The End Times of Native Encryption

1. The Trend of Compliance

Over the past decade, blockchain technology has opened up a regulatory vacuum for the world. Although Satoshi Nakamoto's peer-to-peer electronic payment system has not fully realized its vision, it has opened the door to a brand new world. This internet world, built on countless nodes, once existed outside of traditional laws, governments, and even social norms.

It is precisely this characteristic of being outside of regulation that has become the core driving force behind the development of the encryption industry. From the initial ICOs to the later DeFi wave, and now to the highly regarded stablecoin applications, all of them benefit from the advantage of breaking free from the constraints of the traditional financial system.

However, as the industry continues to grow and develop, the trend towards compliance is becoming increasingly apparent. Whether it is the approval of Bitcoin ETFs or the impact of significant political events, these all signify that the era of native encryption is coming to an end. The industry is beginning to actively seek compliance, attempting to bridge the gap with traditional finance. Stablecoins, tokenization of physical assets, and payments are gradually becoming key areas of development. At the same time, pure asset issuance still exists but often degenerates into a tool for speculation.

This transformation is not accidental. Although blockchain technology can ensure the honesty of nodes and the disintermediation of DeFi, it still falls short in constraining the behaviors of the entities behind the addresses. Many projects overly rely on the entities behind them, while blockchain lacks effective means to supervise these entities' reasonable use of the raised funds.

The vision of non-financialization cannot be achieved solely through improvements in infrastructure performance. Goals that are difficult to achieve perfectly in a centralized environment are even less likely to be realized in a decentralized blockchain environment. The current trend towards compliance may ironically be a necessary path for the healthy development of non-financial applications in the future, despite the fact that this process is fraught with irony and helplessness.

The encryption industry is gradually integrating into the traditional financial system, becoming a subset of it. The narrative power of this decentralized ledger is gradually being controlled by upper-level forces. Bottom-up innovation is becoming increasingly scarce, and opportunities are continuously being compressed. We are ushering in a new era of on-chain hegemony.

2. The Evolution of Stablecoins

On-chain hegemony is mainly reflected in two aspects: the development of stablecoins and the reproduction of traditional internet models.

In the stablecoin sector, fiat-backed and algorithmic stablecoins dominate. A significant bill recently passed has had a profound impact on the stablecoin industry. The bill clarifies the definition of "payment stablecoins," requiring issuers to obtain licenses and accept regulatory oversight, hold reserve assets equivalent to 1:1, and regularly disclose reserve status. At the same time, the bill establishes a clear regulatory framework, bringing stablecoins under the purview of banking regulation.

The passage of this bill means that long-standing industry concerns about the potential collapse of certain large stablecoins can be alleviated. At the same time, it paves the way for blockchain payment technology to enter the mainstream financial system. However, the establishment of this regulatory framework also means that on-chain transaction mediums are officially included in the regulatory system, which may bring new risks and challenges.

On the other hand, algorithmic stablecoins are also continuously innovating. Some projects attempt to provide high yields while maintaining stability through complex hedging strategies. However, this model has also sparked a morbid craze, with various institutions rushing in to try to get a share of the pie. This trend may lead to innovation being stifled and market entry barriers continually rising.

Compared to other innovations, stablecoins seem to have become the main development direction in the current encryption industry. Although this may be more valuable than mere speculative behavior, it also reflects a lack of overall innovation momentum in the industry.

3. The Evolution of Asset Issuance

As the largest asset issuance platform, the development trajectory of public chains is also changing. From the initial ICOs to various later variants, although it has driven the emergence of some innovative narratives, it is now increasingly approaching traditional internet models. The profit models of some emerging platforms are very similar to Web2, while their feedback to the community is relatively limited.

Asset issuance platforms are becoming a field where major institutions are competing to position themselves. However, this trend has also brought some problems. Some projects that are completely off-chain have begun to issue tokens, even becoming new off-chain asset issuance platforms. This extreme speculative behavior is continuously lowering the industry's baseline.

Despite the emergence of some new concepts and attempts, such as DeSci (Decentralized Science), which aim to combine speculation with innovation, the results have not been ideal. The market seems more eager to chase short-term trends, such as celebrity tokens. When the market cools down and narratives become weak, some projects even start to adopt obvious Ponzi schemes to attract investors.

Compared to the innovations in areas like DeFi during the previous cycle, the speculative behavior in the current stage seems unlikely to yield truly valuable results. Perhaps we need to rethink how to establish healthier industry rules while maintaining innovative vitality.

IV. The Rise of Attention Economy

In the current encryption market, the key to a project's success has shifted from technology and narrative to the competition for attention. Many projects adopt a points system or directly invest funds to attract KOLs, forming a model similar to traditional internet marketing. Although this approach has significant effects in the short term, it may struggle to capture long-term value.

Some projects attempt to quantify attention and even introduce AI technology to assess the "value" of information. However, whether this model can truly reflect long-term value remains to be seen. Tokens are becoming a kind of "fast-moving consumer goods," and competition among projects is becoming increasingly fierce.

While there is nothing wrong with marketing efforts themselves, the current market shows a trend of comprehensive Pumping. Monetization of influence has become a mature business model, with everyone from political figures to large exchanges to ordinary KOLs seemingly participating in this game. However, whether this model can truly promote the healthy development of the industry remains to be considered.

Conclusion

As stablecoins and blockchain payments gradually move into the mainstream, the encryption industry is facing significant changes. However, what the natives of the industry truly need may be on-chain native innovations, non-financial applications, and new waves of development, rather than a purely traffic-chasing Web3 world.

Although some early Bitcoin supporters' predictions seem to be coming true, we still look forward to a future that can challenge these predictions. The development path of the encryption industry may be tortuous, but the spirit of innovation should never fade away.