Waterdrip space panel NO.5 Recap

Topic: What’s Next after the DeFi & CeFi Crash?

Date: 2022/7/5

Speakers we invited:

Elaine — Investment Manager of Waterdrip Capital

Layla — Investment Manager of Huobi Tech Capital

Xiaohan Zhu — Co-founder of Sumer Money and Meter.io

0xAlpha — Co-founder of Deri Protocol

May — Head of business strategy of Volare Finance

Cohost：

Susan — Co-founder of Bitpush

Rex — Investment Assistant of Waterdrip Capital

Sponsorship:

15 Meter Punk NFT from Sumer Money & Meter.io

Q1: As the market went down, what is your view on the current secondary market trading? As a Defi project, what would you do, and what is your plan to deal with the current situations like low trading volume, lost users, etc.

0xAlpha:

I think the winter is going to last for a while, maybe one year or even longer. Being a team of a Defi Project does not affect what we’re doing right here. But we do see some symbols of an increase in the trade volume, especially for prices of Ethereum at $1,000 and Bitcoin at $20,000. Those are the most actively traded symbols in their protocols. This is primarily caused by people’s concern about Bitcoin and Ethereum going further lower.

Meanwhile, we just keep building. We’re building a developer community for outside developers to build things on top of their protocols or combine their protocols and other projects. We are also trying to make trading more user-friendly to lower the barriers.

May:

As a Defi option protocol, I think we’re feeling relatively more grateful for the current volatile market. As you know, the options are built for the volatile market. The options market is clearly underdeveloped in crypto and the demand for customized risk management should only increase over the long term. Especially in the few recent cases, the proper risk management rules felt to be designed and executed. I think people would need options to hedge against the risk while earning yield, and we’re just here to take this position.

Xiaohan:

This is already the second bear market we have been through. In comparison, it is actually still pretty active. Back in 2019, I think the bear market is actually a good time for developers because there was less time pressure for building. You don’t have to rush on everything. It’s easier for projects to collaborate. We have several major Dexes in discussions that we’re looking to bring to Meter.io. For Sumer, we finished everything in terms of the security audit, but right now our focus is basically polishing the product and also building the initial user base without having to launch a token.

Elaine:

As crypto VC, we went through two rounds of bear and bull markets. Crypto markets are very positively related to US stocks, so somehow there’s no decoding of the independent market of Crypto. I think the Federal Reserve expected to raise the interest rate several times this year and the SNP 500 has not yet reached the bottom. The Crypto currency bottom may not yet come and the market may go lower than now. The liquidity of crypto is not good. Therefore, for the second market, I think retail investors should not operate very frequently. Keep money in your pocket. Cash flow is very important for the down trend market.

From our views as an investor, there’s not many relatives to see on Defi. According to the data from DefiLlama, there is only 75 billion which is way less than the ATH of 250 billion from last December. It downs a lot. We can see the market went up in 2020 summer due to the Federal Reserve printing large amounts of money. Low liquidity is hard for Defi to boom up. Also, due to the recent protocol crisis, many investors lose their confidence. Most of the tokenomics is very similar like copy paste from the curve. I think it may take a little bit of time to recover. And many top of the different projects so maybe have to wait for new tendency.

Layla:

The current market is not very as active as before. Actually according to the relevant data, the market cap of this industry also decrease a lot. A lot of people will not divide into tokens, but they will choose to go for maybe NFTs. It might be a tendency for the current market.

In the capital, maybe investing in Defi has off-flow. It should be a good chance for the Defi projects to improve their product.

Q2: When would be the best time for you to do the secondary market investment? What kind of indicators will be the basis for you to determine the switch from the late bear market to the early bull market? Are there any factors other than crypto world that can be used as a reference?

Elaine:

I think we should pay attention to 2 special investment related time. The first one is when US slow down and even stop the raising the interset rate. The second one is the next Bitcoin halving. The mining profit may further decrease, so the miners have negative expectations.

0xAlpha:

I do agree with the part that there are like some indicators for example, some of those macroeconomic factors like Cpi interest rate or even like more advanced parameters in the interest rate. And also there is a fear and greed index. These are the things that you can depend on to find the switch from the late bear to the bull market. But I think for most people, the best practice is not to time the market with such indicators. The market timing is always very difficult, even for those top traders and top institutions.

Susan:

I really think the timing market is really Mission Impossible. Not only in crypto market, but also in stock market. No one can timing the market. But for one thing like the Indicators, to some degree, maybe we are not able to know the market goes. As we know, the rising Defi is the engine of the last bull market. But maybe for the next bull market, something like new technology coming up will lead to the next bull market. You don’t know what is going to drive the next bull market?

May:

I’m sitting on 2 rows actually: one is the investor.and the other role is representing option project. From an investor perspective, we’re not trying to capture the turning point. Whoever stays will definitely have the longer vision. From the view of Volare Finance, we’re delivering different type of strategies, just like how we have bullish strategies period strategies or directions. Neutral strategies, which will give people different kind of like options when we are facing different market situations. Catching the turning point is actually a little bit risky based on my own experience. That’s why I try to avoid making decisions based on that?

Layla:

I’ll share an interesting story here. Recently, I was talking with some friends who are working for funds. They are considering buying tokens from the secondary market since they think the price is just as low as before and even lower than the primary market. It might be a situation in the current primary market.

It is necessary to consider the micro environment to support decision-making, since actually all the markets share the same flows. If the micro environment is not performing well, crypto market cannot change to bull market either.

Xiaohan:

I actually kind of feel the entire crypto market goes in psychos. Basically, the only thing that Crypto has proved to be really unique and the part of super advantage to the traditional is on the finance side. So you would typically see in the beginning of the cycle from Bitcoin and Ethereum. After that, there will be the boom in financial related applications. Back in 2017, it was the ICO. In the last cycle, it was Defi. And then after that it was NFT and Gamefi sort of you can build some Ponzi type of scheme in there and create high paying users and thinking about attracting users out of crypto into crypto. In terms of the user activities in the bear market, it can be really low. For example, back in 2019. We hosted several Defu meetups and conferences. We invited projects like Compound, dYdX, and MakerDAO at that time. The number of users at that time for these protocols was about 100 to a thousand levels, the TVL was around a hundred million rage. The bear market can be really brutal. New drivers on the financial related application side may push the market forward to the next level.

Q3: There have been a lot of big things happening in the crypto world recently. One of them that cannot be ignored is the liquidity crisis of Celsius Network. According to the liquidity crisis of stEth, what impact does it have on future crypto projects? As a Defi user, what is your view? As a project, how and what would you deal with it?

Layla:

I think one of the key issues may be the risk management. Some of the projects were designed and borned in the bull markets . The liquidity was enough at that time. This could be an issue.

For the crisis of Celsius Nextwork, 3 Arrows Capital has caused a serious problem of chain reactions. I saw the report saying a Singapore institution has stopped their deposit and withdrawal. This has a huge influence on the entire crypto market. There should be something that has not finished.

0xAlpha:

One thing that needs to be pointed out is Celsius is not Defi. The Celsius crisis is not a Defi problem.

Not just limited to Celsius, there are more crises like BlockFi and Babel Finance. They displayed the building problem or intrinsic problem of a centralized system. It is inevitable. It’s almost impossible for outsiders to know what’s going on inside and you only get to know the issue or the crash after it takes place. The crisis has been there for several days or several weeks and these institutions have pretty much already been dead several weeks ago after people found out about their crisis. I think there are some relevant articles regarding these bankruptcies in which the author gave a term floaters to describe it. It means people drowned to death underwater. I think that is a very good analog for exactly what happened to the centralized institutions.

