NEST Roundtable 6：How to deal with the risks in bearish market and in general?
Participants:
Ricky: CTO of NEST
Camila: Poly Network CM
Chris: Global Expansion Manager at Conflux Network & Crypto Tech Night Co-Founder
James: CTO of PlatON
Stanley He: Head of Research at MetaWeb Ventures
Conference recording：https://twitter.com/NEST_Protocol/status/1576919802399969280?cxt=HHwWgMCi1ZKNrOIrAAAA
Would you please introduce yourself and your project?
Camila: Poly network is a global cross chain protocol for implementing blockchain interoperability and building web3 infrastructure, and we have already integrated over 30 blockchains. And since our launch of the midnight, the protocol has already enabled cross chain asset transfers of more than 16 billion USD dollars.
James: PlatON is like a three-layer sandwich. The first layer is a trustless public chain with the state of art consensus algorithm. The second layer is privacy preserving algorithms. And the third layer would be the privacy AI.
Stanley: MetaWeb Ventures is a multi-chain VC with a focus on near. We invested in all environments, but we definitely have a focus on there because we are deeply rooted in near ecosystem.
Chris: Conflux Network is a public blockchain AKA layer one infrastructure, and we have launched our mainnet in 2020. What differentiates us from others is we started off as a POW chain that’s what our consensus is. And early on this year, we had a hard fork where the consensus became a hybrid POW plus POS consensus. The main reason for the POS is that as all you know that the PW networks do have the possibility of 51% attacks, and the POS layer on top of it just reduces or eliminates that risk completely to make the chain even safer when we’re talking about the security. In addition, the Conflux Network is the only government endorsed public blockchain in China for NFTs.
Ricky: NEST is a web3 infrastructure. After the Ethereum, the demand for the randomness of entrance smart contract is dramatically increasing and the need for risk management of assets is also rapidly grossing. Therefore, the importance of stochastic assets and their related programming and applications have become self-evident. NEST introduces rich random sources for on-chained transactions and for all smart contracts by designing the NEST Oracle. Therefore, it provides investors with customizable and vibrant stochastic information spaced acid through the OMM mechanism and PVM. Stochastic calculus are also prepared for the future of various on-chain applications
What is the standard of a good project in your sector?
Camila: In the cross-chain services sector, taking our Poly Network as an example, we support not only the cross-chain token assets which by the mapping of the assets but also now we are also moving forward with NFT assets and, we support many other tools such as O3. We are more mature technically and incorporate more different types of projects
James: PlanON is more than a blockchain infrastructure sector, and I would prefer to refer this infrastructure one as the ecosystem rather than a project, to see if it has enough energy. For example, if it has a very good group of investors and can run for long-term investment. Another thing is the active community to debate, discuss, develop new idea, and grow organically.
Stanley: We want products to have real utility to organically attract real users from both crypto and the real world i.e., the web2 world. We want projects have solid economic independence and mechanism. We want projects to be able to generate value to both users and investors so obviously we want users to be willing to play with projects and protocols and hopefully get values from it.
Chris: I think especially for layer one, it has so many different verticals that you have to tap into to distinguish for yourself whether it’s good or not. You can talk about the security aspect, the decentralization aspect, the throughput of the network to consider its longevity, the team behind it, are there enough builders and community with enough relevant workshops etc. And I think one thing to consider as a big question if it’s bear resistant or has the stamina and strength to build throughout the bare network.
Ricky: Since we are a web3 infrastructure, we care about the security, the ability of anti-attack. And the second idea is the decentralization. I guess many of you have heard the impossible triangle: decentralization, security, and effectiveness. It’s very hard for a project to complete all the three factors here. So for us, we try to make all users and investors safe. And in addition, I believe the project has to be continuously working on the community and serve for the users.
How to distinguish and avoid bad projects?
Camila: When we are about to select projects to cooperate, I would say it’s very necessary to conduct some background research, and we are usually looking from four factors. The first is obviously social media, like from Twitter, Discord, Telegram community, to see how many followers they have, how active are. Secondly we will look at their applications, like their practical cases, trade volume, tokens and assets. Also, we would explore their white book. We will dig into their protocol design like to see whether it’s reasonable and safe. We also check their source code like whether it’s open source and whether like it’s outdated by authoritative agencies.
James: Except Camila said about the hard thing, the soft thing is to meet the team. The smart person could let you feel that they are creative and could stick with the objective for long term.
Stanley: I would say one fundamental thing that you can do is really just to watch the space carefully. Right now, like 90% of the projects in crypto space are actually the forks or some amended forks of certain projects. And I also agree to talk to the team.
