When you think of y2z Ventures, what’s the first thing that comes to your mind? The “mentor” of young entrepreneurs? Metaphysics? Or the founders TT and Alen? Compared to the "icing on the cake" that VCs prefer, y2z Ventures often "provides timely assistance". When many young entrepreneurs have nothing or are even "down and out", y2z often firmly supports them. Mask, Rct.ai, Pure White Matrix, SeeDAO, Ethsign... Behind the new Chinese Web3 forces stands y2z Ventures. At the same time, y2z Ventures maintains its own unique investment methodology and Value Add, including face reading, horoscope, fortune telling... their indicators on "metaphysics" are unique. Two partners with idealism but not so "traditional" and "serious" use comics and games as their life and work stories, travel the world, and start a great voyage DAO in the Web3 world. With curiosity and respect, TechFlow talked with Alen, partner of y2z Ventures, about Web3, about young people, and about this world... From fans to leadersTechFlow: Would you please introduce yourself? How did you enter the crypto world and meet tt, and then become a partner of y2z Ventures? Alen: OK. I’m Alen. I used to work in a traditional A-share secondary market private equity firm. It was by chance that I joined the cryptocurrency circle and met TT. In 2016, the A-share market was hyped up by the concept of blockchain because Ethereum was launched in 2015, and Vitalik's head portrait appeared in The Economist at the end of the year. At that time, I attended a blockchain conference held by Guotai Junan and listened to a lot of so-called "smart contracts changing the industry". I felt that it was too far from being implemented and it was difficult to reflect in actual performance. It happened that I heard TT's speech at that time, which was different from many official speeches. He said, Ethereum was worth one dollar during the ICO, and now it has increased 100 times in a year. We are going to be the Chinese Ethereum, how many times do you think it can be increased? I was attracted to it at the time, it was so simple and pure that it touched my heart! Because first of all, it is an opportunity for primary and secondary arbitrage, and at the same time, it is not regulated, and it is easy to realize the liquidity premium. Basically, I think those who do traditional stock IPO arbitrage should be able to get to that point. Then I joined the ICO QQ group and lurked quietly, but I just thought I could make money at the time, and I didn’t quite recognize these things. I thought the people in it were too imaginative and had a big picture, because it obviously did not conform to some common sense and securities laws. In 2017, I encountered the ICO craze. When I saw that Antminer had risen, I started to pay attention to it again. I studied the concepts of Ethereum and Bitcoin seriously. I felt that the most amazing thing to me was the possibility. For example, when Decentraland came to Shanghai for a roadshow, I thought their concept was very good, so I wanted to go and listen. It happened to be raining heavily that day, and only 2 or 3 people went, so I talked to them for 2 hours. I didn't expect that the market value would be so high a few years later. Blockchain gives even an ordinary person the opportunity to have channels to communicate with project parties half a world away on an equal footing, and they are also willing to communicate with you. At the same time, you can also have channels to invest and even make a lot of money. This is a very big shock to me, which is completely unimaginable in the traditional market. Of course, making money is part of it, but the possibility and atmosphere of being able to invest in world-class innovation are very attractive to me. At that time, I always thought tt was very special, so every time I saw his speech, I would go to listen. I remember that at the end of 2017, he would talk about DAO, cyan organization, complex network, causality, and human-computer integration. Even though it has become a popular subject now, it was very special in the domestic cryptocurrency circle at that time. Every time I listened to it, it was something new, and tt could always convey the core in his own style, which was very rewarding. But in fact, I always had a fan filter and didn't communicate much. In 2019, the cryptocurrency market was in a bear market. I happened to see that tt's X order was recruiting people, so I joined with the filter of being a fan of tt. I remember that he told me about the future of billions of tokens at that time. When NFT had not yet taken off, it can be seen that he had great faith in Crypto and financialization. At that time, X order we had roughly three parts:
At the same time, we also tried many so-called Dao organizational forms internally, and fell into many pitfalls. TT doesn't care what you do specifically, as long as you find it interesting. At that time, we also helped Bitcoin fortune-telling and studied metaphysics. In 2021, there was an opportunity. In 2019, TT invested in Suji of Mask and Wu Xiao of Pure White Matrix, both of which came to fruition. This unlocked new interests, watching outstanding young people grow and realize the dreams of others. At that time, the question that TT liked to ask colleagues internally was "Tell me what your dream is." So I started to think about becoming a capital that specializes in helping talented young Chinese people. At the same time, because I started playing with NFT relatively early, I saw several signs at the time: 1) NFT is a combination of finance and culture . Its hidden point is that you will identify with some information, culture and ideology behind the picture through some price increases. If it is just DeFi making money, people will think it is nothing. But when it can convey an ideology and culture, it is a very powerful weapon. Especially in the context of Chinese project narratives always being weak, there is a sense of crisis. 