The ignition point of the next wave of encryption? A new way of diverting from Web2.

Original Title: "The Trigger Point of the Next Bull Market: A New Way of Flowing from WEB2"

Original Author: W Labs

One, the wealth code revealed by the early bull market in 2023

On January 1, 2023, the price of BTC was still at 16500U. As of February 6, when this article was written, the price of BTC was around 23000U, with a growth rate of over 40% in just over a month.

The market of Xiaoyangchun has driven the rotation of long-lost sectors. Last year, the new public chain Aptos in the bear market was fiercely attacked by the Korean coin speculation team, directly pulling up nearly 7 times from the bottom of 3U to a high of 20.4U. Friends who understand the Aptos ecosystem know that it is still a super inactive chain, but it doesn't matter. When the wind comes, not only can pigs fly in the air, but even the withered elephant like Aptos can soar freely. However, it is said that it is tied with a thin line and constantly pulled up, and the other end of the thin line is held in the hand of a Zhao surname god in the cloud (this is gossip, details omitted).

Looking at the rotating sections, the AI section has the highest increase, with the leading AGIX increasing tenfold. We consulted with senior scientists and found that AGIX has not yet been practically applied and is still in the PPT stage, completely different from ChatGPT. However, this does not affect AI as a new section soaring to the moon.

Did you notice that this bull market has once again validated a principle: in the cryptocurrency industry, new projects are favored over old ones. Aptos is a new public chain, and AI is a new sector that has not yet been launched in the first two rounds of the bull market. This should be the most important focus for everyone to keep an eye on in 2023: what kind of projects exist that have logical new concepts?

二，如何挖掘符合逻辑的新项目

Translation:

2. How to discover new projects that meet logical criteria

Here it needs to be clarified that not all novel ideas or concepts should be blindly pursued. For example, if a project's white paper states that they are developing a method of using brain waves to demonstrate the instantaneous nature of quantum entanglement and storing it in a nanochip that can be linked to a decentralized network and implanted in the brain, it may be very innovative, but would you believe it?

The new concept still needs to follow the rhythm and logic of the times. So how to explore it? Without a methodology, one will be exhausted. In the cryptocurrency industry, one day is like a year in the human world. It always feels like there is not enough time. Missing out on a project and watching others make a fortune can be very frustrating. A few days ago, I read a good article that said that the "point + line + surface" model should be used to capture projects. Just focus on one or two surfaces and start analyzing. I personally agree with this approach, after all, most investors do not have enough funds to cover the entire WEB3 track and create a complete portfolio. The main focus should be on one surface, analyze it to the line, and finally start with the point. By earning a good profit at this point, it is enough. For example, in the bull market of 2021, the surface analysis should include the emergence of new public chains; the line analysis should include fresh models, large funds, and CX communities; and the point analysis should focus on Solana: innovative POH model, large funds supported by FTX and OK, just go all in, and other altcoins can be ignored. In the end, a hundredfold return can be achieved. Of course, this is hindsight, but this analysis method should be effective.

Returning to the topic that everyone is most concerned about, where should we focus on in the next bull market? As mentioned earlier, it is best to find new concepts that make sense. It's not that there is no chance for old sectors such as public chains, DEFI, NFT, Gamefi, and Metaverse, but rather that there is a greater probability of finding projects that can increase by a hundred times with new concepts.

I am a practitioner in the encryption industry. Please translate the following Chinese text to English without considering the context or industry-specific terms and names. Do not omit any English words or phrases, such as ZKS, STARK, SCROLL. If there are English characters in an a tag, do not translate them and return the tag as is. If the content only contains punctuation marks, return them as is. Do not translate HTML tags such as

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I have been following the "WBE2 to WEB3 Traffic" section. My guess is that the narrative of the next bull market will likely focus on how to build the WEB2.5 ecosystem module, which requires a clear path to introduce more new players (newbies) to WEB2. Yesterday, I read an article that analyzed the data and concluded that this small bull market was initiated by stock funds, but without a large influx of new funds, it cannot form a real bull market.

Okay, if we analyze it from a surface level, our main focus is on the "WBE2 to WEB3 Traffic" section. How can we further analyze it online? The current difficulties in transitioning from WEB2 to WEB3 are twofold: 1. The infrastructure is not up to standard, and the entry barrier for WEB2 users is too high; 2. Apart from striking it rich, WEB2 users lack the motivation to enter WEB3. Therefore, our online analysis will focus on these two aspects.

