BounceBit Founder: Breaking the Current Dilemma of Cryptocurrency, Understanding the Essence of Things and Social Traps

Original Title: It’s not the manifestation that traps you, but your obsession with it

Original Author: Jack Lu, Founder of BounceBit

BounceBit has been established for over six months now, making it one of the faster-growing projects in the industry. Recently, the market has been sluggish, leaving many people feeling lost, so I want to take this opportunity to share some insights from the front lines of the project. Many previous articles have analyzed the situation from an economic perspective, directly linked to money. However, analyzing the market from sociological and psychological perspectives is also quite interesting. This article will provide a very direct analysis, and I hope for your understanding if any offense is taken.

Understanding the Essence of Things

In the crypto space, it is easy for people to fall into misconceptions or confusion. Being too close to money, many individuals end up doing things that contradict their inner beliefs. For example, when you invest in a project, you may know deep down that it is unreliable, but because so many people are praising it, you still invest. Or take startup teams, where members may know that an idea won't work, but because the concept is trendy, they decide to give it a try anyway. Almost every participant in the industry has had such experiences. When the market is good, people are willing to be led by this confusion, but when the market turns bad, they begin to complain about it. In reality, understanding the essence of things can help us avoid being misled. Therefore, for every role in the industry, insight into the essence of things is crucial.

Taking the BTC ecosystem as an example, its essence lies in the collective demand for the appreciation of BTC as an asset. This demand may manifest in wealth management, mining, or arbitrage, and the driving force behind this demand is the expectation of an upcoming bull market and the desire to earn more BTC. The essence of this matter is not about developing application chains based on the BTC chain. The BTC ecosystem and applications are merely a form of "confusion," because if even ETH, which is inherently an application chain, lacks demand, how can BTC be expected to have it? Once we see the essence of things clearly, we will focus on product development around BTC CeDeFi, as the yield of BTC is inseparable from CeFi, rather than developing games, social applications, and other products based on the BTC chain. I believe that the essence of crypto and blockchain is finance, so products and projects must directly address the theme, which is financial products. Focusing on the theme can make the product and entrepreneurial ideas clearer. The so-called SocialFi and GameFi are "confused behaviors" that fail to see the essence. These categories may succeed, but their logical chains are too long and involve too much luck. You might ask: If the essence is finance, then why hasn't DeFi taken off this round? We will discuss that later.

The Clash of Asian and Western Cultures

There is much discussion on Twitter about Asian versus American projects, which brings me to my second point: cultural conflict. Because the crypto space is so closely tied to money, we tend to view the differences between Asian and Western cultures from an economic perspective. I believe the key lies in the mindset of "paying for dreams." Most Western projects seem far-fetched and unrealistic. In Asia, something that could be accomplished in a week might lead to Western projects raising hundreds of millions of dollars and taking years to develop. The result is that people endlessly criticize Western projects on Twitter, yet when these projects launch, they still obediently buy in.

From a cultural perspective, Western culture glorifies heroism. Most Hollywood movies tell stories of heroes defeating all enemies and ultimately achieving victory. Thus, from a young age, Westerners think, "I am a hero (like Spider-Man or Iron Man), and I believe I can create and realize my dreams." This cultural difference manifests in the crypto space as a series of grandiose projects, where founders are very social, articulate, and confident, believing they are doing the right thing. We can see from Twitter what the founders of those major projects post daily. Because they have dreams of changing the world, Western projects are almost all infrastructure-related, as a DApp seems too small a story for these heroes. This phenomenon has led to many technological innovations, such as those by Elon Musk. However, in crypto, many heroes have failed because they did not see the essence of things clearly.

In contrast, Asian culture is relatively conservative. Our culture emphasizes "speak less, do more." Therefore, Asian projects are usually more reserved, with developed applications being directly usable but lacking any heroic flair. Taking the development path of Bitcoin as an example, from a cultural perspective, Asians first lay the groundwork (mining), and then Westerners take on the roles of promotion and storytelling. Bitcoin is the only product that perfectly combines Asian and Western cultures; other projects, including Ethereum, can only choose one or the other.

