The End Times of Native Encryption: When YBS Stablecoin and the Flow Economy Rule the On-chain World

Original Title: "The End-Times of Native Cryptography"

Original Author: Zeke, YBB Capital Researcher

1. Bowing to Compliance

How did crypto transition from a niche market to the mainstream? Over the past decade, decentralized blockchain provided the world with a regulatory wilderness, where Satoshi Nakamoto's peer-to-peer electronic payment system did not succeed but opened the door to a parallel universe. Law, government, and even society and religion could not constrain this internet existing across numerous nodes.

Operating outside of regulation was almost the sole factor driving the success of this industry. From asset issuances starting with ICOs and subsequent countless variations, DeFi ignited by UNI, and now the so-called super app stablecoins, all were built on this factor. The removal of the trivialities of TradFi has shaped the industry today.

Interestingly, after the failure to explore the new continent in the Age of Discovery, people began to abandon ships and return to the past. Perhaps it was from the moment the BTC ETF was approved, or from the moment of Trump's election victory, that native crypto entered the end-times. The industry started seeking compliance, filling the gaps in TradFi's needs, with stablecoins, RWAs, and payments becoming mainstream in industry development. Apart from this, we are left only with pure asset issuance, where a picture, a story, or a CA string are the only topics of discussion. The meme chain is no longer a pejorative term.

How did we get to this point? I have analyzed this in many articles over the past two years, but ultimately, blockchain lacks an effective means to restrain entities behind addresses from wrongdoing. We can only ensure that nodes are honest, and DeFi is intermediary-free. Aside from this, we cannot prevent whatever occurs in this dark forest; many things are destined to decline. NFTs, GameFi, SocialFi all heavily rely on the entities behind the projects. While blockchain has excellent fundraising capabilities, who will ensure that these project teams use these funds reasonably and turn a story into a real project?

The vision of disintermediation is not something that can be solved merely by infrastructure performance improvements. If these tasks cannot be done well in a centralized server, how can we expect them to be done well on-chain? We cannot enforce proof of work on project teams. Perhaps bowing to compliance is the beginning of the future of disintermediation. This is truly ironic yet inevitable.

Crypto has indeed become a subset of the traditional, where the voice of this ledger is starting to be stripped from the bottom up. Fewer bottom-up things are happening, opportunities are also being compressed, and we are facing an era of on-chain hegemony.

2. Stablecoin

What is on-chain hegemony? I think it can be explained from two aspects: stablecoins and the replay of the traditional Internet story.

Let's start with the former. Nowadays, stablecoins are mainly dominated by fiat-backed stablecoins and YBS stablecoins. Regarding fiat-backed stablecoins, a significant event took place recently, which is the passing of the "Genius Act." Let me briefly summarize the content of the act here:

· Definition and Issuance Restrictions: It defines "payment stablecoin" as a digital asset used for payment or settlement, which must be fully backed 1:1 by the U.S. dollar or highly liquid assets (such as short-term government bonds). Only licensed issuers (who must be registered and regulated) are legally allowed to issue stablecoins, and unauthorized individuals or entities are prohibited from issuing them.

· Reserve and Transparency Requirements: Issuers must hold reserve assets equivalent to the value of the stablecoin at a 1:1 ratio (such as the U.S. dollar or high-quality liquid assets) to ensure stability and solvency. They are required to regularly disclose their reserve status. Issuers with a market capitalization exceeding $500 billion must undergo annual financial audits, comply with anti-money laundering (AML) and counter-terrorist financing (CFT) regulations.

· Regulation and Compliance: Establish a clear regulatory framework where stablecoins are not deemed as securities and are regulated like banks instead of by the SEC. Implement a licensing process to standardize issuing institutions and enforce anti-money laundering, asset freezing, and destruction mechanisms.

· Promoting Innovation and Financial Inclusion: Aim to promote the development of the stablecoin industry in the U.S. through a clear legal framework, enhance financial inclusion, and maintain the dominant position of the U.S. dollar in the digital economy.

· Limiting Big Tech Companies: Prohibit large tech companies from issuing stablecoins without regulatory approval to prevent market monopolies.

The long-standing concern in the industry about a potential Tether collapse has finally become a thing of the past, and mainstream adoption of the underlying payment infrastructure is only a matter of time. The widespread adoption of blockchain technology has begun to take shape. However, what will stablecoins look like after being brought under a regulatory framework? How will regulators in other countries respond to this? As for why stablecoins have been successful, I believe it's unnecessary to reiterate.

The passing of this act also signifies that the on-chain transaction medium has been officially taken over by the United States. U.S. private enterprises are enjoying the benefits of U.S. bonds, and with control over the currency, this country will also have a high level of control over on-chain activities. Not to mention the continuation of the U.S. dollar's hegemony, how should one imagine a scenario where all stablecoins in a DeFi project are suddenly frozen?

