HNS Online AMA: How to locate the market value depression of small currencies

On March 9, the HNS special online AMA was successfully held, hosted by Ares Miner and strategically supported by Y2K, Wayi and Whale Exchange. The event specially invited the media observation team of Mars Finance, Wabi.com and Mining Vision to participate in the whole process. The theme was "HNS is on fire: locating the value depression of small currency market", and the host, Y2K CMO Qingqing, talked with Mars Miner Wu Haoran, Wayi co-founder Li Peicai, and Whale Exchange Chairman Zhao Yi.

Handshake was initiated by Joesph Poon, the founder of Bitcoin Lightning Network and Ethereum Plasma, and has received investment from top VCs such as Sequoia Capital, A16z Crypto, Founders Fund, Polychain Capital, and Draper Associates. It has been listed on many exchanges such as namebase.io, Whale Exchange, gate.io, MXC Matcha, CoinEx, and blhodl.com, and is currently the hottest small-currency blockchain project. What are the key points and wonderful views of this dialogue? The following is a summary of the main content of the dialogue (according to the order of speeches):

1. Small currencies such as HNS and CKB have been very popular recently. Why are they favored by the market?

Zhao Yi, Chairman of Whale Exchange: First of all, Handshake has real business scenarios and needs. Domain names were the most important digital assets before the emergence of Bitcoin. Secondly, it has the support of a star team and star investors.

The top 0.1% blockchain projects may also meet these two points. The most unique thing is that Handshake has a strong altruistic heart and idealistic light. A public chain is an ecosystem, and the prosperity of the ecosystem is closely related to the altruism of the founding team. We saw that after Handshake received $10.2 million in financing from A16Z and Sequoia Capital, they donated all of it to the open source community. We saw that Handshake recently airdropped 70% of its tokens to effective developers on GITHUB. Because of its selflessness, it can achieve its own goals.

Mars Miner Wu Haoran: There are three reasons that promote the activeness of the small currency market: first, the development team is experienced and initiated by opinion leaders or senior people in the blockchain industry, so they have great appeal; second, well-known capital investment has increased market liquidity and capital endorsement; third, under the background of Bitcoin halving and ETH pow to pos, it is long-term positive and has a greater impact on the short-term market. At this time, star projects in the small currency market are more likely to gain attention and traffic support.

As for Handshake, the project was initiated by well-known developers in the industry, including the founder of Bitcoin Lightning Network, and has received support from well-known institutional investors including Andreessen Horowitz, Sequoia Capital and SV Angel Investment. The project has a clear vision and a good application foundation (domain names themselves are valuable digital assets, and they are products of a destructible nature). It is impossible for the algorithm to be modified and forked. It is normal for it to be popular in the small currency market. We also firmly believe that HNS will have a good future.

Li Peicai, co-founder of Waiyi: The two previous guests have answered a lot of questions. I will not repeat them. According to my experience, in the field of blockchain, the popular coins in the market can no longer just talk about concepts like in 2018, but must have real application scenarios and technical implementations. The popularity of the HNS chain is not just about concepts and white papers. It became popular after it went online, which means that it has complete technical implementation, which is a prerequisite for the popularity of HNS and other more valuable blockchain projects.

In addition to technical implementation, there must also be innovative application scenarios. After HNS appeared, its online domain name auction system has already started working. A few days ago, I observed that there were some auctions with high values. It seems that one domain name has been auctioned for more than 1 million. This is the real application scenario, which is the second reason why I think HNS can be popular. It is not like those air coins we talked about before. When it came out, it already had certain application scenarios.

Finally, I think its application scenarios are consistent with the innovative spirit of blockchain. It can provide a higher degree of freedom in some aspects. As for HNS, it provides a higher degree of freedom in the field of decentralized domain name resolution. It allows people to be less restricted when using domain names. I think this is also a very important reason why the HNS project can be so popular.

2. We noticed that these new projects all use Pow mining. Does it mean that Pow is a better way of operation? How do we understand the significance of Pow to blockchain projects?

