Dialogue Standard Crypto Partner: This is the best bear market cycle in history, and the next bull market will be driven by new applications

Organized & Compiled by: Deep Tide TechFlow

This episode of The Block features an interview with Alok Vasudev, co-founder of Standard Crypto. In this conversation, Alok discusses the changes and trends in the bear market, as well as the reasons behind market fluctuations. He believes that each crypto cycle will have a new blockchain application to drive the bull market. They also discuss the potential of crypto games, economic crises, and the combination of AI, ZK, and blockchain.

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Here are the main points from this conversation, transcribed and organized by Deep Tide:

Host: Frank Chaparro, The Block

Speaker: Alok Vasudev, Co-founder of Standard Crypto

Original Title: "Crypto's 'Best Bear Market Of All-Time'"

Podcast: "The Block"

Show: Link

Trends in Bull and Bear Markets and the Explosion of Application Layers

• Alok discussed some changes and trends in the bear market. He mentioned that during a bear market, the speed of transactions slows down, but the quality of transactions improves. He believes that the current market participants are more serious, no longer entering the crypto space just because it seems cool or to chase hype. Now, there are many founders who are entering the crypto space for the second or third time, bringing richer experience and better understanding.

• Frank and Alok discussed the reasons behind market changes. Alok believes that BlackRock CEO Larry Fink changing his view on Bitcoin and cryptocurrencies could be a significant factor in market changes. Alok mentioned that the crypto market may have been undervalued in November and December of last year because cryptocurrencies and blockchain technology are the right direction in historical development, and the market should reflect the balanced price of these assets based on the progress made.

• Regarding trends in the crypto market, Alok believes that each crypto cycle will have a new blockchain application to drive the bull market. For example, the bull market in 2013 was primarily driven by Bitcoin, the 2017 bull market was driven by tokens and ICOs, and the 2021 bull market was driven by DeFi protocols and NFTs. He believes that the next cycle may be driven by new applications, as we are no longer limited by infrastructure as we were before.

• They discussed the biggest barriers to the explosion of application layers. Alok believes that for more consumer-grade applications to work, first, people need to own wallets. He thinks that as more people start using wallets, the difficulty of using wallets should decrease, making it as simple as using a browser. This means that cryptocurrency wallets should become more user-friendly, accessible, and easy to operate, thereby encouraging more people to participate in cryptocurrency usage.

• Alok mentioned the concept of "small network effects," which refers to the idea that as the number of users of a new product or service increases, the value of that product or service also increases. Network effects are a common economic phenomenon that indicates the value of a product or service is proportional to its number of users.

• Alok's point is that there are now enough users to start forming this small network effect in new products. This means that as more users begin to use a new product or service (such as a cryptocurrency wallet or application), the value of that product or service will increase. This increased value may manifest as a better user experience, more features or services, higher security, etc.

• Alok believes that social networks need to start relatively niche and not introduce a large number of celebrities right away. Successful social networks are those that can cultivate their own celebrities rather than those that bring in celebrities and expect them to bring their own fans.

• Alok believes that the big opportunity for social networks lies in figuring out tomorrow's Status Game, which may include NFTs and other crypto features. He thinks that crypto-centric social networks are a cool place to be because they meet all the characteristics; they are still relatively niche, but he believes many crypto enthusiasts are on the right side of history.

The Potential of Crypto Games and Economic Crises

• Alok and Frank shifted to a discussion about games. Alok mentioned an interesting investment strategy of looking back at the previous market cycle to identify projects that resonated but may not have fully succeeded. He believes these projects could be great investment opportunities. Alok cited two examples, Cryptokitties and Axie Infinity. Both games achieved some success to a degree but also had some flaws. He believes these games showcase the immense potential of gaming in the cryptocurrency market.

• They discussed economic crises in games and how to manage these crises. Alok believes that economic crises in games may be caused by falling token prices, market volatility, or other factors. He mentioned that to address these crises, game developers need to take measures to maintain the game's appeal. He believes that financialization is an effective solution that can help attract players and provide them with additional incentives.

• Alok also mentioned that financialization in cryptocurrency and gaming can be achieved through token rewards, token economies, DeFi protocols, etc. These financialization methods can help game developers attract players and provide them with additional incentives. He believes this is an effective way to help games maintain their appeal even under pressure from token prices.

