The End Times of Native Encryption: A New Landscape of Compliance, Stablecoins, and Asset Issuance

In the past decade, decentralized blockchain has provided a regulatory wilderness for the world. Although Satoshi Nakamoto's peer-to-peer electronic payment system failed to succeed, it opened the door to a parallel world. This internet world, existing above countless nodes, transcends the constraints of traditional laws, governments, and even societal and religious norms.

Breaking free from regulation has become the core driving force behind the development of the encryption industry. From the asset issuance and its variants that began with ICOs, to the rise of DeFi, and now the so-called super application stablecoins, all of these are built on this foundation. It is precisely by freeing ourselves from the cumbersome restrictions of traditional finance that we have created today's encryption world.

However, with the approval of the BTC ETF and some political changes, native encryption seems to have entered the end of an era. The industry is starting to seek Compliance, trying to meet the demands of traditional finance. Stablecoins, tokenization of physical assets, and payments have become the mainstream of industry development. In addition, pure asset issuance - a picture, a story, a string of contract addresses - has become a major topic of daily discussion.

The fundamental reason for this transformation lies in the fact that, so far, blockchain lacks effective means to restrain the improper behavior of various entities behind addresses. Although we can ensure the honesty of nodes and the decentralization of DeFi, we cannot prevent anything that may happen in this "dark forest." Many once-popular concepts such as NFT, GameFi, and SocialFi heavily rely on the entities behind the projects. While blockchain has strong fundraising capabilities, how to ensure that project parties use these funds reasonably and turn their ideas into reality remains a challenge.

The vision of non-financialization cannot be achieved merely through improvements in infrastructure performance. Tasks that are difficult to accomplish on centralized servers are even harder to expect to be realized on-chain. We cannot impose "proof of work" on project parties. Today, bowing to Compliance may be the beginning of future non-financialization; this shift, though ironic, is inevitable.

The crypto world is becoming a branch of traditional finance, and the discourse power of this ledger is beginning to be stripped away by the upper echelons. Bottom-up innovation is becoming less frequent, and opportunities are being compressed. What we are ushering in is the era of on-chain hegemony.

In this new era, the resurgence of stablecoins and traditional internet narratives has become two key features. The stablecoin market is primarily dominated by fiat-backed stablecoins and yield-bearing stablecoins. The passage of the U.S. "Genius Act" provides a clear framework for the issuance and regulation of stablecoins, which means that on-chain trading mediums are officially taken over by the United States.

On the other hand, the concept of yield-generating stablecoins has rapidly spread, with traditional hedge funds, market makers, and exchanges all venturing into this field. However, this trend seems to have deviated from its original meaning, with innovation replaced by high APY and convenience.

Asset issuance platforms are also undergoing transformation. The profit models of some emerging platforms have come very close to Web2, with almost zero return to the community. Launchpad has become the last paradise for native encryption users seeking to get rich quickly, but its operational model also has issues. Even more concerning is that completely off-chain projects have started to issue tokens, further blurring the boundaries of the crypto world.

At this stage, whether speculative behavior can create real value remains an open question. We may need a new set of rules to balance innovation and speculation.

The role of the attention economy in the cryptocurrency world is becoming increasingly prominent. Project parties no longer rely solely on technology and narratives to attract attention, but instead begin to purchase attention directly. This approach, while direct and effective, also brings some problems. Tokens are becoming a "fast-moving consumer good," while the true long-term value is difficult to capture.

The globalization of stablecoins and the popularization of blockchain payments seem to be a foregone conclusion. However, as natives of this world, what we may need are on-chain native stablecoins, non-financial applications, and the next wave of innovation. We do not want to live in a Web3 world that merely sells traffic.

Although time seems to validate some early believers in Bitcoin, I still hope that the future can prove them wrong. The future of the encryption world is still full of possibilities, and we need to find a balance between Compliance and innovation to create a truly decentralized new era.