Edit: Wu Shuo on Blockchain
This episode is hosted by Colin, the founder of Wu Shuo, with guests including Wu Shuo analyst Xiao Liu @defioasis; former BitMEX analyst and English podcast host at Wu Shuo, Shang @lasertheend; on-chain analyst and advisor at Wu Shuo, "Guo the Table Guy" @sankin_eth. The three guests shared their experiences of how they first entered the cryptocurrency circle, how they earned their first bucket of gold, and how they encountered their first major setback in the cryptocurrency circle, as well as their views on the current market and their current strategies.
Note: The content of this episode is purely based on personal experiences and does not constitute any financial advice. Personal investment activities are not related to the position or work of Wu Shuo media. Due to the huge fluctuations in the cryptocurrency market, please do not participate casually and strictly abide by local laws and regulations.
The following is a summary of the content:
Colin: How did you enter the cryptocurrency circle? How did you earn your first bucket of gold?
Shang: I first encountered Bitcoin in 2018. My background is in finance. Initially, I thought entering Wall Street was a very cool thing. But in my junior and senior years of college, I realized that the industry was highly competitive, and it was difficult for newcomers like us without a strong background to break into the inner circle. It was during this time that I discovered the field of Bitcoin. I started using some of my funds to buy Bitcoin, and from 2018 to 2020, during the bear market, I did not sell any Bitcoin but focused on learning and observing.
In 2021, while I was in graduate school, I came across the concept of decentralized finance (DeFi). I noticed that this field was completely different from the early narrative and gameplay of Bitcoin, involving novel things such as smart contracts and liquidity pools, which were completely different from traditional currencies. In the same year, I was also fortunate to invest a relatively large position in Solana (SOL) when its price was low. Additionally, I submitted several articles and eventually went to Singapore, officially dedicating myself full-time to the cryptocurrency industry, where I worked for two years.
During this process, I also had the fortune of encountering misfortune because some of the projects I invested in eventually went to zero, such as Solana, which rose from one dollar to two hundred dollars and then dropped to thirty dollars, Luna, which rose from five dollars to one or two hundred dollars and then went to zero, as well as Stepn and FTX projects. Now, I am focusing more on exploring airdrop opportunities.
Guo: I started to learn about Bitcoin around 2017, when I had just been working for one or two years. I was working in Fuzhou, the capital of Fujian province, and I realized that it would be difficult to buy property locally with just my salary. Since my work was related to the internet, I had relatively easy access to information about Bitcoin and blockchain technology. I remember very clearly that on September 1, 2017, I made up my mind to register for a Huobi account, which was still usable in China at that time. However, during the registration process, I needed to undergo KYC verification, including providing ID information and a selfie, which made me suspicious. I wondered why a strange platform needed this personal information, so I did not complete the registration.
Three days later, on September 4, the government issued policies regarding cryptocurrencies. At that time, I thought, fortunately, I did not invest because it seemed like Bitcoin was being suppressed and might disappear. But by December, I happened to see news about Bitcoin and found that its price had nearly increased tenfold compared to September 4. This potential wealth growth attracted me, so I started registering with other exchanges and officially entered the cryptocurrency circle.
As for the so-called "first bucket of gold," I did not have that concept because over the years, I have been working in different places to earn money and continuously investing in the cryptocurrency circle. Whether it's investing or spending, I have not experienced a huge increase in wealth, or for a one-time large investment, I have not felt the impact so far.
Xiao Liu: I came into contact with cryptocurrency around March 12, 2020. At that time, due to the pandemic, I had nothing to do at home and wanted to explore shorting gold, but found that it was quite complicated to operate domestically. While browsing the web, I accidentally learned about Bitcoin. When I first entered the cryptocurrency circle, I experienced the market crash on March 12, 2020, which was quite shocking. For the rest of 2020, I mainly engaged in contract trading, initially on the Bitget platform, and experienced a brief period of high returns, such as a 17-fold increase in profits within two days, but then lost it all, entering a chaotic state until the end of the year.
After joining Wu Shuo, I started researching projects. On Christmas Day, December 25, 2020, I carefully considered my future investments. Considering the heat in the DeFi field at that time, I decided to invest in on-chain DEX, believing it would be a huge opportunity. After careful consideration that night, I bought Uni in the early hours of the morning, investing all my funds—about 5,000 yuan. Shortly after, that investment doubled, increasing tenfold within two months, which surprised me. By late February 2021, my investment had grown tenfold, and I chose to sell.
