In the tech industry, two technological revolutions have been highly anticipated: AI and Web3. AI is expected to reshape productivity, while Web3 is expected to reshape production relationships.
In the tech world of 2023, there is almost heavyweight news every day. It is the first year of generative AI and a deep bear market for Web3.
The total financing of Web3 in 2023 was only 3.6 billion US dollars, a 78% decrease compared to nearly 16 billion US dollars in 2022. Meanwhile, the financing funds in the AI field reached 25 billion US dollars in the first half of the year. One of the largest crypto venture capital firms, Paradigm, has undergone a paradigm shift, stating that it will no longer focus solely on cryptocurrency and Web3, but will begin to expand its focus to AI.
Those who once believed "Web3 is the new sexy" now feel that "Web3 is no longer sexy" and have turned to AI.
However, it must be acknowledged that this deep bear market for Web3 seems more lively than before. Even in a bear market, people still discuss compliance, ZKP (zero-knowledge proof), and Bitcoin ETF. Some people choose to enter the market at this moment.
"When I was at Ant, I often compared AI and Web3 with my colleagues. Their development trajectories are very similar," said Jerry Li. Over the past sixty years, there have been three waves of artificial intelligence, with tens of billions to hundreds of billions of dollars invested almost every time. Highs and lows have continued to alternate until the emergence of OpenAI. "This new large-scale technological revolution needs to go through round after round of cycles before it can truly bring about a leap in development."
Jerry Li has had several prominent labels: former Chief Architect of Ant Chain, former R&D Director of Apple China, and the top scorer in the college entrance examination in Shanxi Province. Now he has added another one—newcomer to Web3.
Of course, strictly speaking, Jerry is not a newcomer to Web3. After graduating from Tsinghua University, Jerry worked in Silicon Valley for more than 10 years before returning to Shanghai in 2015 to establish Apple's Asia-Pacific R&D center. In 2017, Jerry joined "Ant Blockchain," which had not yet been upgraded to "Ant Chain," with a rank of P10.
"The industry is still in its early stages, and compared to AI, it has not reached the level of development in its previous cycle. The total market value of the entire cryptocurrency market is still less than half of the market value of a single company like Apple," Jerry compared the current situation with his former employer, indicating that the Web3 market still seems too small.
Of course, compared to the over fifty-year-old AI, Web3 seems to still be in its adolescence.
The concept of Web3 was first proposed in 2014, as the predecessor of "cryptocurrency" and "blockchain" concepts. These concepts were first introduced in 2008 through Satoshi Nakamoto's "Bitcoin White Paper," just 15 years ago.
Rebellious and unstable, Web3 is going through a period of labor pains, causing the "parents" to shake their heads. After the collapse of FTX, which had a market value of 32 billion US dollars in November last year, regulators around the world began to impose strict regulations on this "mischievous child."
At this critical juncture, at the end of 2022, Jerry left Ant Chain and officially went all in on Web3, founding the public chain project Artela. He stated that he would not consider doing anything else in the short term. When asked about the reason, Jerry used a saying from Ant: "Because I believe, I see."
The Artela team has chosen the public chain track, which is part of the infrastructure of Web3 and is also known as the "highway" of Web3, as there must be roads to transport everything.
In the public chain track, there are long-established Web3 founding projects, such as Ethereum, which have already built their own moats through the "network effect" of their ecosystem. There are also several all-star projects with golden key backgrounds.
When asked about his views on "first-mover advantage," Jerry said to WSJ., "Although there is a lot of competition in the public chain market, it is still far from perfect and has a long way to go." Recently, Jerry has been traveling around the world, taking the first step to adapt to his new role. After interacting with numerous projects, he feels more confident. "After communicating with many projects, our confidence has actually increased."
The biggest difference between Artela and other chains lies not in the currently "overlapping" scalability, but in extensibility, and it is compatible with EVM (Ethereum Virtual Machine), allowing developers to transfer applications with a single click.
This is to prepare for future mass adoption.
Mass adoption is a term often mentioned by Web3 enthusiasts. In other contexts, it can also be described as the "iPhone moment" of the industry and the "last mile." However, the core issue is clear: how to enable ordinary people to use Web3?
During the internet era, the "Ant Gang" was the creator of mass adoption. In their context, mass adoption is more like building another "Alipay" in Web3.
