar to the previous wave of NFT, GameFi, or Defi. Although the answer is still unclear, we still want to make some guesses. What do you think are the possible narrative engines in the next wave of storytelling?

Xin: Recently, I personally have been optimistic about the concept of consumer apps. European and American institutions have been investing in consumer apps, which may not necessarily be Web3, but Web3 can actually be a type of consumer app. Friend.tech, which is quite popular, can also be considered a consumer app. The so-called consumer app actually refers to a product that targets C-end users. They may not be very familiar with wallets and cryptocurrencies, but they can use fiat currency to buy Ether or directly make blockchain payments with fiat currency. The user experience is quite smooth. For example, if I want to buy a room on friend.tech and I don't have any cryptocurrency, I can use Apple Pay to pay in US dollars, and then it can help me make the purchase, which may be converted to Ether in the background.

However, this kind of consumer experience, whether it's Ethereum's 4337 abstract account or other solutions, because everyone wants to achieve this goal, in the wallet or infrastructure side, after having this idea and promotion, including making some progress, naturally there will be corresponding applications. So I am more optimistic about this type, including NFT, but I think NFT may be integrated into every application, such as your avatar or the pictures you post or your chat content, which are all NFTs. It will be subtly integrated into this consumer app, a larger trend, so this is an exciting point for me.

Alex: I understand that Xin's description of a consumer app is more like To C, with a wider audience and not just targeting native Web3 users. It is an application that is easily accepted and digested by traditional internet users. Do you think it is similar to last year's Stepn?

Xin: I think it's similar, but maybe it needs to have a lower threshold. Its financial attributes are a bit too strong. If it has some financial attributes but not so strong, for example, you don't need to use a table to calculate daily earnings and check the token price. This is something that friend.tech does well. You don't necessarily need to pay attention to the price of the token itself. Settlement may be in Ether or USDT, so I don't have to worry about the fluctuations of the local currency when I earn money every day. It's very annoying to have to sell and buy every day, and it's against human nature. Ordinary users are unlikely to rush to Binance to sell, only crypto users would do that.

So if you want to develop a consumer app, I think you should first abandon the influence of your own currency. Actually, I think this is a good thing, which means that the project party no longer releases coins just for the sake of it, but needs to consider whether users really have a demand for purchasing and generating revenue, and then think about whether your own protocol really needs to issue coins. If there is really a reason and users can benefit from purchasing the tokens of your protocol, then I think its achievement value can also be seen. If there is no reason and the coin is purely issued for the sake of issuing, and users have no use for it, then maybe in this ecosystem, everyone thinks it is a dispensable point. I think in the next bull market, people will pay more attention to the intrinsic protocol income rather than tokenomics in token design.

Alex: Xin just mentioned a point, and I think the implicit meaning is that Web3 applications still need to have Fi, because Fi represents a high association with human greed and gambling. This is often unavoidable in Web3 and can be considered one of its characteristics. However, Fi cannot be too complicated, like Stepn, which may be difficult to understand even for ordinary users. Therefore, platforms like friend.tech may set a price for a key to rise or fall, with only one factor affecting its price fluctuations, which is relatively simple. Xin just mentioned that many institutions are investing in consumer apps now. Apart from social platforms like friend.tech, are there any other trends in consumer apps that institutions prefer, such as a certain type of consumer app?

Xin: I think social is still a relatively common category now. In addition to it, there are some other categories such as prediction markets, some lightweight applications, clocking in, and tool classes. For example, recommendation systems. I think there are more tools and lightweight applications. This type may be more addictive with some economic incentives. You may not have the motivation to clock in normally, but with some economic incentives, or even some social elements, you may compare with your friends and the motivation to clock in will increase. Or something like calendar, which you have a demand for, can it be linked to your identity in Web3, such as social DID, and prediction markets, including the combination with AI that you mentioned earlier, can it generate new content in human-computer interaction, or use data on the chain to generate some new content, which is also being explored.

Alex: What does Teacher Zheng think might be the next wave of narrative engines in the encryption industry? Earlier, you mentioned that there is no clear answer yet despite the arduous search. Are there any alternative answers or speculations?