2) Metaverse is too far away, but NFT is a good capital carrier. It can first create a shell that can be hyped, and then bring players or users to the future Metaverse. This is what Crypto is good at; 3) Compared with DeFi, Metaverse can integrate more traditional Web2 content and companies into Web3, which has a lot of arbitrage space at the time and in the domestic environment. Based on these two starting points, and the trust relationship that the team has experienced through bull and bear markets, Metaverse Capital was established. Why is it called this? At that time, I also wanted to come up with a name like "Red Pill and Blue Pill" with a bit of a stalk, but I thought it was not auspicious, and found that no one called it Metaverse, so I just called it Metaverse Capital. If you are familiar with TT, you should remember his article "The Chinese Dream". Overall, we think it is meaningful to grow up with young people. Tech Flow: For many industry practitioners, when talking about Metaverse Ventures (y2z ventures) and tt, the first word that comes to mind is "gratitude". They are grateful to Metaverse Ventures for providing help and support to some young entrepreneurs when they had nothing or in the most difficult times of the market. There is also a sentence on the homepage of y2z's official website, "We are dedicated to supporting young people and startups..." Why do you tend to focus on and invest in young people and make some investment decisions quickly? Are there any cases that make you feel particularly profound? Alen: Indeed, our investment is path-dependent and has TT’s personal characteristics. People who have come into contact with TT will identify with him. He has some very unique points, such as his advanced views, sense, innovation, narrative, appeal, straightforwardness, simplicity, courage to break through limits, etc., which are very rare and important. This kind of trait can easily attract some young people outside the N standard deviations. TT also likes to invest in young people like this. He thinks they are very energetic, full of vitality, and very diverse. TT always has a catchphrase internally: "What is your dream?" He really wants to help people realize their dreams and get pleasure from it. At the same time, he positions himself as "a link between the past and the future." This also affects us, and can be said to be a kind of vibe and internal consensus. Also, we can always see the light in the eyes of some young people, which allows us to make decisions more quickly. We had a very simple investment criterion in the early days:
In 2017, there was a concept called the tokenization of people, or social tokens, personal tokens. The important point of personal tokens is that individuals can be K-lined . For example, if you can share some of your income with your fans, it is inevitable that your personal tokens will be tokenized. Let's imagine, if you were to trade, what kind of K-line would you like to see? You would definitely want to enter the market after 312, when leverage is cleared and the price of the currency is stable. We also think that if he goes through hardships, it is equivalent to the leverage being cleared. We will find it interesting to grow with this young person. And the more heart-wrenching the hardship, the better. Speaking of cases, one is the now very popular AIGC company rct . At the beginning of 2021, we contacted the co-founder Xiankun. When he came, I felt that he was very charming, with a bright look in his eyes, and talked to us about Metaverse. At that time, everyone's understanding of Metaverse was still relatively superficial. RCT's 2020 article expressed a very deep insight into Metaverse. I even think that they surpassed some overseas articles. At that time, he said that the current content consumption is too fast. It takes three or four years to make a 3A masterpiece, but we may finish playing a game in dozens of hours. The production of content is far behind the consumption of content. AIGC must be needed, and there must be some human beings. They are working on this content, which will make NPCs more and more like people, so your sense of immersion must be strengthened, and AI must be involved, which will also be a very important part of Metaverse. We were very excited to see such a young team with great ideas and the desire to enter the crypto space. At the same time, their own narrative and aesthetics were online, which was very rare. Later in the conversation, I asked him shyly, "Have you ever suffered any hardships?" He said, "Since we are talking about this, I won't tell ordinary people." After he finished talking about his previous hardships, we didn't express any sympathy at all. We were very happy and thought: Wow, I found someone." We quickly decided to lead the investment. There is also Tang Han, the founder of See Dao . When she came here at the beginning of 2021, I had the impression that she was a petite girl. Some of her understandings of NFT are very similar to ours. When talking about how NFT can combine culture and finance, it will have a huge impact on the traditional world, and she expressed a strong