I’m very fortunate to be a Defi user so that I have avoided all these centralized crashes. As a project, we do not have this kind of problems. But we are also affected. Projects should improve the robustness against this kind of market turbulence. I guess the only way you can get immune to such crisis is to improve the overall antifragile ability of the project.

Also, I want to say more about the Celsius crisis. I think that’s largely a marketing trick and their narrative of replacing Wall Street or replacing the banks is just a fake story for Celsius and many other similar projects. Cause they’re just doing exactly the same thing a bank does. They just absorb a lot from the depositors and lend the money for a high rate. So there’s nothing new about there and that’s why I think their narrative is nothing but a line. In the later stage, whether part of the money goes to very high risk investment, if you put money like deposits into a very high risk investment like a hedge fund kind of investment, that doesn’t sound right. That narrative is a fake story and there is very little added value from such centralized institutions.

Elaine:

As we know, the lending business is very stable during the bull market. But if you compare with the bear market, you will face great problems like money efficiency, liquidity, etc. The low capital efficiency will lead to the low APY, it will affect the expansion of the debt. These projects in crisis all have the problem of capital efficiency. On the issue of stETH, it comes with great risk, but we are here for ETH2.0. The Eth is locked up. It kind of suffers from the loss of confidence. I’ll suggest we should do more research about Lido, Curve, and AAVE to know about the potential risk.

Layla:

It’s just like chain reactions when one of the sections suffers a problem . They will also influence a lot of things. We cannot know some internal situations of some exchanges and some projects whether they are suffering in a centralized system. I would suggest all the listeners or their audience to do your own research about whether you are going to make some investment into certain tokens. Maybe consider more and try to reduce the frequency to do some trading and just keep our eyes on the market.

May:

We can learn from this lesson, which means what will be the impact that could be happening in the Defi. I think the industry will be similar as what we learn from the 2008 crisis. We need some necessary financial products, not just product who can give you yeilds. We need some product that can help you hash the risk based on insurance strategies. The mechanism should be provided to those financial institutions whether you are Defi or Cefi.

Under the liquidation scenario, a lot of users are squeezing. We are all kind of expecting huge dump. But I think we should be able to figure out a mechanism to let a firm fall in an orderly way instead of just having multiple players dramatically impacted on this part. We may also see some traditional finance solutions in some Web3 Finance solutions as we are looking for some revolutionary change. But in fact, we need to make sure that certain rules need to be followed. For example, we need to require stronger capital or liquidity positions for those financial firms.

Q4: What happened to 3 Arrows Capital is also a huge boom to the crypto world. They’ve been doing pretty well in the past few bull runs. What is your opinion about that? Would there be any 3ACs in the near future? What do we learn through this story?

Elaine:

What happened to 3AC was not that surprising because many of my hedge fund friends here in Wall Street watch them a lot. Also, they kind of like to shot them. It was very dangerous because 3AC was very transparent for the untrained. They used several leverage to access accelerate the return.

The media may not disclose is that both the centralized and decentralized leading companies have the 3AC exposures but only the centralized lending company has failed. So I think many of the other companies holding of the 3AC’s LP have suffered this round. I think it’s the time for the whole market or especially for the institutions to remove leverage. When all the leverage is removed, I think the whole market will be more healthy and I think that will also be a turning point.

0xAlpha:

I think in the future, we will see 3AC or 4AC, even 5AC or whatever. History will always repeat itself. We just need to be cautious with this kind of centralized system, especially the overleveraged centralized system. We just need to be cautious with this kind of centralized system, especially the overleveraged centralized system. Before we didn’t really have a choice, centralized institutions were the only way to provide service for the financial demands.

But now, we do have a decentralized choice, which is Defi. Defi is your friend.

Xiaohan:

Because I was running an investment fund, we had a portfolio of tokens and 3AC was actually one of the trading partners. We had several OTC tradings with them. I knew they were pretty aggressive, but the news really shocked me.

I think many hedge funds in the crypto space try to image themselves as highly regulated, very disciplined investors. They just have to like portray that image here because they have to raise funds from traditional financial institutions. However, I’m concerned that these types of regulations may have a bad impact on Defi, because the benefit of Defi is transparency.

May:

I think in the near future, maybe not. But in the future, definitely.

For sure, we don’t like such kinds of player, they’re manipulating the market, they are kind of breaking the “rules”. What we can do is to protect ourselves with decision-making rules, like how we should work with such kinds of teams. Personally, I don’t work with the Cefi Solutions, just because it may not be very safe on that part. People will see that’s why we need Defi.

We should know that certain types of rules need to be followed and monitored and people have the right to understand what’s going on in the back. We all see that people prefer to follow the bigger players, no matter in what kind of industry. However, in Web3, what we are looking for is we should have the right to govern the product. We should have more rights in the future.

Layla:

To be honest, I think maybe it is necessary for the institutions to do more researches about the project that they would like to make the wealth management to see whether the project is reliable or not. To calculate the pressure that the project could undertake and do better risk management. It is very important.

I’m not sure about whether there will be more 3AC in futures, but it is affected at a number of project institutions are influenced by these situations. With the market going down, they might face more challenges in the coming future. I think all these kind of things and all these institutions should do better risk management to control the risk.

Q5: For the DeFi projects, the discussions about the regulatory issues are impossible to avoid. With the development of decentralization, some governments have started to regulate the crypto currency and the defi derivatives. What is the impact of the policy on DeFi? Are there potential risks or could this be an opportunity for developing DeFi? Do you still believe in the future of DeFi? What keeps your eyes on DeFi?

Elaine:

Defi is still in an early stage. We’ve seen a lot of these institutions entering this market of the Defi relatives recently. For the next round, maybe we will have more web2 Defi traders over retail traders. Also, dYdX announced that they will deploy on the Cosmos and build its own chain. I think it’s a good signal because dYdX is leading the whole derivatives market to a more kind of scalable market which has a more users friendly function and is more scalable. I also check over the layer2 Defi. They do have a bright future as well. We do have Volare Finance in our portfolio.

Besides, I think the Defi ETF and the index portfolio also may have a good future in bear and bull markets. Also, I know that Sumer Money also provides cross chain synthetic assets protocol solution. I think this will help investors to choose some beta investment portfolio. At the same time, I think the Defi Insurence Solution is also very important for the Defi market and the future.

0xAlpha:

I want to add some points to what Elaine just said before I answer the question. Regarding the dYdX, I personally don’t think dYdX is a good example to be referred to as a Defi project. Simply said, it is not a Defi project and it is a fake Defi. Just because they’re famous, big and they have big trading volume won’t maintain them as a great example of defied derivative. They’re nothing but a centralized system diploid on AWS connecting to Ethereum through some layer 2 technologies. I’m not going to elaborate on all the details here, but actually I wrote an article and have some points about it recently.

Okay, first of all, Defi is not something to avoid crisis. The market always goes up and down. Crises cannot be avoided, and crises are just the building part of the economy. But they can happen in very different ways. Going forward, more and more crises will happen, but just to mention, we can see the Terra Luna thing or the crisis procedure from day 1 instead of know after several weeks or months. That is the key difference and that is what I want to say.

Xiaohan:

That’s my concern for regulations of Defi. Basically, like most of the regulators, they have no idea what Defi is and how it works. There is a lot of education and logging has to be done.I’m not that confident that this can be done. Probably actually. And also, the whole purpose of Defi is sort of avoiding traditional regulation because people are interested in freedom and transparency. They don’t want to have types of thing like Big Brother looking over your shoulder, so I’m relatively pessimistic about regulation on Defi, but I think regulation is definitely necessary.