Zheng Siwei: My own idea is like this. I think the encryption industry, or what we commonly call the "coin circle", has been doing two things for a long time. The first thing is to try to make every possible link trustless and decentralized, that is, to use code to replace human participation. This will become what we are familiar with as decentralization, such as decentralized CDN, decentralized storage, decentralized network structure, or decentralized payment, and so on. Regardless of how much demand these things have, at least in the coin circle, it is a relatively politically correct thing. So we will see a lot of things like DePIN in this field. I think that in the long run, this kind of thing is very valuable for maintaining the long-term and solid operation of Bitcoin and Ethereum in this world, but such projects or things are not the dominant factor that constitutes the bull market engine.

It is the real growth of fundamentals and technicals, but not the catalyst for a bull market. I think the more realistic point is that what everyone has been doing for a long time is actually pursuing wealth. I think the ignition of a bull market is when a group of people make a considerable amount of money due to one or two things or one or two tracks, and then others follow suit, and finally people outside the circle come in. It is such a process. Therefore, no matter what it is, it must have a strong wealth effect to start a bull market. Specifically, in terms of tracks, in addition to L2 and NFTs mentioned earlier, I think games are likely to explode in this round. In the last round, I was deeply impressed. Starting from the bear market, I read some media summaries of investment and financing news every month. From the perspective of the number of projects, games accounted for a very large proportion, even often accounting for one-third. With so many people and so many projects invested in this track, it has a great chance of exploding.

It is very likely that a popular game like Axie will appear first, triggering a huge wealth effect. Projects that have been preparing for two or three years will release their good news or launch their games at this time to promote these projects. In the end, some Ponzi schemes and even some CX projects will come online to end this cycle. I think that under so many inputs, there is a high probability that a game like this will emerge. However, it is difficult to choose a specific target because we have seen some works that want to benchmark 3A masterpieces. To be honest, in terms of playability, I think that the projects in the currency circle are at least at the second level, and I have not seen a game that really makes me want to play it. Logically speaking, and in terms of the cause, I think that so many people are rushing into Web3 to make games, probably because it is easier to finance in this area. If you face those VCs or investors who are facing Web2, and you say you want to make games and want to get tens of millions of financing, I think it is not as easy as it is here. And there are fewer regulatory constraints here, and there are not many restrictions such as game licenses. The third is their way of harvesting. In addition to in-game revenue, there are also many other ways to exit, such as tokens, which has led to many people rushing in. But when I look at the projects that have already been launched at the second level, I think the playability is still not good, so I think the game will explode, but it will still be based on economic effects.

Defi will also be affected, because Xin's explanation just now was very good, and there will be rotation in the sector. Defi's rotation probability is indeed relatively high. One reason is what Xin said, the rise of Bitcoin and Ethereum will drive up most of the TVL, because the main liquidity of dex is Bitcoin and Ethereum, and our leveraged long positions are also mainly Bitcoin and Ethereum. This is a natural thing. In addition, a round of Defi summer was indeed ignited first, so the market's expectations will be higher. And as I mentioned before, L2, NFT, GameFi, I think L2 is more like a line that will run through the entire cycle, just like L1 in the previous round. It started to rise in 2020, and even after the first half of 2021 and after May 19, 2021, Solona's strong performance even maintained until April 2022. So I think L2 will be a line that runs through the entire cycle. As for games, I think if someone can design a cycle of Meilin clocks or sector rotation, it would be more appropriate to put it in the middle and later stages. Because the wealth effect leads to a characteristic of the game, that is, the first wave of people who make money must dare to expand their investment, and those who have not started playing the game must dare to FOMO. At the beginning of the bull market, the public's psychology is actually uncertain whether this is a bull market. The first wave of people who make money will want to make a little money and leave quickly. What if it falls again? He dare not go up later, because most GameFi projects are relatively Ponzi-like.

When a person reaches the later stage of a bull market, they actually have a feeling of excitement. They are very happy and counting money every day. In this situation, their mind is no longer rational. Whether they participate intentionally or unintentionally, they will participate more relaxedly. At this time, the entire game sector's scale and cycle will be relatively long. As for NFT, I don't know, it may happen at some point in this stage, and it may end up with those "local dogs". We say that investors have the order of entering the market early or late, and entrepreneurs also have the order of entering the market early or late. The truly best ones are those who did not give up in this bear market cycle. They are definitely the ones who will earn the most in the next round.