sense of anxiety. At that time, most people in China were still talking about speculating on pictures and artworks. In this case, a seemingly fragile girl could talk about such a far-reaching future. Her cognition was very advanced, and the contrast was also very strong. We felt that it didn't matter what we did, so we invested. Later, I actually didn’t expect that Tang Han and Bai Yu would be able to get to where they are now. It was not easy to get through the past year, but we were excited every time we met. They were physically exhausted, but in their eyes, they all said, “We have overcome some difficulties, we have found some mistakes, and we have taken another step towards the right future.” We were easily infected by them. So we would like to invest in such young teams, who have light in their eyes. The world is a gameTechFlow: There are some investment methods of y2z circulating in the industry, such as some issues that are more philosophical and feng shui-related. Could you please tell us about the investment methodology of y2z ventures, or how it is different from VCs in other industries? Alen: Actually, you can’t disprove that our world is a game. And I am increasingly convinced that our world is a game world, which may also be created by AI analysis. When you design an open game, you will design many NPCs, and let these NPCs have some basic attributes. Then you may need an algorithm to fill in the basic attributes. These NPCs may just have some fixed patterns at the beginning, and have some prescribed text exchanges with the protagonist. But in the foreseeable intelligent future, this NPC or character will be assigned its attributes when it is born, and its attributes may have different buffs and debuffs depending on the region and time, just like matrix multiplication in linear algebra. Some exchanges with the protagonist group will also change with changes in time, place and plot. Because we are creating a Metaverse in this direction. If the technology and computing power are sufficient, we can actually create such a new world. Although it sounds a bit mysterious, the things that happened around me in the past year made me believe it. It may be related to the fact that tt and I both like to read comics and play games. Although it is a bit far-fetched, in this world view, it is easy to think that there are so-called "dungeons" and "main tasks". At the same time, a group of people are needed to complete the main tasks of these dungeons. tt is very good at discovering these so-called "main tasks", such as public chain nation-building, super-sovereign stablecoins, etc., and hopes to find or invest in the protagonists around him who can complete these "main tasks". This can explain a lot of things. If you are familiar with TT, you will know that he likes to talk about collective intelligence, emergence, causality, complex systems, etc. Of course, these concepts are all together. He also invested in Jizhi, which specializes in complex networks and causality. If you are interested, you can read their articles, which are more academic. Our primary investment has always been to invest in "key nodes in the emergent environment." The crypto world changes too fast, and it is difficult to use a certain formula to invest. The first principles can be used in the direction, but there is a lot of randomness (luck) in the path. But at the same time, the crypto world gives this uncertainty a sufficiently large risk premium as compensation. In general, the entire industry encourages innovation and risk-taking. At this time, the environment that can best emerge innovation is very valuable. For example, Ethereum is an emergent environment. Although its performance has been surpassed, it does not prevent its consensus from being the strongest and its developer community from being the most vibrant. The greater the diversity of Ethereum and the more nodes it has, the greater its network value and the more irreplaceable its position will be. It can become a self-operating system that never stops. Some founders do have light in their eyes. They can always find something differentiated that conforms to the first principles and occupies an ecological niche. And because of their unique characteristics, everyone wants to work with them. They can connect more and more nodes, making them a key node in an emergent environment. And thanks to tokens, we can always find a tokenomic way to capture the value of this network at the right time. This is also what TT teacher has always believed in. So for us, in addition to the so-called track, we are more concerned about whether we can invest in such young people and enjoy growing with them. Of course, the theory is beautiful, but in practice, it is actually difficult to judge because it involves people. Inevitably, some metaphysical powers will be used, such as physiognomy, horoscopes, etc. (laughs) This may be called "combining with the excellent traditional Chinese culture to accelerate the construction of modern Crypto investment with Chinese characteristics." TechFlow: You once expressed your long-term optimism about Chinese Web3 on Twitter. Regarding the current situation of Chinese entrepreneurs "scattering around the world and facing a difficult situation", you said "I am not pessimistic about this, nor do I think that Chinese people cannot see hope in the Web3 field." Where does this confidence come from? How do you view the current situation of Chinese Web3 going overseas? Alen: I feel more confident. When we started y2z last year, tt told