Organized & Compiled by: Deep Tide TechFlow

The Block interviewed Alok Vasudev, co-founder of Standard Crypto, in this episode. In the conversation, Alok discussed the changes and trends in the bear market and the reasons for market changes. Alok believes that each crypto cycle will have a new blockchain application to drive the bull market. They also discussed the potential of crypto games, economic crises, and the combination of AI, ZK, and blockchain.

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Here are the main points of the conversation, translated 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"

Episode: Link

Evolution Trends and Application Layer Breakout in Bull and Bear Markets

Alok discussed some changes and trends in the bear market. He mentioned that in a bear market, trading speed slows down, but the quality of trading improves. He believes that current market participants are more serious, no longer joining because they heard that the crypto field is cool or chasing hype. Many founders entering the crypto field for the second or third time now have richer experience and better understanding.

Frank and Alok discussed the reasons for market changes. Alok believes that BlackRock CEO Larry Fink changing his view on Bitcoin and cryptocurrencies may be a significant factor in market changes. Alok mentioned that the crypto market may have been underestimated in November and December last year because cryptocurrency and blockchain technology are the right direction for historical development, and the market should reflect the balanced prices 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 mainly 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 because we are no longer limited by infrastructure as before.

They discussed the biggest obstacles hindering the breakout of the application layer. Alok believes that in order for more consumer-level applications to work, there first needs to be someone owning a wallet. He thinks that as more people start using wallets, the difficulty of using wallets should decrease, becoming as simple as using a browser. This means that cryptocurrency wallets should become more user-friendly, accessible, and easy to operate, thereby promoting more people to participate in using cryptocurrencies.

Alok mentioned the concept of "small network effects," which refers to the increase in the value of a product or service as its user base grows. Network effects are a common economic phenomenon that indicates the value of a product or service is directly proportional to its user base.

Alok's view is that there are now enough users to start forming these small network effects in new products. This means that as more users start using a new product or service (such as a cryptocurrency wallet or application), the value of the product or service will increase. This increased value may manifest as a better user experience, more features or services, higher security, and so on.

Alok believes that social networks need to be relatively niche from the beginning, not introducing a large number of celebrities at the outset. Successful social networks are those that can cultivate their own celebrities, rather than those that introduce celebrities and require them to bring their own fans.

Alok believes that the big opportunity for social networks is to find the Status Game of tomorrow, which may include NFTs and other crypto features. He thinks that a cryptocurrency-centric social network is a cool place because it has all the characteristics, it is still relatively niche, but he believes that many cryptocurrency enthusiasts are on the right side of history.

Potential of Crypto Games and Economic Crises

Alok and Frank turned to the discussion about games. Alok mentioned an interesting investment strategy, which is to review the previous market cycle and find projects that resonated but may not have been fully successful. He believes these projects may be good investment opportunities. Alok gave two examples, Cryptokitties and Axie Infinity. These two games have achieved some success but also have some flaws. He believes these games demonstrate the huge potential of games in the cryptocurrency market.

They discussed economic crises in games and how to manage them. Alok believes that economic crises in games may be caused by token price declines, market fluctuations, or other factors. He mentioned that to address these crises, game developers need to take measures to maintain the attractiveness of the game. 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 games can be achieved through token rewards, token economies, DeFi protocols, and other means. 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 attractiveness under pressure from token prices.

Alok believes that Axie Infinity is an important milestone for many game developers, prompting them to delve deeper into the cryptocurrency field. He mentioned that the success of Axie Infinity shows that games can still be attractive even under pressure from token prices. He believes this is because financialization in games can help attract players and provide them with additional incentives.

Combining AI, ZK, and Blockchain

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

They discussed the intersection of artificial intelligence and the crypto field, with Alok believing that there is a deep connection between the two. Alok mentioned that both artificial intelligence and the crypto industry are technology-driven fields, rapidly developing, and with great potential. He believes that both fields are exploring new business models and application scenarios, with the potential to have profound impacts on society and the economy.

Both artificial intelligence and the crypto field require a large amount of data and computing power. The crypto field can provide a secure, transparent, and decentralized data exchange and computing platform for artificial intelligence. At the same time, artificial intelligence can provide more intelligent and efficient trading and contract execution for the crypto industry.

Alok also mentioned that artificial intelligence can help the crypto field better predict market dynamics and risks, while the crypto field can provide a more secure and efficient payment and trading platform for artificial intelligence.

With the development of blockchain and the crypto industry, 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 trading, investment, or other financial activities with players. This will make games more interesting and realistic. Players can have more complex interactions with NPCs, experiencing a more realistic game world. At the same time, this will provide more business opportunities for game developers, such as advertising, promotion, or other commercial activities through NPCs.

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

Alok believes that ZK technology will enhance the trustworthiness of the market. By using ZK technology, trading parties can verify the correctness of transactions without revealing any other information. This will help increase the transparency and trustworthiness of the market. Secondly, ZK technology will help improve the efficiency of the market. By using ZK technology, trading parties can complete transactions more quickly and securely. This will help increase the liquidity and trading speed of the market.

Finally, ZK technology will help expand the application scope of the market. By using ZK technology, the crypto field can better meet the privacy and security needs of users. This will help attract more users to enter the market and expand the application scope of the market.

Impact of Market Cycles on Technology Development and DeFi

Alok believes that market cycles play an important role in driving technology development. He explained that market cycles can inject funds into technology development. During a bull market, cryptocurrency prices rise, and the assets of market participants appreciate. This means that there is more funding available for technology 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 of the crypto market far exceeds past levels, with a healthier market foundation, more participants, more applications, more technological innovations, and more compliance.

Alok specifically mentioned DeFi protocols and believes they are the most ideal investment targets. Alok believes that DeFi protocols have several advantages:

Low capital requirements: DeFi protocols typically do not require a large amount of capital investment because they are based on blockchain technology and do not require traditional centralized infrastructure. This makes them ideal investment targets.

Strong defensibility: DeFi protocols typically have strong defensibility because they are decentralized and not easily susceptible 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 operating expenses, with users bearing transaction fees. 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 high operating expenses, while DeFi protocols have almost no operating expenses, with users bearing transaction fees. This allows DeFi protocols to operate more efficiently and achieve higher returns. Alok believes that DeFi protocols represent the best business model in history.

Alok also expressed expectations for a revival of Bitcoin. He believes that Bitcoin may be experiencing a revival. He mentioned that Bitcoin was once a vibrant ecosystem that attracted many developers and tech enthusiasts. However, over time, this vitality gradually disappeared. But he believes that Bitcoin is now recapturing this vitality, and many newcomers to the crypto market may not realize the potential of Bitcoin.

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