Of course, they have a wealth of experience. Artela's CTO, Qiu Honglin (nickname: CP), previously worked on the underlying architecture support for Ant's digital collectibles platform, Whale Explorer. He stated that through the Chinese New Year's "collecting five blessings" activity, Whale Explorer had already achieved a daily active user base of over 100 million. "At that time, we had already achieved stable transactions in the billions on the chain, while Ethereum was only in the millions. In a sense, Ant Chain had truly achieved mass adoption."
CP was an OG member of the Ant Chain team, having joined the initial form of Ant Chain in 2015 when it was still just an interest incubation group.
"They say that if anyone in Ant Group wants to talk about blockchain, usually when they ask the second person, my name will definitely come up," CP said with slightly curly hair and a slight Cantonese accent. His half-smile always made people feel like they were having a casual chat, but upon closer listening, his content was very professional and detailed. Ant Chain has the highest number of patents in the world, and CP alone holds hundreds of blockchain patents.
Regarding Extensibility, CP gave an example: "In games, in addition to player input in the foreground, there is also the background, such as map refresh, time and weather, or when the big boss dies, the nearby small monsters will also be eliminated. Blockchain does not have background tasks because all executions on the blockchain must be interactive through users."
In the future, running Fully On-Chain Games on Artela might become "the earth still turns without you," meaning that players design the rules and the system runs automatically.
For the blockchain, which currently struggles with interactive lag in playing board games, there is a higher demand for the computational layer. "We want to achieve 100 times that of EVM." Thanks to the experience accumulated in Ant Chain, CP added, "In fact, the test data now shows that we can already approach two orders of magnitude in terms of the computational layer."
But they don't want to replace Ethereum; projects on the Ethereum chain can be transferred to Artela with a single click. CP "abstractly" summarized the characteristics of Artela: "In simple terms, if we liken EVM to the CPU of the blockchain, we are adding a GPU to the blockchain." In simpler terms, large-scale games can be played on the blockchain in the future.
"The 'Jiebei' and 'Huabei' of the Internet finance era were innovations from 0 to 1. We have all experienced the process of going from a vague concept to a specific commercial product, and we know the complexity behind it," CP said. He believes that walking the same path in the public chain era will be challenging, but fortunately, there is experience to refer to.
Most of the Artela team members come from Ant Group. "A very taciturn team of a dozen people, with progress similar to that of a team of more than twenty people." Just a few months after its establishment, Artela received a $6 million seed round of financing, led by Shima Capital, with A&T Capital, Big Brain Holdings, SevenX Ventures, Dispersion Capital, Amino Capital, and others participating.
Artela's test network went live in September and is using targeted invitations for current ecosystem partners. Defi and Fully On-chain Games may both be future focus points. CP said that Artela does not intend to engage in the airdrops and conventional combinations of public chains, but rather wants to explore innovation with ecosystem applications. They are focusing on development in the coming months and plan to officially launch the public beta around December.
"Stably achieving a daily active user base of over 100 million, there is no doubt that Ant Chain has already reached the ceiling in some areas of Web3. However, their activity seems to be somewhat isolated from Web3."
Just as the decentralized nature of Web3 should bring "open source" rather than "patents," it seems that the more mainstream public chain technology abroad and the more suitable non-coin blockchain, also known as the alliance chain, have some "incompatibility" with the domestic context. Ant Chain wants to pave a different path for Web3 in China, opening up the alliance chain and industrial Web3.
As early as 2017, Ant Group already believed in the future of blockchain. At that time, the industry was not yet formed, but Ant already saw blockchain as a core strategic strategy. "At that time, Ant said it wanted to focus on it, but actually not many people understood it. We were a very small team. After reading a lot of foreign literature and reports, I felt that this thing still had a lot of potential, especially in the context of globalization, having financial applications, I think it is particularly valuable."
As the Chief Architect, Jerry began to study the white papers of Bitcoin and Ethereum. As his research deepened, he increasingly believed that blockchain is the "next stage of using technology to serve finance."
In the same year, Ant Chain's "big brother" Jiang Guofei joined Ant Financial as Vice President and President of the Financial Technology Business Unit, in charge of Ant Blockchain. The strategic level of Ant Chain within the group continued to rise. Ant Chain gained momentum, and applications based on the industrial end, such as cross-border remittances, supply chain finance, electronic bills, and judicial evidence, were fully implemented and blossomed.
