The Past and Ambitions of Universal Blockchain

This article was first published on September 26, 2019, on the Chain Catcher WeChat account, by Hu Tao.

Last week, the fifth Global Blockchain Summit initiated by Wanxiang Blockchain Lab was held in Shanghai, gathering a large number of renowned figures in the blockchain field, including Li Lihui, Yao Qian, Xiao Feng, Jae Kwon, Vitalik Buterin, and Song Xiaodong. It has also become one of the most influential events in the blockchain industry in recent times.

During this event, Wanxiang Blockchain itself demonstrated an increasingly broad reach, seemingly becoming one of the most influential players in the blockchain industry, yet its specific development history and layout seem to be little known in the industry.

It is evident that Wanxiang Blockchain has intricate ties with the well-known Wanxiang Group. As one of China's most famous private enterprises, Wanxiang Group has long been primarily engaged in the automotive parts manufacturing industry. In recent years, it has begun to layout the upstream and downstream industrial chains of automotive parts, forming a vast empire that involves many fields, including automotive, new energy, agriculture, real estate, and finance.

In this process, Wanxiang Group's founder Lu Guanqun and his son Lu Weiding have showcased their talents in capital operations and financial maneuvering. According to data, the Wanxiang system currently controls four listed companies: Wanxiang Qianchao, Chengde Lulu, Wanxiang Denong, and Shunfa Hengye, and has stakes in 14 A-share listed companies, including Huayi Brothers and GAC Group, while obtaining most financial licenses. Today, the "Wanxiang system" employs over 40,000 people, with annual total revenue exceeding 100 billion yuan and annual profits exceeding 10 billion yuan.

It is noteworthy that many financial capital operations of the Wanxiang system are not conducted through Wanxiang Group but rather through China Wanxiang Holdings Limited, founded by Lu Weiding, and the two do not have direct equity ties. This makes it clear that the Wanxiang system's business strategy is to build an industrial empire through Wanxiang Group and a financial empire through Wanxiang Holdings.

Wanxiang Blockchain Lab was also established by Wanxiang Holdings in mid-2015, and Wanxiang had already been researching blockchain technology for at least a year prior. According to public information, the positioning of Wanxiang Blockchain Lab at that time was to focus on non-profit frontier research in blockchain technology, aiming to gather experts in the field to conduct research and discussions on technology development, commercial applications, and industrial strategies, to provide guidance for entrepreneurs, reference for industry development and policy formulation, and to promote the advancement of blockchain technology in serving social and economic development.

Xiao Feng, the vice chairman of Wanxiang Holdings, is the founder of the lab. He has considerable experience in the traditional financial industry, having served as the general manager of Bosera Funds, vice chairman of Minsheng Life Insurance, and chairman of Wanxiang Trust. Choosing to fully invest in the blockchain field at that time demonstrates Xiao Feng and the Wanxiang system's recognition and emphasis on blockchain technology.

In Xiao Feng's view, the blockchain network has the functions of various third-party authoritative institutions such as banks, judicial systems, accountants, and lawyers, which can maintain the entire social trust system. If all transaction systems are entirely based on blockchain, the trust relationships of all exchanges will be restructured, eliminating costs.

At the same time, the concepts of automatic issuance of digital currency and governance through consensus algorithms across the network disrupt all current governance structures and incentive mechanisms, achieving incentive compatibility and Pareto optimality, making it the best means to construct stakeholder incentive mechanisms. Therefore, Xiao Feng believes that blockchain will reconstruct existing business models, and decentralized trust networks will link various scenarios to form a distributed economic ecosystem, providing a complete financial system for the digital economy, including new markets and new service methods.

Additionally, Xiao Feng found two co-founders for Wanxiang Blockchain Lab who now seem to be the most correct choices: Vitalik Buterin, the founder of Ethereum, and Shen Bo, the co-founder of BitShares. The former later brought the blockchain industry into the 2.0 era with Ethereum and became one of the industry's spiritual figures, while the latter became one of the most influential figures in the blockchain investment industry.

