Author: Hedy Bi, OKG Research
Last weekend, OKLink Research Institute accepted the invitation of FT Chinese and participated as a roundtable guest in the financial master class jointly hosted by FT Chinese and Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University. In the roundtable session, the author and professors and frontier practitioners of technological innovation in the financial industry discussed in depth the complex relationship between technology, finance and human beings, as well as their far-reaching impact on the future. It is particularly worth mentioning that Professor Liu Xiaochun, an adjunct professor at Shanghai Advanced Institute of Finance of Shanghai Jiao Tong University, sorted out the development of the financial industry over the past few decades in this master class. One of his points made me think deeply: the financial industry actually bears the risk cost of the entire society, which is often misunderstood as a problem of finance itself.
The picture shows the SAIF Finance MBA professor open class and big-name dialogue event jointly organized by FT Chinese and Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University
Professor Liu's insights remind me of the mixed reviews that the Web3 field has faced in recent years. As Professor Liu said, emerging technologies are often quickly exploited by criminals, but this is not a defect of the technology itself. Instead, it should be a driving force for industry practitioners to accelerate innovative applications. Looking ahead to 2024, the Web3 industry is ushering in new development opportunities: the United States and Hong Kong are gradually incorporating Bitcoin and Ethereum into the mainstream financial system, attracting the attention of a large number of investors. Taking the US market as an example, the total amount of funds flowing in through the spot ETF channel has reached US$14.7 billion. Although this figure seems considerable at first glance, it has not caused greater waves in the market. In addition to the underlying logic of the entire market changing, the author would like to talk about where we are now and where we are going in this article.
Original innovation is stagnant, and the future will move from fintech to techfin
From Fintech to Techfin, it is already an ongoing development trend in the Internet and financial industries. There is a similar trend in Web3. We have observed that the original innovation stage has come to an end. For example, DeFi, NFT, tokenization and other methods are all about using technology to enhance the flow of finance or assets. Since the creation of Uniswap in 2018, the total locked amount of assets on the DeFi DApp chain has increased from the initial US$420,000 to a peak of US$179 billion in 2021, an increase of about 420,000 times in just three years. During this period, many people got rich through the opportunities of Web3, so Web3 is hailed by the younger generation as a rare opportunity to get rich and a growth industry in the economic downturn.
At the Goldman Sachs Digital Assets Conference held this week, Animoca Brands co-founder and executive chairman Yat Siu mentioned that the crypto world is similar to the real world in structure and is advanced. At present, the scale of DeFi is already one of the largest central bank asset scales in the world. According to specific data, this asset scale can already rank in the top 30 among nearly 200 countries in the world.
However, since the opening of the BTC spot ETF channel this year, investors have turned their attention to mainstream trading products such as BTC, and the native innovation of Web3 seems to have entered a temporary stagnation period. From using technology tools to provide financial efficiency (fintech) to technology companies feeding back to finance to provide financial convenience for users, OKLink Group has also started from providing technology tools around digital finance to consolidating the commercial use of on-chain data in various scenarios, and now, using our user base in more than 180 countries to promote the continuous integration and development of Web3 technology and finance.
In the future, we will see technology companies quickly enter Web3 by leveraging their huge user traffic base and data advantages, especially at the application level. In addition to the birth of cross-border cooperation products with traditional finance, we can also look forward to super applications like ChatGPT that can quickly gather millions of users. These applications will not only open up new prospects for Web3, but also bring new tools to technology finance.
Whether it is the recent news that Meta plans to integrate more generative AI technologies into VR, AR, and mixed reality games to revitalize its metaverse strategy, or Microsoft's acquisition of Blizzard Games as early as 2022 and its cooperation with Aptos Labs in 2023 to develop new blockchain AI tools, or OKLink Group has already used AI to optimize and improve the efficiency of the underlying platform, etc., these are unstoppable future development trends.
Although the development of the Metaverse has encountered a blank slate, in the future, the game and social networking branches in the Metaverse will likely explode into super applications as hardware becomes more complete and AI catalyzes them. In addition, we can also observe that some technology giants born from Web3 are also expanding to a wider range of users from Web3 wallets, trading platforms, etc.
East and West diverge, tech giants choose different
We have conducted an in-depth study of the development of several companies in the Web3 field that have been explored by technology giants in the East and the West over the past 1-2 years. In summary, we can find that they are different in terms of strategic focus, technology implementation, and market positioning:
In terms of strategic focus, Eastern technology companies are more focused on applying blockchain technology to enterprise-level services and industry digitization, such as supply chain finance, data sharing, and open source community development. For example, Baidu and Tencent provide enterprise-level technology solutions. In recent years, the West has turned its attention to more extensively exploring the application of blockchain and Web3 technology in consumer markets and innovation fields, including VR, NFT, and games, aiming to create new digital markets and application experiences for consumers. For example, Apple and Meta are focusing on hardware, TikTok and Google are supporting some applications of NFT among existing user groups, and Google's parent company Alphabet continued to invest in the Web3 field in early 24 years.
In terms of technological implementation, Eastern companies tend to develop directly with their own personnel; while Western companies tend to open up cooperation and ecosystem building, such as Microsoft's cooperation with Animoca Brands and Aptos Labs, to quickly promote technological innovation and market adoption.
In terms of market positioning, Eastern companies tend to focus on deepening their presence in the local market, while Western companies tend to leverage the global nature of Web3 for promotion. For example, Google Cloud’s role as a validator in the Tezos blockchain demonstrates its global strategy and influence.
This chart is based on limited public information, and the information is up to date as of July 1, 2024.
Based on the borderless and global characteristics of the Web3 community, we can see that some technology companies have quickly integrated into the Web3 ecosystem. Therefore, at the application level, the characteristics of the Web3 community make it easier to conduct global business by directly expanding across local markets. As a leader in Web3 technology, OKLink has also personally experienced the global characteristics of the Web3 market. At present, according to public data analysis, Western Internet giants have moved to the application layer after completing the infrastructure construction link, while Eastern Internet giants have not yet seen this obvious trend.
Although, we have observed that Web3 has come to a crossroads: native innovation is stagnant, and technology giants and financial giants from the East and the West are constantly entering the Web3 field. As the two giants of finance and technology continue to merge with it, these two forces are like two hands holding up the Web3 industry towards vigorous development.