But I’m still very optimistic about Defi. As I mentioned earlier, the only proven application for blockchain is actually a financial related. The next bull definitely still comes from the broad sense Defi for crypto.

May:

I think this could be a very interesting combinable products compared with traditional finance. We see a lot of like a institutions are taking dominant. Maybe we’re not going to see a lot of Defi projects taking dominant. But when we’re talking about the Defi firms, I think we should be able to see some strong solutions in the near future.

Layla:

Finance is one of the most important parts for Blockchain and Crypto ecosystem. Financial things could actually launch into our real world. For the last round, the situation, the stories, and for the future of Defi is still charming for me. To link with the real world. I think that will be something you will happen in the future.

Maybe to some extent, the policy would bring some limitations to the development of Defi. Somehow The policy and government supervision could protect users, especially when they made some problems.

Waterdrip Capital Brief Information

Twitter link: https://twitter.com/waterdripfund

Official website:http://waterdrip.io

Waterdrip capital was founded in 2017, based in Singapore and Shanghai ,which was funded by crypto OG investors. We have great resources in bitcoin mining and node service, we are also one of the biggest holders of Bitshare and top active VCs among asian Capital

We have already invested in more than 200+ projects varying from different fields of blockchain. Infrastructure/Metaverse/Defi/Web3/Gamefi ,we provide all-round post investment services for our projects, helping them to build together.

Date: 2022/6/12

Speakers we invited:

Nelli Orlova — the Founder of InnMind

Sarah — Project Manager of RockTree Capital

Jademont — Managing Partner of Waterdrip Capital

Doug Witt — the CEG Leader of Metis

Kevin Tseng — the Founder of NAOS Finance

Cohost：

Elaine — Investment manager of Waterdrip capital

Yihao Wei — Marketing Director of BlockBeats

Sponsorship:

$300 worth $Metis Token From Metis

200USDT From NAOS Finance

Q1: Since 2022, the bear market is the most discussed topic that cannot be ignored in the crypto world. What is your strategy for the primary market ? Will you still invest in early projects , or will you stop the investment for a while?

Jademont:

Yes. I’m quite familiar with the bear market because this is where I have gone through, and I’ve survived. There have been 3 cycles since 2013. So basically we’re still investing. But we’re slowing down,

Actually, because there are not many projects as last year. For last year, we signed one or two every week, but now our frequency for signing is two to three each month. So this is a big decline. And most entrepreneurs are very smart, so they can feel the bear market, and they don’t want to start their fundraising in the bear market.

I think we had over a thousand decks or slides for the past year, you know. It is a lot of work. So, I hope we can take a break and go visit some partners and talk with some teams face to face. So we can go through this bear market, and we can expect the next bull market.

Sarah:

For RockTree, we are coming from the traditional investment world. Since we came to China in the 90s. We have been in the market from bear to bull for many rounds already. So the answer is positive.

First, we are still investing during the bear market. We do invest in good companies and projects during the bear market. It’s very easy to spot who is swimming naked. A lot of noise will be illuminated from the picture when I try to look for a new project to invest in. And also the prices for good projects are more reasonable compared to the bull market. You can check our portfolio. You can see we have invested quite a lot of projects in both bull market and bear market such as Phantom, the Graph. Chainlink. We invested in those projects during the previous “Crypto Winter”. But now, it turned out to be a very good investment.

Besides the investment in the project, we also looked at the value beyond the money that we can bring to the project that we invested. Money is fungible. As RockTree. We want to bring more value in all aspects to the project to help them to achieve success. Will bring a wealth of expertise to each investment from our legal, finance, and marketing to facilitate the growth of the blockchain investment. The bull market does not last forever. That is the bad news. But the good news is, that the bear market also does not last forever. So just don’t panic, take the risk off the table and take some cash. When you buy things later, you will find the things at a better price, and you will also find out it is easy to find better projects to invest in.

Nelli Orlova:

I really like and fully agree with what Sarah from RockTree Capital. I hope it doesn’t sound like hypocrisy. I think the bear market is a really healthy figure. We do continue investing in the seed sector and for startups fund-raising. We just made our largest lead investment so far in Eva Protocol with 300k, and we have 3 more deals on the table. Hope to close down by the end of this month. Nothing changed in our investment strategy. For the infrastructure projects and our long-term projects, they have the same added value between the bear market and the bull market.

A few other positive changes that I see now is, in bull market, investors compete with each other for good startups. Sometimes there exist a lot of confusion by startups. They get very much spoiled by not only high valuations, but also super speedy deal closure and funding offers that they receive every day or every hour from different VCs, pools, etc. Sometimes it really breaks their mind.

Right now, it’s absolutely different story. Startups compete for good investors. Therefore, there is much more time now to think, to do due diligence, to have numerous calls with founders to analyze the market and also to make entrepreneurs to prepare better for fund-raising. However, I didn’t see many valuations fell down. I didn’t notice that, but I expected it to happen. Maybe in a few months.

Kevin Tseng:

In a bear market, not only we talk about valuations, we talk about what investors are really focusing on: a sustainable business model.

In a bull market, it’s pretty easy to lose track on what’s important, what type of project has a sustainable business model and their go-to market strategy. In a bull market, you just don’t think about these things.

In this current market situation, the topic has changed quite dramatically from “What’s hot in the market?” to “What will survive the bear market?” You really get a chance to evaluate on the business model, tokenomics, team structure and spending. DAOs and a lot of different projects are being more transparent on how they handle their treasury.

In a bear market, the most important thing is confidence. How do you instill trust in your community and investors?

From the investors’ perspective, they’re definitely looking for value. They’re looking at projects that have a viable business model in both bull and bear markets.

For projects, the focus has been shifted from “How do I get my community excited” and the potential partnership that never come to fruition. Now this is a time for us as projects to really sit down and communicate with the communities and share more on what we have in mind, and this is what I am dealing with everyday. The bear market is a really good opportunity for a project to come forward to the community and share development updates. In a bull market, we often focus on token price, not on what’s really important for the long term health of the project.

Doug Witt:

More transparency, especially a solid team. And these are times when things really kind of slow down. It’s really important to communicate to your community with your road map and what you have planned to do.

As a hype kind of fades away, you just need to stress quality in general across the Crypto markets, especially but even within a project? What you’re trying to do, the value you’re trying to bring. Your vision is you going to communicate that vision and I can execute on it. We are essentially an infrastructure project ourselves, but kind of the big problem with the bull market is a lot of hype, a lot of kinds of vaporware, a lot of promises, a lot of evaluations and a lot of people just investing blindly when you have seen the bear markets.

The true infrastructure projects, the ones that really have their vision, are really dedicated to moving crypto forward as a whole. Look at the top 20 projects today, almost all of them started in the last bull market. Bear markets are the last market for that. So that is the shining light and gives people faith in that.

Q2: As the founders or the operators of the projects, what is the biggest risk of bringing the project to the table during the bear market? Or, would that be a good chance for the projects to have a bigger picture during the bear market?

Sarah:

Finding good projects, staying focused on financing development, and user adoption during the bear market. Focusing on the fundamentals and generating the value of the project.

For the market strategy of investors, we would suggest doing it at the end of the bear market or the beginning of the bull market. Ideally, you can buy the things when it has a big discount and sell t it when the market condition is favorable.

For projects, according to the rhythm of the cycle of market, it will increase the chance to succeed.

Doug Witt:

Raising enough money in the bull market, knowing how to get you through the cycle, spending those funds wisely, growing a strong team and also growing your community. The community is just as important as a team, and it’s really important that you communicate your vision to the community. It will support you both of the bear market and the bull market. Not only that, they don’t necessarily have to stay investing. They can still be in the community and put their money in stables and just wait for the right entry.

