Jiuding Investment Sun Jian: Quantitative investment will be a great opportunity for the digital currency secondary market

特邀专栏作者

2020-12-15 02:41

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Blockchain investment should focus on three logics: infrastructure, applications and services. In addition, investment can be judged from four aspects: team background, business strategy, competition pattern and development direction.

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Huobi University Huobi Education

Sun Jian said in class that blockchain investment should focus on three major logics: infrastructure, applications and services. In addition, investment can be judged from four aspects: team background, business strategy, competition pattern and development direction. In terms of investment advice, Sun Jian believes that quantitative investment will be a great opportunity for the digital currency secondary market.

Faculty Profile

Faculty Profile

Sun Jian, managing director of JD Investment, star investor of JD Investment, founder of JLAB blockchain laboratory. He has worked in the wireless value-added industry for many years. He entered the VC industry in 2008 and joined Jiuding Investment in 2011, focusing on early venture capital in the mobile Internet industry.

The following is the essence of Sun Jian’s courses, and Huobi University hereby organizes them.

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Analysis of Bitcoin Price Rising Factors and Company Form Evolution Direction

Recently, the price of Bitcoin has skyrocketed, driven by three major events:

1. Fidelity Investments. Fidelity Investment Group is currently the world's largest professional fund company. In the context of the U.S. election and the global epidemic, Fidelity suggested that U.S. giants holding traditional assets spend at least 5% of their money on the allocation of digital currency assets, resulting in a large amount of capital flowing into the digital currency field. From the data on the number of user addresses of Ethereum addresses, we can see that the number of addresses has exceeded 10 million, and there have been leaps and bounds.

2. Subjective and quantitative watershed. This year has experienced four circuit breakers in US stocks that Buffett finds incredible. In addition, this year is a watershed between subjective and quantitative. Because the problem of subjective investment is relatively large, especially when there are four circuit breakers this year, the performance of the quantitative industry this year is actually better. It can be predicted that machines will gradually replace people in the industry.

The evolution direction of the company form: the earliest company is an unlimited liability company, and all the debts of the company must be borne by itself. From the perspective of traditional Internet companies and listed companies, many business owners and CEOs who do financing have A bottom-up agreement, so all company financing is actually a debt; in a limited liability company, these rights and interests have become equity, and the rights and interests corresponding to these shares can be owned, but when the company goes bankrupt, you don’t have to bear this Responsibility; when it evolves to a decentralized organization, all these things are neither equity nor debt, but a credit, but the establishment of credit is a very long process.

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Blockchain Investment Logic and Prospects

Three logics of blockchain investment:

1. Infrastructure. The new infrastructure that the country is talking about now, the logical benchmark is the public chain.

2. Application. For example, after the entire information highway of the Internet is opened up, all the regeneration on it will be applications. Looking at the game field at present, the early stages of development are very difficult.

3. Service. Equivalent to a service station on a highway, there are mining machines, media, and exchanges in the blockchain field. For PE and VC investment, the mining industry is considered a manufacturing industry, which is not sensitive enough in the secondary market and has little value, but the mining industry is also profitable.

Four Prospects for Blockchain Investment:

1. Top teams. How to define a good team at the top? First of all, its background should be better. The better the background or the better the reputation in the industry, the less likely it is to make mistakes, and the more it will cherish its feathers.

2. Excellent business model. A company must have a good business model, and even a good profit model, to be worth investing in.

3. Competitive landscape. If there are a large number of companies in this industry, take a look at its competitive landscape, which links are in the entire industry, and whose competitiveness will be stronger.

This leads to a word - long-termism. It is impossible for you to invest in a project or invest in a business and hold it forever. Companies, like people, must have peaks and troughs. The best way is to hold at the bottom. When the listing is at a high point, you can selectively reduce your holdings or funds. According to statistics, 95% of start-up companies will go bankrupt within 5 years, which also means that it is impossible to hold a company forever for investment.

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Excellent investment case sharing

Examples of excellent business models and competitive landscape:

Take the exchange as an example. The exchange industry is very profitable, but the exchange ecosystem needs to be developed. If you still want to invest in the exchange, there are still some industries and directions that have opportunities in the future. You can also take a look at this point .