On the other hand, there is the YBS stablecoin. Ethena's idea is good, being able to provide UST-level yields during a bull market while maintaining stability far beyond what is normally seen in stablecoins. As mentioned in my previous articles, on-chain native stablecoins may ultimately be achieved through Delta-neutral hedging, such as with more complex projects like the f(x)Protocol, utilizing Resolv on Hyperliquid for hedging. Strangely, now everyone has started to create YBS stablecoins. First, various traditional hedge funds entered the space, followed by market makers like DWF, and now even trading platforms want to get involved. While they may not become Tether, they at least want a slice of the ENA's cake, and this ideal is spreading like a virus.

This abnormal craze for YBS stablecoins has obviously drifted away from its original meaning. Using their own initial accumulation and adopting more aggressive strategies to seize market share, truly innovative projects are being aggressively suppressed, and the barrier to entry for new projects is increasing. Yes, technology and ingenuity are no longer important here, and whether it's decentralized or not doesn't matter. Innovative projects like f(x)Protocol have not received widespread attention, and now it seems that the right approach is to combine CEX with high-end quant teams. In this war, APY and convenience are everything.

Although compared to losing my ETH through small images or various strange narratives, YBS stablecoins may be a good choice. However, these CEX financial products have become the only innovation in this round, indicating that most of the paths taken in the past were wrong.

Three, Asset Issuance

The public chain is the largest asset issuance platform, with ICOs marking the beginning of this game. Everything that followed has been a variation, but at least it has spurred the birth of some narratives, driving industry progress. However, everything is now moving towards the development of the traditional internet. Models like Base and Pump's profit structure are already very close to Web2, with almost zero community empowerment, sometimes even less than CEX. The essence of Web3 was meant to democratize everything, emphasizing co-creation and mutual prosperity, but it has now taken a different turn. And this is just the beginning; now all oligarchs are researching how to create asset issuance platforms and what constitutes innovative asset issuance.

Launchpads are now the only paradise for native crypto users to get rich quick, but this space is equally unhealthy. Besides having to pay fees to platforms and tools like GMGN, users also have to experience the feeling of being in the trenches. Asset issuance has also started to become nested, and even capable of off-chain development. Well, although strictly speaking, NFTs and GameFi are not entirely decentralized, at least they have an on-chain component that has driven the development of Infrastructure, leading this industry into the mainstream.

Starting from AI frameworks in the previous years, even fully off-chain projects can now launch tokens, with some of them being an off-chain asset issuance platform themselves. The extreme speculation has paradoxically continued to lower the industry's bottom line. What is the meaning behind all of this?

CZ and Vitalik were puzzled by Memes, leading to the concept of DeSci, allowing speculators to speculate and researchers to innovate. It seems like they found common ground, but how could research on lab mice and classical mechanics be more interesting than today's internet memes and strange AI developments? This narrative only had a brief moment of popularity. After AI and DeSci cooled off, it was the turn of celebrity coins to take the stage, from North American President Trump to South American President Mila, thoroughly squeezing out liquidity.

As the market started to cool down, the narrative was passed on, and when it came to asset issuance, playing a Ponzi scheme became necessary. Virtuals combined the Binance Launchpool+Alpha approach, where staking was exchanged for points to participate in new projects, which then allowed for further staking and indeed caused the coin price to skyrocket. Hmm, such a naked and direct approach, yet it no longer piques my interest. What is the next step? Believe (an Internet capital market concept)?

I cannot be certain, but in the previous cycle, various flywheels, Ponzis, and narratives left behind the treasure trove of DeFi, which indeed sparked numerous fresh ideas in the industry. What can speculation in this stage truly create? I only see a continuous simplification of the issuance threshold, accompanied by many malicious events. Do we need a new set of rules?

Four, Attention

In the past, a project's rise depended on narrative and technology, coalescing consensus and then bursting forth. Today, we are buying attention, like Blur, using points for purchase, or like a trading platform, investing substantial sums of money to form an MCN company for KOLs. The combination marketing tactics of PDD + Douyin's livestreaming sales have permeated the industry. Compared to founders running various technical community gatherings, this approach seems much more direct and effective.

Undoubtedly, attention is one of the most valuable assets of this era, yet it is also difficult to measure. Kaito is now attempting to quantify it, but Yap-to-Earn is not really an innovation; this was already evident in ancient SocialFi. Kaito's biggest innovation is AI-driven, claiming to recognize the "value" of information and measure the ability to drive sales through AI. However, this model clearly cannot capture long-term value, as tokens are becoming more like "fast-moving consumer goods."

The downsides of the points system are self-evident, as I believe many of you have experienced them. I have also reviewed the impact Blur had on this community in previous articles. If future projects rely on buying attention, it is difficult for me to judge whether this behavior is right or wrong. All I can say is that there is no harm in projects striving for marketing efforts, but there seems to be a trend in the community towards a collective pump. The old crypto era has indeed come to an end. Selling influence to make money has become a mature business, from the U.S. President to Binance and now to KOLs, no project has thrived as a resu< everyone is simply taking what they need.

Conclusion

Stablecoins will move towards global adoption, and blockchain payments have become mainstream. However, the indigenous people living here may not need these; we need on-chain native stablecoins, we need de-financialization, we need the next wave, and we don't want to live in a Web3 that sells traffic. Time is indeed proving some of the BTC OGs right, but I still hope they are wrong in the future.

This article is a contribution and does not represent the views of BlockBeats.