Chris: Just to mention one thing, if a project say they are not a fork, just check and go on Github and see what they do. For example, if it is a lending protocol, its code might contain similar things to Aave or Compound. Just see if they put in any effort in changing some of its code or not. Fork is also ok, but you need to see how innovative they are. And security is also an important thing. One other thing is marketing and exposure of the project right so you can have the best and the most innovative project out there.
What kinds of risks are related to the projects in your sector?
Camila: In our sector security is the top one concern, like the hacker attack. To better enhance user assets and data security, our open-source contracts are audited by several authoritative auditing agencies, and we are updated on a yearly or shorter period of time basis, and all audit reports have confirmed that the organizational structure of poly networks code base is relatively clear and there is risk control system is relatively rigorous. And meanwhile we also launched a 500,000 bug bounty program to enhance network security. I believe that with the wisdom of all developers and white hats we will better avoid vulnerabilities and backdoors that might be hijacked. With the gradual improvements of the whole industry, these vulnerabilities will gradually be avoided.
Chris: I think they’re super many risks. I think in in my last term I already talked about couple of the risks, right? Especially if it’s forks. Are they capable of forking it enough? Are there any security measures? And the way they run the community. Are they talking about the road map? Are they open about what they’re building? How to mitigate risks? I think that’s something that’s very important for projects, especially projects that involve assets, users, assets. For example, can whitehead hackers can go on to the platform and do their hacking to find security bugs and whether the project will compensate people for finding bugs in their program.
James: We are layer one plus privacy preserving AI etc., and since we are brand new, we have rich imagination, and we have to build a space to land. Another challenge or a risk will be that the technology is not mature yet. And the third one is how to make it profitable.
What’s your principle of risk management of projects selecting and investing?
Stanley: Security is always the first priority. Technical we do diligence on every project so obviously that’s not a full audit, but still our engineers will look at the code and to make sure the team is actually capable. The second risk is the economic failure. It’s really hard to actually model every project to the most detail but we’re trying very hard to figure out how everything flows within the products economic cycle. The ultimate risk management is to have the bottom line in your mind.
Are there any interesting projects you’d love to talk about?
Chris: There are many interesting projects out there right now and I think from the 10,000 APY over the 100 million APY until now I think even if we have 5 to 10% APY, it’s pretty good for now, and people have already remarketed into real yields and so I think you can find on twitter, for example staking ETH is one of them because you get eat in return. Also, don’t invest if you can’t afford to lose it.
Stanley: As Chris mentioned, the real yield is definitely one of the biggest trends you know right now in DeFi. GMX actually started the real yield and is currently the largest decentralized perpetual swap Dex and people can leverage. They’re not really compensating users with token inflation, but they’re offering real yield. People could also stake on ETH
Could you provide any risk manage suggestions to our listeners?
Stanley: Use a hardware wallet, set a smaller amount for transaction, and prove it.
What’s your future plans and expectation toward crypto world?
Camila: Poly Network plans to introduce more reputable notes and more public chains in the industry which will not only increase our influence but also bringing more resources to increase the networks transaction volume and capacity as a whole. We also have many plans to carry out such as enriching our functions of bridge and ecosystem services. We are also open to new members, so our mission is to connect existing heterogeneous chains to emphasize the advantages of each chain in the aspect of security, privacy and efficiency, and maximize the value transfer potential.
James: On the PlanON side, in the recent blockchain global summit shanghai, the doctor was calling the infrastructure building era has completed. Now let’s move on to application building era. For a lot of infrastructure type of token we try to find out interesting use cases, and put them onto the infrastructure, including Dex and GameFi. On the cryptographic side, the zero-knowledge proof related stuff will be one of our focus plus the homomorphic encryption.
Chris: The Conflux Network will have a hard fork in the upcoming weeks, and then we’ve also already started to discuss with the community on whether we should change our POW mining. We do have a very China centric and focused ecosystem that complies with all the regulations and with more than 70 projects that focus on NFT solutions in the greater China area where you can also pay with Chinese fiat and through WeChat and Alipay, and that’s another focus. And we’re also thinking about how to bridge the west as well. I really hope that within this bear market until the next bull market comes, people, regardless of which industry they come from, especially outside of Web 3, they understand more concepts from web3 and what we’re building.
Stanley: We are moving toward the destination of our technical road map and we’re going to move to dynamic sharding. We definitely want to blockchain technology and crypto to be true revolutionary economic factor to be accepted and widely used by everyone in the world.
In the end
It is a great discussion on Investment strategy in crypto bear market, we will have our 7th NEST Roundtable (Twitter Space) on Oct 10th, and discuss “New chances of NFT under Web3 infrastructure” Please follow our twitter feeds and don’t miss out.
