Article source: YBB Capital
Author: YBB Capital Researcher Ac-Core
TL;DR
The emergence of DeSci hotspots primarily stems from Binance Labs investing in BIO Protocol, CZ's comments on biotechnology direction, CZ discussing DeSci with Vitalik, and a16z leading the DeSci project AmionChain.
If DeSci is viewed as a meme, its fundamentals require stronger narratives and figures to platform, while also having greater potential to break boundaries compared to memes in other areas like zoos, AI, and art.
From a practical standpoint, the current economic scale available in the DeSci market is insufficient to support research funding expenditures. Currently, DeSci is still in the early stage of the 'market capitalization dream', and hype is a necessity.
I. Background
1.1 What is DeSci?
A more official explanation: DeSci (Decentralized Science) aims to build public infrastructure for scientific research through the fair and equal use of Web3 technology, focusing on solving issues related to peer review, research funding, intellectual property management, and data transparency and auditing mechanisms.
A more colloquial explanation is that DeSci brings the pure speculation of the cryptocurrency world into the zero speculation of scientific research. However, DeSci is not a new concept that emerged this year; VitaDAO, which focuses on funding and promoting early longevity science research, was established as early as 2021 and even received investment from the world-renowned pharmaceutical company Pfizer. However, DeSci has not developed much attention in the market until recently when Binance Labs announced its investment in BIO Protocol, and CZ and Vitalik participated in the DeSci conference, making this track re-enter the public eye.
1.2 The Birth of Hotspots
Binance Labs exclusively invests in BIO Protocol:
BIO Protocol can be seen as a crowdfunding platform for raising funds for scientific projects, obtaining funding through token sales and using these funds to support and advance the development of biotechnology projects. Intellectual property exists in the form of IPT (Intellectual Property Token) under the Molecule protocol and is shared among participants.
BioDAO will reinvest the profits from intellectual property and product sales back into BioDAO's treasury to fund the next generation of R&D projects. Binance Labs stated: 'BIO can be seen as the Y Combinator of on-chain science.' Currently, the total value of the 100 highest-valued or capitalized startups under Y Combinator has exceeded $100 billion, including well-known companies such as Airbnb, Coinbase, Stripe, and Reddit.
CZ's comments on the new direction include biotechnology and discussions with Vitalik about DeSci:
CZ described his relationship with artificial intelligence and biotechnology in his first speech after being released at the 2024 Dubai Binance Blockchain Week, stating, 'Now I am mainly doing two things: one is Google Academy, and the other is investing. The investment focuses mainly on three areas: blockchain, artificial intelligence, and biotechnology.' Subsequently, CZ attended Binance's DeSci Day event in Bangkok and discussed DeSci with Vitalik. This move sparked market discussions, and the prices of various DeSci project tokens surged.
a16z leads DeSci project AmionChain:
Recently, AminoChain announced that it had secured $5 million in seed funding led by a16z, along with previous investments from private funds like Cercano, bringing the total funding to $7.8 million. Its vision is to build a decentralized 'biobank' on L2, allowing researchers to easily find and access samples while patients retain control and receive compensation for the use of their data.
Image source: X(@BinanceLabs)
II. The Real Demand and True Use Cases of DeSci
2.1 Serious DeSci: The Funding Needs of Scientific Research
According to the 2024 report from the National Science Foundation (NSF) and the National Center for Science and Engineering Statistics (NCSES), US research expenditures are estimated to be $710 billion in 2023, with R&D spending in 2022 nearing $700 billion, of which corporate R&D dominates, accounting for about 78% of R&D investment from the private sector, especially in fields such as information technology and pharmaceuticals.
In 2021, apart from China and the United States, the other countries that performed best in research expenditure were Japan ($177 billion), Germany ($154 billion), and South Korea ($120 billion). In 2021, US R&D expenditure accounted for 3.5% of GDP, with Israel and South Korea exceeding 4%, while Taiwan, Japan, and Germany were between 3% and 4%, and the UK and China were over 2%. In 2022, the US higher education R&D investment ranked second, second only to business. Funding for life sciences research is the highest in the fields of science and engineering, reaching $42 billion (accounting for 44% of the total), mainly from the Department of Health and Human Services (data see extended link 1).
Image source: See extended link 1
In 2023, China's R&D expenditure exceeded 3.3 trillion yuan (approximately $458.5 billion), a year-on-year increase of 8.1%.
Among them, the investment in basic research amounted to 221.2 billion yuan, an increase of 9.3%. Compared to previous years, China has maintained a high growth rate in recent years, especially in high-tech and basic scientific research, demonstrating the driving force of the strategy for becoming a technological power (data see extended link 2).
Comparison of research expenditure growth: China's research funding growth rate is relatively fast, especially in basic research investments, demonstrating the country's commitment to technological innovation and emphasis on high-end technology fields. Although the absolute amount in the US is higher, its growth rate is relatively stable, with a focus on long-term technological frontier advantage areas.