Although Vitalik and Shen Bo focused more of their energy on their own careers afterward and participated little in Wanxiang Blockchain's business, the beliefs and missions they held in the early stages, combined with Wanxiang's reputation and appeal, still allowed Wanxiang Blockchain Lab to generate significant influence in the blockchain industry right from its inception.

At the first Global Blockchain Summit held in October 2015, Wanxiang Blockchain Lab was officially launched. At this summit, several central bank officials, including Yao Yudong and Yao Qian, attended and gave speeches, and well-known projects such as Circle, Definity, Ethereum, Factom, Maker, and Tether also participated in the discussions.

At the same time, Wanxiang Holdings announced at the summit the establishment of a $50 million blockchain investment fund called Distributed Capital, which would be China's first venture capital fund focused on investing in blockchain technology-related enterprises, with Shen Bo serving as the main manager. Subsequently, it invested in at least sixty projects, including ZEC, VEN, and NAS. However, as Distributed Capital has introduced more and more LPs in recent years, Wanxiang Holdings' influence over Distributed Capital has significantly weakened, and the intersection between the two has become increasingly rare.

In the early stages, Wanxiang Blockchain Lab focused more on directly funding and incubating projects, including various sponsorship programs, training programs, and hackathons. At that time, Wanxiang Holdings announced that it would sponsor Wanxiang Blockchain Lab with $1 million annually for the next three years to support global volunteers and projects in the blockchain and digital currency fields.

In November 2015, Wanxiang Blockchain Lab initiated a sponsorship program called "BlockGrantX," specifically aimed at supporting the development of the blockchain industry and its open-source community. In the first phase of sponsorship that year, a total of 9 projects received rewards totaling $100,000, including well-known projects such as BTC Relay, Casper, and IOTA.

Winning projects of the first phase

From these projects, it can be seen that Wanxiang Blockchain Lab had a very close cooperative relationship with Ethereum in its early stages, making many contributions in terms of financial support and ecological incubation, laying an important foundation for Ethereum's later success. Insiders have revealed that Wanxiang is still funding many researchers in the field of cryptography.

At the same time, Wanxiang Blockchain Lab did not completely abandon direct investment. At the second Global Blockchain Summit held at the end of 2016, projects such as Qtum, VeChain, and Bubi received investments from Wanxiang Blockchain. Subsequently, Wanxiang Blockchain's external investments became increasingly frequent, participating in investments in projects such as Miaotai Fang, Le Kua, and Nervos Network.

At the aforementioned second Global Blockchain Summit, Xiao Feng also announced a significant piece of news, claiming that he would invest 200 billion yuan to create the world's largest blockchain application project to date—Wanxiang Innovation Energy City. According to Xiao Feng's description, Wanxiang Group plans to build an industrial new city covering nearly 10 square kilometers, with the manufacturing of new energy vehicles as the core industry, where blockchain technology will be used for city management and daily operations.

Such a plan seemed quite incredible at the time, but the vision it brought undoubtedly made anyone who recognized blockchain technology feel acknowledged and hopeful. Subsequently, Wanxiang Group and Wanxiang Blockchain Lab also conducted a lot of preparatory work for this.

Since 2016, while promoting and incubating blockchain technology, Wanxiang Blockchain Lab has also begun to pay more attention to its own development and reserves of blockchain technology, while introducing many blockchain technology talents. Around early 2017, Wanxiang Holdings invited Wang Yunzhen, the former general manager of IBM's Greater China Innovation Division, to join and serve as the chief innovation officer of Wanxiang Holdings. He had previously been involved in the strategic design, technical planning, and platform construction of IBM Blockchain in Greater China, and he later became one of the main promoters of Wanxiang Innovation Energy City.

Also in early 2017, Wanxiang Holdings integrated its previous layouts in the blockchain field and established Shanghai Wanxiang Blockchain Co., Ltd., which includes Wanxiang Blockchain Lab, New Chain Space, and the Distributed Business Group.

