Crypto's Waning Ambition

The crypto industry has experienced multiple cycles of innovation, and after enduring years of rejection, spot ETFs have finally launched, attracting record inflows for Bitcoin and Ethereum ETFs. Trump's election paved the way for the crypto industry to approach mainstream American society, and with increased lobbying power, Gensler and other opponents encountered greater pressure. Now, the crypto industry is recognized as an independent sector, with Bitcoin even regarded as a reserve asset by some countries.

In terms of price, I remain optimistic about the crypto market, with the main upward momentum coming from external macro factors. However, I believe the internal innovation engine of the crypto industry is gradually slowing down.

As the industry matures, the pace of innovation naturally slows down, yet prices may continue to rise even in the face of slowing innovation.

But I dare say that the slowdown in innovation is not the root of the problem, but rather a symptom. The real issue is that our ambition is fading, and the industry's aversion to risk is increasing.

The crypto industry once rose due to its radical ideas that aimed to disrupt the world, but now it seems satisfied with pursuing regulatory approval and institutional adoption.

Don't just take my word for it; look at what Vitalik wrote in his 2023 blog post about "bringing Ethereum back to its cyberpunk spirit":

"Our purpose is not just to develop isolated tools and games, but to holistically promote a freer and more open society and economy, allowing technology, society, and economy to integrate with each other."

Think carefully: what innovations have emerged in this cycle?

AI×Crypto can be considered one.

But AI is an external innovation; without it, this cycle might still be stuck in the hype of meme coins.

Personally, I do not like meme coins because their only real goal is to get rich quickly, rather than truly changing the world. The purpose of these projects is merely to make you rich enough so that you no longer care about the problems of the outside world.

Do you remember that phrase we often used in the last cycle?

"[Project Name] is the most egalitarian thing we've seen, ambitious, and if successful, will truly change the social structure."

However, in contrast, in the last cycle we witnessed various radical innovations:

Between 2020 and 2021, innovations in token economics also peaked, such as:

Current projects and VC supporters are more inclined to adopt time-tested simple token economic models, favoring robust operations, as they typically only have one opportunity for TGE.

$EIGEN (Subjective Objectivity Token) is a rare exception in the field of token economics.

The ICO frenzy of 2017 can be said to be the peak of ambition, when various bold ideas attempted to decentralize everything. It was a bubble filled with imagination, many ideas were too crazy to realize, and most projects failed, forcing the surviving projects to dilute their visions.

However, these wild concepts attracted a group of people yearning for a radically different world, including myself.

I recently read "Boom: Bubbles and the End of Stagnation" by B. Hobart and T. Huber, where they explain that transformative progress comes from small groups with a unified vision, well-funded yet almost unaccountable. They argue that although financial bubbles have a negative reputation, many breakthroughs in the past benefited from them, and future progress will also be driven by this.

While we have not completely bid farewell to the era of "lack of accountability," with increased regulation, the industry's risk aversion is rising, which may be the last bubble cycle capable of bringing about actual innovation. I hope that the bubble of AI combined with crypto can at least spawn one or two killer applications.

It's not to say that there are no ambitious crypto projects today; here are some worth watching:

You might think that WorldCoin's eye scan is too radical, or that Liquity v2 and its stablecoin named $BOLD cannot succeed. But these are precisely the risks that ambitious protocols are willing to take. They are the most egalitarian things we've seen, ambitious, and if successful, will truly change the structural foundations of society.

Ethereum is notably absent from this list; perhaps I am being a bit harsh on ETH, but Vitalik's cyberpunk vision is hardly felt on Twitter. The upcoming fork will have some very minor updates, at least users won't notice. It will abandon sharding technology and L1 scaling, and the best part we've recently thought of is a slight increase in the gas limit of blocks.

Ethereum seems to have outsourced both execution and ambition to L2.

The North Star of ETH is still not visible. I hope to see Ethereum greatness again and hope for the emergence of radical new ideas. However, currently, Ethereum seems to have accepted the viewpoint that modular blockchains cannot scale, while Solana has chosen a completely different path, sticking to a single-chain model,