The Misconception of Upward Socializing

When money is too close and substantial content is lacking, socializing becomes particularly important. This space places a high value on social connections, which is why many people build their personas on Twitter and at conferences. Why are there so many conferences in this space, and why do we keep attending them despite seeing the same familiar faces? Because everyone is fearful, afraid of missing out. When everyone is doing something and you are not, it creates a sense of unease. As a result, project teams invest heavily in socializing, organizing events, and so on. People are accustomed to upward socializing: meeting big shots, whales, miners, and KOLs, so they seize every opportunity to connect with these individuals.

However, the problem is that the so-called upper echelons of the crypto community are not formed through decades of competition and struggle; many people have climbed to the top purely by luck. Thus, many individuals, after reaching a certain level of upward socializing, get a reality check and begin to reflect on life. The real upper class is not as "upper" as they imagined. Recently, the issues with upward socializing have been fully exposed: everyone is against VCs. In fact, VCs are a symbol of upward socializing: project teams need to find VCs, and retail investors judge a project's quality based on VC investments. However, because the projects that VCs invested in this year are all declining, people are directly feeling the emptiness at the top of the crypto food chain. Another phenomenon is the inflation of TVL: TVL is a very "upward socializing" metric because it is tied to money. A project with high TVL makes people feel it is at the top of the industry, but it can quickly be impacted and pay the price.

In my view, these recent phenomena are positive because people are realizing that "upward socializing" is not as magical and beneficial as they imagined. Sometimes, a reminder from a group friend or certain social interactions in life can provide more inspiration. For instance, many ideas are generated during conversations with friends rather than at conference dinners. A reminder from a group friend may be more useful than a VC's research report. A project that never attends conferences might actually be the most impressive.

The Experiment of Submission in CeDeFi

CeDeFi is the track we are pursuing at BounceBit. Today, I won't discuss CeDeFi products but will analyze this track from social, economic, and psychological perspectives. First, CeFi and DeFi have existed for many years, and everyone is well aware of their advantages and disadvantages. DeFi projects dominated by the West shone brightly in the last cycle, dreaming of achieving financial decentralization for all humanity (which is the heroism phenomenon I mentioned earlier). However, over the past few years, we have clearly recognized that pure DeFi is impossible. The CEXs in the crypto space are mainly controlled by Asians, so they perform well in both product and execution, and the competition is fierce. The Asian-dominated CEXs and CeFi began to be drained by DeFi in the last cycle and faced regulatory pressures.

From a sociological perspective, CeDeFi is a combination of Western and Asian products. A clear example is that the last round of DeFi almost ignored the power of Asian CeFi, with CEXs needing to beg for listings. In this round, Ethena, a purely Western team, needs to collaborate deeply with Bybit. Therefore, CeDeFi is a positive phenomenon. Western teams have less heroism, while Asian teams have more innovation.

Another angle is "where the money in the industry is." I believe the biggest change this round is the location of funds: on-chain funds are inactive, and DeFi projects are sluggish. At the time of writing this article, ETH's Gas is already below 1 Gwei. Meanwhile, the reserves of CEXs led by Binance continue to rise, with the latest reserves reaching 100 billion USD. Analyzing this with the logic mentioned above: the essence of crypto is finance, and the essence of finance is to make money using funds. When most funds are in CEXs, entrepreneurs need to invent and design products that can utilize this portion of funds, which is the essence of CeDeFi. Of course, BounceBit and Ethena have only done a small part of CeDeFi; there is still much to be done in the entire CeDeFi track. Returning to Binance, with reserves of 100 billion, I believe this is a good scale. CeDeFi entrepreneurs should find ways to utilize CeDeFi to "activate" this 100 billion in funds; only when funds flow will the bull market arrive.