In pursuit of eternity in the digital world
Author: Felix Xu, ARPA & Bella Protocol CEO
"We are not the architects of human society, we are the weavers of the autonomous network of rules"
Origin: Trisolarans and Wallfacers
I still remember that afternoon many years ago, in my small apartment on NYC 40th Street, I read all of Liu Cixin's Three-Body Problem trilogy in one sitting. In the ensuing years, I have reread the Three-Body Problem many times, among which Cosmic Sociology, Dark Forest, Water Droplet and Sophon have left a deep imprint on my mind.
The Trisolarans described by Da Liu are aliens with transparent thinking, and their technological capabilities far exceed human beings. The black box of thinking has become the only weapon left by human beings, and the wall facing project came into being. When I was investing in Fosun in 2017, I came into contact with the blockchain for the first time. I was amazed at its mathematical beauty, and naturally associated the blockchain as the projection of the Three-Body Society in human society. At the beginning of 2018, several partners and I jumped into the blockchain world and never looked back.
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Belief: Pursue eternity in the digital world
Our mission is to pursue eternity in the digital world. Human pursuits are varied, and the desire for wealth, mate, achievement and fame is part of human nature. The anticipation of the future makes human beings creative, but it is also accompanied by changeability and unreliability. Blockchain and smart contracts represent unbreakable rules, abandoning the changeable characteristics of human nature, and transforming the non-transparent game between people into a transparent game based on rules. If the blockchain infrastructure can be completely decentralized, its impact on the form of human organization will be profound.
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Picture 1, the Bible is on the left, and the Bitcoin white paper is on the right
The second concept: code governance is the path back to the laws of nature. The law of the jungle in nature, the dark forest in the universe (to be verified), are all natural laws, there is no ambiguity, and there is no middle ground. There are "gray levels" in human society, because many things in interpersonal communication are not black and white. Similarly, human laws are suggestive, and violations of the laws require a price, but it does not mean that they are “unable” to be violated. The rules in the blockchain world are mandatory, and the rules are adjusted from the subjective choice not to do evil to the objective inability to do evil. At the same time, in the design of the blockchain protocol, it is necessary to simulate the behavior of all parties, so that they can fully compete in transparent rules to reach an equilibrium state. Similar to nature, participants with different purposes will enhance the protocol's species diversity and sustainability.
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Further reading:https://continuations.com/post/645017712412786688/a-word-on-nfts
Total Value Locked in DeFi (Source: DeFi Llama)
The fourth concept: incomplete decentralization will lead to complete centralization. In the past year, DeFi smart contract liquidity (TVL) has exploded from US$670 million in early 2020 to US$120 billion in June 2021, a growth rate that is rare in any industry.
Behind the terrifying growth is the closed loop of the whole chain of business completed with cryptocurrencies and smart contracts. Taking DeFi mortgage lending as an example, user cryptocurrency deposits, borrowings, collateral liquidation and redemption are all executed through smart contracts, and there is no centralized link. Compared with DeFi, asset chaining and STO security tokens are relatively closely related to the existing financial system on the asset side, and the speed of advancement is relatively slow. In the long run, where assets are issued, transferred, and cash flow generated on the chain, it will be the next explosive point. We believe that only digital native products can eventually be combined with crypto.
The fifth concept: the two-way prosperity of the asset side and the capital side. At present, the size of the cryptocurrency market that DeFi can serve is more than 2 trillion US dollars. In the middle of 2020, we predicted that the growth rate of stablecoins will greatly exceed the overall growth rate of crypto, and even exceed BTC several times in the future. (2020 Global DeFi User Survey Reportimage descriptionSource: CoinGecko）
Major Stablecoins by Marketcap (Source: Coingecko)
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Daily Stablecoin Transfer Volume (Source: Dune Analytics)
The sixth concept: the butterfly change from the narrow sense of cryptocurrency to the broad sense of digital assets. It is undeniable that most of the current cryptocurrencies in Bitcoin and Ethereum have the functions of transaction medium, equity and value storage. The emergence of stablecoins has weakened the properties of crypto as a trading medium, but strengthened its financial properties. Digital assets in a broad sense include all valuable items generated in the digital world, from infrastructure such as data, storage, and computing power, to communicable media such as pictures and videos, to usable assets such as game props and virtual items. Digital assets do not have financial attributes, but as assets (Assets), they can be confirmed and circulated using the blockchain.
