Web3 is currently experiencing a slight downturn in the bear market, and the NFT market is particularly lacking fuel in the short term, severely undermining holders' confidence. Does NFT have a future? How can Web3 break people's biases? How can we quickly judge the quality of a project? What should we do in the bear market?
In the third dialogue, we are delighted to invite Maodao Chef & Hash Global founder KK to share his insights on Web3 and NFT. What do Web3 and NFT look like in the eyes of investors?
1. First, please introduce yourself, KK.
Hello everyone, I am KK. I have been working in the traditional financial market, including asset management companies in the United States and China. After 15 years, I started doing equity investments and established Hash Global in 2018, mainly investing in early-stage Web3 projects. We currently manage two funds, a VC fund and a parallel fund. Due to our limited resources, we focus on Chinese Web3 teams. So far, we have invested in over 60 Chinese Web3 startups. We recently completed the acquisition of the MaoDao PFP project, and hope to use it as a base to build a Web3 Chinese community. At the same time, we are starting to try out Web3 products in China, aiming to promote the mass adoption of Web3 technology in China (based on consortium chains).
2. How do you view the current NFT market, KK? What do you think the future holds for NFT?
We are very bullish on the NFT market and have been investing in entrepreneurial projects in the NFT field. Last year, I explained NFT and Web3 to many friends in the Web2 industry on various occasions. I particularly liked using a title from an internal material for explanation: NFT is the cornerstone of the next generation of the Internet. In my opinion, NFT is not just digital collectibles and PFP, it is actually "Everything." It can be data, it is the mapping of the physical world in the virtual world, it can be the carrier of asset securitization, it can also be combined with the real economy, and it can demonstrate its strength in managing private traffic. Therefore, we have seen many Web2 companies around the world, such as Starbucks and Nike, trying to use NFT to further enhance their membership systems and brand culture.
If we only limit the concept of NFT to areas such as avatars or artworks, I think the current market performance is just a normal value regression. I have also bought many zero-value NFT projects, and I do care about making or losing money, but what is more significant to me is being able to follow the market's development through purchasing. Many operational models and value presentation methods of Web3 are closely related to money, so people in the industry are particularly sensitive to prices and may feel it is a bear market. However, from the perspective of technological development and the expansion of application fields, NFT has a significant technological breakthrough. Originally, in our internet or metaverse world, there was no way to establish ownership of something, such as a picture, which could be copied endlessly at zero cost, and you could not assign value to it. But with the emergence of NFT as a carrier, the logic has changed, and a picture can be sold for tens of thousands, millions, or even tens of millions of Hong Kong dollars. This phenomenon actually implies a significant change in the underlying business logic.
In general, the narrow NFT market may currently be in a bear market, but the entire NFT market, including the application of NFT technology in the real economy and its empowerment in various industries, is developing rapidly in our opinion. The upcoming development will be very interesting, and this market will become unimaginably huge.
3. I noticed that Hash Global recently completed the acquisition of the NFT project MaoDao and made it the first project to be incubated. Could you please give a brief introduction of MaoDao and its vision?
We have always been paying attention to PFP and Web3 native IP. In simple terms, MaoDao will be divided into two parts. First, we will build a community for Chinese people in Web3 based on the original PFP project; to put it more ambitiously, we hope it will be the spiritual home for Chinese people in Web3. Our understanding of PFP may be different from some other project teams. We hope the project can become a membership club like YugaLabs, rather than a specific cultural trend. Of course, the development path we are planning is different from YugaLabs as well.
I believe that Chinese people in Web3 are the only group of entrepreneurs who can be on par with European and American startup teams. Whether it is entrepreneurs, KOLs, or professionals in related media, the group formed by Chinese people is undoubtedly the most outstanding among global startup teams.
However, the entrepreneurial ecology among us is sometimes not particularly friendly. There are often incidents and figures of "pseudo-Web3" that "pollute" the industry. Our mainstream media and many professionals from Web2 actually have a limited understanding of Web3, and Web3 practitioners are easily viewed with suspicion: Are you laundering money? Are you just a speculator? Are you running a pyramid scheme?
I think Chinese teams that are truly doing things need a positive community to explain our understanding and vision of Web3 to mainstream regulators, the mainstream media, and users outside the mainstream Web3 community. And the best carrier for such a community is PFP. Web3's PFP is not comparable to the skin or avatar of a certain Web2 platform; the gap between them is dimensional.
MaoDao now has 5000 cats. If you own a cat, you belong to this community. You are a member of the community and can participate in various offline and online activities. We will provide various benefits in the Web2 cultural and entertainment fields based on our resources. These benefits are not our focus. We don't see PFP as just a vehicle for benefits. We want you to stay in the community because the community can provide high-quality content and communication, and community members can help each other. We are even considering whether to divide the community into different cohorts based on different industries and regions. Each cohort consists of a diverse group of people, including those from Web2, Web3, entrepreneurs, professionals, investors, etc. This way, the community can grow quickly, and each member can receive their complementary part.
