Cryptocurrency's “Zhuang Xue” Thoughts: How to Create a New Circuit, New Narrative

Refer to the entertainment industry, starting with -> driving force -> public opinion -> naval controversy -> commercial performance monetization. Every step is rule-making. They obey this rule from top to bottom. It is an unspoken rule and an explicit rule, and rules drive the industrial chain, upstream and downstream, and everyone is subtly influenced by the rules

Similar to the “bookmaker mentality” (and “panics”) in the financial market — a market that actually survives has never relied on “free growth”. This set of rules may not be written in a white paper, but permeates the behavior of every participant, and the reason why certain crypto tracks always “go round and round” is precisely because they lack this set of “rules instructions” or, in other words, their so-called innovation does not directly lead to rule-setting

There have been many “phenomenal extravagances” in the crypto industry, but its core is inseparable from innovation. The entire crypto industry can undoubtedly be seen as a testing ground for Web2. DeFi/GameFi/SocialFi/various types of FI are trying to find out how to step left foot on the right foot and spiral to the sky in the stock market

Of course, as we explore, we'll discover that its core is inseparable

1) Asset-side innovation

2) Innovation on the transactional side

Let's talk about asset-side innovation first. This includes asset class innovation & asset distribution innovation, defining asset class innovation (such as inscription runes/ERC20 tokens/NFT/SFT assets), while innovation in asset distribution is ICO/airdrop airdrop/split candy 1:1 give/ liquidity mining defi, etc.

Speaking of the 2017 ICO (initial coin offering), how good was the original intention — “so that ordinary people can also participate in early project financing” results? The project party can write a white paper at will, set up a Telegram group, send a coin, and attract several communities to reach tens of millions of dollars

Early ICOs were completely “wild”: some projects ran off the road after issuing coins, some promised to “double the launch” without implementation. Until the end of 2017, a set of “default rules” were spontaneously summed up by the market and “forced to abide by” by all project parties. This is what I call the “minimum trust rule in the market”

1. Mandatory white paper: the “project background, technical plan, and token economy model” must be clearly written (otherwise users think it is “unreliable”)

2. Standardized public offering process: first private placement (discount for early investors), then public offering (public sale), and final listing (exchanges require a “lock-up period”)

3. Token distribution rules and CMC/CoinGeco are included. The exchange posted token distribution, and it is still being used by BN until now

These rules are not determined by a specific project, but are refined by the market using “pit-stepping experience”: only by adhering to these rules can the project be included in the exchange, trusted by users, and disseminated by the community

This is not a racetrack rule, but a rule such as the “minimum trust rule in the market” is generally an established rule formed with subconscious endorsement. It is a back rule (what is a back position? (The source of trust is not the project itself, but the result of the above, so it's a backstage rule)

Let's talk about a few more examples of actual track design. Most of them are mistakes and collisions, because our circle is just such a platform. Focus on 2 examples. One is Pumpfun and the other is the Ordinals BTC ecosystem

PumpFun, an interesting example, uses the “bonding curve (curve casting)” algorithm for automatic pricing. Essentially, it uses the Friend.Tech curve model to cover up the impermanent loss of price in the middle. Buying it once feels like it's a very low price. In fact, to make money, you have to have 2 or more people to take over before you can sell to make money (including the middle pumping rate), so essentially, this is a kind of barrier method. It's a “mutual aid plate” that everyone is familiar with

Pumpfun has set a set of rules. Use constant consensus magic to change it, and use a curve casting method to keep everyone's money in the “internal plate”. If they play enough, they go out and do LP; if they don't play enough, they always stay in the curve. This is a rule set by Pumpfun. His gameplay is to solve the problem that not so many people have enough LP liquidity

Using false early low costs -> defraud you of “exchange” liquidity -> fake transactions become real liquidity -> as a matter of course

Well, the model of pumpfun makes the original model of issuing coins more rapid, making transactions faster, and making the way of thinking faster. The emergence of pumpfun not only created rules, but also influenced user habits through rules, greatly reducing your average holding time (if you don't sell, then you just withdraw from liquidity)

1. Pursue speed and buy at a lower price one second faster than others (retail investors are starting to learn about nodes, Solana's tips, and Twitter scrapers like bloosm)

2. Chip structure. Previously, it was impossible to find C-side application scenarios similar to ArkHarm's on-chain analysis. The advent of pumpfun made retail investors consciously analyze on-chain chips, and paid third-party software similar to Bubblemap/fast100x was born)

3. User habits, the most users' chain scanning usage habits have entered front-ending/boting, and trading bots have become an entry point for traffic

4. The rise of subculture and the popularization of common sense that news is a token are all changes in user habits brought about by this round of pumpfun

Ok, so let's continue to look at Ordinals and the nine-month BTC ecosystem narrative. How does he set rules through agreements -> user behavior habits are changed -> adapted upstream and downstream products = new narratives embedded in “rules”

First, the Ordinals Protocol is a protocol that “engraves” cryptographic assets (called inscriptions) on the Bitcoin blockchain. It allows users to store and disclose arbitrary data in witness data of Bitcoin transactions to create digital assets similar to NFTs. It is not an innovation; it is an “add-on” brought about by the soft upgrade of BTC's Taproot

Essentially, there used to be such “digital assets” called color coins. Old coin users are familiar with it. Early attempts to record “color” information by modifying the UTXO output script (such as adding special operation codes or comment fields) also required off-chain indexing. There was not enough space at the time to put small images

However, after December 2022, the BTCTAproot software upgrade allowed the inscription data to be directly embedded in Witness Data (Witness Data) and verified by all network nodes as part of the transaction

Ordinals, on the other hand, is a specific product that has been amplified after this upgrade. He has his own set of models to define what an inscription is, what is a rare smart, and what is an inscription number. Theoretically, anyone can create another “rule system” and rearrange it

It's not that he's irreplaceable, it's that he couldn't be replaced back then, so what changed?

1. The Unisat team, which originally worked on BCH, quickly found an opportunity and began supporting the inscription system in just 1 month, making Unisat the leading BTC ecological wallet, laying the foundation for subsequent marketplace+ and even the public chain

2. It has received attention from some miners, and some mining pools are very happy to see a boom on the chain

3. Users are getting used to UTXO, starting to watch meme.pool, and starting to understand what RBF (replace by fee) is to understand what anti-sniper is

4. It has opened up a new asset distribution channel - Mint fair minting, so that the rules are printed in the heart of every user

5. The transaction-side order book system eliminated the set of AMM rules for ETH, and allowed originally illiquid assets to achieve false prosperity by observing the psychological price of the “floor price”

6. It began to have a magical effect surrounding Casey, and it began to have followers, project parties, and investors

The rules of the agreement, user habits, and product compliance have made Ordinals and the BTC ecosystem. This is the rule setting of the racetrack, which is why it is so important

Finally, I'm sure you'll also discover that the opening of a new track is not through old mechanisms, but through innovation, formulating new rules, new ways of playing, and rapidly following and replicating such rules with large-scale effects, making him deeply rooted in the hearts of the people, talents, and new narratives

Whatever works out of design, I'd rather seek in the sky, and never seek out people and clouds. What is correct and dialectical will fill Jeong EV

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