Then there must be a group of entrepreneurs who may have dropped out in this bear market cycle. They have been watching and not paying much attention. Only when the entire cycle rises to the middle or even the later stage, they will come to their senses and start a project. But by then, their time is actually running out. They may choose to make quick money, which can easily lead to some copycats or even scams. I think this is how the whole cycle works. There may be an unprecedented emerging track, but I haven't found it. Finally, I would like to mention that I didn't spend much time searching for L1 projects in this round, because I believe the main battlefield will shift to L2.

Lawrence: My view is very similar to that of Teacher Zheng. I believe that the engine of a bull market, regardless of the specific track or narrative, must have the characteristic of bringing good earning or wealth effects. From this perspective, I am currently considering three things: social, game, and meme. I actually have some personal experience. In 2019 and 2020, I talked to some former colleagues in the Internet industry and said that Bitcoin and Ethereum were very good. At that time, I was investing in Bitcoin and I told them to buy some, but they ignored me. In 2021, two colleagues asked me how to buy Shiba Inu coin, and another person asked me whether to buy Dogecoin or Shiba Inu coin. From my personal experience, including my observation of people around me, the vast majority of people who truly become crypto users are driven by earning or wealth effects. Of course, in the future, as our industry becomes more and more sound, more people may come from the perspective of us being able to provide a better product. I think in this cycle, the narrative may need to bring a good wealth effect. From the user's perspective, social and game may introduce a large number of users. Because from recent attempts, the combination of social and DeFi is not easy, of course, it is also possible that there have not been really good teams and ideas to make this thing more sustainable and the model more complex, which can make this thing have a relatively long-term operation. Game may be better in this regard, and its natural economic system will be more complex, which I can do through some design. Like what Xin just criticized, it may be difficult to use, but through some means, such as Stepn, which may maintain operation for more than three months, I think Stepn's attempt at that time was very good. If something similar comes out in the next bull market, I think it will be worth paying attention to. In the process of introducing users, it can embed some peripheral designs, and then bring more people through the earning effect. The last one is meme. If we look at all memes as a whole track, in the previous cycle, memes may be relatively few, but in this cycle, I think memes as a sub-track may be one of the fastest growing tracks, and there are also some more subdivided tracks, such as the TG bot that was popular some time ago. From my personal experience, I think that the explosion of some memes may also become the engine of the bull market. I will also pay more attention to stability, the complexity that can be embedded in the design of stability, including its narrative, although it has been proven false in the past, I think that under the new conditions of more liquidity, some better-designed stability may also become a source of wealth effects.

Alex: Let me briefly share my thoughts, but it's just a guess and not that I'm optimistic about anything. Because being optimistic means that the logic has been basically figured out, and both of my guesses haven't been figured out yet. The first one is the concept related to AI that we just talked about. The core logic point is that in the long run, the development speed of AI will be very fast, and it will gradually penetrate into the field related to crypto. I think this is inevitable. It's not about doing AI applications on crypto, but AI infiltrating into the crypto field. And I think that in the next 3-4 years, everyone will find that the development speed of AI far exceeds our expectations. So when this happens, concepts related to AI, whether they have good business models or just a meme or a narrative, may grow very fast because their fundamentals are still zero, and they are still in a stage of simply telling stories, even with few projects. There may be some secondary projects, but overall, they are not well-formed. So it may be a process from zero to one, and from one to one hundred, with great potential.

Representative projects with potentially large market capitalization, such as Worldcoin, which was initiated by Sam Altman, the founder of Open AI. I think this project itself has a lot of gimmicks, and it is deeply tied to the top figures in the AI industry, giving me the impression that its ambition is quite large. A race between AI and crypto, I think it is in line with the characteristics of many grand narratives that can bring huge bubbles, first of all, it is difficult to falsify, and secondly, it has a long-term vision and broad social value. This is a bit like Defi, because the narrative we talked about at that time was also about decentralized finance devouring the traditional world, including the software devouring the world during the Internet bubble, which are all grand narratives, and its business logic is indeed reasonable. The second is something we just talked about in the TG ecosystem. I think the underlying value provided by blockchain is, first of all, that it reduces transaction costs. This so-called transaction cost is an economic concept, which is not about trading, but about the cost of cooperation that people need to spend to trust each other. Currently, when we sign a contract, we need to sign a contract, there are legal costs, including cross-border transfer fees and other things. On the blockchain, we can greatly reduce transaction costs through code and transparent ledgers.

