The relationship between coins and community is a strong binding one. The significance of tokens lies in establishing participant consensus and governance rights, rather than being merely a financing tool.

Interviewer: lasertheend

This article only represents the views of the interviewee and does not reflect the views of Wu Shuo. Readers are advised to strictly comply with the laws and regulations of their location and not to participate in illegal financial activities.

In this interview, Yan Xin, co-founder of Sign (formerly EthSign), reviewed his complete transformation path from miner, cryptocurrency trader, crypto VC to Web3 entrepreneur. He emphasized his choice to bet against the trend on the Web3 application track during the 2021 bull market. Despite initial difficulties in financing, he ultimately secured joint investments from Sequoia in three regions due to a clear direction and continuous progress.

Yan Xin stated that the relationship between coins and community is a strong binding one, and the significance of tokens lies in establishing participant consensus and governance rights, rather than being merely a financing tool. He advocates for a "community first, product second" construction logic, criticizes the short-term orientation of airdrop culture, and shares how Sign builds a sustainable community participation mechanism through cultural symbols, mechanism design, and application tools.

Initial Experience in Crypto: Starting from Mining in the Laboratory, Transitioning from POW Miner Mindset to Early DeFi Speculation

Shang: Can you introduce yourself and how you entered the crypto industry? What were you doing at that time?

Yan Xin: I am Yan Xin, the CEO and co-founder of Sign. I initially entered this circle through mining, then transitioned to being a crypto VC, and four years ago we founded EthSign.

At that time, it was quite simple; I had just graduated. I studied EE (Electronic Engineering), so most of my career path led me to work at big companies like Intel and AMD. Working at these companies gradually made me realize that we were only responsible for a small part of the R&D in the entire massive industrial chain. Each big company has a very complex industrial chain; for example, if you develop a basic circuit, it will be packaged into a chip, and the chip will then become a terminal product sold out. The final money is distributed in stages, and the returns we could get from our part were very limited.

Then someone in our lab mentioned that we could mine cryptocurrency. The crypto we mined didn’t need to be shared with anyone. At that time, we were quite poor, and during my internship, I felt this was a great opportunity. The so-called Degen play at that time was not the DeFi lending pools we see now, nor was it PVP Memecoins, but various PoW-based altcoin mining. We needed to modify mining algorithms to mine these new shitcoins and then quickly sell them off.

So we were standard Degens, systematically learning and researching through this process, and because we could make money, we gradually started doing crypto full-time. The earnings at that time were actually quite good; we mined a couple of hundred dollars a day, which added up to several thousand dollars a month, which was a lot of money. Moreover, mining itself can be considered a trading strategy. The volatility of these small coins is very high; sometimes a coin you didn’t mine could go up tenfold, and after you mined it, selling it might mean no one would take it, with no liquidity on-chain.

At that time, the PoW game was quite fun. I remember once we were mining a chain and suddenly found that almost all the blocks were mined by us. At first, we were quite happy, but later realized that this actually meant no one was competing with us for the mine anymore, and no one was mining anymore, which likely meant the chain was about to die, and the team had already given up. When no one is playing with you, you have to start thinking—where did everyone go? If no one is mining this chain anymore, it’s hard to expect anyone to come back and buy these coins.

Becoming a Crypto VC: Transition from ICO to VC Model

Shang: You started with PoW, right? How did you gradually transition from mining to trading coins, and then decide to start your own project? Can you share that experience?

Yan Xin: Yes, the pace of development in this industry is very fast. Initially, whether you entered through PoW mining, DeFi, or PVP models, everyone was attracted by the high returns and high multiples. After entering, you start to think about whether these models are sustainable. The gameplay in the entire industry keeps changing. I think the underlying logic of the crypto space is that it initially attracts you with a gameplay that has a certain threshold and technical content, making you feel that as long as you invest time and effort, you can achieve excess returns. But once everyone masters this gameplay, it immediately switches to the next game; this is the norm in the industry.

When we were mining, by the end of 2017, everyone was directly using USDT or ETH on Ethereum to buy new coins, competing on who could transfer faster and buy earlier, and then quickly listing on exchanges. This gameplay at that time was the new generation of "mining." After 2018, PoW gradually quieted down, and the market began to shift towards PoS models. Most asset issuances no longer relied on PoW but were completed through ICOs or VC investment models.