Firstly, infrastructure construction is an eternal challenge that requires a huge amount of funding or a god-level team. The most likely project to achieve WEB2.5 is Twitter, which is already the top stream in the encryption circle and has a large number of WEB3ers gathering, with unparalleled dissemination power in the WEB2 world. If Twitter launches its own token and wallet, as well as a subsequent information storage network, a large number of WEB2 players will be able to seamlessly connect to WEB3. There may not be many new projects related to this concept, but some old projects related to the concept, such as Mask, have been jumping up and down, with fluctuations of 4-5 times.

Secondly, why do players in WEB2 want to enter WEB3? "Everything that can be played and used in WEB2 is already available. Don't talk about decentralized concepts. Smooth experience and high-quality services are the top two priorities for users. When WEB3 products reach the same level in terms of experience and service, then I will consider the bonus points of decentralization." This should be the real idea of ​​most users. Then, in the past two years, most WEB3 projects have come up with ways to attract users through "get rich quick" schemes, but the result proved that the method of constantly printing money by the Ministry of Finance to spend on the people is not sustainable, which even Satoshi Nakamoto opposed. The death spiral is waving at you at the intersection ahead. In fact, there is another way that has been more successfully validated, which is to rely on the idol effect and real IP to attract users. This is the focus of our analysis in this article.

Don't forget that the ignition point of the previous bull market that began in early 2021 was NFT. At that time, NFT didn't have as many bells and whistles as it does now, there were no PFPs, no gaming utility NFTs, it was just a new model that could help artists and celebrities make more money in a transparent way. Let's recall this news: On March 11, 2021, at a Christie's auction, the famous digital artist Mike Winklemann set a record with his single work "Everydays - The First 5000 Days" selling for $69.3 million. Therefore, this is the most expensive NFT auction of Beeple's work ever recorded.

Recall the time when "NBA Top Shot" skyrocketed, how many WEB2 NBA fans joined the hype.

This type of traffic diversion is healthy and sustainable. Step one: Artists, celebrities, and creators have a natural impulse to turn their work into NFTs. The popularity and circulation can quickly be monetized, which is in line with the fundamental interests of this group. Therefore, they and NFTs, and transparent and open blockchain contracts, are natural best friends.

Step 2: They have driven fans into WEB3: Support your brother by collecting an NFT and join the DAO community to vote for your brother. Fans' enthusiasm for their brothers is so strong that they are willing to do anything, but they still lack the motivation to install a MetaMask wallet?

In fact, this model is not new in WEB2, it is private domain traffic.

Three, three stages of IP drainage model development

Phase One: Image Phase. The speed at which users accept different domain IPs is related to human anatomy. Why did image-based NFTs become popular in WEB3 first? Because visual contact through the eyes is the fastest way to receive information. The eyes are the windows to the soul, and the brain processes pattern and color information captured by the eyes the fastest. This is how the "eyeball economy" came about. Therefore, Beeple's art, Punks, and other small images like Bored Ape Yacht Club led the NFT market in the last bull market.

Phase 2: Music phase. After the eyes, comes the ears. By listening to beautiful music, one can also experience pleasure and enjoyment, and such works have a good foundation for IP dissemination. A16Z has been trying this area with its Audio, but it is mainly focused on social aspects. In recent years, some traditional record companies have turned some new songs into music NFTs, but they still operate in a traditional way and the effect is not good. Last year, two music WEB3 projects, Melody and MMMM, emerged during the bear market. Melody quickly disappeared, while MMMM is still being built. If it can persist until the bull market arrives and create a product model based on song IP and social aspects, it may even fly directly to the Centaurus constellation, let alone the moon. Looking forward to such products breaking through as soon as possible.

The potential of written works has been proven in WEB2. In 2008, the former richest man in China, Chen Tianqiao's Shanda Group founded Shanda Literature. They acquired various Chinese online literature platforms such as Qidian, Rongshu Xia, and Jinjiang Literature City, and at one point held a 70% share of Chinese original works, becoming a privately-owned publishing company with "Internet genes" and a classic case of how the Internet has changed the traditional publishing industry.

By 2015, Tencent, a wealthy company, directly acquired Shanda Literature and merged it with Tencent's existing literature section, becoming the current giant "Reading Group". Two years later, it went public in Hong Kong. Take a look at the IPs it owns: "Douluo Continent", "Ghost Blows Out the Light", "Tomb Notes", "Nirvana in Fire", "The King's Avatar", "Joy of Life", "The Story of Minglan", and so on. Its annual income in 2021 and 2022 is around 8.5 billion yuan.

