On September 11th, shortly after arriving in Singapore, I received a question from a journalist friend, “The market suddenly dropped by 4%, what are your thoughts on this?” My mind flipped for a moment, but I still gave a very professional yet vague response to my friend, “The market decline is not only related to market liquidity shortage, but also exacerbated by FTX’s liquidation concerns during the market downturn. However, based on current economic data and future catalysts (Ethereum upgrade and Bitcoin halving), I personally have confidence in the mid-term market.”
After replying to my friend, I immediately opened my OKX account and looked at the glowing red numbers, silently heading to the duty-free shop at the airport to buy a bottle of liquor.
Bleak market, but it doesn’t dampen the enthusiasm of participants
September 13th was the first day of Token 2049. I intentionally woke up early, and when I arrived at the venue, it was already crowded. The conference was held on the fourth and fifth floors, but the line to pick up name tags had already reached the third floor. After entering the main venue, there were at least 30 larger booths, including well-known projects such as OKX, Avalanche, CertiK, Fireblock, OKLink, Bloomberg, etc. The participants couldn’t hide their excitement, introducing themselves and their companies to unfamiliar project teams and attendees in the crowded aisles, unaffected by market fluctuations.
Industry giants gather at the venue
Prior to attending the conference, I had done a lot of preparation, mainly to meet some friends, visit industry predecessors, and hope to gain new market insights from sharing sessions by industry veterans.
I found the most interesting topics among the three main sessions were: Navigating Blockchain and Web3 Data; Crypto Exchange: Challenges and Opportunities Ahead; Institutionalization of Digital Assets; and Banking with Crypto: Insight from The Bankers.
Because the main invited guests for these sessions are executives or founders of major institutions, such as Standard Chartered Bank, DBS Bank, Temasek, OKX, Chainalysis, etc., the main topics revolve around the future development trends of virtual currencies and market compliance trends. I can briefly summarize the content of these sessions featuring industry giants as the main speakers and clarify the discussion points of the conference.
The topic of Navigating Blockchain and Web3 Data mainly revolves around the development of the virtual market, on-chain data, and the current market hot topic – artificial intelligence. The host asked a very interesting question: the SEC is currently using AI for compliance, what are your thoughts on this (invited guests)?
Chainalysis founder Michael Gronager’s answer was very precise.
“This is a very interesting experiment because current on-chain data service providers can explore the similarity of transactions through the transaction characteristics on the chain, and then use massive blockchain data for machine learning to more accurately identify the characteristics of each transaction.”
This is similar to the label services provided by many on-chain data service providers (which is also the focus of EcoChain’s attention).
The founder of Glassnote is also very excited about the combination of artificial intelligence and web3 on-chain data because massive on-chain data can provide AI, and AI can also more easily help project parties with data management. The other founders also expressed their views on AI: AI can do things that ordinary people cannot do, such as analyzing massive data behaviors and then labeling addresses.
Banking with Crypto: Insight from The Bankers focuses on the layout of major banks in the field of virtual currency. However, due to the high market volatility and the bankruptcy of FTX, even the usually cautious institutions are only in the stage of testing the waters. But what is clear to them is “don’t challenge the regulation,” although the current regulatory framework is not clear, if institutions engage in “mixed operations” in the virtual field or treat money laundering in a perfunctory manner, they will be the focus of regulatory attention in the future when operating virtual asset businesses.
The topic of Institutionalization of Digital Assets mentions that many institutions are providing virtual currency services to their clients, but they have not invested their assets in the market. Although many institutions are still interested in the market, the high market volatility and low liquidity prevent institutions from entering the market. The MD of Temasek also mentioned that in this industry, institutional participation is very important, but some irregularities in the industry may cause institutions and retail investors to suffer losses, and these irregularities need regulatory guidance.
Especially after experiencing strict regulation in the first half of the year, many institutions are watching the virtual asset market, one is to observe the trend of the virtual market in the medium term, and the other is whether the regulatory attitude will change significantly.
Impressions from attending the conference:
Lack of innovation in projects, institutions focus on regulation
I also attended some Side Events, where most of the attendees were project personnel, and most of the domestic project personnel were Infra projects, which were more inclined to ZK technology or wallets. Foreign projects are more diverse, but there is not much innovation either.
Compared with the conference in Hong Kong this year, most of the project participants at the Hong Kong booth focused on DeFi, which solves capital efficiency, while the conference in Singapore was more focused on infrastructure, with higher technical thresholds and market size, but still not much innovation. There were more investment institutions in Hong Kong, and at that time, I received a lot of business cards with gold borders, with the names of founders of certain capital on them. In Singapore, the number of investment institutions is much smaller than that of project participants, and even the attending investors complained to me that, in the current market, projects are still expensive.
When communicating with partners from Captial 6 Eagle, he also expressed his opinion on so many ZK projects in the market: “We support ZK development, but many ZK use cases are overestimated. ZK technology is not always the optimal solution in many scenarios. Overestimated use cases have led to overvaluation of most ZK projects. Therefore, we will not invest in projects where the current use case does not match the valuation.”
In contrast to the project side, the main topics at the main venue are mostly unrelated to ZK or RWA. Institutional topics mainly focus on security or compliance infrastructure, such as on-chain data and the integration of AI and compliance. Due to continuous regulatory actions in various countries in the first half of this year, regulatory requirements for on-chain data monitoring (to prevent money laundering) are clearly stated in regulations proposed by Hong Kong and Singapore, for example. Additionally, the SEC’s lawsuits against various virtual activities in the United States require institutions to pay more attention to compliance.
Final Thoughts
It must be acknowledged that the current focus of institutions is not on wallets, payments, or even RWAs, but more on compliance and regulation. This is related to macro-market trends and their core business. Many conference attendees mistakenly believe that the actions of institutions in the virtual market indicate their intention to invest in cryptocurrencies, but in reality, the vast majority of institutions are only catering to market demand and making business innovations to serve their clients. Essentially, they are only providing services as “shovel sellers” and will not personally get involved. When institutions provide services as “shovel sellers,” there is a need for a lot of compliance work. This is why the main venue narrative is gradually shifting towards custody, licenses, on-chain anti-money laundering, and other directions.
For ordinary project parties, although participants are very excited, there is not much innovation in terms of projects. There is a strong tendency for convergence, and the main development directions are wallets, ZK, and RWA. When choosing these directions, project parties are not thinking about going far, but going fast. When everyone cleverly thinks they are the pig on the crest of the wave, they may ultimately be unable to take off because there are too many pigs on the crest of the wave.
One reason for the lack of innovation in the industry is that people are not building the industry with a long-term perspective. Many innovative projects from the previous cycle are no longer visible, but not because the technology or business model is not viable, but because they cannot make money in the short term, and neither the capital nor the market recognizes them. However, projects that have not been developed for a long time cannot lead the development of the entire industry. Therefore, the market narrative is still guided by EIP upgrades and Bitcoin halving.
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