I definitely think the biggest risk for any project is the mismanagement of funds. We just started the bear market, but you’re going to see a lot of projects die off for various reasons, but the number one reason being that they don’t have the funds to continue.

Kevin Tseng:

This is time for communication. As a project, I wouldn’t consider anything as a “risk”. In a bear market, no one is thinking about the expansion. Everyone is thinking about cutting back on marketing. You’ll see a lot of projects keeping their heads down and start building for the next bull. That’s a smart move, in this market, the most important thing we need to focus on is value proposition.

The time for triple-digit “risk-free” yield is over. NAOS Finance’s value proposition is to bring real world asset on chain and provide dollar based yields that are fixed and sustainable. The yields are not from NAOS token subsidies, but from interest-generating assets such as corporate bonds, account receivables and supply chain financing. It’s uncorrelated from crypto market volatilities.

Many blue-chip DeFi protocols are taking closer looks at real world assets as a way to diversify and stabilize their portfolios. For example, MakerDao is actively increasing the composition of real world assets in its portfolio to further stabilize DAI.

Q3: As we can see today eth’s price decreases a lot because of steth‘s Mortgage liquidation. What do you think about this steth’s black swan event? and even many nft ‘s floor also drop a lot, it is kind of double kill of eth. What can retail investors do based on this deep beer market?

Jademont:

I don’t think the price decrease of eth is due to the depaging of steth. If you know the scheme of Lido， the steth is 1 to 1 tracked by real eth. Don’t worry about it. steth is not Luna, it is not USDD. They are safe.

I think the price decreases are due to the bear market. Everything is decreasing. The price of Bitcoin, Ethereum and everything. The liquidity of the whole market is drawing out, but I don’t worry about it. The bullish market will eventually come back. What we need to do is to make sure that we stay alive and don’t die.

From my observation, it is very hard for retail investors to earn money as their first bullish bearish cycle. They might be lucky enough to get a lot of money at the beginning of their crypto career from randomly investing in some projects in a bull market, but they were paid it back during the bear market also by randomly investing.

What I would like to suggest is to keep calm, keep learning, keep building with your favorite projects and grow with these great projects. When the next bull market comes back, you will stand out and win.

Sarah:

As Jademont said, it won’t be an issue, it is 1 to 1 back. Lido itself has several factors that lead to asset losing parity, such as the crack of terror UST, the wide deleveraging of the market and the withdrawal from the lending platforms.

So basically, people lost quite a lot of confidence in the bear market. steth has just begun to lose parity. It remains to be seen whether more factors will come. Right now, don’t be panic. It is different from Terror & UST.

Regarding the retailer investors, they should be aware that the bear market is here and there are a lot of things. Price will adjust according to the market conditions and market confidence. We should do our risk control and also adjust our investment or trading strategy accordingly. Stay alive first. That’s all.

Nelli Orlova:

For my advised to retail investors is to spend time on learning curve. I am sincerely disappointed that a lot of retail investors who participate in the last bull run are lack knowledge. There are so many opportunities to increase your understanding and help you to analyze projects. How to start and get involved in the early stage, how to support projects, analyze them, contribute to the development of the ecosystem and so on. This is what I would definitely recommend to any retail investor: Switching from hype mindset to more investor mindset.

Q4: As the market goes down, we can see there are numbers of Defi projects that are oversold. With the price drop, what is your opinion of Defi in the future? Will the investors buy the dig from the second market?

Kevin Tseng:

My personal opinion is that the DeFi is here to stay. People haven’t been talking about Defi for a while. If you’re really looking at the essence of what blockchain and what crypto can do, it’s designed to revolutionize the existing financial system.

When you’re looking at the global credit gap, and the unmet borrowing demands from real businesses. I truly believe DeFi is the solution.

Let’s take NAOS Finance as an example, we are building the infrastructure for real world assets, but we can’t do everything alone. If you’re thinking about replicating the entire financial system, DeFi must have banks, insurance companies, legal supports, accounting firms and collection services. All these things are part of a working ecosystem.

Yet, DeFi today is only about lending. For starters, we only have a handful of insurance protocols are capable of providing coverage for real world asset. To build that ecosystem, we’re working with the MakerDao, Chainlink and Tidal. Over the last year, we’re excited to see that “real world asset” has become a focus for many new protocols. We’re meeting new projects that are solving the same problems as NAOS Finance on a daily basis, this is the true spirit of DeFi.

Defi has accomplished so much over the last 2 years. But for DeFi to take another step forward, real world asset is the key. Goldman Sachs is exploring tokenizing securities. J.P. Morgan is doing the same. Circle, Coinbase are working on digital IDs for regulated DeFi.

On the compliance side, we’re seeing that Japan and Eastern Europe are taking steps in providing more clear regulatory guidelines. When DeFi no longer dance around the grey areas, a lot more new protocols will enter the space, and accelerate the growth of the entire DeFi space.  

Jademont:

I would like to talk about why the traditional Defi since 2020 will not last. Most of these top tier Defi projects decreased 90% from 2 years ago either on their token price or their TVL. The reason is simple. Liquidity mining as the engine of last Bull Run is turning into liquidity flooding. There are too much inflation, and they don’t know where is the buying power. The true reason is that the underlying assess which are stuck in those different protocols have no profiting ability. They are just playing the Ponzi game, so you stick some tokens, and you get more tokens. They cannot do this kind of game forever. Therefore, the traditional Defi projects have no future in my opinion. I think the solution is that we need to bring more assets that are independent with the Crypto market.

So far as I know, as Kevin said, NAOS is staking traditional banks related commercial papers from real world which have interests from some kind of commercial activities. These activities like real estate borrow and their loan to others. Also, I see some other different products, they’re using their NFT as staked assets, which are also not directional related to Eth or Bitcoin prices. I think this kind of Defi also has great potential.

Q5: As we can see that recently layer2 solution Optimism launched token, this year many top VCs focus on layer2, but due to bear market, are we really need layer2 solution ? What’s your opinion on layer2?

Sarah:

Ethereum Blockchain is the most widely used blockchain with huge ecosystem. But it comes with some shortcomings, so Layer 2 solutions are important. Because they allow the scalability and increase the throughput while still holding the integrity of Ethereum blockchain, allowing for complete decentralization transparency and security wire. Also, they’re reducing the carbon footprint, less gas and less energy used. We do need layer 2 solutions.

Doug Witt:

For the last year, the big narrative was the Alternatively layer 1. They were superfast, super cheap but just, of course, going back to the Blockchain Dilemma. They sacrificed decentralization and sacrificed security, and I think we really saw that with somebody pretty much all of the Later ones. They had their big run-ups then they started going down.

There was a speaker Edward Snowden that consensus and he kind of spoke on it about the financialization of Blockchain and kind of the core of what he was saying was we really need to get kind of get back to our roots. I truly believe in decentralization without the end, and any smart contract platform theorem is by far the most decentralized. And sure it might sacrifice scalability, but that’s why we have layered 2. I think in the future, we’re going to see layer 2s really grow and ethereum kind of transition to becoming from a business-to-consumer blockchain to just being for primarily, either a business-to-business blockchain or Ethereum permanent transacts just with Layer 2s.

Nelli Orlova:

For sure, we need layer 2. All of us know that bear market is a temporary thing. We don’t know how long it will take, but Ethereum survived already from the past bear markets. Its history and the problems as Doc mentioned remain scalability. Security, speed of transactions as cost of transactions and many, many other things. Even those layer 2 solutions that we have these days, they are not completely solving the existing issues, we definitely need the existing Layer 2s. We definitely need new ones. We need those that are solving also interoperability problems and many, many others. So for sure, just shortly answering: Yes, we need it.

