When a new innovation emerges, the initial stage is called the Innovation Trigger, also known as the Dawn Phase. A key characteristic of this phase is that the number of participants is relatively small. If even elderly folks on the street know about it, it’s unlikely to still be in the Dawn Phase.

After the Dawn Phase comes the Peak of Inflated Expectations. In the encryption industry, the hallmark of this phase was the flood of narratives such as public chains, GameFi, and DeFi. At that time, large amounts of talent and capital poured into the industry, creating a FOMO-driven frenzy. However, given the broad impact of encryption technology, the journey from the peak to the trough has occurred repeatedly.

To be more precise, after each high-expectation narrative faded, a new narrative quickly filled the gap. It’s like a charming but unreliable playboy—you know you’ll be disappointed, but you still hold onto hope every time.

Technological development in emerging industries often progresses in leaps. For our industry, the curve isn’t a simple linear progression but rather a larger cycle containing numerous smaller ones.

The same can be said for AI. Back during World War II, expectations for AI were sky-high. Simon, a giant in the field who won the 1975 Turing Award and the 1978 Nobel Prize in Economics, confidently declared while seeking funding in the ’60s and ’70s that machines would be able to perform all human tasks within 20 years. Yet here we are in 2024, still hiring humans for video editing, community operations, and graphic design. Despite ChatGPT being heralded as revolutionary, it hasn’t yet replaced anyone on our team.

AI’s development has also moved forward in leaps, jumping between narratives. Initially, Simon’s vision of a general-purpose AI that could do everything dominated. Then, in the 1990s, the era of artificial neural networks emerged, with applications primarily focused on character recognition. Another leap occurred in the 21st century with deep learning, pioneered by researchers like Hinton, who recently won the Nobel Prize in Physics. Deep learning’s main application was facial recognition. Now, with ChatGPT and large language models, the focus has shifted to conversational AI. Again, a leap.

Looking back, many entrepreneurs in the encryption industry a few years ago were shouting about revolutionizing the world. Some wanted to create the Nasdaq of the encryption world, while others sought to disrupt global finance. But now? The focus has shifted to compliance and practical use cases. This transition marks the entry into the Trough of Disillusionment and the gradual move toward the Slope of Enlightenment. Eventually, as more useful projects emerge, the industry will reach the Plateau of Productivity.

When investing, there’s a psychological curve that aligns closely with the technology maturity curve. On this psychological curve, the Peak of Inflated Expectations is referred to as the Peak of Foolishness, the Trough of Disillusionment as the Valley of Despair, and the Slope of Enlightenment as the Slope of Enlightenment.

When a new technology, like encryption, enters the Peak of Inflated Expectations, investors are often at the Peak of Foolishness. As the technology moves into the Trough of Disillusionment, investors often find themselves in the Valley of Despair.

For the encryption industry, entering the Trough of Disillusionment coincides with an investment meme supercycle, where everything starts to look like a meme. However, after this phase, both the technology and the investors may reach the Slope of Enlightenment. This is when the encryption industry will truly see its springtime.