Subsequently, I invested in Filecoin (FIL) and also received a tenfold return. Through these two investments, my assets quickly grew to 500,000 yuan. However, after experiencing some setbacks, I began to diversify my investments, but found that the losses were more severe. My assets retreated from 500,000 yuan to just over 300,000 yuan. In the second half of 2021, Axie Infinity sparked a frenzy in blockchain gaming, and I decided to invest all my remaining funds in a gaming platform, Mobox. This investment also yielded a tenfold return, temporarily increasing my assets to over 3 million yuan.
However, due to my subsequent investment mindset, I experienced a significant retreat. In 2022, after various failed attempts to invest in Stepn's simulated trading, I lost tens of thousands of yuan. Throughout the bear market, I failed to change my strategy of heavy investment, resulting in even greater losses. It wasn't until the end of 2022 that I began to adjust my investment strategy. In 2023, I have been keeping a low profile, but the continued decline in the market has led to further retreats. In the second half of 2023, I refocused on the Ordinals project and believed it might represent a new starting point for the Bitcoin ecosystem. I started dollar-cost averaging into Ordinals from June or July and have since gained more than tenfold returns, recouping some losses, although still some distance from the previous peak.
Colin: Xiao Guo, there are rumors that you have recently made a lot of profit in this inscription.
Guo: I think it's okay. In fact, when everyone hears stories about inscriptions, such as hundredfold or thousandfold stories, it feels exaggerated. But if you delve into this community, you will find that its capital capacity is actually very small. It is not possible to have a large amount of capital to do these things. It's similar to the recent stark airdrop, where many people see others with 1,000 or 10,000 accounts. You may not know how much cost is behind these 1,000 or 10,000 accounts; they just tell you how much money they made at the moment. From my perspective, the investment cost and capital capacity of the inscription are currently very small on-chain.
How did you manage to sell only after a tenfold increase?
Xiao Liu: Personally, when making investment decisions, I am always very cautious. I will not easily take action unless after extensive research, I am confident that a certain currency is a good investment opportunity. In my opinion, I only consider investing when a project has about tenfold growth potential, such as my views on Uni and FIL. My approach to channel investment is also the same; I never heavily invest without long-term observation and in-depth research.
Guo: There is an old saying in the investment world, "buying is for apprentices, selling is for masters." Selling is often more difficult than buying. Like Quan Kai mentioned, he evaluates investments based on market cap, but the problem I encountered is that we often focus on market cap (Marketcap) and overlook fully diluted valuation (FDV). There is a saying that in a bull market, we should only focus on the fully diluted valuation. Many projects, such as early Solana, had a small fully diluted valuation but a large FDV, and this difference caused me to miss many opportunities. For example, Link, because I saw its fully diluted valuation (FDV) was large, I shorted it when it rose to over ten dollars, resulting in heavy losses.
Shang: Starting from first principles, we need to consider who is buying this coin. The cryptocurrency market is essentially a player-versus-player (PVP) game, where we observe who is buying and who is selling, and whether they are willing to trade. A good method is to observe the attitudes of enthusiasts in the market you are interested in. If you believe a project is good but many people are unaware or do not understand it, then in the current cryptocurrency market environment, this project is likely to be hyped. Even FTT, despite eventually going to zero, was hyped during its decline, and the same goes for Luna. So, I observe how many people are hyping a particular project. As for me, I particularly like cars, and during the bull market, every time I browse the Porsche website or consider ordering a car, I realize that it might be time to sell.
What was the biggest setback you encountered?
Shang: I want to share two experiences, both related to trust. The biggest challenge I faced was the Terra Luna incident. This was not just a financial loss for me—overall, I still made a profit—but it had a huge impact on me mentally. For those who are not familiar with the Terra and Luna projects, let me explain briefly. It is a stablecoin project with obvious Ponzi characteristics. They created a stablecoin that is minted by another coin. In a bull market, if everyone uses this stablecoin, the supply of the base coin naturally decreases, while demand increases.
This project, due to its strong execution, indeed attracted many real-world use cases, such as Anchor achieving a 20% fixed interest rate. But in the end, it turned out to be a Ponzi scheme. Many institutions, including 3ac and Delphi Digital, were attracted to this story, and I think the reason we believed it was because we trusted the narrative of decentralized stablecoins. We believed that even if there was a short-term unpegging, because everyone trusted the project, they would not easily short it. But in the end, when the project collapsed, we realized it was all just a facade. For me, it was about believing in a project with the potential to change the world's financial system, but due to issues with the project team and market factors, it eventually went to zero.
Another case is FTX, where I also believed in SBF's endorsement and his influence. But in the end, the whole organization was a farce. I put a large portion of my bottom-fishing funds into FTX, disrupting my investment plan. These two cases are related to the fundamental principles of the cryptocurrency circle and have taught me profound lessons.