So I naturally entered the VC industry and started doing crypto investments. At that time, many people wanted to invest in crypto, but very few truly understood the industry. I joined a fund, mainly responsible for technology-related research and investment.

The prices of investment targets at that time were really very cheap; looking back now, it was a golden period. For example, Solana had a primary market valuation of only forty million dollars, Aptos was around thirty million or sixty million, I can’t remember, and NEAR was also about thirty million. In short, everything was very, very cheap.

Shang: Did you personally participate in these projects?

Yan Xin: There were actually very few opportunities; the fund didn’t give us many direct participation shares. Then in 2020, I joined Huobi. I officially joined in 2021, and shortly after, we started our entrepreneurial journey.

I had two main considerations at that time: first, I personally wanted to gain a deeper understanding of the industry. When I was doing early investments, I often wondered why an ICO's coin could be speculated to such a high market value when it clearly had no real value support. As an engineer, I found it hard to accept this "irrationality" at first.

But after staying in this market for a long time and engaging in games for a while, I realized that the market is not fundamentally value-driven; more often, it is driven by emotions and narratives. Mature markets are suitable for value investing, but the crypto industry is not. Once you can accept this, many market phenomena can be rationalized in your mind. 2021 happened to be a bull market, which further solidified my determination to start a business.

I believe that in the crypto industry, whether you are a trader or a founder, you are essentially thinking about how to seize the bull market. Because bull markets typically occur every four years, each wave of bull markets is a key window for maximizing returns. Your network resources, market voice, and social capital are all forms of capital.

Starting a business is certainly a high-threshold, high-risk, low-success-rate endeavor, but it is relatively easier during a bull market, such as smoother financing and easier team building, etc. So we firmly prepared to start a business in 2021, and my two partners and I began Sign.

Counter-Trend Financing: Persistence in a Niche Track Earns Sequoia's Favor

Shang: Your initial financing results can be said to be very successful. Can you talk about the story behind it? It seems that many teams with strong backgrounds, such as PhDs and star founders, did not receive support from top investors like Sequoia as you did. How did you achieve that?

Yan Xin: Actually, everyone now says we were very successful in financing, but the real process was not like that at all. We started the project in 2021 and didn’t receive that round of Sequoia investment until 2022. Throughout 2021, we went through a very difficult financing process; it was not easy at all.

At that time, we did not choose the hottest track. We judged that the most popular NFT track had actually entered a narrative bubble stage, with a lot of "storytelling" involved. VCs usually package early simple products very complexly; for example, NFTs become NFT-Fi, Memecoins become Meme-Fi, everything has to go through "Fi." This is the inertia of VCs; they need narratives, but as entrepreneurs, you need to judge whether this track is in the early or late stage.

We felt that NFTs were not suitable for our team's capabilities, and the golden phase of DeFi had already passed, so we ultimately chose a relatively niche direction—developing Web3 applications. At that time, Web3 was not yet a mainstream narrative, but I was an early investor in Polkadot and was very familiar with the concept of Web3, so we decided to lay out in advance.

We were developing a Web3-based application product, and financing was very difficult. In the early stages, almost only our closest friends and those who supported our long-term vision were willing to evaluate us. For a while, we also faced the pressure of whether to accept less-than-ideal investments, but we judged that the trend had not truly arrived, so we chose to persist and continuously advance the product and delivery.

By the end of 2022, Web3 finally took off, and everyone began to see that Web3 applications had real users and realized that this direction had a future. It was at this moment that we secured investment from Sequoia.

Of course, Sequoia's involvement did not mean everything became easy. We are about to celebrate our fourth anniversary, which is a long entrepreneurial journey. Many people only see that we received Sequoia's investment, but behind it is long-term persistence and investment. At least at that time, Sequoia's involvement made many people start to realize that this product and idea had real problem-solving capabilities.

Shang: After Sequoia invested, many people must have started rushing to invest in you, right?

