Recently, I have seen a number of projects defining various new forms of Xfi. After discussing them, I found that most of them are still limited to the X2E framework. They introduce the Token mechanism to incentivize multi-party participation and talk about the narrative of value distribution. In fact, this model of fi is only limited to fi at the financial level, and has not financialized the more important X.

The most basic logic of fi is to allocate funds to where they are most needed within a certain period of time, and the degree of need is reflected in high interest rates. Under the X2E framework, the shovel required by X2E is abstracted into an interest-bearing asset that continuously obtains the token income stream through X. Funds are sold when their income rises, and sold when their income falls. X is just an action that fails to realize the time value of funds and can be replaced. From this perspective, it is still limited to the allocation of funds.

I think the core of Xfi is to focus on the value of X and allocate the value of X to where it is most needed at a certain time. Take Socialfi as an example. The pure token incentive only played a role in short-term user growth. Putting aside the mainstream narratives such as DID, data ownership, and end-to-end encryption, in fact, the value provided by most Web3 social products is not much different from that of web2 products. The good financial characteristics brought by smart contracts and VMs are still not fully utilized.

Let’s take the example of X = social. Its value may lie in social capital and emotional value. If this part of the value is stored and allocated within a certain period of time, it will form a very native scenario. For example, Alice helped Bob today, and Bob owed Alice a favor, but Alice did not need help recently. This part can actually be recorded and stored through NFT and other methods. Maybe Alice will never need Bob’s help, but now she can sell NFT, or even use it as collateral or proof of credit, which stores value to the extreme. I think this is a more native perspective of fi.

In short, the object of fi should be more focused on how to express the value of X in token form, and then build the lego of fi, rather than simply releasing tokens to motivate X, and eventually go into a spiral. How to use the technical characteristics of web3 to create a more native application scenario, we still need more imagination.