From the practical application of DeSci, it currently remains more in the narrative stage of memes, making it difficult to directly drive technological development. Whether through donation driven by narrative empathy or market liquidity brought by speculative trading, the existing economic scale is still far from sufficient to support the massive funding expenditures required for scientific research. Therefore, DeSci is still in the early stage of the 'market capitalization dream'. If DeSci wants to truly land in the future, it needs to meet regulatory requirements and gain the continued support of influential figures.
2.2 The Real-Life Academic Finance Case of DeSci: The Korean LK-99 Room-Temperature Superconductor Incident
Image source: Taj Quantum - Official website of Taj Quantum, USA
2023 is known as the 'Year of Room-Temperature Superconductivity', mainly due to several studies claiming to have discovered room-temperature superconductors, which have drawn widespread attention from the global scientific community. However, as subsequent investigations deepened, these discoveries were found to have serious issues, even sparking academic scandals.
The beginning of the event: Physicist Ranga Dias from the University of Rochester in New York published a paper in (Nature) magazine, claiming to have discovered a material that can achieve superconductivity at room temperature. This finding was initially seen as a major breakthrough, as the emergence of room-temperature superconductors could fundamentally change the technological development in the fields of energy transmission, medical devices, and electronic components. Typically, superconductors need to operate at extremely low temperatures (below -196 degrees Celsius), and the ability to function at normal temperatures has been a goal pursued by the scientific community. However, Dias's research has faced significant skepticism since its publication, particularly because his academic reputation was already controversial due to similar research in 2020.
As early as 2020, Dias quickly rose to fame due to a paper on room-temperature superconductors, but that paper was retracted by (Nature) magazine two years later. Nevertheless, Dias published similar research again in 2023, attracting renewed attention. However, many peers accused him of data manipulation and even plagiarism of PhD thesis content. Several well-known media outlets, including (The Wall Street Journal) and (Science) magazine, launched investigations into him, exposing issues in his research. The University of Rochester also initiated multiple internal investigations against Dias, and external experts ultimately confirmed that his paper had 'data reliability issues,' resulting in the revocation of his authority to manage the laboratory and students. In November 2023, (Nature) magazine officially retracted his latest paper on room-temperature superconductors.
The insider story behind this scandal gradually came to light. According to an investigation by (Nature) magazine's news team, members of Dias's research team did not observe the key superconducting phenomenon 'Meissner effect' in their experiments but received a manuscript from Dias and were asked to cooperate in submission within a short period. These graduate students felt confused about some of the experimental data in the paper but ultimately did not publicly question these issues under the authority and pressure from their advisor. Subsequently, more reviewers and experts expressed skepticism about Dias's experimental data, discovering that it might have been manipulated.
While Dias's first paper encountered skepticism, he claimed to have discovered the phenomenon of room-temperature superconductivity in another material (a compound of lutetium and hydrogen, LuH). However, the measurement data of this study is also full of issues, and many students pointed out systematic errors in the experimental results, even believing they were 'deceiving themselves'. Faced with increasing skepticism, Dias still chose to proceed with the publication of the paper, but 8 of the 11 co-authors ultimately decided to request retraction.
This series of academic scandals not only caused serious reputational damage to Dias himself but also affected the entire research field. Many young scientists' career prospects became uncertain due to their involvement in these studies, and trust in academia has also been compromised. Paul Canfield, a physicist at Iowa State University, stated, 'This scandal has harmed the careers of young scientists, especially those in the field of superconductivity.'
At the same time, another main player in the room-temperature superconductivity field, the Korean LK-99 team, has also become embroiled in similar controversies. Although they claim to have discovered a new 'room-temperature superconductor' - PCPOSOS - in 2024, many members of the scientific community are skeptical about the authenticity of their research. The data presented by the team at academic conferences is similar to the previous LK-99 research and lacks sufficient verification support.
Image source: Bloomberg
After the announcement of breakthroughs in superconducting technology, some Korean stocks related to superconductors attracted a large number of investors. Small-cap stocks such as Duksung Co. and Sunam Co. have been limit-up for three consecutive trading days by 30%. Sunam Co. surged about 260% over the past six trading days, while Duksung rose 170%. Mobiis Co. rose 30% on Thursday, and Shinsung Delta Tech Co. briefly rose 21%, reaching a historic high.
In the later stages of the event, the Korean Superconductivity Society Validation Committee stated that LK-99 did not exhibit the Meissner effect and could not be proven to be a superconductor. This news led to fluctuations in Chinese superconducting concept stocks, with shares of Falson and Zhongfu Industrial falling sharply; the former is not involved in superconducting technology, and the latter only provides venue and equipment support, while shares of American Superconductor fell 29%, and Sumitomo Electric Industries also declined due to poor performance.