entrepreneurs in Beijing to come to Shanghai as soon as possible. Because Shanghai is a combination of Crypto, culture and finance. Shanghai culture is particularly strong, which is particularly suitable for startups related to open Metaverse. So we persuaded Tang Han to work in Shanghai, but she encountered some policy problems when she first arrived, so we suggested that they go abroad, and now they have also gone abroad. It can be seen from this that entrepreneurs who have the ability, sense of mission and strong desire will not reject going abroad or adapting to the environment in order to achieve their goals. Because if you play a game, in order to complete the main task, you are required to run out, and if you play a game, you will definitely run out. It's nothing more than how to run, not whether to run. So back to the reason why we are optimistic about Chinese teams or Chinese entrepreneurs is that this is a group of entrepreneurs who are willing to leave their comfort zone and have been screened or baptized in determination. They will do their best to survive. In addition, we have a strong foundation in Web2 applications, with many excellent Internet entrepreneurs, a lot of user growth, and a lot of methodologies and practical experience in increasing product experience. We are strong in productivity and efficiency, such as exchanges, which are the most Web2 direction in the Web3 world, and we are very capable. These are the internal reasons for our confidence. Another reason is that the external environment is changing. The current environment may not be in the advantage of Chinese entrepreneurs. For example, because there are many repressive points in China, project parties can only enter overseas markets. It is very difficult for people in China to enter overseas markets. At the same time, Chinese people are not very good at making structured narratives and integrating into the so-called orthodox ecology. At the current stage, everyone is still focusing on infra to start businesses and invest, because the falsification cycle of infra is too long. For example, if you build a public chain, as long as the team background is strong, the technology is unique, the narrative is innovative, and it has a certain degree of legitimacy, it is actually difficult to disprove it in the short term. For technologies like zk, the barriers to disprove are very high, and the narrative cycle, coin issuance cycle, unlocking cycle and performance cycle can all be mismatched, so it is relatively easy to make back the investment. However, there are many people who understand the application, and it is easier to disprove it in the short term because it is difficult to achieve the same Web2 experience with the same demand logic under the current infrastructure. At this time, it is necessary to combine the product with ponzi and narrative, but ponzi will need to look at the timing, and narrative is not a strong point, so the application is relatively weak at this stage. Infra emphasizes the innovation of a technology and the ability to build an ecosystem, which is actually relatively lacking among Chinese people. At present, the strongest point of Chinese entrepreneurs is the iteration ability of products. But this external environment will change in the future: First, after the construction of Infra is almost complete, we need to think about how to import users into the Web 3 world. This will definitely require a lot of applications as media carriers. This is the time for Chinese entrepreneurs to show their strengths, and the timing will not be too long. Second, when these entrepreneurs who have completed the baptism and screening go overseas, there will be a process of disenchantment and elimination of information gaps. When we really deal with overseas investors, overseas projects, and overseas users face to face, we may feel that most of the overseas investors may not think much different from us, or are at the same level. However, because Western capital may still have the right to speak and the right to structure pricing, we may choose to follow in doubt. However, after those excellent entrepreneurs have sufficient two-way exchanges and find that we are not behind in cognition, we will learn from each other and will be more determined to take some paths we believe in. For example, entering the Asian, African and Latin American markets. Third, when the Chinese teams that have already gone overseas have completed the process of demystification and confidence building through more adequate communication, they may be better integrated into the mainstream circle. For example, mask donated to gitcoin to build the ecosystem, and the scroll team had many speeches and workshops in devcon, and communicated openly with developers. The Rollup Day they held the day before devcon invited only the top core people, which shows that they have been well integrated into the mainstream circle. These methodologies can also be gradually shared with those teams that come out of the "rollup" culture and want to build an open ecosystem, slowly helping more outstanding entrepreneurs to integrate into the mainstream system. To use the words of "On Protracted War", we have inherent strong factors, but at the same time, unfavorable factors will undergo major changes in strength and weakness, and in the form of advantages and disadvantages. Ethereum culture is like a countryTechFlow: As you just mentioned, you just attended Devcon in Bogota. What were your biggest feelings and gains from the conference? Are there any