The first-generation fiat currency exchange took Coinbase as an example. They have indeed done a good job in compliance, and there are still relatively large opportunities in the future. The second token exchange takes Huobi as an example. They have obtained a license in Japan. The third-generation Chinese team has some disadvantages in going to overseas exchanges, but there are still some high-quality projects that need in-depth understanding to make judgments. The fourth-generation mining exchange has the well-known Fcoin. Although this model has been declared invalid now, it did affect many exchanges at that time. Of course, this is also a case of investment failure. The fifth-generation exchange has an independent community and independent traffic. A new ecology has emerged. There is no actual controller of the exchange. The community is the node of the exchange, and all the traffic is supported by these nodes.

The sixth-generation private domain traffic exchange, in fact, the value of private domain traffic is no less than that of public domain traffic, and we can use the case of Wechat Business to think about it.

Growth company case:

We also did our best to adjust the Telegram project (it has failed so far), and contacted its founder Durov during the research period, but they quoted a sky-high price. In the end, we did not invest because the project was already too expensive, even if it is very powerful, but For our investors, there is no room for making money. This is due to our own judgment logic and a growth logic.

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Different investment strategies for three years from 2017 to 2019

The industry is developing rapidly, and the market is frenzied in 2017. All project investments will be rewarded, leading to the emergence of "Quota Quota". But after we reflected on it, there would be an inflection point in the market frenzy. Sure enough, the industry took a sharp turn for the worse in 2018, and we made timely adjustments in 2017.

In 2018, we plan to enter the secondary market and connect the primary and secondary markets. In 2019, he established his own trading team to deal with the volatility of the market and produced a relatively positive effect. After three years of development, JLAB has now become a comprehensive asset management organization covering traditional equity investment, token investment, digital currency asset management and other fields. The investment strategy can be summarized as the following points: small-scale funds, high returns; strict risk control, investing in leading projects; less investment and fast withdrawal (6-24 months of listing time); heavy positions in core projects (such as ONT).

In terms of investment philosophy, the four points of technology orientation, global investment, two-wheel drive, and long-term value are used as the core direction to select projects.

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Future Outlook and Investment Opportunities

There is a sentence that can describe the phenomenon of the entire blockchain enterprise: "The future is bright, but now it is all air." The development of the industry takes a long time, and we believe that the financial market will be the main battlefield for blockchain implementation. We have already seen the financial transformation brought about by DeFi. In fact, the entire financial industry has three main lines, banking, securities, and insurance. At present, many traditional banks have begun to accept the custody business of digital assets. Traditional stock exchanges will gradually be replaced by digital asset exchanges. Insurance is the most A line that is difficult to change.

Due to the rapid development, the current world has undergone tremendous changes, and the status of machines replacing humans has increased. It can be seen that the general direction of quantification has been determined. From last year to this year, we can see that many traditional industries have entered the digital currency market and performed well. One is that due to the increase in market trading volume, the machines that can support quantification are running, and the other is that the market fluctuates relatively large, so arbitrage behavior can exist completely, and quantification with relatively stable risks is arbitrage, which can exist. It is also a promising direction for the future. If the risk is a little higher, doing trend-oriented transactions, generating your own digital model through the quantitative system, and following the entire big industry, you can also obtain quantitative benefits.

The above is Sun Jian’s intensive lecture on the Global Blockchain Leader Course at Huobi University, hoping to give readers more thoughts on the exploration of the blockchain investment field.

About Huobi University

The Global Blockchain Leader Program (GBLP for short) is the top business course in the blockchain industry launched by Huobi University. A model of transformation in the blockchain era.

The GBLP lecturer team spans the three worlds of global academics, business, and venture capital, and has developed a global blockchain leadership course based on the demonstrations of blockchain technology experts and business leaders. GBLP courses will be taught in Chinese and English in Beijing, Hainan, Silicon Valley and other places, and will be divided into modules such as trends, industries, investment, and study tours in Silicon Valley. Courses include blockchain industry trends, global blockchain policies and laws, blockchain + industry scenarios and case studies, blockchain project investment trends and logic, blockchain and new economy and new finance, etc.

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