III. Overview of the DeSci Ecosystem
3.1 BIO Protocol
BIO Protocol, which received investment from Binance Labs, has been dubbed the 'Y Combinator of on-chain science' for early-stage company incubation, providing funding and resources to accelerate project development. According to (Deep Tide TechFlow), the main components include BioDAO, curation systems, liquidity and IP transformation, and incentive mechanisms.
Image source: Deep Tide TechFlow - Interpretation of BIO Protocol - BioDAO
$VITA (VitaDAO): Founded in 2021, VitaDAO focuses on funding and promoting early longevity science research, aiming to extend human health span, managed by $VITA holders.
$RSC(ResearchCoin): Used to reward users' contributions on the ResearchHub platform, aiming to accelerate scientific research by incentivizing contributions within the community; anyone can earn $RSC by sharing, curating, and discussing academic science within ResearchHub.
$ATH(AthenaDAO): AthenaDAO is a decentralized community composed of researchers, funders, and advocates dedicated to advancing women's health research, education, and funding.
$GROW (ValleyDAO): A decentralized organization focused on anti-aging drugs and longevity projects.
3.2 Pump.Science
The Solana ecosystem DeSci platform Molecule DAO is a meme launch platform introduced at the Solana Breakpoint 2024 conference, and Pump.science will issue meme tokens representing drugs on Pump.fun, with related concept tokens being:
$RIF: Rifampicin, according to the official website: 'Rifampicin is an antibiotic that has drawn attention for its amazing effects on aging. In model organisms like Caenorhabditis elegans (often used for aging research), rifampicin has been shown to activate the natural defense mechanisms of cells against stress and damage. Imagine it as a 'cell coach' that protects cells from harmful oxidative stress and maintains the quality of proteins within cells, encouraging them to stay healthy and resilient. These protective effects help worms live longer and healthier.'
$URO: Urolithin A, according to the official website: 'This is a compound that your body produces when you consume foods rich in ellagitannins (such as pomegranates). The uniqueness of Urolithin A is that it can perform a 'spring cleaning' for your cells. It helps clear out old, dysfunctional mitochondria (the energy factories of cells), allowing fresh, healthy mitochondria to thrive. This process is called mitophagy, and studies have shown that it can extend the lifespan of Caenorhabditis elegans, as it makes cells more efficient and vigorous.'
3.3 Donation Concept
$Scihub: An unofficial token donated by @0xAA_Science, aimed at supporting the open-source research paper website, with its token direction sourced from the Sci-Hub shadow library, and is merely a community meme token. Sci-Hub is a non-profit, non-governmental website that provides free access to academic papers for download, integrating a series of other academic resources available online in both Chinese and English, allowing users to search for and download domestic and foreign literature, patents, books, and other academic materials in one place.
3.4 DeSci Quantum Meme
$ANTI- Antitoken and $PRO - Protoken: The two are a pair of token combinations that express support and opposition to Meme Tokens, founded by algorithm engineer and mathematical physics expert @sshmatrix_, where 1 $ANTI = 1 $PRO rises and falls together.
IV. How long can the elixir of life on the chain last?
DeSci is not a concept that emerged this year; its sudden rise is mainly influenced by three factors: Binance Labs' investment in BIO Protocol, CZ discussing DeSci with Vitalik, and a16z leading the DeSci project AmionChain, while the market also needs the impetus of 'pulling the plate is justice'. Looking at the current market, DeSci is still mainly driven by memes, but its fundamental attributes differ from other meme logics.
Unlike other memes: Compared to memes in different directions such as AI, zoos, and art, DeSci attributes require a strong influential figure to 'sell' the idea; perhaps relying solely on internal traffic may not be sustainable, and external figures with 'scientific research' attributes are needed.
The valuation of leading projects needs to continue to rise: Currently, the DeSci track has not yet produced a leading project with a market value exceeding 1 billion, compared to other tracks, memes still have significant market potential, and mainstream centralized exchanges have not yet listed related tokens, and there has not been large-scale financing in the primary market.
DeSci may have greater potential to break boundaries: The current PVP market is highly competitive, but if an outsider with a 'scientist' background uses the DeSci narrative for donations or financing, there will be more room for development. Similar to crowdfunding to purchase rare original copies of the US Constitution, $PEOPLE, and the high-priced NFT (Everyday: The First 5000 Days) auctioned for $69.34 million at Christie's, Elon Musk took $DOGE to the moon. DeSci and these cases exhibit a similar core logic, with marketing effects comparable to Jia Yueting presenting a PPT plan to create cars in the cryptocurrency space.
Extended link:
(1) https://www.nsf.gov/nsb/news/news_summ.jsp?cntn_id=309719&org=NSB
(2) https://english.www.gov.cn/news/202403/05/content_WS65e6ff4dc6d0868f4e8e4b66.html