Additionally, blockchain provides a free market. The traditional world market has boundaries, at least limited by national borders, and cross-border transactions are not always convenient. However, on the blockchain, everyone can trade freely without discrimination, whether it's between the United States and China, or between Palestine and Israel. This market is unlimited and very free. I think this provides these two things. The TG ecosystem has utilized these two things quite well because, firstly, TG may be the social platform or instant messaging platform with the least administrative regulation and censorship. In fact, it naturally shares the freedom attribute of blockchain.

Another area is when the concentration of users on TG is so high, there are also many potential opportunities for collaboration between them. Therefore, I think that some consumer apps, as Xin mentioned, will emerge in the TG ecosystem. These apps may be messy, and may even have some evil or gambling-related properties, or even more dark attributes. However, there will also be some good applications. Basically, the TG ecosystem is still a process from scratch, and I think its potential is relatively large. This may be two potential trends in the next wave of bull markets.

Bear Market Work and Study

Alex: Finally, let me talk about a more relaxed topic. In your opinion, is there any difference between the investment research work during the bear market period and the lively bull market period before? Also, what do you do in your spare time besides investment research work?

Lawrence: My time is mainly spent with my family. My daughter was born during a bear market cycle, so I spent a lot of time with her. Additionally, I spend more time communicating with friends.

Zheng Siwei: Our conversation includes the first-class cabin as a whole. Actually, the working hours during the bear market are still relatively long, similar to those during the bull market, but not as busy. There are not as many dopamine secretions to stimulate oneself every day, so the time spent on trading software is also reduced, and the overall atmosphere is more relaxed. I do two things in my spare time. One is podcasting. I started to get in touch with podcasts last year, and I feel that there are many high-quality podcasts that are suitable for me. Sometimes when I'm tired of looking at projects or reviewing K-lines, I listen to podcasts in the afternoon around 3 or 4 o'clock. It's relaxing and I can learn something new. The second thing is that I also look at some AI-related things. This is not just following the trend, because in fact, in 2015 and 2016, I had not yet entered the cryptocurrency industry. At that time, I was investing in US stocks, and I was also looking at AI. One thing that impressed me deeply was that AI had a cycle at that time, and there was a bubble in the primary market.

It started to rise again last year. Sometimes when I discuss with my colleagues, I say that the rise of the AI industry is due to a true qualitative leap in technology and large models. Things that were previously imagined or doubted can really be implemented and can effectively help humans, increase everyone's sense of happiness, reduce costs and increase efficiency for enterprises, and solve many human pains. But in the cryptocurrency industry, as someone who has been in the industry for 5 or 6 years, I feel that although the technology has been iterating, each cycle seems not to be due to a huge technological breakthrough, or the beautiful projects in various tracks that we have long imagined have truly landed and entered the homes of ordinary people. It's not like that. I think the cryptocurrency industry is still in a stage where it is swayed by the wealth effect. So I envy the AI industry. Of course, the advantage of our industry is that the threshold for investing in blockchain is relatively low. Individuals can obtain rewards or punishments according to their own cognition with a certain amount of funds. Even if the cognition of AI is strong, it is difficult to participate in the entire wave if it is not in some particularly top VC. Overall, this is the feeling.

Xin: My main focus during the bear market is to continue learning. For example, I want to learn how to communicate with founders from scratch and see how they manage their projects and finances during a bear market. This is a test of project management and financial management skills. I also think this is related to strategy and tactics, so I often chat with founders about how to transform their products. I welcome founders with ideas to communicate more often. I also attend various conferences, such as the recent Ethereum conferences, to meet more developers. I believe that developers who can persist during the bear market may become the founders of the next star project during the bull market. Previously, people like Uniswap's Hayden Adam learned Solidity during a hackathon and came up with great ideas. Maybe we can also meet some amazing people. Finally, I hope everyone can exercise more and maintain a healthy body to prepare for the bull market. I exercise every day during the bear market, but during the bull market, I may have to overuse my body.

Alex: I still prefer bear markets because on the one hand, there are better prices to invest in some assets that were previously difficult to buy, and on the other hand, it's easier to stay calm and read some classic and fundamental books that are hard to focus on during volatile times. Another thing is to exercise more like Xin. I hope our next conversation will be in the middle or later stage of a bull market, and we can discuss whether we should sell, how to sell, and what kind of assets to sell. Thank you all for sharing so many valuable thoughts and information today. Thank you.