Unfortunately, the crisis has already emerged. The dragon slayer who once dreamed of overthrowing the monopoly of traditional publishing houses has turned into a larger evil dragon. WEB2 entertainment companies like Yuewen Group have already monopolized most of the resources in the market. At this time, they are squeezing original authors with their left hand and constantly collecting high fees from readers and fans with their right hand. Currently, except for those top authors like Tang Jia San Shao, Xi Hong Shi, Mao Ni, etc., the vast majority of creators are living very difficult lives and have no bargaining power with Yuewen Group: not accepting commercial terms? Okay, even if your work is good, we will promote other people's novels. What's even more frightening is the temptation to rent-seeking using power that will arise later.

Fortunately, the wave of WEB3 has begun. Since more than a decade ago, WEB2 publishers were able to overthrow traditional publishing houses, why can't text IP projects of WEB3 overthrow WEB2 publishers? A small spark can start a prairie fire!

Four, How to create WEB3 products for text-based IP?

阅文集团 claims to have subverted traditional publishing houses, but in fact, they have done three things: 1. Converted physical books into internet text; 2. Based on transparent internet data, they can gamble with authors on performance (dividing profits according to votes and clicks); 3. Embedded works into the realm of entertainment, which may eventually change into film and gaming.

而 WEB3 的文字类 IP 产品可以更加进化：
And WEB3's text-based IP products can evolve even further:

Positioning itself as a platform, not giving itself the opportunity to "turn from a dragon-slaying boy into a dragon". China Literature Group is a company with the power to select and promote works, a centralized organization. WEB3 can introduce DAO to allow the DAO community members to decide on the quality of the works and how to promote them, with the largest fan base. Daily staff work for the DAO community. In short, WEB3's text IP products should only be a platform that connects creators and fans, without intermediaries like China Literature Group making a profit. The platform's revenue should only come from two sources: revenue sharing agreed upon with the creators and investment income from the increased value of the works themselves.

For creators, every work that is uploaded to a WEB3 platform can be seen as a stock market listing. The platform issues NFTs and tokens corresponding to the works, which are tokens that inject copyright into NFTs and tokens. The simplest model is: originally planned to issue 100,000 physical books, now issue 100,000 NFTs, and only fans who hold NFTs can read them; subsequent updates require payment with tokens to see new chapters; after reading, NFTs can be sold to allow new fans to enter. All of the creator's income (sales and royalties) is written and locked in the blockchain code, and the contract is automatically executed, so there is no need to worry about data tampering.

For fans, in addition to being readers, they have an additional identity: investors. Previously, when we read physical books or online novels, our only identity was that of a reader, and we had to spend money. Even if we found a book that we really liked, we couldn't gain any financial benefits from our foresight. However, in WEB3, if you find a work on an IP platform that you like, you can buy its NFT or corresponding token. If more people want to see it, the price will definitely increase. So, after being shocked by "The Three-Body Problem" more than a decade ago, instead of just recommending it to classmates or colleagues, why not buy its NFT and grow and make money together?

Five, WEB3 Case Study of Text-based IP: Read2N

Read2N, a project that caught my attention last year, as a seasoned reader, I sneered at it at the time: another StepN copycat, do I have to rely on gold farming to motivate myself to read? It's simply an insult to culture! This was misled by the project name "Read to Earn".

During the Spring Festival, I started researching a project out of boredom, but found out it wasn't what I thought it was. The essence of Read2N is to establish a decentralized trading platform for investing in excellent written intellectual property! Simply put, it is a decentralized incubator for excellent written works + opensea for trading NFTs of written works.

Read2N's core logic is similar to the approach I discussed in the previous section, but it excels in the following areas:

A DAO has been established for each book, and the author has assigned the copyright of the work to this DAO. The DAO then issues NFTs as tokens for the securitization of copyright. Only with NFTs can the book be accessed, and the issuance is limited. As of now, NFTs are issued by Freemint. NFT holders can also enjoy a portion of the project's revenue, representing a portion of the copyright income.

The project party charges 6% of the total transaction amount of the mall as the first part of the project's revenue, and at the same time extracts 30% of the book rental income as the second part of the revenue. Simply put, it earns revenue by taking a cut. Compared with most projects that rely on selling NFTs and tokens for revenue, the source of income is healthy.

After the creator assigns the copyright of the work to DAO, they receive two parts of income from the project party, which is [30%]. This means that the more related products of this copyright are traded and the more people rent and read the book, the higher the creator's income will be. From the community and AMA, it is learned that the creator can earn an average of 2-3 BNB income, which is about 600-1000 US dollars, after the work is launched for 15 days, and the income is increasing every day.

The project team further divides the remaining 【70%】 of the revenue: a portion is allocated to NFT holders and loyal community users; a portion is allocated to WCM token holders for governance; and the final portion covers the project team's costs, expenses, and profits.