Combining Concept 3 and Concept 4, we believe that digitally native things are better on-chain objects, because digital assets are not easy to confirm their rights in the real world, the issuer has nothing to do with the existing financial system, and can be efficiently circulated globally. The issuance, circulation, use and consumption scenarios of digital assets are expected to form a closed loop through blockchain and smart contracts. At present, NFT's attempts at IP peripherals, digital art, and game props are baby-like first steps. With the iteration of the blockchain infrastructure, more weak trust scenarios will be moved to the chain, and the types and layout of dapps will expand, creating more application scenarios that generate cash flow.
The seventh concept: spiraling infrastructure and applications, and continuous innovation brought about by low switching thresholds. It took the Internet more than 20 years from the earliest ARPANET to dial-up Internet access, reading text, and sending emails. It took 10 years from the emergence of browsers to the establishment of Facebook. At present, the infrastructure of the blockchain world, Bitcoin, has been released for 12 years, and Ethereum has been online for 6 years. The functions have gone from the initial transfer, to the issuance of tokens, and then to the DeFi that broke out last year. It has gone through the Internet for 20 years. We have reason to believe that blockchain, a rule-based infrastructure, will be applied to all strong trust scenarios (such as assets) and some weak trust scenarios (such as data) in the future.
Internet (50 years)
1969 - ARPANET
1982 - TCP/IP (Infrastructure)
1994 - Web browser (Killer platform)
1995 - Amazon, Yahoo
1998 - Google
2004 - Facebook
Mobile (20 years)
2003 - 3G Mobile Network (Infrastructure)
2007 - iPhone (Killer platform)
2008 - App Store (Killer app)
2012 - 4G Mobile Network
Crypto (12 years)
2009 - Bitcoin Launch
2013 - CEXs, wallet
2015 - Ethereum Launch
2018 - Stablecoins
2020 - DeFi
2021 - DeFi, NFTs, and CBDC
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https://twitter.com/AndreCronjeTech/status/1390916920694673414
Looking ahead: the fusion of humanism and machine rules
There are many differences between the blockchain world and the human world, and it is a paranoid rule-driven trust machine. In theory, the blockchain should be the underlying driver of all digital native assets, including financial activities, virtual assets, and even social and generalized data and information flows. It is true that the current performance of the blockchain can only barely support applications such as DeFi, but we believe that applications and infrastructure are spiraling upward. Over the past 50 years, the Internet has changed the way of life of human beings in all aspects; and the blockchain will be the portal for human beings to go from human governance to code governance. All human efforts are in pursuit of eternity. The ultimate destination of all science, philosophy, and theology is unchanging truth. Computers, only a few decades old, are the first glimpse of carbon-based life into a silicon-based world. The world, the rules, and the religion are all brand new. We believe that a society with highly developed humanism and clear rules is slowly opening.
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Conclusion: Be a Partner of Believers
At the beginning of 2018, my partners and I co-founded ARPA, which is dedicated to using cryptography to develop applications such as private data sharing, on-chain random number generation, and BLS aggregate signatures. Along the way, ARPA has participated in the establishment of several international privacy computing standards and created many firsts. At the same time, our verifiable random number and BLS aggregation threshold signature architecture are industry-leading.
At the beginning of 2020, we saw that decentralized finance is the general trend. Combining the team's deep experience in the crypto and financial fields, we invested and incubated Bella Protocol. Bella's mission is to substantially increase the penetration rate of decentralized digital asset management. We were honored to receive early investment from Binance Labs and TechCrunch founder Michael Arrington, and became the first DeFi product to land on Launchpool.
The three-year journey may seem short, but in the crypto industry, which is developing at the speed of light, it is enough to experience a bull-bear transition and witness the vicissitudes of the situation. During the long journey, more and more aspirants join the industry to jointly promote this great change. Therefore, we decided to set up an encryption fund with a scale of 20 million US dollars to invest and link believers. This fund is currently managed by me and my partner Nomu. It will focus on investing in innovative projects mainly based on DeFi and NFT, with a single investment size of 100,000 to 500,000 US dollars. This fund is an evergreen fund with no fixed investment and exit period. If possible, the time we hope to fight side by side with like-minded people is forever.
as well asfelix.xu@arpachain.ioas well asyemu.xu@arpachain.io
Citation 1: https://duneanalytics.com/hagaetc/stablecoins
TVL: https://defillama.com/home
(2020 Global DeFi User Survey)
