Meng Yan: Industrial blockchain and DeFi are not contradictory, but complementary.

Meng Yan: Industrial blockchain and DeFi are not contradictory, but complementary .

Abstract: It is precisely DeFi and token economy that bring more imagination and more possibilities to the future decentralized Internet, which is its core advantage.

It is precisely DeFi and token economy that bring more imagination and more possibilities to the future decentralized Internet, which is its core advantage.

At the Digital Economy and Open Finance Forum on the morning of December 6, Meng Yan, co-founder of Youzheng Liantong and vice president of the Digital Asset Research Institute, delivered a speech entitled "DeFi is the Value Protocol Layer of the New Digital Economy". In his speech, Meng Yan mentioned that blockchain is not for people, but for the intelligent society between people and machines, and between machines in the future, and this intelligent society constitutes the financial network. From this perspective, DeFi and industrial blockchain are not contradictory concepts, but can be combined with each other to form the end of blockchain.

The following is the full text of Babbitt's speech:

Meng Yan: Thank you, host, and thank you everyone. I am honored to return to my hometown, Wuhan. When the host introduced me just now, he quoted some of my recent views. Indeed, I have some new insights into DeFi recently, and I would like to share them with you here.

The future of blockchain is the financial network of ubiquitous intelligent society

During this visit to Wuhan, I heard a lot of high-level opinions, such as yesterday's opening speech, the wonderful speech of Professor Li Guoquan from Singapore, and Director Jin Jian mentioned that they are adding various IoT logos to smart devices and establishing various blockchain communication protocols. There are also speakers from Inspur and several institutions who mentioned the combination of blockchain and IoT. The guest speaker He Bin, who will speak later, is the founder of imToken. His topic is about the end of DeFi. Now more and more people have begun to form a consensus on the general direction of the entire industry, DeFi, and the future of blockchain. In fact, whether we are doing blockchain or DeFi, we must pay attention to the things in front of us, but we also need to look up and see the general direction, what is the overall end of this industry, and in which direction to go.

I recently read a book called "The Real Business Opportunities of Blockchain". This book mentioned that the future of blockchain will be divided into three stages. Three years from now, that is, 2020-2023 is the stage of innovative application solutions of blockchain, and 2023-2025 is the stage of complete application solutions of blockchain. However, the true face of blockchain will not be seen by more people until after 2025.

What is the future direction of the blockchain train after 2025? I dare to say that blockchain is not mainly for human use, but for the ubiquitous intelligent social network composed of billions of people and trillions of intelligent devices in the future. If it is for mutual payment between people or mutual cooperation between people, the significance of blockchain cannot be fully utilized. We can even go a long way forward based on existing technologies, including centralized technologies. Only when everyone truly understands that the future society is a new ubiquitous intelligent society composed of billions of intelligent primates, that is, humans, and trillions or even tens of trillions of intelligent devices, can we thoroughly understand what problems blockchain exists to solve.

The book I just recommended points out that blockchain will be integrated with artificial intelligence and the Internet of Things after 2025 to support enhanced blockchain applications. In this future, all people will interact with a large number of smart devices. What are smart devices? Your mobile phones are smart devices, computers are smart devices, mining machines are smart devices, unmanned vehicles are smart devices, drones are smart devices, smart highways, traffic lights, sensors, and various other smart devices. The number of them may reach tens of trillions or even hundreds of trillions in the future. After such smart devices are connected to each other, what can blockchain bring? Without blockchain, they can also be connected to each other, and they will make autonomous decisions according to the predetermined AI algorithm and the target. But only after they are connected, with blockchain and tokens, can these devices collaborate on a large scale.

When these smart devices work together on a large scale, there will be several profound changes. First, until today, people are the main force in creating wealth, but in the future, smart devices will become the main force in creating wealth. Second, today only people can consume, but in the future, smart devices will also be able to consume. I dare to predict that in 50 years, more than 95% of the world's wealth will be created by smart devices, and more than 95% of consumption will be spent by smart devices.

Therefore, we will face a completely different society and future than the present. The theme of this conference is to believe in the future. What is the future? What kind of future should we believe in? Please think about this question.

The problem that blockchain is trying to solve is that any two intelligent entities in the world, between people, between people and smart devices, and between smart devices, can conduct safe and reliable transactions under the protection of smart contracts without going through an intermediary. The frequency and scale of this transaction can be arbitrary, ranging from hundreds of billions to 17 zeros behind the decimal point. Blockchain is prepared for this world.

Industrial blockchain and DeFi have the same goal

When we understand this, we can understand the two blockchain routes that have emerged in China and internationally. One route is the industrial blockchain based on our country, or blockchain+. The future mentioned is that we want to combine blockchain with the real economy. Another future is DeFi, which is developing rapidly and booming internationally. It emphasizes the reconstruction of finance with blockchain. Are these two things contradictory? In fact, they are not contradictory at all. They are moving in opposite directions. If the future we look forward to is that people and smart devices coexist and jointly form a financial network, this network must have both finance and smart devices. We in China plan to make smart devices first and then connect to finance. Foreign countries plan to make finance first and then connect to smart devices.

Just like the project Mr. Wozniacki mentioned just now, I think it is a preview of the future blockchain application model, using smart methods, smart devices or smart measurement methods to understand the performance of energy consumption and energy saving, and then express this performance as a token. Only after it is expressed as a token can it enter the decentralized financial market for circulation. This is exactly the basic model proposed when I attended the Babbitt Conference in July.

I don’t think that the industrial Internet and open finance are in a contradictory state. On the contrary, when we see the future outcome clearly, they are completely complementary. That is, we must use the industrial Internet, cross-certification, and trusted storage to transform trusted data into trusted assets. Through cross-certification and measurement by smart devices, we transform trusted energy-saving data into digital assets, which represent energy. Then, after the necessary technical and legal procedures, they are tokenized and then enter traditional financial institutions or the DeFi market to circulate and generate financial value. Under this paradigm, you can imagine that our entire industrial blockchain and open finance are actually pointing in the same direction.