Yan Xin: Yes, the FOMO sentiment was very strong. Sequoia itself has not made many investments in the crypto field, and this was a joint investment from Sequoia China, India, and the US, which is a historical first and will not happen again in the future—because Sequoia China and India have now become independent.

So that round was indeed completed quickly after Sequoia led the investment. But the market is always changing; after the financing was completed, the industry entered a new adjustment cycle, and Web3 also faced some doubts. So we had to readjust and continue to seek true product-market fit. This is a long-term process; it’s not a story that ends with one round of financing.

Why Issue Tokens: Building a Consensus Network Rather Than Just Financing

Shang: What is your view on issuing tokens?

Yan Xin: I think it is a very special and exciting thing. Once you choose to issue tokens, you are essentially choosing to embark on a "crypto grand voyage." The act of issuing tokens itself has no upper limit, but it also brings many restrictions.

I am often asked, "Your project is already profitable, with revenues of around twenty million dollars a year; why still issue tokens?" But I think this question itself is based on a wrong starting point. Issuing tokens is not about making money. You could ask back: why do exchanges issue tokens when they are already very profitable? The reasoning is the same.

First of all, I believe that coins are a means of interacting with and building relationships within a community. They are essentially the entry point into the "Stakeholder Economy." For example, when you use OpenAI, you spend money on its products every day and help train its models, but you are never a shareholder, right? For most people in many countries, owning shares is almost impossible. In this relationship, users are always just users—they are merely passive consumers.

However, with tokens, if users can earn a certain share of tokens by using the product and participating in the community, they become part owners of the project. At this point, you no longer treat users as customers but as co-builders of the project. This relationship is healthier and more sustainable, and I think it is very meaningful.

Secondly, tokens themselves are also an independent "product" or "asset." I often think about when, as a founder, I am seriously refining a product and when I am refining an asset. The methodologies for these two things are completely different, and the energy and strategies required are also different.

Over the past three years, we have refined the products under Sign to a considerable level of maturity. Next, we hope to build and operate it as an asset. This is a new challenge, but it is also a space with enormous potential, so we decided to pursue it.

Token Value Comes from the Community, Not Driven by "Product Value"

Shang: I find your point particularly interesting, especially the idea that users can connect with projects they like through token issuance. But you also mentioned that making products and making assets are actually two different paths. As a supporter of Sign, what is your view on token issuance? Is it possible that it could deviate from the fundamentals of your original product?

Yan Xin: Yes, I have another core viewpoint, which is that coins and communities are a binding relationship. Coins are currency, and currency must exist in conjunction with a community. If you don't have a community, there is no value for the coin; if there is a coin but no community, that coin is destined to go to zero. Coins themselves have no intrinsic value; their value comes from their circulation and consensus within the community.

Of course, there are some VCs now promoting the so-called "pure Utility Token theory," which means that as long as there are products and users, a coin can be supported. But I think this is completely empty talk. If you look closely, almost none of the successful coins are supported by utility; they are almost all driven by community sentiment, enthusiasm, and recognition. Its use value, if it can account for 1%, that would be good.

Shang: I understand what you mean.

Yan Xin: For example, the EigenLayer project had a very high valuation when it launched last year, and everyone said it was a "top-tier" project. But does its token really have that high a use value? Obviously not. There is also a person named Murad, who is involved in meme projects, and he has expressed similar views: the value of a token is partly mimetic value and partly utility value. But in reality, utility value rarely exceeds 5%.

Another example is Layer 1 projects, which often claim that their tokens have ticket value and are gas tokens. But if you actually tally the gas consumed using these tokens on-chain and convert it into valuation, it simply doesn’t add up. What people are buying is not the "usage rights" of these coins, but the prospects of the project and the power of the community behind it. Therefore, I believe that the community and the coin must be bundled together.

The US dollar is also a good example. It is a "coin" that is universally accepted worldwide; most countries hold US dollar reserves, and some countries even use the dollar as their legal tender. This means that the dollar has a huge global "community," with countless people using it every day, which maintains its stability and liquidity. The value of the renminbi and gold also comes from the size of their "user base."