In 2018, Alipay Hong Kong launched a blockchain-based cross-border remittance function, allowing over 180,000 Filipino domestic workers to receive their salaries back home without waiting for several days and paying relatively high cross-border fees. Ant achieved successful case studies in inclusive finance very early on.
CP also became a popular engineer in the company. Jack Ma mentioned CP while attending the second World Intelligence Congress and shared his widely circulated story about CP's dating profile.
"We have an engineer at Ant Financial who wrote on his dating profile that he is a 'software engineer' and a code farmer, but no one clicked on his profile, and the girls were not interested in him. Later, he changed his profile to 'blockchain engineer' and received over 200 love letters."
In 2020, Ant Blockchain announced a brand upgrade to Ant Chain, and senior company officials stated that the decision was "no less than the decision to establish Alipay."
However, three years have passed, and Ant Chain, which has been deeply involved in industrial Web3, has not yet seen a truly "Alipay-level" application.
Take cross-border remittances as an example. An Ant-related person told WSJ. that there are no technological barriers to cross-border remittances, but the level of support for this technology varies in each country due to different policies and regulations. Therefore, such projects are more like customized solutions. "When we collaborated with Standard Chartered Bank, they were our long-term partners."
Even Whale Explorer, which had over 100 million daily active users during the Spring Festival, faced the problem of unsold collectibles and difficulty in breaking through. Previously, Whale Explorer launched digital collectibles that were mostly cultural and artistic, making it difficult for young people to find them trendy. "But my dad likes it a lot. Among the products I have worked on, it is the only one he has been using all along." CP's work content is closely followed by his family, and Whale Explorer may be the most understandable product among them.
"Although Ant Financial is already very advanced in financial technology, the main framework of domestic regulation is still the alliance chain. This actually removes the essence of the blockchain, which is to represent its value with digital assets. I think in the future, we still need to take the path of the public chain, but the public chain currently has no soil in China." Jerry is more optimistic about the future of the public chain.
The alliance chain, which has stripped away the concept of digital assets, lacks the incentive for rights confirmation. "The alliance chain only takes on the data aspect, and to truly reconstruct production relationships, I think we are still far from that stage."
"Running a commercialized scenario truly requires more than just a chain. Many technical support links are still not in place, and it is still quite difficult to run end-to-end. The current application scenarios actually only require a database with permission settings. If you insist on using a blockchain system, it seems a bit redundant."
CP has experience in building multiple alliance chain application scenarios. He cited the example of using blockchain technology for food traceability, which was expected to eradicate food violations such as "poisonous milk powder."
But the reality is that no one is willing to pay for a better system. "Food traceability, from food production, overseas transportation, customs clearance to platform sales, is an industrial chain matter. Everyone needs to access the blockchain to work, but when it finally reaches the hands of consumers, the price hasn't increased at all."
"Many companies on the industrial chain were passively brought in, without consensus." Consensus is the core driving force of Web3 and the secret to achieving more with less, but the market is still far from that level.
Before obtaining "consensus," it seems foreseeable that the alliance chain will remain in an awkward position for a long time. Outsiders don't recognize it, and insiders don't like it.
At Ant, Jerry joined an interest group related to public chains, where CP was also a member. Today, this interest group has once again become the initial incubation ground for projects.
In March of this year, CP left Ant and joined Artela, marking his first entrepreneurial endeavor. "Every year, Web3 projects approach me, and I always consider them very seriously for a long time because I had never been an entrepreneur before. However, this time, I didn't hesitate for long to seize the opportunity at Artela." CP's basis for this decision is his belief that the team is more important than anything else in entrepreneurship, especially in Web3. Within the industry, he has heard many cautionary tales.
During the recent meeting with WSJ., CP jokingly mentioned his previous identity as a "popular engineer," saying, "I'm already past my prime." CP now wears a Mobius ring on his ring finger, bidding farewell to his previous dating story, as his career and life move on to the next stage.
Dr. Chen Jidong (nickname: Pi Dong), a member of the Big Data Expert Committee of the China Computer Society, with nearly 20 years of experience in AI, has also become a "newcomer" in Web3. Pi Dong previously had a more widely known background as the founder of Alipay's facial recognition payment and Ant Financial's anti-fraud system, with a P10 rank.
He is more optimistic about the combination of Web3 and AI. In October last year, he founded the Web3 security project Trusta Labs, which is a product comparable to Alipay's "Sesame Credit."