Guo: Regarding the turning point in my investments, it wasn't necessarily the biggest setback I encountered, but it was indeed a significant shift in my understanding of the entire industry, and that was the Luna incident. I was not an early investor in Luna, nor was I one of those who invested early in Luna and waited for it to rise, and I was not a UST staker. I got involved with Luna after its crash, I remember it dropped from over 100 dollars to around 5 dollars due to the issuance, and I rushed in to bottom fish, thinking that a super public chain project with a market cap of billions, dropping 90% in a day, would definitely rebound.
But this incident made me realize that the secondary market price is actually illusory. Luna issued a large amount, so the market cap did not actually drop that much, but the price dropped dramatically. At that time, I did not understand the entire mechanism of Luna and was not very familiar with on-chain data, so I bought Luna from the perspective of a regular trader on the exchange. As a result, because I was trading contracts rather than spot, my position quickly disappeared, causing a huge impact on me.
After this incident, I realized the need to understand more about on-chain data and the essence of projects. Since then, I have started to delve into on-chain knowledge, conduct data analysis, and interpret projects. At the same time, my view of secondary market prices has also changed, realizing that it can be very deceptive. Taking Bitcoin and Ethereum as examples, although their price increases seemed similar in the last bull market, Ethereum's market cap growth was actually higher because Ethereum has a higher inflation rate. Ethereum may even deflate now, but Bitcoin's total circulation continues to increase every year.
Therefore, if in the next bull market, the market cap increases of Bitcoin and Ethereum reach similar levels, the price increase of Ethereum in the secondary market will definitely surpass that of Bitcoin. As ordinary investors, it is difficult for us to access the channels of currency issuance, so we should pay more attention to how we should hold the coins we own in the secondary market. For example, Doge, despite being a popular meme coin, has a large annual issuance, and many price increases are actually diluted by miners. Overall, the Luna incident was a major turning point for me in terms of investment sentiment and understanding of the entire industry.
Xiao Liu: During the bear market in 2022, I learned some lessons. First, I suffered heavy losses in the first half of 2022 when I invested in Stepn's simulated trading projects, and then in the second half of the year, I turned to the NFT market, trying to invest in some second- or third-tier platform coins, but also suffered heavy losses. This series of experiences made me reflect on my investment style. I found that I tend to adopt a more aggressive investment strategy, buying and holding until reaching the target before selling.
However, this strategy has a major flaw, which is the necessity to correctly judge the market cycle. In the bull market of 2021, this method allowed me to achieve my goals smoothly. But in a bear market, the assets bought may continue to decline, resulting in significant losses. In addition to judging the cycle, I also realized that the selection of investment targets in the race track is also crucial. I invested in Stepn's simulated trading and some second- or third-tier platform coins in the NFT market, but did not choose the leading assets in those races. Leading assets may also experience declines in a bear market, but their risk resistance is significantly stronger than other assets.
Therefore, I have developed a habit of choosing the leading tokens in the race track when investing in the secondary market. This strategy helps me to have stronger risk resistance when facing market fluctuations.
Judgment of the current market and the strategy adopted?
Xiao Liu: I have already sold about sixty to seventy percent of my holdings. I believe we are definitely in the early stages of a bull market, which may have started since the end of last year. From June or July last year, I have been dollar-cost averaging into Ordinals (Ordi), planning to hold for the long term until entering a larger bull market. In addition, I have also invested in some other leading assets, such as the recently popular LRT and its predecessor LST. I believe Pendle is the leading asset in this race track and also plan to hold for the long term. My core positions have been allocated, and I may focus on some potential airdrop opportunities in the future. Overall, I believe we are in the early stages of a bull market.
Guo: Let me talk about the Blur incident. Actually, I am not a qualified NFT player, and my investments in NFTs have mostly been failures, buying many small images that now have almost no liquidity. However, I unexpectedly invested in a token of an NFT trading platform, which is Blur. To be honest, I have not even used Blur for NFT trading until now; I still use Opensea. So why did I invest in Blur? It was entirely because of my perspective from on-chain data analysis. I often observe the gas consumption of the entire Ethereum network, seeing which contracts are used every day and which contracts have a large usage. There are roughly three categories: the largest gas consumer on Ethereum is Uniswap, which belongs to a liquidity DEX. Then there are the data broadcasters of various L2 sequencers. Lastly, there are others, and among these contracts, I found Blur. I started researching and found that the market cap of this token was relatively low at the time, with an FDV of only about 1 billion, but its trading volume and market share in the NFT trading platform were comparable to Opensea. It lags behind in some aspects and is ahead in others. So I think a token with a valuation of 1 billion and such a strong user base is quite promising from a community perspective.