So returning to your earlier question, the biggest difference between making products and making assets or coins lies in whether you prioritize building the product first and then finding users, or whether you prioritize building the community first and then making the product. Many entrepreneurs, when facing VCs, often first find a "fake problem," then propose a "fake solution," package it up, and go for financing, and then slowly turn it into a real product. At this point, the product comes first, and the community is an afterthought.

But when you are ready to issue tokens and truly establish a community, you will find that the best path is to first build a community, observe the core needs and problems of that community, and then create products to meet those needs. For example, if you have an investment community and everyone is concerned about how to fairly obtain tokens, then you design a reasonable token distribution; if everyone encounters problems in governance and cannot reflect their contributions, then you design a Reputation Label system.

In short, if you have a community first and then create products in response, the entire go-to-market path will be much easier, and the cold start problem will naturally be resolved.

Key to Building Community: Cultural Resonance and Frequency Connection

Shang: Interesting! Can we talk about how you build your community? Do you have any insights to share?

Yan Xin: I think this is a particularly interesting topic. Building a community must start with "culture." If a project carries a certain spirit or direction, then its cultural theme needs to be defined very clearly from the beginning; it must be distinct enough to attract people who truly resonate with your frequency.

In fact, building a community is not about "attracting everyone" but about "finding those who resonate at the same frequency." People in this world are inherently different; you cannot expect everyone to join your community—that would be futile. You first need to be clear about who you are, what values you hold, what cultural inclinations you have, what interests you pursue, and what kind of vibe you want to express, and then clearly communicate these. Only then can you attract people who are like you.

Most people feel lonely inside; many hope to find people and groups online that resonate with them. For example, the Bitcoin community gathers a group of people who dislike the dollar and support decentralization; Bitcoin has become a repository of their emotions and beliefs. When we build our own community, we also need to have this "spiritual anchor," which is our own sign, our values.

For instance, we believe that the greatest significance of blockchain is that it serves as a platform that can provide rapid publishing capabilities for assets and services to everyone globally. Therefore, our customized culture is globalization; we hope to become a global family, welcoming people from different countries and backgrounds. In this process, we have good products as support, which can accelerate this global narrative and truly allow people to "engage."

At first, we just clarified our philosophy and then gradually visualized these ideas, turning them into part of our brand identity. For example, we have an orange heart and orange Sign Glasses; these visual elements slowly began to attract some people to join. Once they come in, the community will start to grow naturally.

We do not push everyone to do something; instead, we let them self-organize based on the vibe. For instance, some people start creating Memecoins, others make memes using elements from our community to create images and content; there are also people initiating various activities, such as Poker Tournaments, and even an organization called "Old Poker" grew out of this. These things are all organically grown by the community, not planned by us, and I think that is the core of a healthy community.

How to View Airdrop Culture: Airdrops are an Entry Point, Not the Goal

Shang: What is your view on airdrop culture?** Especially for projects like yours that have not yet issued tokens, many community members are actually "airdrop hunters." They may have joined the community simply in anticipation of an airdrop and will quickly turn to the next project after the token is issued. Which projects do you think have truly retained their communities? Are there any cases you think are worth learning from? For example, Bitcoin is very typical; people not only do not sell but actively buy in.

Yan Xin: To be honest, there are not many such projects. I think that over the past few years, since 2017, the entire crypto industry's discourse power has actually been hijacked by VCs. Many projects have not spent time building a real community but have focused their main energy on "maintaining relationships with VCs." There are very few projects that genuinely take the community seriously.

As for how to view Airdrop Farmers, I think that is a good question. Since Arbitrum, Airdrop Farming has almost become an independent industry. From the perspective of retail investors, Airdrop Farming is actually a strategy with a relatively high success rate. Compared to buying meme coins or various tokens, airdrop farming at least has advantages in terms of safety and return stability, making it suitable for professional players.

But from our project's perspective, we want to build a community that truly has a sense of belonging and value recognition. We hope that when you receive tokens, it is not just because you did a few things, but because you are willing to stay here, participate in building, and support each other. We give you tokens in hopes of exchanging them for your long-term contributions to the community, not for a one-time transaction.