Pi Dong joined Ant's blockchain team in 2017, responsible for the commercialization of security technology in the security aspect, and thus came into contact with blockchain. Before entering Web3, their team had always operated independently of Ant, and the team was more akin to a startup, so Pi Dong has rich experience in technology, business, and international expansion.
But now, as the wind blows towards AI, Pi Dong has chosen to be a maverick.
With high expectations, Pi Dong sought out CP for "training" in Web3. After studying for nearly half a year, Pi Dong decided to bring his accumulated knowledge in AI into Web3. In less than a month after its establishment, Trusta Labs won the championship at the Gitcoin Open Data Hackathon.
As compliance gains momentum, this time, Ant Chain's architecture has also expanded to include compliant Web3 on the basis of industrial Web3, taking a two-pronged approach.
According to sources close to Ant Group who spoke to WSJ., Ant Group has invited people to conduct a series of Web3 lectures internally, "They don't want to miss this opportunity."
In April, Ant Chain open-sourced its cross-chain protocol, announced compatibility with the Ethereum ecosystem, and partnered with the only compliant public chain in China, Conflux. This means that Ant Chain's open alliance chain will further support the Web3 ecosystem.
Industrial Web3 is still in progress and won't stop. If helping companies develop apps is likened to "building a building," then after the building is constructed, the next step is "building roads," which means achieving data circulation and incentives in a non-token manner.
"We don't believe that Web3 is about issuing tokens and then exploring business models," explained a responsible person at Ant.
"Multi-party incentives are the spirit of industrial Web3, but they don't necessarily have to be done in the form of tokens. Why do we have to use tokens for incentives? It's because the circles abroad consist of a group of strangers. But in China, doing business in the industrial sector is not about being unfamiliar with each other. In the TO B industrial sector, it's originally about acquaintances, so it's not necessary to use tokens. It's still possible to achieve rapid asset circulation throughout the industrial chain and gain the trust of all parties without using tokens."
And for the development of compliant Web3 in the Hong Kong and overseas markets, Ant Chain has also made new moves. At the Bund Summit on September 8th this year, Ant released a new Web3 product, ZAN. ZAN provides technical solutions for Web3, with a focus on security and compliance-related products. The former CTO of Ant Chain, Zhang Hui, serves as the CEO of ZAN, and he is currently based overseas.
ZAN is a team of dozens of people, with technical support from Ant Chain, and is currently recruiting on a small scale externally. Unlike the discussion of patents and industrial blockchains, ZAN talks about open source and RWA (Regulated Asset Issuance).
"We have actually been paying attention for a long time, but we were just waiting for the right time," said a responsible person at Ant, emphasizing that ZAN was not a "spur-of-the-moment" decision.
In fact, it's not just Ant. Huawei, Tencent, and other major companies have also chosen to "forge ahead" this year.
Huawei Cloud has made frequent appearances at various summits in Singapore, Hong Kong, and elsewhere, and held a "TechWave Web3.0 Special Day" at the Hong Kong Cyberport, where it released a series of blockchain services such as the Web3.0 Node Engine Service NES and QingTian Enclave Confidential Computing.
The "Tencent Gang" is even more well-known. Cai Yige, the former head of Tencent's blockchain, left the company at the beginning of this year and founded the Web3 wallet Punk Code. In addition, many employees from business lines such as Magic Core and ZhiXin Chain, which are more involved in blockchain and metaverse, have turned to Web3 entrepreneurship.
"In 2021, there was a lot of money, but the projects were chaotic, and many well-known people in the industry ended up in disgrace," Jerry began to engage with investors in October last year, when the financing window had not yet closed.
"If we were to start a project this year, it might be difficult to get it off the ground." WSJ. learned that another project born from a major company and entering Web3 faced significant difficulties when seeking financing this year.
"Neither too early nor too late." For long-term proponents of obtaining funding, this may be a good time to explore.
"In the previous cycle, blockchain was not considered an industry." Kevin, another co-founder of Artela, studied psychology at Fudan University, worked at Ant for over a year, and then entered the family office of a senior executive at Alibaba to manage investments. Out of personal interest, he entered the Bitcoin and Ethereum communities in 2016.
Kevin gives the impression of being more like an original crypto geek within the industry. He doesn't like to be in the spotlight, but he always manages to have deep connections within the industry. In the jargon of Web3, Kevin is very "Crypto Native."