It is understood that the Distributed Business Group is mainly based on the technical accumulation of Wanxiang Blockchain Lab over the years, providing enterprise-level blockchain products and application solutions for clients in various industries. Subsequently, it cooperated with Zhongdu Logistics to jointly create the Yunlian Alliance, collaborated with Singapore's DBS Bank in the field of supply chain finance, and partnered with the American Karma Automotive in the automotive sector.

From 2017 to 2018, although Wanxiang frequently mentioned Innovation Energy City, there was no substantial progress for a long time, and there were many doubts from the outside world. However, Innovation Energy City officially broke ground in March 2019 in Hangzhou, and more planning information was disclosed.

According to reports, Wanxiang Innovation Energy City plans to use blockchain technology to reconstruct a smart, digital city that integrates the Internet of Things, the Internet, and the Vehicle Network, focusing on smart living, smart transportation, and smart services. Specifically, it will include industries such as new energy components, batteries, buses, and passenger vehicles.

Planning design diagram

More specifically, Wanxiang hopes that the online data generated by the daily operations of this city will be stored on the blockchain, with each data producer being a node in the network, such as charging stations, manufacturing sites, underground energy storage facilities, and automobile manufacturers. At the same time, all residents' identity information will also be uploaded to the network, and through the use of Multi-Party Computation (MPC) and other privacy protection technologies, residents' digital identities will be stored in a distributed ledger and shared and interacted with various data information.

As a result, the data generated by different facilities will achieve free flow and aggregation, significantly improving the operational efficiency of various industries, while also optimizing the operation and management of the city. "We can imagine a smart transportation system that can track and reward responsible driving behavior, or a renewable energy grid that incentivizes energy production and trade, or even countless urban services that can be easily verified, constructed, and provided without strict data limitations," Wang Yunzhen stated.

To enhance the willingness of different stakeholders to join the blockchain network, Wanxiang also stated that it would establish a micro-token system for testing, using a reward and punishment mechanism to incentivize different stakeholders to contribute data, thereby promoting data exchange and value transfer. Clearly, this will be a very bold attempt, with significant policy risks. How Wanxiang will implement this plan in the future is worth further observation.

Online information shows that the main technical partner for Wanxiang Holdings in building Innovation Energy City is a project called PlatOn. This project actually has a deep connection and relationship with Wanxiang Holdings. The project's official website shows that Xiao Feng from Wanxiang is a co-founder of PlatOn, and another early founder of Wanxiang Blockchain, Xiao Ziwen, serves as the chief strategy officer of PlatOn. The project's founder, Sun Liling, is also the founder and CEO of Matrix Elements, which received 150 million yuan in angel round financing from Wanxiang Holdings at the end of 2016, and PlatOn was initiated in 2017.

In May of this year, Dr. Zou Chuanwei, the former chief economist of Bitmain, joined Wanxiang Blockchain as the chief economist and also serves as the chief economist of PlatOn. From the aforementioned information, it can be inferred that PlatOn is likely a blockchain project under Wanxiang Blockchain.

Sun Liling stated that PlatOn is a global computing architecture for the next generation, serving as a public infrastructure for the fully digitalized era. "This is not just a conventional blockchain technology system; it is essentially a service-oriented operator for the next era." It can be considered that one of PlatOn's main tasks is to explore blockchain experiments for Wanxiang Innovation Energy City and develop feasible technical solutions.

According to the plan, Wanxiang Innovation Energy City is scheduled to be completed by 2025, accommodating 90,000 residents. If the aforementioned blockchain application plans are successfully implemented, this will undoubtedly become a milestone event in the blockchain industry, significantly accelerating the development and landing of the industry. However, at the current stage, these blockchain application plans remain in the design and conceptual phase, and considering the development cycle and policy issues, these plans face many unknown factors.

Overall, although Wanxiang Blockchain still appears to lack actual progress at the business level, it has established a significant influence in the blockchain industry over the years through various summits, incubations, competitions, and investments. The concept of Innovation Energy City is also very impactful. Given time, Wanxiang Blockchain's layout may produce even more powerful chemical reactions and establish a broader blockchain business system, especially as its experiments in Wanxiang Innovation Energy City may be adopted by more regions, but the effectiveness of these efforts will require time to test.