From the perspective of "old suckers" in encryption: 2022 Bear Market, FTX incident, and industry innovation

Recently, Cobo co-founder and CEO Shen Yu accepted an exclusive interview. As a seasoned individual who has experienced multiple rounds of cryptocurrency cycles, he shared his views and deep thoughts on various topics including the current market, the impact of the FTX incident, DeFi innovation, and the future of DEX.

Current Bear Market Cycle Observation

The Bear Market of 2022 is not as desperate as previous ones. After more than a decade of development, the industry has accumulated a wealth of experience and gone through ample trial and error. We have basically clarified the capability boundaries of blockchain technology and have a clearer understanding of future development directions.

Solutions for scaling modular blockchains and Layer 2 networks have begun to emerge. Although it will take another two to three years for final implementation, the light of hope can already be seen. Compared to previous cycles, the industry now has a clearer confidence and direction regarding its future.

Analysis of the FTX Collapse

Sam is essentially a person who seeks the ultimate utilization of funds. As the confidence brought by success grew, his risk appetite gradually increased, ultimately leading to a loss of control.

The encryption industry is still in its early stages, with inadequate infrastructure and regulation, leading centralized exchanges to bear too much responsibility. For entrepreneurs, it is difficult to resist the temptation of human nature when faced with such vast assets.

Similar stories have been frequent in the past decade, essentially a human nature issue. In the future, it may be possible to avoid such events through technological means, but the industry has not yet developed to that stage.

Prospects of DeFi Innovation

DeFi has essentially replicated over 200 years of product innovation in traditional finance in just two years. Currently, DeFi mainly consists of four major modules:

1. Stablecoin: still in the early stages, about 30-40% progress completed
2. DEX: The basic form has matured, with a completion rate of about 60-70%.
3. Lending: relatively mature, completion rate about 70-80%
4. Derivatives and Risk Management: Relatively Early

The underlying financial framework of DeFi has matured, but there is still significant room for innovation in the composability of upper-layer applications. In the future, core DeFi modules may evolve into on-chain standard protocols, providing foundational support for other applications such as NFTs, GameFi, etc.

The Future of Centralized Exchanges

The FTX incident marks the dawn of the demise of centralized exchanges. Institutional users have a deeper understanding of industry issues, and a large amount of assets have been transferred from exchanges to on-chain wallets.

Decentralized exchanges can meet most needs and may do even better. In the future, a combination of decentralized and centralized methods may emerge to mitigate risks. Long-tail demands may be resolved more efficiently directly in a decentralized environment.

Outlook of the Mining Industry

The ideal future state of mining is for a large number of small and medium-sized mining farms to connect to the global power grid, assisting in regulating the grid status and achieving efficient energy utilization.

As the space for chip iteration shrinks and the lifespan of mining machines extends, the trend of decentralization may re-emerge. Home mining may become more advantageous in the future, even gaining extra income by connecting to the power grid.

Reasons to Maintain Passion in the Industry

The development of the encryption industry is showing a spiral upward trend, with new innovations and opportunities continuously emerging. It is important to maintain curiosity and continue to observe and think.

This industry evolves rapidly, is full of innovation, and constantly encourages personal learning and growth. Experiencing the development of the industry firsthand is far more interesting than simply reading financial history. Once you delve deep into this industry, it becomes difficult to leave easily.