"At that time, there was no concept of a bear market or a bull market, and the community atmosphere was really different from now. When we gathered, we discussed economics and non-nationalized currency."
Kevin was completely disillusioned with the industry due to the ICO boom in 2017 and 2018, describing it as a "misplacement of idealism." He sold off most of his coins, turned to entrepreneurship in the AI education sector, and also obtained financing. But later, the education industry also suffered setbacks, and Kevin went to Columbia University for a master's degree.
Now, he has returned to Web3. "Because I see that the public chain has developed to this stage, and what I have done, seen, and experienced in other industries happens to be what they need. That's my motivation. I still have a strong builder mentality, and even though the market conditions are poor, if this matter is meaningful, I will do it."
"The development of things is a tortuous process. This industry has taught me a very important thing, which is not to make value judgments." Kevin explained.
"Aliens sent a piece of code, and everyone interpreted it as frog eggs. But what do frog eggs really represent? I tend to believe that when this industry is really being built, or when it actually has a driving force, it will develop and grow on its own, and then produce some things that may be completely unexpected. I think this process is definitely meaningful."
"Entrepreneurship is very fragile, but personal motivation is not. The foundation of the Web3 industry is still there, so as long as you grow with it, it's fine."
Kevin is a big fan of the science fiction novel "The Voice of Its Master," which is about humans receiving signals from extraterrestrial visitors. A part of the signal is seen as a production formula that can create a wonderful organic substance called "frog eggs," but no one can decipher the information in the frog eggs.
In real life, the appearance of the Bitcoin white paper seems to be the signal from extraterrestrial visitors. The value of Bitcoin is the "frog eggs." What exactly will Bitcoin bring to humanity? This is a mirror, and each person sees themselves through their interpretation of it. "The voice of its master is indeed my voice," is a precise summary of this book on Douban.
"This explanation is a bit abstract. In summary, it means not making value judgments, but always doing things that are beneficial to the industry."
Kevin believes that Web3 will become more and more mainstream as it is accepted by the public, finding his own place and point of integration, even if it deviates from the original ideal.
The industry is indeed advancing. Initially built by crypto geeks, the blockchain industry has evolved from "blockchain" to "Web3" as the concept continues to upgrade, leading to industry differentiation and more narratives being woven into it, making it easier for people to find their roles within it.
"This time it's real entrepreneurship, whereas before at Ant, it was all pseudo-entrepreneurship," Jerry chuckled. "Before, at Ant, it was a very good office, and the middle and back offices provided a lot of technical and other support. Although at Ant, we always talked about having an entrepreneurial spirit, real entrepreneurship and pseudo-entrepreneurship are completely different."
Perhaps the most obvious change is that the office environment has gone from "heaven" to "underground."
"Our very small team is working in the basement now, you know, it's a real basement." In addition, Jerry is fully responsible for administrative matters such as renting.
The Artela team has rented an office space in a public office in Hangzhou that can accommodate six people. The largest item on the desk, besides the computer, is an air purifier. There are no windows, there are plants, but no sunlight. "We all say we are Underground," CP chuckled.
During the interviews with WSJ., all the interviewees mentioned the same question. "Will the experience advantage accumulated in Ant Chain have a leveling effect on Web3?" They all denied it.
In Web3, they are not called "founders," only "Founder" or "early Builder," and the organizational structure is no longer a "company system," but a "DAO." These are all novel things that make these "veteran newcomers" feel curious. Jerry is still learning how to transition from Web2 to Web3. "We still need to have a sense of awe for the industry. Web3 has many concepts, values, and community cultures. If we directly apply some things from Web2, it will seem out of place. We need to avoid this phenomenon."
Although the big companies have a halo, they are also easily questioned by the community for not being "Crypto Native" enough. Jerry said he has heard this term many times. "On one hand, it's positive, advocating a spirit of freedom. But on the other hand, I think it's not quite right. From the perspective of the Web3 community, we cannot limit ourselves. If we continue to exclude new teams from entering, the Web3 community will never grow."
Although they have left Ant, for them, Ant is still fertile ground. In September, Artela, Trusta Labs, and the overseas Web3 project ZAN from Ant Chain jointly launched A³DAO. Public chains, security, solutions, and brother projects form a complementary ecosystem.
The exact moment of the industry's "Alipay" has yet to arrive, but what is known is that the "gang" from Ant will not miss it.
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