Q6: Under “the winter of crypto”, the bear market is taking away the attention and the confidence of the retail investors. The searching data of “crypto” and some related fields like “NFT”, “crypto” from Google had a cliff fall. What would the projects do to win back the attention and the confidence of the investors?

Kevin Tseng:

I think it’s a crowd mentality. When a topic becomes daily news, people will get curious and start asking questions. But they’re not your target customers. I wouldn’t worry about search results. It’s a temporary social phenomenon.  

It comes down to value proposition. How will DeFi provide a better alternative and experience than what they were accustomed to. This is definitely a really hard problem to solve.

The important thing is for the project to stay true to what their mission statements, and not get distracted by the market sentiment.

We spent the last 6 months talking to different institutions. We are upgrading our products, optimizing process flow, and onboarding different KYC and lending partnerships. Behind the scene, we’ve also built an admin page for our borrowers, so they have a one-stop access to their loans, repayment schedules, bills and protocol updates. Everything they’re accustomed to in traditional finance.

The key here is not to get distracted. The toughest thing a founder must do in this market is to keep the team at bay, and convey that “Hey guys, I know this is a tough time but we need to stay focused, and keep pushing because we’ll see the light at the end of the tunnel.”

In the bear market. I wouldn’t spend too much on marketing. Bear market is a time to instill confidence and to build. To publicize and share with the community what you’ve done and what you’ve accomplished.

Q7: Many Gamefi projects have also achieved good results in the last bull market. But because of the impact of the bear market, many gamefi’s valuations and related data affected a lot. As an investor, in this round of bear market, Is Gamefi facing an important turning point like any chance for Gamefi ? What is the future of Gamefi? And What feature would you expect a Gamefi project to have in the future?

Sarah:

We believe Gamefi is still going to be a very important domain in the future. During the last Bull Run, a lot of Gamefi projects got overpriced. So now it’s time for Gamefi project to stay calm and stay focused on the development and the delivery. We should shift the focus from how much money they can make to what product they can build and deliver and the product’s value.

Jademont:

So far as I know, for most of that gamefi projects, they have a decline either in the token price or the TVL. The reason is the token economy. They only have an inflation factor, but they lack the token consuming scenario. There are some good gamefi projects who keep their token prices quite stable these days. No matter how. If there is more Bitcoin as the price is going up and down, they’re quite stable because they have their independent token economy.

For example, there is a game, their play to earn is not from inflation. It is from the other players. That means the total number of liquid tokens doesn’t increase a lot. Another good enough good example is adding randomness into the process of play to earn. Sometimes you even lose tokens. The players will focus more on the game itself. If you focus too much on the earning part, it is not Gamefi, it is Defi. I think for the next Bull Run, the gamefi projects which have the consumers’ scenario will be found by most of the crypto users.

Nelli Orlova:

I expect Gamefi to switch more from play to earn mindset to play and earn mindset, which exactly consider more and focus on gameplay itself. I was reviewing the top Crypto Gamefi projects by the number of effective users, and actually I did not find transparent statistics on how many daily active users are there. This means nothing actually because there is not much proof and when we try to analyze data from a few specific projects. A lot of traction generated by gamefi projects during a bull market was not because they managed to attract a huge and loyal gaming community of people who really loved to play this game, but because they managed to use the hype around and the greatness of end users willing to earn something while spending time on the game.

I hope that by the next bull run, we will see more high quality game plays which will be user-centric or player-centric. These games will rely less on game guilds and incentivize gamers to play because of money, but incentivize. Gamers play to have fun and then want to spend money on tokens for improvements in their game performance in order to make a more sustainable economy around the game.

Q8: One important part of web3 & crypto’s big development is that big corporations are stepping into this area, such as Nike, CocaCola, Visa, Apple, etc… But why don’t we see that many pilots between startup companies yet?

Kevin Tseng:

I wouldn’t worry about getting the Unicorns to jump in if they’re not already for web3. When I was at Alibaba Group, my main focus was to build a well-defined ecosystem. and it requires the industry leaders to take the first leap of faith. Alibaba was able to build its ecosystem by starting Taobao, then building Alipay, a payment infrastructure. With these two platforms, the rest just followed naturally.

I’m excited to see Visa and Master entering the space. For DeFi to continue its growth trajectory, we definitely need traditional institutions such as banks, insurance companies, and even investment banks to come in. Not just speculators such as MicroStrategy and Tesla. Think about the ecosystem around PayPal and eBay. What if eBay starts accepting stable coins for e-commerce transactions, it will create a positive loop for the entire DeFi industry.

I can share a little bit more about the work NAOS is doing without diving into the details. We are working with a US based semiconductor company – financing their manufacturing capacity. They have 0 percent loan default over the last 40 years of operations. We’re also onboarding publicly listed companies in Hong Kong, Southeast Asia and the US. These are exciting opportunities for DeFi to expand into the real world.

I know a lot of protocols are starting to look at real world assets because MakerDao is taking steps in this direction. If industry leaders such as Google and Apple are betting on certain areas, it signals an opportunity for startups to think about how the industry is evolving.

Doug Witt:

I don’t know if they’re necessary, at least at this point I think we can all agree, blockchain and crypto are still super early and we internally as an industry have a lot to figure out and that’s on us. The industry leaders to really solidify the direction we’re going to go and to try and fail and then try and fail again until we get it right, and we’re getting close to it. But once we do, I think that’s really when you’re going to see some of these bigger web 2 and in Silicon Valley, Tech Companies come in. And they are slowly but surely dabbling, and they are investigating the industry and trying to see where blockchain fits in their business model. But I think it really is more for us as an industry to figure out.

At this point, it’s not necessarily needed because it’s on us to kind of plot our own future for the industry.

Nelli Orlova:

We also have a separate business stream working with our corporate partners, with corporate innovation offices of large multinationals. We help them find the interesting startups, innovative technologies for their business units. Since we met, we dive deeper into the web 3 sectors . We also received a lot of requests from corporate partners. Hyundai, MasterCard than many others who are interested to explore collaborations with startups in web 3, Crypto Blockchain space and making pilots together.

During several months. We made some private startups counting, introduced different web 3 startups to corporate partners, collecting feedback. I have an interesting insider from the multinationals side. Majority of them, they summarize their experience on researching among web 3 startups in the following way. The problem is that the corporate launches pilots with startups when there is clear or request from business unit, so the business unit and the corporation needs to understand the value of these technologies or product and be interested to implement or try it in their own business processes. But when you create the Web 3 startups and get connected with the corporate partners, the majority of them are not capable to adjust their client centric presentation. I think this problem is very much connected with an ability to target wider audience and mass adoption as well. You can even quote one of multinationals told us recently that look. We met with the startup and our business units start with burning eyes starts explaining all the technological advantages like whatever problems on all the huge future of the Web 3, they just missed the most important point to explain in simple and clear messages. What value their product in particular can bring to a particular corporate business unit. Simple clear and common words without using all this specific web 3 or crypto terms and words etc. At least in my opinion, this is a huge barrier and that’s what corporates themselves to confirm huge barrier into starting pilots and starting particular use cases with corporate partners. Explaining delivering your value proposition, adjusting goods to end users.

Q9: The average salary of web3.0 employees will be higher than that of web2, and the value of talents is overestimated, so especially for the bear market, reduce the operation fee is quite important. What’s your opinion about this?