As a fan, there are several ways to read a book: 1. Win an NFT book through a whitelist lottery; 2. Buy the NFT book directly from the store; 3. Pay rent to read the book every day. Currently, reading books requires RCM, and RCM will be launched on December 15, 2022, with a price increase from 0.4U to 3U, causing the prices of NFT and whitelist WL to rise to around 4BNB. Therefore, fans are also investors. If they like a book, they can buy NFT and wait for the price to rise while earning money. If the initial hype is over and everyone is selling RCM, the price of RCM will drop, causing the price of NFT to drop. What should we do? This is an inevitable process: start by accumulating popularity through CX, and after the FOMO, we will know who is naked. If a book is truly excellent and has real readers who want to read it, the NFT will have underlying value support and will not go to zero.

Read2N's NFT represents a part of the book's IP, which is different from StepN's shoe NFT. After the overall market returns to rationality, some book NFTs will have high value while others will have low value, just like stocks on a securities trading platform. The value is left to investors to judge, and the beauty of it is that value is subjective and there is no constant standard. This leads to trading, and as trading increases, the project team and creators can make money. It should be noted that the judgment of a book is based on its content, which is sufficient, while the judgment of a stock can be influenced by various false news and malicious operations. It can be said that written works are more in line with the open and transparent characteristics of WEB3.

6. Among the authors of the more than 20 books currently online, there are also well-known online writers "Wu Manlanjiang" and "Luosen". Wu Manlanjiang is the old fog in Tianya Zhujiao in the early years, and is considered one of the earliest online writers in China; as for Luosen, do you know about his romantic novels like "Fengzi Wuyu"? Hahaha. It seems that the project team still has some resources and capabilities.

Let me summarize the essence of the Read2N project: it can be used for gold farming, but gold farming is just a superficial phenomenon. Its main function is to combine the value judgment of gold farming and textual IP, encouraging users on the platform to bet on and trade good works, just like buying stocks. Therefore, it is the Opensea of textual copyright IP.

It can be inferred that the user profile on the Read2N platform leans more towards investors than readers. By leveraging the interactions and transactions among investors, they can discover true blue-chip works and then approach publishing groups such as Web2's China Literature: "We have a work here with this data. It's sure to be a hit after release. Do you want to collaborate?" In this way, Read2N becomes an incubator for excellent literary works.

Let's talk about some of the current issues with Read2N:

Currently, most of the more than 20 books available for sale can be found on other online reading platforms. This means that if readers really want to read the content, there is no need to spend so much money to buy NFTs just to read. Therefore, the conclusion is that the current active users are mainly pure investors, which is not a problem. Which WEB3 project didn't rely on CX and price to create heat at the beginning? The key is when the project can evolve to the second stage, use good content to attract users who want to read the book and invest at the same time, and whether it can negotiate with the creators to have a short-term content first release on Read2N, ensuring that Read2N, which owns the IP, can have a unique feature compared to other platforms. After completing the second stage, we can then entice those large WEB2 publishing platforms to cooperate, which is the third stage.

From a long-term perspective, investors buying and selling NFTs with works as the underlying asset is a good long-term model for value games, rather than the thinking of a Ponzi economic model. However, currently, the price of altcoins is affecting the prices of NFTs and whitelist in a reverse manner, which is still a Ponzi model. How to evolve the early Ponzi model into a game model at the right time requires observation.

Another common problem with IP products from WEB2 to WEB3 is that if the creator does something wrong, they first transfer the IP to DAO (currently using the CC0 network protocol), and then if it becomes popular, they sell the IP to WEB2's Yuewen Group. DAO cannot sue the creator in a real court with the CC0 protocol.

For the strategy of the Read2N case, you can go to the DC community of the project to check it out. We won't go into too much detail here.

Six, Summary

The new narrative section has always been the explosive point leading the bull market in each round. This article looks at how to divert WEB2 users to the WEB3 section. The infrastructure may appear on big players like Twitter, while the driving force for diversion can be achieved through IP diversion and gold mining diversion methods complementing each other.

WEB3 project's IP diversion includes art IP, music IP, and text IP. Artists and creators are willing to promote it from the perspective of profit sharing. Art IP has already started in the last bull market, while music and text are still in the early stages.

The biggest feature of the WEB3 model for text-based IP is that it turns some fans and readers into investors, and works become securitized products similar to stocks, which can help creators realize their value in advance. The Read2N mentioned in the case is actually a decentralized incubator for excellent text works + a platform for trading text NFTs on opensea, not just a chain game for reading and earning money.

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