We believe that such a community will be very valuable. We hope that when the regulatory agencies in Hong Kong, Singapore, and mainland China talk about MaoDao, they will see it as a positive community and be willing to communicate with such a community. Hong Kong warmly welcomes Web3 talents, and gathering places for these talents will be communities like MaoDao. Once such a community is built, because it is based on PFP, it will become a Web3 IP, which will also be valuable. The value it brings can be shared synchronously by community members. We will also establish a points system and give members points rewards based on their contributions.
Currently, there are some great Chinese PFP projects, most of which focus on trendy brands, games, animation, etc. I think these are good because they are telling a story and creating value rather than just hyping a concept, an image, or a slogan. But this is different from what we want to do. As an investment institution, we have helped nearly a hundred Web3 Chinese entrepreneurial projects. We are in a position to aggregate resources, and we have had many exchanges with many practitioners in the Web3 field. At the same time, our team members come from traditional finance and Web2 industries, and many of our investors are successful entrepreneurs and investment giants in Web2. We understand the thinking of regulatory agencies and hope to work with Web3 entrepreneurial teams to better meet the requirements of government regulations, so that Web3 can truly replace Web2.
The current Web2 Internet is compliant with regulations, so it has achieved the greatest development. And we should know that once Web3 complies with regulations, its energy and power will be even greater than Web2. Because it is more in line with government requirements in terms of data privacy and data regulation. We will dismantle the monopolistic economic model of Web2 platforms and completely replace it. In the future, there should be no exclusive terms like Web3. The Internet is Web3, and Web3 is the Internet itself. Web3 entrepreneurial teams need a stronger community, a more cohesive organization to do this, and that is also the plan of the MaoDao community.
Finally, let me talk about a product we are working on in China called "Cat Island". "Cat Island" is something we decided to do after observing the development of Web3 in China. The product is currently under active development and we are designing solutions for our first batch of customers. We will soon onboard its membership system.
In China, it is entirely possible to implement the business model of Web3, but there are certain aspects that need to be avoided. Cryptocurrency is not allowed, and you have to rely on a consortium chain. The operators of Cat Island will be completely separated from the custodians of product data. Data and assets will be stored on a public database using NFT as the carrier, which is a consortium chain. Therefore, the data is public, which is completely different from the operating logic of all Web2 platforms. This will greatly improve the user experience. For us, this is the core aspect of the Web3 business model.
We hope that Chinese users have no knowledge that they are using a Web3 product. They don't need to know that the ticket they collect, the fan cards, or the collection of a certain actor's "highlight moments" are NFTs. They only know that they have these things, and they can even legally and compliantly trade them in the secondary market. At the same time, these items can be displayed across multiple apps, not just on Cat Island, but on any app that can read data from this consortium chain. This way, the user experience will be excellent as they don't need to know that it is based on a consortium chain or that it is an NFT. They just discover that all of their "cultural footprints" are being preserved.
4. According to KK, which specific application in the blockchain field has the highest possibility of completely entering people's lives and breaking their biases towards Web3? Are there any similar applications available now?
At the beginning of the year, we drew a chart in which we believed that the next three years would be the "iPhone moment" for the mass adoption of Web3. In our opinion, there are three areas of application that will lead us towards mass adoption.
One is gaming, another is NFT (creator economy), and the third is DePin. Since this interview is focused on NFTGo, let's talk more about NFT. NFT is something worth investing time and effort into. We believe that if we want blockchain to completely integrate into people's lives, we need to make blockchain seamless.
Our friends, and even our parents, when they use these applications, should not be told that this is a Web3 application or that their collectibles are NFTs. They shouldn't be told about the underlying chain either. They just need to use it, and we should use technology to provide them with a better experience. Once they start using it, they will feel like they are using the regular internet, but suddenly realizing that this app has become more user-friendly.
For example, the essential difference between the Web3 Membership System of Eastern Airlines and the Web2 Membership System lies in the fact that when Ctrip needs to market to users, Ctrip no longer needs to say to Eastern Airlines, "Open the database and let me check if KK is your Platinum member." This is because Eastern Airlines has already opened these data on the first day of issuing the Platinum card, rather than waiting for authorization when a third-party service provider like Ctrip wants to verify. We know that the data of this card is recorded on the alliance chain, but 99.9% of people don't know, and don't need to know; all they need to know is that Ctrip can read this Eastern Airlines Platinum Membership card, and they no longer need to go to great lengths to prove themselves. Based on this, the underlying technological revolution will bring about significant changes in business logic.