So the first point is that we will be very clear in telling everyone: we do not want to attract those who are only here for quick profits and FOMO. We want to build "genuine connections"—a community where everyone knows each other, interacts, shares stories, and collaborates. A true community is not just about everyone having a relationship with me, but also about members being able to connect with each other.

Of course, we also appreciate the airdrop farming culture; without this culture, many people might not even notice us. But whether you can stay depends on the strength of our product, the design of our mechanisms, and even a kind of soft power to attract you to continue participating. We need to "convince" you with actual products and experiences that this project is worth accompanying for the long term.

The second point is that mechanism design is particularly crucial. If your airdrop model involves doing tasks before the TGE (Token Generation Event), issuing tokens after the TGE, and then having no further channels to obtain tokens, it is very normal for most people to leave as soon as the TGE ends.

Therefore, we will design airdrops as a long-term, continuous mechanism. For example, like Optimism's Retroactive Rewards, community members can earn rewards through contributions at each stage. We will also launch something called the Sign APP after the TGE, where users can contribute to the project in various ways and earn tokens.

Our initial airdrop ratio may only be 5%, but we will allocate 30% of the tokens for the APP mechanism, releasing them over the long term through task systems, content contributions, community operations, etc., so that the entire community can truly retain and grow. Airdrops should not be the "end"; they should only be the entry point.

Community Positioning Differences: Sign Does Not Follow a Downward Route

Shang: Returning to your choices in product design, do you think this trade-off is acceptable?

Yan Xin: Yes, I think the key is to look at what kind of users you intend to attract. For example, Bitcoin initially attracted geeks, those interested in cryptography; Ethereum was also more radical at the beginning, attracting a group of people passionate about decentralization and identifying with the cyberpunk spirit. Some projects resemble activities in my grandmother's community selling medical devices—many elderly people know the machines are not very useful, but they still go every day to experience, chat, and participate in activities because they have companionship and emotional value. This "social atmosphere" is what they truly value.

But this is not the path we want to take. There are many different types of communities in the world today, but we do not need to target users in the "downward market." The community members we currently position ourselves with are mostly young, lively, outgoing, and playful people. For example, when we hold events on Twitter Space, there are thousands of people singing together; that is our style.

Our core narrative is actually that "blockchain is a fair infrastructure," and it should allow everyone to access the best assets and services. In the future, we may introduce some mainstream assets, such as US stocks, to the platform, allowing global users to buy US stocks directly with USDT. In terms of services, we might introduce tools like "interest rate" products, wealth management functions similar to Yu'ebao, and even on-chain governance and custody for pensions, insurance, and charitable donations, forming a long-term stable financial service ecosystem. Of course, these are just concepts for now, but they belong to the long-term vision we are willing to promote.

Shang: The biggest takeaway from our conversation today is your mention that "the coin is actually not closely related to the product, but more to the community."

Yan Xin: Yes, some coin projects even operate very well without any products at all. The community aspect is indeed worth our long-term investment. I remember we briefly discussed this topic last time, and I mentioned that based on my own calculations, there may be a billion people unemployed in society in the coming years.

This is not alarmist; it is because the development of robots and AI is happening too quickly. Large companies are no longer hiring junior programmers because the code written by AI tools like Cursor and Codeium is better than that of beginners and is more efficient. The costs of industrial robots and service robots are also decreasing, gradually replacing many basic labor positions.

This means that in the future, a large number of people will fall into a state of "identity value loss." They will feel confused and not know what to do. And "community" will become increasingly important; it not only provides social connections but also allows people to regain a sense of identity, value, and purpose.

I was not originally a community-oriented person; I was the typical VC style. But over the past few years, as I slowly engaged in community building, I realized that the existence of community is not just a need of the founders but a need of the entire world. This world needs people to seriously and continuously engage in community building. I am also willing to keep doing this.

Shang: Exactly, the success of crypto itself has already validated this viewpoint to some extent. Thank you, Yan Xin.

Yan Xin: Thank you, Shang.

Audio transcription completed by GPT, may contain errors. Please listen to the full podcast:

Xiaoyuzhou:

https://www.xiaoyuzhoufm.com/episodes/67eea0690decaeb094c81bc6

YouTube:

https://youtu.be/4ARPgyyRMss

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