projects or tracks that you are optimistic about? Alen: My biggest feeling is that from an ideological point of view, Ethereum is really starting to export culture like a country on the blockchain. At the opening ceremony, they invited a local black dance troupe from Bogota to perform, which made you feel like it was a Spring Festival Gala or the opening ceremony of the Olympics, and it would generate a sense of cultural identity. Why is this meeting held in Bogota? Because most of the world's people are still in developing countries, the organizers hope to support some developers and local people in developing countries. He wants to tell everyone that many people's traditional impression may be that this place is unsafe, but in fact the Latin American market is a very vibrant and diverse market, and he wants to promote this concept. In that environment, I talked to some people and found that the entire venue was not utilitarian and friendly to newcomers. For example, there were many OGs in the venue, and they were still willing to share and let new developers come in, including developers from developing countries. The venue environment of the entire conference is very much like a co-working space full of humanistic care, a community that respects developers and gives them full voice. My biggest feeling is that it encourages innovation and then encourages communication, or open source communication. I believe that it is because of this atmosphere that even though Ethereum has performance problems now, everyone is still willing to develop on it. In terms of technology, it is actually zk, MEV, layer2, Bank Sharding, account abstraction, public scolls and global influence. There are three projects that I am most optimistic about: One is DankSharding, which will be launched next year . It can solve the problem of data availability, and its launch will benefit various OP Rollups. The other is account abstraction and smart contract wallet, which can make C-end users experience Web 3 more seamlessly and onboard users better. Because it is a smart contract wallet, it can do a lot of things (you can read some articles on argent or unipass), but because of gas, it is not very useful on layer 1, and it is more used on layer 2. In this way, DS and AA, one from the perspective of infrastructure supply, and the other from the perspective of solving the demand for increased user experience, I believe that there will be an application ecosystem worth looking forward to on L2 next year. The last one is On-Chain Gaming. I think On-Chain Gaming is very interesting and has the potential to become a self-circulating ecosystem. Because On-Chain Gaming needs to consider a lot on the technical side of the blockchain, such as how to design MEV and Rollup. These developments are nuts and they will delve into the technology. Unlike entrepreneurs who develop applications, they know which new technologies are usable at the underlying technology level and will test them. At the same time, from the user perspective, many of the early On-Chain Gaming users were a combination of developers and players, and were technical users. This feels a bit like the early Ethereum ecosystem. At the beginning, through the game mechanism and game rules, a basic consensus was created, and it was agreed which were the scarce resources, and some basic element constraints were given. Then these early scientists and players would do a lot of development to compete for these artificially defined scarce resources, such as running scripts on it, running some front-end plug-ins, and making some third-party applications. This is very similar to the ecosystem that many public chains want to build at the beginning. At the same time, many of these players have a strong sense of identity and narrative power. For example, if you have played Dark Forest, you will know that many of these games require group play, which will form a governance environment with real short-term goals and rapid feedback. So I think a successful on-chain game will form an ecosystem similar to a public chain, or even a small Metaverse. This is worth observing, but the question of how to commercialize and invest is also worth thinking about. Participants Third World countries have great potentialTechFlow: With the influx of a large number of practitioners, Singapore and North America seem to be becoming more and more "inward-looking", so some people have begun to target the crypto markets in Southeast Asian countries such as Thailand and Vietnam, Africa and South America. What do you think of the Crypto markets in these third world countries? Will they be huge opportunities in the future? Alen: I think so. I used to like a book called "Rogers's Global Investment Travel", which is about Rogers traveling on a motorcycle and making money. Its general theory is a bit similar to the time machine theory, and then add in the local conditions, you can find many opportunities for time-space arbitrage and location arbitrage. Now it seems that the overall cost of Singapore is very high, not suitable for some startups, and the commercial atmosphere is very strong. The United States is good, whether in terms of talent, technology or capital, there is no shortage, but the cost is relatively high, even higher than Singapore. The public security there is relatively not so safe. For some teams that have not raised a lot of money, it is still difficult to live in Singapore and the United States. Europe also has living cost issues, and South America has language barriers. I see many