In addition, we believe that NFT is most capable of demonstrating its value in private domain traffic management - some large hotel groups in China have already started doing this. Any major Web2 platform such as Xiaohongshu and Douyin has excellent public domain traffic tools and huge value in terms of traffic distribution. However, if an influencer wants to sell a product instead of simply selling their personal traffic, they will have a genuine need for private domain traffic management. We have talked to many big bloggers and KOLs. Whenever they want to sell something, they often need to create a WeChat group and manage, sell, or chat in it. Of course, they can sell through platforms like Xiaohongshu and Douyin, but through those platforms, they have no idea what the profile of their users is. We asked an influencer with 50,000 followers, and even though she has sold hundreds of thousands of RMB worth of products in the past few years (through Xiaohongshu), she doesn't know the profile of her 50,000 followers. This is a great pain point. Just imagine: If these things happen on a Web3 platform, can she use NFT tools to see the profiles of all her users and know who her true collectors and fans are, as well as their preferences?
"Cat Island" wants to create such a product. We hope that after this product is launched, all influencers and their fans can establish direct contact. Our platform only earns the money it should earn as a platform; we do not monopolize data; we aim to provide users with the best experience. We will also create a cultural wall for fans - all their collections will be displayed, and they can showcase them across platforms or show them to their friends. They will find that they can take everything, all their collections, with them, not limited to a specific application (what they have in Xiaohongshu can never be displayed on Douyin).
We hope to provide the best experience for our users, while allowing Influencers to realize their influence value. This is also the application that we believe is most likely to explode in the NFT field. I wrote an article at the beginning of the year, which explained our views on this matter. We originally wanted to find a team to incubate, but since we couldn't find a suitable team quickly, we decided to do it ourselves.
5. Many Web3 ers want to learn investment strategies. From the perspective of an investor, how does KK quickly determine whether a project is worth investing in?
If it's from an investor's perspective, just like when we invested in NFTGo, first we look at what problem this project is going to solve, whether this problem truly exists, and whether there is a future demand for the product and a real market - at least we have to believe that this point exists. Second, we want to know why it's you and not someone else (doing this), and whether you can convince us.
After judging these two things, we will filter out about 90% of the projects. Then we will discuss the specific situation with the team, and the discussion process will be fast - because we receive a large number of decks, which takes up a lot of our energy. We invest in early stages, so the judgment of the remaining 10% of projects mainly depends on the founder's ideas and their future execution ability (because people are very important), as well as the communication and collaboration within the team. This process will also filter a considerable proportion of teams.
If we are judging an NFT project itself from the perspective of an NFTer, it is not our expertise. This includes us doing PFP projects like MaoDao. We want to create a real product and a valuable community. We don't even want to see high turnover for MaoDao PFP (of course, we value the floor price of MaoDao, which is definitely the hardest indicator and represents the recognition level of the community). We hope that after you get the PFP, you truly become a part of the community. We hope that only about 10% of people choose to leave each year, while another 10% choose to join, instead of the current turnover rate of 200%, 300% or even higher. We also don't want to make money through royalties.
I think investors in PFP or more broadly NFT projects still need to spend some time looking at the team behind the project - does their vision align with your expectations? Does it have long-term value appreciation potential? Take the perspective of whether you want to buy a house in a first-tier city or buy a value stock. Our advice is not to focus too much on surface-level things, but to look at the internal qualities. However, this may require a certain level of threshold, personal understanding, and time and effort for research.
6. NFT is facing a bear market, and the cryptocurrency market is also sluggish. In a bear market, what advice does KK have for Web3 ers? What do you recommend everyone to do now?
I think the NFT technology and its applications in the real economy and various aspects are actually booming, and it has not been affected by the market itself during its development (whether it is the cryptocurrency market or the NFT trading market itself). I suggest that everyone should study and learn more during the current bear market, and be prepared; on this basis, because there is less noise and fewer good options, it will be more focused. We think it is a very good time to start the MaoDao project now, whether it is from the cost we invest or the community construction. If the NFT market is really a market you are optimistic about in the long run, everyone should look for teams and projects that continue to build in the bear market.
Actually, we don't think there is any blue-chip NFT project right now. Being a blue-chip is not simply achieving a floor price, but at least three years to prove that you are a blue-chip - whether you can withstand the market's bull and bear cycles. This market and industry are just beginning! When the bull market comes, projects that continue to do practical work in the bear market will have more explosive power.
There is a greater possibility of making money in a bear market, while it is easier to lose money when the market is particularly hot. So I think it is necessary to learn more, study more, and have a longer-term perspective, at least for two to three years. I think this stage may be a good market entry point, but be careful with your asset allocation.
Conclusion
Thank you very much for KK's answer. Investors have a broader perspective and can give us a lot of inspiration. At the same time, every Web3er is looking forward to the iPhone moment of Web3 mass adoption.
In the future, NFTGo will continue to invite Web3 Builders for interviews and conversations. Please also follow our Chinese Twitter: @NFTGoCN to keep track of us. If you have any suggestions, builders you want to see, questions you want to ask, or want to recommend yourself, please feel free to comment or DM us on Twitter.
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