In addition to Blur, I believe that holding Bitcoin is the most politically correct choice in this industry. I remember a KOL once said that no matter how your position changes, you should put 50% of your investment in Bitcoin. Because Bitcoin is the market leader, when the market rises or falls, most of your position will not be greatly affected, so you will not make overly hasty decisions due to market fluctuations. This does not mean it will bring huge returns, but at least it will give you a psychological advantage, preventing you from hastily investing in projects you do not yet understand. I think it is important to invest in things you can understand. Since I started learning and analyzing on-chain data, I prioritize entering projects or public chains from the perspective of on-chain data, making my investment decisions more independent.
Colin: How do you currently view the inscription track?
Xiao Guo: Regarding the inscription, I think many people may have a holistic view of it because they have not actually participated in it. But personally, I believe that the inscription itself, or BRC20, is not the most crucial point. For me, the most important thing is that it represents assets on Bitcoin, which is the most important. My focus on assets on Bitcoin, such as commodity-like assets, is not limited to just the inscription. Although people may now call them inscriptions or BRC20, I think this classification is not appropriate. For me, the most important thing is that they are assets on Bitcoin.
We know that in the past, most off-chain assets, such as dApps or tokens, were mostly based on Ethereum's ERC20. For example, on CEX, there may be seven or eight hundred ERC20 tokens, and they do not belong to other chains. Since the rise of ICOs in 2017, ERC20 standard tokens have almost occupied 80-90% of the investment market for all altcoins. Besides the transfer function, Bitcoin seems to have been overlooked. Although some solutions were explored in the early years, such as USDT-OMNI, the right to issue coins was not delegated to ordinary projects. Since the appearance of Ordinals and the inscription, people have started to pay attention to assets on Bitcoin again. I believe that if the assets and network activities on Bitcoin are not prosperous, it will be difficult for other networks to surpass Bitcoin's prosperity in the long run. This is true for the entire industry.
Colin: It seems that Bitcoin's core developers do not want to issue assets on the Bitcoin network.
Xiao Guo: How do I view this matter? For me, compared to the current Ethereum and Solana, Bitcoin is more like a larger common ground. Why should we care about what the so-called core developers of Bitcoin say? Bitcoin belongs to everyone, not to any individual. If the Bitcoin core development team makes some not-so-good decisions one day, or if the decisions they make really do not meet the market's needs, they will definitely be abandoned by users. We come to the blockchain world not to listen to some people's high-sounding words. I believe that those who truly understand and believe in Bitcoin will not pay too much attention to what the core developers specifically say. The key is to return to the users, what do the users really need?
For example, how many new addresses and new users has the Ordinals project brought to Bitcoin, this should be very obvious. For miners, the prosperity of the entire network's transaction fees is also very important. Another point I forgot to mention in terms of investment is that in the new cycle, we should not only focus on old assets. Looking back, for example, the hot assets in 2017 may have disappeared by now, leaving only Bitcoin and Ethereum. Many new users may not even know what YFI is now, it may have been the first project that made retail investors ecstatic at the beginning of the DeFi summer. People may have forgotten about YFI and SUSHI.
Our industry has a high acceptance of new projects, but their elimination rate is also very high. New assets and new gameplay continue to emerge, driving the industry's technological or conceptual iterations. But in the end, most of it will still return to Bitcoin, I believe that is the case.
Shang: At one point last year, I really thought Crypto was not interesting at all, feeling like a bunch of scams, everyone was trading MEME, and fewer and fewer people were paying attention to the meaning behind Bitcoin, Ethereum, and DeFi. At that time, those who survived were all paying attention to things like Dogecoin. But later, I thought that this might just be a market environment. The difference is that this year, Bitcoin ETFs were approved, and we discovered some interesting projects, such as those related to RWA, which may attract institutions.
For me, the biggest indicator is how many new people and how much new capital is entering the Crypto market. In 2021 and 2022, many people came to the Crypto world because they received relief funds. Even though Crypto is not perfect, it is still a place full of opportunities. Under the impact of AI, people can use their spare time to earn more money and participate in a whole new world.
As an investment, I think the safest way is to participate in airdrops. Many projects now need to issue coins, they have raised too much capital, and there are too many similar projects, leading to oversupply. Each person may be interested in at least 10 or more projects, and almost no project will not consider issuing airdrops, this has almost become an industry consensus. Especially after the first phase of the Blur airdrop, users are still relatively scarce compared to the number of projects. So, participating in airdrops or some transparent investment opportunities can be profitable. For example, with Blur, I had almost no risk, and I got nearly 100,000 Blur through a lending platform. Then there are airdrops like Jupiter and JTO, which are very low-risk or even risk-free opportunities. I think this situation may continue to occur in future cycles.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