Blockchain infrastructure has a promising future

Of course, we are very happy to see that this thing is not far away from us. Many people will be very worried about whether our infrastructure can support it. We see that our blockchain infrastructure is growing rapidly. In the development and future of blockchain just mentioned, blockchain does play a core role. I just talked about such an end. Obviously, it is impossible to rely on today's blockchain infrastructure to support 7-15 transactions per second. The limitations of smart contracts and the high cost of storage cannot support the end we just mentioned. We must make a huge breakthrough in technology, and such a breakthrough is happening. Over the past 12 years, blockchain infrastructure technology has shown a cyclical forward fluctuation of 3-4 years.

The Bitcoin white paper was published in 2008. By 2013, Bitcoin had eliminated very dangerous bugs and finally entered a stable state, achieving a 100-fold growth. Everyone remembers that Bitcoin first attracted attention in 2013. In fact, it took three or four years for it to grow from a bud to a harvest. Its success has attracted a lot of follow-up projects, some of which are simply imitations, but one of the shining ones is Ethereum. It was proposed in 2013, and it took three years from the bud to the harvest. In 2016 and 2017, it was Ethereum that gave birth to the last round of bull market, or big bubble. At that time, Ethereum reached a level of 15 TPS, Turing-complete smart contracts, but there was no native cross-chain support, which can be said to be a very poor data storage capacity.

However, its success continues to inspire the innovation of a large number of new projects, which have raised funds through various means and then started to enter research and development. We understand that DeFi and many projects have been developed from 2016 to 2018, including Polkadot, Ethereum 2.0, and the increasingly well-known NEAR and Libra, which are all new projects created under the inspiration of the previous round of Ethereum technology. Similarly, they also need 3-4 years, or even longer time to do research because the span of this wave of technology is very large, before they can move from the embryonic stage to the harvest stage. But once they succeed, we will face a major technological upgrade of the entire industry in 2022 and 2023. We will face new technical facilities, which will have a basic performance of 100,000 TPS, strong cross-chain, digital assets and smart contracts, large-scale trusted storage, and multi-language smart contracts. This technical foundation will completely update our understanding of blockchain technology, and it will also initially have the ability to support the finality I just mentioned. Unlimited sharding, combined with edge computing, can effectively support high-frequency mutual interaction between smart devices.

When we see this, we are of course very optimistic and confident that we can definitely get there. However, many people may still wonder, if your future is three or five years from now, what should we do in the next few years? Will we lose momentum in the meantime? No, in the next few years, we have an important task, which is to make the value Internet or decentralized Internet, or Web3.0, a reality.

The success of Bitcoin has actually added a new protocol layer, or value layer, to the entire Internet. The traditional Internet is divided into storage layer, computing layer, interconnection layer, and application layer (Figure 1). The emergence of Bitcoin and Ethereum has added a protocol layer, or value layer, to the Internet, which has then developed into a financial layer. After this layer is added, we can quickly transform the Internet and create a new value Internet application layer.

(Figure 1)

Among today's Internet users, 99.9% are concentrated in the application layer. Similarly, the real large-scale application of blockchain must be in the application layer. We are still laying the foundation, that is, the real mainstream users of blockchain have not yet come in. In the future, there may be 1,000 times more mainstream users than now, because they want to participate in the application layer, decentralized WeChat, decentralized Honor of Kings. Although DeFi seems to be very popular, it is still just a protocol layer, which supports applications, so there will not be many DeFi users, and there should not be many.

Therefore, in the next two or three years, we may need to pay more attention to one issue, that is, how to make our new Internet, the decentralized Internet, produce applications as soon as possible. I think this is a big problem. We also need to think about a question, what are the advantages of this new Internet application compared to traditional Internet applications? For example, if we have a decentralized Douyin, why is this Douyin better than the Douyin we are using now, and why are users more willing to use it? It is definitely not the product. The traditional Internet emphasizes product thinking and makes the product to the extreme. If decentralized Internet applications can keep up with this aspect, it will be a victory, but this is by no means its competitive advantage. So where is the competitive advantage?

The answer is in the picture, because we have an additional financial protocol layer. What is finance for? Don't mystify or sanctify finance. The meaning of finance lies in the aggregation of resources at "this moment". Through the support mechanism of DeFi and the unique incentive method of the token economy, our decentralized applications can aggregate various resources at "this moment" and obtain advantages that the fan economy and community economy of the traditional centralized Internet cannot achieve. For example, it allows our bloggers to have the opportunity to form a large collaborative group of their fans through the token economy. For example, it is possible to allow social media such as Twitter to use a token economy to avoid the arbitrary control of content by the centralized system and effectively control illegal content.

To be precise, it is precisely DeFi and the token economy that have brought more imagination and more possibilities to the future decentralized Internet, which is its core advantage. Therefore, when we see this end, the long-term vision, and the near-term vision, we should be very aware of what we should do. At least from my point of view, I have studied the token economy for a long time in the past few years and helped many projects to design their token economies. But objectively speaking, only now, when the technical infrastructure is constantly improving and DeFi is constantly developing, we are finally approaching that goal. So now my team and I are actually developing a new DeFi protocol. Our goal is very simple. It is not to make DeFi continue to be a tool for zero-sum games, but to strongly support the decentralized Internet applications that will emerge and flourish in the future, as well as the ubiquitous intelligent society of the future. This is our real responsibility in doing DeFi. We are about to launch this protocol, and I hope everyone will continue to pay attention.

Thank you everyone!