Doug Witt:

For one, there’s just a huge talent shortage in web 3. Obviously, the biggest talent shortages is for the developers. The codeing is the ones that know solidity and any other languages, but also just even in business development and market learning curve really is just so high. Even if you’re really good in web 2 and speak those languages, you don’t necessarily translate to web 3. So that’s typically why the at least in the past, the differences in salary were so big. Regarding the bear market, I definitely think teams will slow down hiring, and they will maybe lean up and there is possibility there could be some layoffs. But I don’t really see the differences in salaries changing from rolls.

Kevin Tseng:

Exchanges are hiring aggressively even in the bear market, and that inflates salary structure. I see web3 talents now demanding 25-30% premium on their salaries. But that’s just part of the game.

We’re competing with exchanges and established protocols when it comes to web3 talent hiring. But we’re also hiring talents from traditional industries to evaluate assets and financial statements – and we expect them to grow into DeFi.

We don’t necessarily need to hire DeFi experts, but we always hire problem solvers with passions to learn. The best talents are the most liquid asset in the market. Instead of competing for “top talents”, we look for the “right talents” – people who align with our long term vision, and we build a company culture around that.

We always ask our candidates to look at the business model, and to ask tough questions in the interview. We want to make sure that we hire the right person instead of the best person. Because the best person is liquid, but the right person will grow with the company.

Nelli Orlova:

I agree that salaries in Crypto Web 3 are way higher that is Web 2 and I think this is another good opportunity for coming from the bear market adjusting salaries to the same ones. Because we keep very close to our portfolio companies, startups where we invest and advise, and I observed numerous cases during the last couple of years. When the startup struggled with HR hiring people, even after getting funded, even after getting enough money to pay high salaries, they struggled to get people who can execute and deserving these salaries. Therefore, the best way I believe is not to seek specific people with a mind-blowing expertise in Web 3 sector, but to hire good and very motivated professionals from web 2 and actually educate them. This is a huge challenge, but a great opportunity for everyone on this market. Educate your team and educate your users. The best examples what I saw so far, the best performing employees and web 3 startups, were actually those who were coming from professional web 2 sectors, but got inspired and motivated by the Web 3 ideology of the particular product that was developed by this at startup and joined the team and learned together with the team. It also gives an opportunity to reduce the costs for Crypto startups during bear markets.

Q10: As the investors, what would you like to see from the projects during the bear market? Take a big guess, What would be the next hot topic of the next bull market? Are there any fields that have caught your attention lately?

Jademont:

We know the engine of last bull market was Defi and NFT. There are many altcoins that have 10 times or even 100 times in the last bull market. However, the Bitcoin itself was only 3 times higher compared with the big price of 2018. We also know that Bitcoin will take about half of the whole market cap. It means half of the access didn’t experience bull market? I mean “the crazy” bull market. For the next bull run, the opportunity might come from this area. I mean the Bitcoin itself. I have been investigating the development status of Bitcoin. Many people, especially for the newcomers, they think that there’s nothing new on Bitcoin because Bitcoin is Bitcoin. It is just for payment or for value storage. But actually, there are a lot of projects on Bitcoin itself. We know there’s a technology called Lightning Network, which we can recognize it as the Layer 2 on Bitcoin. I was just surprised when I realized that the TPS of lightning network is over 4 million, and I was even shocked. When I realized that there would be some Defi dapps on Bitcoin based on Lightning Network. There will be swaps and dexs and some defi.

I heard either who issued USDT. Back in 2014, the first USDT was issued on Bitcoin by Omni. We know the Omni USDT is due to the high gas fee, and it was almost abandoned by the crypto world. But I heard that Tether will issue their USDT on lightening network, which will have over 400 million TPS and better gas fee. This is very exciting. Just imagine when we have a layer 2 defi Bitcoin network, and we have the layer 2 defi Ethereum networks like optimism. If there is a bridge to link these two layer 2, half of the whole crypto market cap will join. For the next round defi, NFT or whatever, I think even there’s no new money coming into Crypto world, we can take advantage of the Bitcoin access to become the engine of the next bull market. This is very possible in my opinion. This is only my guess, so no financial advice, but I strongly recommend that we can pay attention in this area. Actually, our Waterdrip capital has deployed quite a big fund or quite a big capital in this area. I hope we can bring more news later. Remember to follow our Twitter.

Sarah:

As a fundamental, when we search for a project to invest in, we normally see whether this project and find the pain point and whether they can solve the issue to pinpoint in a fast cheap and good fashion. If the project can do and deliver this, it’s a good project. But of course, whether they can like the field pulse of the market is very important. For us, we’re still looking into web 3 Gamefi, Socialfi, and infrastructure bridges projects. We looked into those areas well, but we also want to open our minds to let new senses to come beyond our imagination . This will help for this bear market and the next bull market.

Nelli Orlova:

I believe in the next future market development, we will see more solutions for real decentralization. There are no fully decentralized apps. We all know that. They are all used from centralized services.

I believe that that could be the next interesting thing on the market are the solutions that allow more complete, more high level of decentralization for developers and for users. Another interoperability is If we speak about gas, I hope that in some future we will see solutions for these everyday hassles when we deal with bridges, swaps, etc. during cross chain transactions. I think that various interoperability protocols and other solutions can be the next big things. Speaking about Verticals. Recently we saw this move to earn concept. I’m not a big believer in it in a long-term personally. But I think there is a huge-hidden potential in online education, self-learning, e-learning, mechanics, and maybe we can see new tokenomics models around that. The fourth thing to highlight here, I truly believe in more data visibility and analytical solutions for our sectors. So I think it’s still missing. We saw during 2021, 22, some good players coming to this market, but they still do not satisfy the full spectrum of demand for good analytics and data around web 3 sectors.

Q11: What can we do to buy the dip from this kind of second market? Just for financial ideas, no financial advice here. Any advice for under estimated token or any advice for the retail investors?

Sarah:

We do suggest people to do their own due diligence and to understand the project or token. For myself as a strong Bitcoin believer, from my own experience, I always believe in Bitcoin.

Doug Witt:

You can never go wrong with Bitcoin. Without taking into consideration, I definitely am a big fan of any infrastructure projects and any projects that we have a strong team. You really gotta do diligence with checking out their tokenomics and you can kind of really tell the goals are. Are they really heavily VC funded? What does release schedule? How much of the token supplied as a team have? In that regard, but essentially infrastructure projects that really kind of power web 3, I think are always solid.

For the second question, maybe taking a little different directions. For retails, just to really focus on the knowledge base and use the opportunities that the bear market gives you to get up to speed more

Jademont:

Usually I don’t give financial advice. For here personally, I have highly back of Metis and NAOS. I would like to recommend them. If the audiences have no else to buy, so you can investigate these 2 coins. You decide whether to buy the dip or not.

Kevin Tseng:

This is not a question for me but I’ll say that WaterDrip is one of the earliest investors and has been a long term holder.

I would suggest to look at what the industry leaders are betting on, and then take a second look at the direction that you’re taking and any other protocols that are developing in the same space.

If I take a step back from the web3 and look at how web2 unicorns evolved, it really provides a clear game plan and strategic direction for all of us.

Nelli Orlova:

First of all for retail investors. I would recommend understanding what kind of investors. Because the word investor especially in Web 3 World is very unclear. Are you an investor for a long term willing to find and identify some opportunities and make diversified portfolio and wait for half a year or one year? I’m not a trader and I can’t advise on any kind of speculative short-term things. I’m speaking about primary markets. Since I’m true believer in infrastructure, try to find an interesting structure solutions that are solving existing problems on the market, analyzed them and join them early and there could be good opportunities. In the primary market, joining it and getting their tokens as early as possible. For the secondary market, I think we are not yet on the bottom and many protocols would be down even more. There could also be good opportunities, because for the next bull run, infrastructure definitely will rise again. So yeah, if we don’t cross the legal borders, that’s all what I can say.

