The moat is not innate. Today, we see that all platform companies with strong network effects have built their moats step by step in fierce business competition. I completely agree with what Brother Chain said, 'The moat was fought out.'. Let's discuss along this line of thought: 1. The moat of strong network effects, especially on bilateral or multilateral platforms, is almost never 'innate'. The essence of network effect is that 'the more people use it, the higher the value', but in the early days when the user base was very small, the effect was almost zero or even negative (cold start problem). To turn it from weak to strong and ultimately form an unshakable barrier, it is necessary to "build" users, suppliers, and data step by step through fierce competition, continuous investment, product iteration, subsidies, acquisitions, or ecological expansion. A large number of platforms in history that seem to be "lying down and winning" now have fought tough battles in the early days. 2. Give a few typical examples and explain in detail how they create network effects from scratch. 1) Facebook (later Meta) Early American social networks were not limited to Facebook. MySpace was once the absolute leader, while Friendster, Orkut, and others also had considerable scale. Facebook started from Harvard campus in 2004, relying on "real identity+closed invitation system" to establish a high-density network in universities, and then gradually opened up. It does not inherently monopolize users, but rather through: A cleaner interface and better privacy controls attract users to migrate from MySpace; - Continuously adding features (News Feed, Photos, application platform); In the later stage, a large-scale acquisition of Instagram and WhatsApp was made to incorporate potential challengers into their own network. The network effect only truly erupted later: if all your friends are on it, you have to be on it; Advertisers and developers also came along. If there is no sustained product competition and expansion, it is entirely possible for it to be replaced by newcomers like MySpace. 2) Uber (and ride sharing platforms) Shared mobility is a typical bilateral network effect: when there are more drivers and passengers, the waiting time is shorter, and when there are more passengers, the driver earns more money. But when Uber started in 2009, it faced fierce competition from Lyft, local taxi companies, and local players in various countries (such as Didi in China and Grab in Southeast Asia). Its strategy is: - In the early stages, significant subsidies were given to drivers and passengers (burning money on both sides), quickly reaching a critical scale; - Optimize matching efficiency with data and algorithms to form a positive loop; - Localized operations in different markets, responding to regulatory and price wars. Uber now has a strong network effect in core markets such as the United States, but this moat has been built through years of high-intensity subsidies and operations. Many markets (such as China) are ultimately taken away by local players with the same or even more aggressive subsidy strategies, indicating that network effects are not "naturally attributed" to a single company, but rather depend on who builds the scale to be large enough first. 3) Visa/Mastercard (payment network) The payment card network is a classic bilateral platform (cardholder) ↔ Merchant ↔ Bank). Visa originated from BankAmericard in the 1950s and 1960s, with low acceptance among early banks and merchants. It continues to persuade more banks to issue cards and more merchants to accept them; Establish an exchange fee mechanism and global clearing standards; Dealing with challenges from competitors such as American Express and Discover, as well as local card organizations in various countries; It took decades to build the network that is almost universally used today. Today it looks like a "pipeline type, carrying capital flow without touching money", with a very deep moat, but this depth is built by long-term competition and standard construction, not innate. In summary, the core of a strong network effect platform's moat is "scale+density+switching cost". These things hardly exist in the initial stage and must be accumulated bit by bit in real competition through products, subsidies, marketing, acquisitions, or regulatory arbitrage. Once the critical point is crossed, the effect will self reinforce, appearing as a 'natural barrier', but looking back, almost no one has obtained it lying down. Nowadays, many people tend to guard city walls and competitive barriers with strong rearview mirrors, but forget that the establishment of a moat was a mistake and requires a considerable amount of time for operation, competition, and contention. Ultimately, success is still a probability event. Returning to the stablecoin track, it is still the one we talked about today, which is large and growing rapidly. Circle has a certain leading competitive position, but to be honest, it has not yet established enough competitive barriers and moats. The stablecoin bill has only been passed for a year, and the stablecoin field is fighting this battle of "network effects" and building a "moat". The battle is raging. So for stablecoins, from the perspective of Circle's development needs: they are not already far ahead (still in battle, the competitive landscape is not yet determined), but they are also not useless (having a first mover advantage, a certain business scale, team capability, strategy and execution, and narrative scarcity). Need a correct perspective and framework to look at it, discussed this morning: https://(x.com)/qinbufark/status/2085930841503564081? s=46&t=k6rimWsEbo2D2tXolYcM-A