The End of Native Encryption

Author: YBB Capital Researcher Zeke

I. Bowing to Compliance

How did Crypto transition from niche to mainstream? Over the past decade, decentralized blockchain provided a regulatory wilderness, and Satoshi Nakamoto's peer-to-peer electronic payment system did not succeed, but opened the door to a parallel world. Law, government, and even society and religion could not constrain this internet existing across countless nodes.

Being outside of regulation was almost the only factor driving the industry's success, from asset issuance starting with ICO and its subsequent variants, UNI-ignited DeFi, to today's so-called super application stablecoins - all built upon this factor, and removing TradFi's trivialities created today's industry.

Interestingly, after failing to explore new continents in the Age of Exploration, people began abandoning sailboats and returning to the past. Perhaps starting from when BTC ETF passed, or from Trump's election, native crypto has entered its末法 era. The industry began seeking compliance, seeking to supplement TradFi's needs, with stablecoins, RWA, and payment becoming mainstream development. Beyond this, we are left with pure asset issuance, where a picture, a story, or a CA string is the only daily conversation. On-chain meme chains are no longer a derogatory term.

How we reached this point, I have analyzed in many past articles, but fundamentally, blockchain currently lacks effective means to prevent various entities behind addresses from misbehaving. We can only ensure nodes are honest and DeFi is intermediary-free. Beyond this, we cannot prevent anything happening in this dark forest, and many things declining is inevitable. Non-Fungible Token, GameFi, and SocialFi extremely depend on entities behind projects. Blockchain has excellent fundraising capabilities, but who constrains project parties to reasonably use these funds and turn a story into a genuine project?

The non-financial vision cannot be solved by infrastructure performance improvements. If these cannot be done well on a centralized server, how can we expect them to be done on-chain? We cannot implement proof of work on project parties. Bowing to compliance now might be the beginning of non-financial development, which is ironically unavoidable.

Crypto is indeed becoming a subset of tradition, with this ledger's discourse rights being stripped by upper layers. Bottom-up matters are becoming fewer, opportunities are being compressed, and we are welcoming the era of on-chain hegemony.

CZ and Vitalik are puzzled by MEME, thus giving rise to the concept of DeSci, allowing speculators to speculate and researchers to innovate. It seems they found a common ground, but how could studying lab mice and classical mechanics be more interesting than internet memes and weird AI today? This narrative only caught fire for a moment, and after AI and DeSci cooled down, celebrity tokens took the stage, from the North American President Trump to the South American President Milei, essentially squeezing out all liquidity.

When the market begins to cool and narratives fail to connect, Ponzi schemes become necessary for asset issuance. Virtuals combined Binance Launchpool + Alpha's approach, staking for new token allocation, with the ability to restake, and indeed the token price soared. Emmm, so naked and direct, yet it no longer sparks my interest. What's next? Believe (internet capital market concept)?

I can't be certain, but in the previous cycle, amid various flywheels, Ponzi schemes, and narratives, DeFi remained a treasure that indeed sparked numerous fresh ideas. What can speculation in this phase create? I only see continuous simplification of issuance thresholds, with equally numerous malicious events following. Do we need a new set of rules?

IV. Attention

Previously, a project's rise depended on narrative and technology, erupting after consensus was formed. Now we're buying attention, like Blur using points to purchase, or like exchanges using real money to create an MCN company for KOLs. The PDD + Douyin marketing approach permeates the industry, and compared to founders running around discussing technology, this method seems much more direct and effective.

Attention is undoubtedly one of the most valuable assets of this era, yet difficult to measure. Kaito is now quantifying it, though Yap-to-Earn isn't particularly innovative, having been demonstrated in early SocialFi. Kaito's greatest innovation is AI-driven, claiming to identify information "value" and measure marketing capabilities using AI. However, this model clearly cannot truly capture long-term value, and Token is becoming a "fast-moving consumer good".

I believe everyone is deeply familiar with the drawbacks of the point system's three-pronged approach, and I've reviewed Blur's impact on this circle in previous articles. If future projects rely on purchasing attention, I find it hard to judge whether such behavior is wrong. I can only say that project marketing efforts aren't criminal, but now the circle has a trend of universal Pump. The old crypto era has indeed reached its end. Selling influence has become a mature business, from the US President to Binance to current KOLs, with no project truly flourishing, everyone just taking what they need.

Conclusion

Stablecoins will move towards the world, and blockchain payment is inevitable. But perhaps the natives living here don't need these, we need on-chain native stablecoins, we need de-financialization, we need the next wave, and we don't want to live in a Web3 that sells traffic.

Time is indeed proving some BTC OGs right, but I still hope they are wrong.