Mars Miner Wu Haoran: Different mechanisms such as PoS and PoW have their own advantages and limitations. I am more optimistic about the significance of the PoW model in current blockchain projects. As a production mechanism, the PoW mechanism can effectively motivate miners to participate in the security maintenance of the blockchain network. Miners may not need to know too much detailed information about the currency, but they play a very important role in network security and openness and transparency. Economic incentives have always been the most effective way of social collaboration in history. Miners can clearly understand the cost and output of mining, and can also clearly understand the cost of attacking the chain.

As a distribution mechanism, Pow also makes great contributions to project transparency and community development. The growth of computing power and the long-term rise of coin prices are mutually supportive and promoting, which means that more people use real money to support a project, hold coins, mine and invest in it for a long time. From a larger perspective, miners, developers and investors play a dynamic balance in the blockchain network, which is a bit like the separation of powers in the real world, and is also a feature of decentralization.

Zhao Yi, Chairman of Whale Exchange: Haoran always speaks very well about the value of POW. I will focus on the challenges of the POS consensus mechanism. The POS mechanism is very difficult to solve the problem of token distribution. In addition to EOS, which has completed relatively good token distribution due to its one-year ICO, and Ethereum 2.0, which switched from POW to POS because the chips are relatively dispersed, in addition to these two projects, other public chains that adopt the POS mechanism use private placement to distribute chips. Under the POS mechanism, the chips will become more and more concentrated, making it difficult to achieve a wider range of consensus. I personally prefer currencies with the POW mechanism.

Li Peicai, co-founder of Waiyi: Pow and Pos are a very old topic. I think the advantage of Pow is that it will bring a very high moat to the coin, that is, the reset cost of the entire project becomes very high. Because all the blockchain codes are open source, if you redeploy them, it may become a new coin. The deployment cost of the software will be very low, but if you want to reset the computing power, the cost is very, very high. This is a benefit that Pow brings to the coin (blockchain network security).

Another benefit of Pow is that it is open enough. Many people may not need to know about this coin (project), or even be optimistic about this coin, but they can understand and get in touch with this coin through mining, slowly understand the value of this coin, and then become a member of the community of this coin. As an old Bitcoin miner, I have observed that many miners around me were not optimistic about Bitcoin at the beginning, and even did not believe in Bitcoin. Some mine owners, such as those who used to run hydropower stations, actually had no knowledge of Bitcoin at the beginning. But it was precisely because of the Pow mechanism that they all became part of the entire industrial chain. After slowly understanding Bitcoin, they began to become members of the community and fans of Bitcoin.

The openness of Pow does not require users to buy coins as a prerequisite for accessing the community. The addition of fresh blood to the newcomers will be more effective. The last point is that the current Pos will have some problems in the governance of this blockchain, just like we observed the steam project some time ago. In the end, many nodes of Pos were controlled by exchanges. There will also be some problems, that is, its degree of decentralization is far less than that of Pow, at least that's what I think.

3. What benefits does the emergence of ASIC mining machines bring to miners?

Li Peicai, co-founder of Waiyi: The emergence of ASIC is definitely good news for miners. It is an additional investment product. This is the most intuitive understanding. When all new ASIC mining machines first appeared, their payback period was very short. Before it appeared, its market was dominated by graphics card mining machines and FPGA mining machines, and its difficulty was very low. Taking the HNS project as an example, its current total network computing power is only 42T. As the first generation product, the computing power of the Ares H1 ASIC mining machine is 80G. Now the static payback period will not exceed 5 months, which is a potential opportunity for huge profits.

Why is it a potential opportunity for huge profits? Because the static payback period is an estimated value, and the actual payback period may not be completely consistent with the static payback period. The most important thing is that there are unexpected changes in the two variables of currency price and difficulty. Therefore, it cannot be said to be a definite opportunity to make money. However, assuming that no new mining machines are released and the currency price does not fall sharply, that is, a drop of 70%-80% or even more. Then for miners, this is an additional investment opportunity.

The emergence of this new ASIC mining machine has a smaller advantage, which is a benefit to existing mining farms. This means that the mining machine market is getting bigger, which is naturally good for mining farms, especially for the bosses who have already built mining farms.