Topic: Bear market metaverse & nft discussion (3D PFP/LAND/virtual human nft/metaverse as a service)

Date :2022/5/14

Speakers we invited:

Andrew Fai -Chief Visionary Officer of Xtingles

Igor Samaradziski -CSO of TRUE Ecosystem

Elijah-EN Community Ambassador of HALO official

Jademont-Managing Partner of Waterdrip Capital

Hemdaller -Founder of C.A.T

Bamboobee -CatcherVC Researcher

Cohost：

Elaine — Investment manager of Waterdrip capital

Vivi Lin -Partner of Octopus Network

Sponsorship :

20 free BronzeTrue Status Card

3 NFT“HALO OFFICIAL ”WL

1 NFT”Untitled” WL

Q1: As we know since last year, facebook has changed to the name meta. Metaverse already become a hot topic. We have seen many mainstream metaverses, such as Sandbox, Decentraland, Crypo voxel, world of web3. Can any speaker here share your opinion about how you understand the metaverse?

Vivi:

I think Metaverse is really a very interesting topic. It is very close to the concept of Web 3, which in my understanding is about ownership sovereignty and freedom. We all heard about the concept from the book Snowcrash By Neal Stephenson. Everybody was talking about it. That was back in 1992, so for many years. The Metaverse seems like just another name of the evolution of the Internet. We could be more social, but actually more immersive. A16Z recently published a report that I think really makes a lot of sense. It says that broadly speaking, there are 2 competing versions of the Metaverse. One is a decentralized Metaverse with Property rights and new boundaries that interoperable open and owned by the community that builds and maintains it. That is more close to the web3 as I see it. Another Version is a centralized and closed Metaverse basically an extended version of Web 2 like elaine mentioned. Facebook changed its name to Meta. This is still like the same idea with all the platforms take most of the profit. So now which version do you support right? The open decentralized version is owners owning our own data and property right. But obviously, it’s like Shakespeare. so everybody has their own version of the Metaverse, but I think the the Metaverse combined with web 3, should give us open sources, decentralization and let us users owning our own data. We have the data ownership and sovereignty.

Jademont:

I think Metaverse is a combination of multiple technologies, such as AI, Blockchain, cloud computing and big data. It attracted so much attention because everyone actually can jump in and find their own position in Metaverse no matter you are an investor, a programmer or an artist. I’m expecting not only a virtual word that people can spend their time and play, but also a new lifestyle that is in parallel with the current world where there’s no race, no country and everyone is his own Avater. One can only leave less than 100 year in real life, but can actually live forever in networks.

Q2: As we all know Metaverse is not unique to web3. Traditional web3 Internet giants such as Facebook ,Baidu are also deploying the web2 Metaverse. What’s the difference between these different Metaverse products? Which one is more promising in the future?

Andrew Fai：

I have been increasingly worried about Facebook stands on Metaverse. I have a feeling that Facebook may hijack the definition. There is a lack of transparency happening with how Facebook uses users’ data. Nowadays, a lot of these hyper targeted ads are digging into your WhatsApp text messages, your Facebook Messenger, and digging into all your browsing history. I think this level of privacy is not really addressed on Facebook. This just makes me increasingly worried about how much they would know about me as I participate in their Mark Zuckerberg’s version of Metaverse. So I think there will be a competing narrative across like the Giants or Facebook, creating their own version of Metaverse.

Elijah:

I think people will eventually realize the importance of their own data. Musk purchased Twitter and he says that he will be open sourcing the news feed algorithm. How user data will be collected overtime. That is a really big important moment in history, where for the first time people start understanding how much data these big web2 companies are collecting from them and they need to do something about it. And when that awareness start to arise, I think people are starting to leave. They will start to migrate from Facebooks, Instagrams or other web2 companies that are just stealing users’ data. They will embrace the new web 3 Metaverse that we’re seeing today. I believe it is mainstream.

Vivi:

We have faith that open and decentralized version of Metaverse will eventually take over. But it does take time for everything. To be honest, it’s really difficult to or it takes time to educate people, for example, to open a wallet and to really embrace that decentralized app. You know the applications that still struggling to catch up with the web 2 style kind of user experience. It takes time for infrastructure in web3 to develop and mature.

Q3: Under the background of the current bear market, how do you think the future floor price trend of these metaverse land and nft projects will develop?

Elijah:

I choose to treat the MFT market as a consumer. So I’ve purchased rather than do a kind of speculative investment and I can relate to that that position. It’s essentially taking something that has no intrinsic value and creating its value through the network social capital. In the old Gallery system, this was essentially which group show you a part of which kind of creator put on your show. Which level of gallery represented you. Each gatekeeper came with a certain level of social capital and that created the value via consensus mechanism for the object in this case. The painting the photograph the sculpture, etc. And and I see the same thing unfolding with NFTS and that’s not necessarily a bad thing at all. Institutions and Instinctive organizations of society are based around.

Elaine：

As we know that nowadays there are many so many Metaverse Products. Users cannot enter into different Metaverse easily. so I think it is it possible that a future infrastructure can provide solution to build a Metaverse Bridge between different networks.

Jademont:

I think Crosschain Metaverse is very necessary in the future. We can just imagine actually every Metaverse in future is just like a planet in the universe. There are isolated when the technology is not very developed, but one day they will communicate with each other by spaceship or other kind of technology. However, It’s a double edged sword. The traffic and wealth of one Metaverse will migrate from one to the other one which is more popular. I think for each Metaverse, you have to increase your own competitive power before you really make the crosschain Metaverse work. This is what we want to remind all of those founders of different networks.

CAT:

One thing I really concern is about the underlying engine. We see the Sandbox or the decentraland and or other new Metaverse. Every Metaverse was used different engine to develop. Even we use some bridge, as the underlying code so differential, people can not easily switch. So we need to develop some new infrastructure like the developer engine because there are so many underlying software.

Q4: Yugalabs provides sdk for other NFT projects, and are there any solutions which can help these 2d pfp nft projects change into 3d NFT and enter the metaverse?

CAT:

So the basically the first thing Yugalabs needs to do is to build the model. of the 2D-NfT. 2D-NFT projects need to cooperate with other brands to help them to turn 2D NFT into the 3D model and actually. We’re working on this value feature right now my project. Actually,we’re working on this feature right now. My project CAT is developing an avatar like platform. We made a 3D models for some corporative 2D projects so the NFT holders can directly use this kind of model to experience Yugalabs or something else.

Q5:Many web2 brands such as LV,NIKE ,ADIDAS are rapidly entering the web3 metaverse to build their own digital brands. What kind of services as an infrastructure can we provide for brands?

Igor Samaradziski :

It really does come to the utility. It boils down to the liquidity of viewership and popularity. So some of the really nice user cases we had recently were exposure of the designers that quite literally working from home. They map their clothes in 3D styles and create virtual fashion words, virtual fashion shows, which allow bigger brands to pick up and utilize those designs. Similarly, if you take a look at Adidas release in the early days. Who are releasing sneaker designs? How popular a certain design of NFT is depends on how many times it has been traded before the designer decide whether they want to actually produce that sneaker in life. It’s usually the product that is delivered to consumers that enjoy using it. As that liquidity builds up, we’ll see more and more brands utilizing this digital space to bridge their real real world applications.

Q6: in web3 world, DID become very popular, it’s kind of onchain social identity, what do you think about DID paradigm or new business model?