Chinese entrepreneurs going to Thailand and Bali after going to the United States and Singapore. This is the result of the process of elimination. Speaking of third world countries, I think there is still a lot of room for development. Due to internal and external environment, some countries have a high acceptance of Crypto, and they have chosen Crypto. For example , the inflation rate in Argentina is very high in Latin America. The legal tender in El Salvador is the US dollar and Bitcoin, and there is no legal tender in the country. Local people have no loyalty to their own currency. They are more concerned about the consensus of facts when it comes to the legal tender for payment, and the US dollar stablecoin can easily meet this demand. There is a lot of cross-border personnel flow in many countries, and this process must be accompanied by cross-border remittances, and Crypto can solve the problem of cross-border remittances. At the same time, the coverage rate of the banking system in many countries is not strong, and the threshold for opening a bank account is high. Many people are still using cash to buy point cards for recharge. In these countries, as long as traditional fast payment and transactions are done well, as well as localization, such as user experience and regulatory issues, it may already be a killer, and the so-called Ponzi model is not needed. Many Latin American countries also have population advantages, which makes it convenient to recruit people at low cost. They have a high mobile phone penetration rate and a high level of education. They are also a blue ocean for Internet projects. Chinese entrepreneurs are very hardworking and have methodologies. If they can do a good job of localization based on local conditions, enter these markets that do not attach so much importance to orthodoxy and Native, and effectively solve their needs, there is still a lot of room for development. But I also encountered an interesting thing recently. At a hash house in Medellin, I mentioned that I was optimistic about the large Latin American market. The feedback I got was that when Chinese people talk about market, it sounds like "neo-colonialism" and is quite sensitive. This may require entrepreneurs to provide value that can improve their lives from the bottom up and attentively in order to better gain the local market. The hunter must huntTechFlow: At present, which tracks does y2z ventues mainly focus on or is optimistic about in the future? Alen: As I said before, the most important thing is to invest in reliable teams and young people with potential. We will invest based on the speculation of the future main storyline. In 2019, TT was optimistic about the future of hundreds of millions of tokens, which were basically FTs at the time. Until last year, when NFT became popular, there may have been more than hundreds of millions of tokens. If you firmly believe in this future at that time, you can actually deduce many investment opportunities. This year, because we went on a trip in the first half of the year, when we went to Bali in May, we felt very confident in the future of the "cyber nation". The international situation may become worse and worse in the future, and many people will want to go out and take a look, and find an environment that is more suitable for them. The concept of digital nomads has been very popular recently, which is proof of this. In this process, new groups of people will begin to accelerate physical mobility. In the process of mobility, some new ideologies will become mainstream, and new social practices that are truly designed to be off-chain will emerge. Crypto can obviously help these people on the move. The path that Bitcoin originally took in its development may be repeated again, but this time it will be walked in the flesh by a group of people who share a certain philosophy. What kind of Crypto projects will help this group of people? What new products, new governance models, and new organizational structures will emerge? This is what we are concerned about. The Great Voyage that TT wanted to create at that time was also an exploration of this. He hoped to explore the survival methods of the Chinese who went to sea during the Age of Exploration. Many friends still hope that this can continue. TechFlow: During the entire investment process, what is the biggest inspiration or the most important thing that tt has taught you? Alen: Actually, his words and deeds have taught me a lot of things. If I were to sum it up, it would probably be living life to the fullest and having courage. Because I have been with TT for a long time, the whole team and TT are like family. He treats the world as a game, always looking for the mainline dungeon of the current version of the world, and looking for the ecological niche he can reach in this mainline dungeon, and then he tries his best to reach this position, completely ignoring other things and living life to the fullest. This has given me a lot of inspiration. It reminds me of the first of the Hunter's Ten Commandments in the Hunter comics that we all like to read: Hunters must have something to hunt. In the Hunter comics, every hunter must have his own goal and work hard for it, but there is no limit to the setting of goals, it is full of diversity and the greatest respect is given to this. Everyone must find their own main storyline dungeon and mission, and then don't worry about other things, live freely, and you will be much happier this way. |
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