Mars Miner Wu Haoran: Mining is essentially a financial behavior, and it is one of the ways to obtain corresponding chips at a low price. Miners, as investors in this financial behavior, will support the one with the lowest cost and the highest return. This pursuit is the same for every individual. ASIC mining machines have proven that they are not a tool for forming a monopoly, but rather promote further decentralization in the field, which means that the network is more robust, the cost of cheating is higher, and it is also more secure.

The emergence of ASIC mining machines can be seen as a sign that a currency is mature and has received widespread attention. It is one of the channels for currencies to become mainstream and is of great help to miners or investors in enhancing their investment confidence.

Competition may become more intense in the later stages of ASICization. As an early participant in the mining machine industry, we are also very cautious and only produce small batches. This is a release of the current stage of investment demand. From our perspective, the ASIC mining machines participating in HNS this time certainly hope to be extremely transparent, weigh the interests of all miners, and accept the supervision of all miners.

Zhao Yi, Chairman of Whale Exchange: Many public chains and mining coins do not have their own ASIC mining machines. ASIC mining machines mean that there is capital willing to be injected into this system for a long time. They cannot be switched freely like graphics card mining machines and are bound to the Handshake economic system for a long time.

The Handshake ASIC mining machine jointly launched by Hummingbird Miner and Pomegranate Mining Pool has been strongly supported by Whale Exchange. This afternoon, it released Whale Hashrate, which combines mining machines, mining farms, mining pools, and exchanges to provide users with Handshake one-stop mining services, lowering the threshold and giving more users the opportunity to participate.

The payback time for ASIC mining machines of new assets must be significantly shorter than that of Bitcoin mining in order to be competitive. We hope that the miners of the first batch of ASIC mining machines can get excellent returns.

4. Mining pools and exchanges actively support the development of new projects and currencies by setting up innovation zones. Mining farms are also making great efforts to develop them. It seems that they have greater development opportunities. How do we identify a good project? What suggestions do you have for old and new friends in the cryptocurrency circle?

Zhao Yi, Chairman of Whale Exchange: Whale Exchange hopes to have more collaborative cooperation with mining pools such as F2Pool. As for why I am optimistic about Handshake, I have already fully expressed it in the first question. The most important thing for a public chain project is the altruism of the founding team, which is the foundation of the prosperity of the public chain ecosystem. I respect and am optimistic about projects like Handshake and Grin.

Li Peicai, co-founder of Waiyi: New projects have greater development opportunities. First, when a currency is just starting out, generally speaking, few people know about it and the market value is relatively small. If such a project has relatively good fundamentals and meets the points we mentioned above, and there is still room for growth, we will be more optimistic.

As miners, we are optimistic about new projects, especially new projects that support Pow mining, also because there is profit margin in mining. Now the payback period of Bitcoin and Litecoin mining machines is more than 1 year. The payback period of ASIC mining machines of new projects is shorter, which is also the second reason why we pay attention to it.

Mars Miner Wu Haoran: Some hard indicators must be looked at, such as 24-hour output, circulating market value, trading volume, algorithm, remaining mining quantity, etc. In the innovation area of ​​some mainstream mining pools (Fishpool), there is already relatively complete information, which is also a recognition and contribution to the project. In addition, there are also the project's founding team, community activity, supported communities, platform quality, etc. that need to be considered.

If it is an early project, you need to pay attention to its project vision, specific application scenarios and implementation difficulty at the beginning. If conditions permit, interact more with the project team. Early followers have good returns. Of course, you should also pay attention to investment risks.

In response to the miners' question about the expected value of the mining machine's profit after it is put on the shelves, Mars Miner Wu Haoran said that the price has been disclosed and can be purchased through multiple channels. Regarding the number of mining machines, only 2,000 units were produced in this batch, 1,500 units were sold through channels, and 500 units were sold publicly. The machines are expected to be delivered at the end of May. In view of the impact of the epidemic, it is conservatively estimated that they will be shipped in batches around mid-June. The number of machines is limited, and in order to ensure fairness, they will be shipped in proportion. In other words, there is no possibility of pre-mining, so everyone can wait for delivery without worry.