Jademont:

I think it is a very promising technology for the Metaverse implementation. Instead of using a wallet address that is very long and hard to remember, people tend to use our short name like ENS, image avatar to represent their identities in Web3. This is one simple understanding for DID. A key point of DID is how people organize or even devices can be identified and located without centralized system of Identifiers. Metaverse is still evolving. It’s just the very beginning. At the first step, DID is designed for people like you and me. This is what most of the entrepreneurs that the founders are aiming for. In the future, I think DID is for everything, not only for Human being, but also devices like a machine or even cars. We have invested one project. They gives the electricity charger and DID to represent one robot. This device has a wallet , a Ethereum or pocket wallet. They can gain money from what they have done to the people. This is very interesting and I’m very excited to see what will happen. In this area, I think DID in Metaverse is a very interesting combination.

CAT：

I just open my mind about the DID and another things because he mentioned that we also can just put the ID on other product or cars or something else. I believe it will be a hugedevelopment of the IOT industry because now we see the application of the web3 is just the customer application. Till now we don’t see any of the application on the factory and some other to B model so. I believe it will be a very bright future.

Jademont:

Indeed, the idea is unnecessary factor for IOT plus blockchain or plus metaverse. The Technology development for the final metaverse is that there’s no difference between human being and the devices. That’s the ideal world for cyber punk. In the world you cannot tell the difference between a human being or robot because all behind is the DID.

Q7: from investors’ view, what are the new trends in Metaverse NFTs? what do you see the market go from here?

Jademont:

Actually we are looking for 2 kinds of projects. The first one is infrastructure, so that will make the blockchain adoption cheaper, faster and easier. For example, the NFT oriented public chains. The second kind of project. We are looking for is for products who are able to bring traffic to their applications.

Elaine:

first trend i think is that metaverse and nft market will combine with socialfi, so this year, we have seen like like StepN，create a new model like X to earn ,it combined with a good socialfi , which turned out to be a successful Web3 product , nowadays metaverse are very single and individual, we would like to see a multi chain Bridge to link different metaverses together. So we would like to see more infrastructure to provide this kind of solution, They will bring their traffic to different and second trend i think is second time creation, nowadays we have seen some product combined with VR and AR echnique, so they can help artist to do the second time creation, so which would help the users to Show off their own NFTS, for example, if I am byc Holder. So I can use your product to do our second creation, and to share with my like social media, which is cool. And third trend I think is incubation platform like IDO platform for example, we have seen Outland JRLAND ,incubated and onboard many famous artists, such as fanglijun, their nft price perform very well ,so I would like to see more like this kind of incubation platform onboard with many a good artist.

Q8:Can you give some good advice on how to survive in the bear market?

Jademont:

Well, I’m familiar with this question because I have gone three recycles since 2013. I’m an optimist. I think current situation is much better than 2018, the last bear market. At that time product teams were doing the fund raising Ethereum and then the bear market came. They cannot afford the salary of their team members. That was horrible. and wait for the next bull market. But for now, we’re doing fundraising using USDT, the stable coin. It doesn’t affect their stability of the team at least. So they have enough patience to develop their products and wait for the next bull market. So I think for developers and founders of the team members of one project, you just need to ignore all the noises in bear market and make your product get launched as soon as possible and build your community.

Andrew：

I think that our first of all you need to budget yourself in terms of your available resources and exposure to risk to this market and second of all like. Need to have a very fine line between investing and gambling . These 2 are very different. Testing requires you to do very deep earth research. I will also consult experts to reach a well thought out decision entering the market, while gambling is just gathering enough data and just just. Just taking a bet, you know, so it got all you make a very big distinction between the 2 what I would say is like if you if you’re currently under the water or really suffering right now.

C.A.T:

For startup, we’re trying to do our best to go through the bear market.There are 2 things we try our best to serve. We will use the time to develop my product,add some more utility and to do some more color collaboration with it, too, just to build a great good product.

On April 2nd, we invited several speakers to have a discussion centered on NFT +DEFI liquidity solutions. These solutions focus on the issue of NFT lending, renting, staking, NFT fragment and price oracle.

Guest & speakers we invited:

Elaine-host

Tracy-Managing Partner of Waterdrip Capital

LEO-Core Contributor of XCarnival

Aleksandr-Cofounder of Envelop

Steve-Founder of Depo Platform

Shouwen-Core contributor of MACC

Code in coffee- Bend Dao cofounder

Juak.eth-Cofounder of The Lonely Frogs

TUTU-NFT KOL

Why NFT price always has great volatility and low liquidity?

Tracy:

NFT is a digital asset, often related to different kinds of items. Art price, game items, and tickets or other financial notes. Most of the NFTs are art pieces currently. Art price can be very subjective. It is hard to define the price. Compared to fungible token, NFT is not very mainstream in holder number.

Shouwen:

An NFT is an ERC-721 token, it’s not divisible which prevents it from generating more transactions, so its nature makes it of lower liquidity than the ERC-20 tokens.

Leo:

NFT is quite a new niche industry with 1 to 2 years of development, while cryptocurrency takes 10 years to reach a consensus among people. The NFT market still needs more time to grow.

CodeInCoffee:

The lack of utility. Most of the projects are just hypes and fomo.

Solution to the liquidity of NFT

Tracy:

a) P2P lending. For example, XCarnival.

b) Peer to Pool, Collateral NFT to get liquidity. For example, NFTX, collateral NFTs into V token, and put it in Sushiswap. When redeeming, put the V token back into the pool and get back NFT. But the issue is that the gas fee is too high, so there are few people using it.

c) Some NFT projects offer staking to earn rewards

d) GameFi projects, separate ownership and using right. Players are able to rent NFT.

e) NFT Team releases token of their NFTs. Ape coin airdrop

XCarnival:

a) Reduce the friction of the trading process (NFTX)and increase the profitability.

b) Solve the issue of NFT price evaluation problem

Challenges we met:

Shouwen:

a) Need to use variable interest rate to incentivize the liquidity providers to put their money into the pool. However, if the interest rate goes up to a high rate. For example, 20-30%, then NFT holders might not be willing to pay for the high interest rate. NFT holders usually invest the money they borrowed into another NFT.

b) The security concern of the pool.

c) P2P borrowing, interest determined by the money borrower, and the leading cannot be done instantly.

Why do people want to borrow NFT ?

Tracy:

In a GameFi situation, people can borrow NFT to equip themselves, to upgrade and earn more income.

How does the lending platform deal with the change in price of NFTs?

CodeInCoffee:

d) Currently BenDAO is using SDK from Opensea to get the data. Most of the NFT price is not on-chain data these days, only Cryptopunk has on-chain NFT price.

e) Oracle is a huge problem currently. There is no mature Oracle product on market.

How to ensure the safety of the NFT asset in lending protocols?

CodeInCoffee:

It’s the same to the DEFI products.

Shouwen:

Infinite approval has bad user experience and higher costs, though it provides protection for users.

What if the borrower does not pay back the loan on time?

CodeInCoffee:

Lending platform will sell their NFTs to pay back the original loan . If there is more money, the rest of the money will be returned.

What will be the new paradigm of NFT +defi?

Tracy:

a) For the future of NFTs, Crypto Natives will outperform the ones supported by celebrities.

b) There are trends in the future including combination of FT and NFT, including DEFI + NFT, and fragmentation.

NFT Fragmentation

CodeInCoffee:

a) A lot of people used it but not satisfied with it.

b) Too early right now. We still need time for the infrastructure to develop.

Pricing mechanism of NFT

Tracy:

a) It can be very subjective because everyone might has a different view of a unique item. The price can also depend on the situation.

b) One project tried to use data model to adjust and come up with a relatively fair price.

NFT Tools

Tutu Crypto:

NFT tool recommend NFTGO