• Alok believes that Axie Infinity is a significant milestone for many game developers, prompting them to delve deeper into the cryptocurrency space. He noted that the success of Axie Infinity shows that games can remain appealing even under pressure from token prices. He believes this is because financialization in games can help attract players and provide them with additional incentives.

The Combination of AI, ZK, and Blockchain

• Alok introduced their investment philosophy, emphasizing that they focus more on finding promising entrepreneurs rather than pursuing specific investment theories. They believe that the key to investment success is finding promising entrepreneurs rather than chasing specific investment theories.

• They discussed the intersection of artificial intelligence and the cryptocurrency space. Alok believes there is a deep connection between the two. He mentioned that both AI and the crypto industry are technology-driven fields that are rapidly evolving and have significant potential. He believes both fields are exploring new business models and application scenarios that could profoundly impact society and the economy.

• Both AI and the cryptocurrency space require vast amounts of data and computing power. The crypto space can provide a secure, transparent, and decentralized platform for data exchange and computation for AI. Meanwhile, AI can offer smarter and more efficient trading and contract execution for the crypto industry.

• Alok also mentioned that AI could help the crypto space better predict market dynamics and risks, while the crypto space could provide a safer and more efficient payment and trading platform for AI.

• With the development of blockchain and crypto technology, NPCs in games may have their own bank accounts and wealth. He believes this will provide more opportunities for innovation and interaction for game developers and players.

• For example, NPCs may engage in transactions, investments, or other financial activities with players. This scenario would make games more interesting and realistic. Players could interact with NPCs in more complex ways, experiencing a more authentic game world. At the same time, this would also provide game developers with more business opportunities, such as advertising, promotions, or other commercial activities through NPCs.

• Alok Vasudev discussed the impact of technological development on the crypto market, particularly the advancements in zero-knowledge proof (ZK) technology. Alok mentioned that zero-knowledge proofs allow one party to prove to another that a statement is true without revealing any other information. This technology has many applications in the crypto space, such as protecting transaction privacy and verifying the correctness of smart contracts.

• Alok believes that ZK technology will enhance market trust. By using ZK technology, both parties in a transaction can verify the correctness of the transaction without disclosing any other information. This will help increase market transparency and trust. Additionally, ZK technology will help improve market efficiency. By using ZK technology, both parties can complete transactions more quickly and securely. This will help enhance market liquidity and transaction speed.

• Finally, ZK technology will help expand the application scope of the market. By using ZK technology, the crypto space can better meet users' privacy and security needs. This will help attract more users into the market and expand the application scope of the market.

The Impact of Market Cycles on Technological Development and DeFi

• Alok believes that market cycles play a significant role in driving technological development. He explained that market cycles can inject funding into technological development. During bull markets, cryptocurrency prices rise, and the assets of market participants increase in value. This means there is more funding available for technological development. This additional funding can help develop new technologies, optimize existing technologies, or expand the application scope of technologies.

• Alok pointed out that the progress in the crypto market has far surpassed previous levels, with healthier market fundamentals. The current crypto market has more participants, more applications, more technological innovations, and more compliance.

• Alok specifically mentioned DeFi protocols and believes they are the ideal targets for venture capital. Alok believes DeFi protocols have several advantages:

• Low Capital Requirements: DeFi protocols typically do not require large capital investments because they are based on blockchain technology and do not need traditional centralized infrastructure. This makes them ideal targets for venture capital.

• Strong Defensiveness: DeFi protocols usually have strong defensiveness because they are decentralized and not easily subject to attacks or manipulation. This makes them more stable and secure in the market.

• High Operational Leverage: DeFi protocols typically have high operational leverage because they have almost no operational expenses, with users bearing transaction costs. This allows them to operate more efficiently and achieve higher returns.

• Alok also mentioned that the revenue of DeFi protocols is different from that of software companies. Software companies typically have to bear high operational expenses, while DeFi protocols have almost no operational expenses, with users bearing transaction costs. This allows DeFi protocols to operate more efficiently and achieve higher returns. Alok believes that DeFi protocols represent the best business model ever.

• Alok also expressed optimism about the revival of Bitcoin. He believes Bitcoin may be experiencing a renaissance. He mentioned that Bitcoin was once a vibrant ecosystem that attracted many developers and tech enthusiasts. However, over time, this vibrancy gradually faded. But he believes Bitcoin is recapturing this vibrancy, and many newcomers to the crypto market may not realize Bitcoin's potential.