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In 2014, the Ethereum Foundation was established in Switzerland as a non-profit organization. In 2015, Vitalik Buterin, a Canadian-Russian prodigy who won the World Technology Award, served as the chief scientist and led the project's development.

The Ethereum project began a 42-day crowdfunding campaign on July 22, 2014, where investors could participate by sending Bitcoin to the address 36PrZ1KHYMpqSyAQXSG8VwbUiq2EogxLo2. To incentivize early participation, the exchange rate for the first 14 days of the crowdfunding was set at 1:2000, after which the exchange price increased linearly, reaching 1:1337 on the final day. The foundation stated that it had the right to use funds of up to 5000 Bitcoins to accelerate development during the crowdfunding period. There was no upper limit set for the crowdfunding, and by the end on September 2, a total of 31,529 Bitcoins had been raised, valued at approximately 18.4 million USD based on the Bitcoin market price at that time. According to subsequent statistics, a total of 60,099,765 Ethereum tokens were sold, with the average cost of acquiring one Ethereum token during the crowdfunding period being about 0.3 USD.

From August to the end of 2015, the price of Ethereum stabilized in the range of 1 to 1.5 USD, representing an increase of more than three times compared to the crowdfunding price. However, unexpectedly, starting in early 2016, the price of Ethereum began a remarkable surge, peaking at 0.033 Bitcoin in mid-May, which was approximately 15 USD based on the Bitcoin price at that time (440 USD). This represented a 50-fold increase from the crowdfunding price. In July 2015, one year after the crowdfunding, the genesis block of the Ethereum blockchain was created, containing 60 million Ether from the crowdfunding and an additional 12 million Ether from the development fund, totaling 72 million Ether. The first phase of the Ethereum blockchain operation was called Frontier, which was similar to a public test, providing developers and stakeholders with a development environment close to real applications, enhancing security, distributing tokens, and further gathering community support and developers.

The crowdfunding provided ample funding for developers, and the open-source nature of the project attracted developers from around the world, allowing the development team to use various programming languages such as Golang, C++, and Python simultaneously, which also contributed to the decentralization of the development team. Additionally, Ethereum software nodes could run on various operating systems such as Windows, Linux, and Mac OSX, achieving good cross-platform compatibility.

In March 2016, starting from block 1,150,000, Ethereum entered the Homestead phase. This phase marked the official commercial use, with a large number of projects emerging around Ethereum development. According to statistics from the ethercasts website, there are currently 298 distributed application (Dapp) projects that have been submitted.

Although there are many projects, not all of them can be successfully implemented. Here are a few assets based on Ethereum with significant market capitalization and trading volume.

Augur is a decentralized prediction market platform based on Ethereum blockchain technology. Users can make predictions and bets using digital currencies, relying on the wisdom of the crowd to predict the outcomes of events, effectively eliminating counterparty risk and the centralization risk of servers, while issuing the REP token as an incentive system for the entire ecosystem.

Augur aims to achieve predictions of real-world events through crowd wisdom prediction technology. In a 45-day ICO from August to October 2015, Augur raised a total of 18,639 Bitcoins and 1,171,816 Ether, corresponding to 11 million Augur tokens. Each token cost about 0.483 USD. With a crowdfunding amount of 5.32 million USD, Augur successfully entered the top ten crowdfunding projects globally.

In March 2016, the platform released its public beta version of the application.

In October 2016, Augur tokens were listed on major trading platforms, and after listing, their price experienced significant fluctuations, currently around 4.5 USD. Before Augur, websites like bitbet.us and predictious.com accepted Bitcoin bets on certain public events, categorizing bettable events into five major categories: sports events, political events, economic predictions, entertainment, and technology.

Unfortunately, there has not yet been a typical event prediction contract seen on the Augur platform. Although the Augur application hopes to better predict real-world events through a decentralized wisdom platform, the line between betting and gambling is blurred, and if exploited by others to become a tool for illegal profit, it will face significant regulatory pressure.

DigixGlobal is a distributed autonomous organization team based in Singapore, whose product is a token issued on the Ethereum blockchain, characterized by being backed by physical gold. Digix is a platform that tokenizes physical gold assets, placing ownership of physical gold on the Ethereum blockchain, which can be verified by anyone.

The ICO began on March 30, 2016, and within 14 hours, 2 million tokens were sold out, raising funds that reached the 5.5 million USD fundraising cap, far exceeding the original minimum target of 500,000 USD, indicating a surprising level of enthusiasm for the funds.

According to the project's design, there are two types of tokens: one is the DGD token, which pays dividends quarterly, with profits coming from transaction fees generated by the DGX token; the other is the DGX token, where 1 DGX token = 1 gram of gold. Since the trading of DGX tokens incurs a 0.13% transaction fee, these fees will become the source of dividends for DGD tokens. During the ICO, 2 million DGD tokens were issued, with each DGD token costing about 2.75 USD at that time. By the end of October 2016, its trading price was around 11 USD.

The main risks of this project lie in high costs and the uncertainty of whether trading volume can stabilize. Additionally, due to historical instances where organizations like E-gold and Liberty Reserve issued digital gold for Ponzi schemes, the project also faces compliance issues in various regions.

As of October 2016, DGD holders had not received any dividends, as the DGX token had not officially launched for trading, thus failing to generate transaction fees.

"First Blood": 5.5 Million USD Raised in 10 Minutes#

In May 2016, the "First Blood" project was launched. "First Blood" originates from the well-known online game Dota, where the corresponding text and voice prompt "First Blood" appears when a player successfully takes down the first enemy. The team includes founders Joe Zhou and Marco Cuesta, who previously co-founded the Bitcoin options platform Alt-Options. Team member Zack Coburn is the founder of Ethereum-based applications Etheropt and Etherdelta.

On July 16, 2016, the Pre-alpha version of the game—Trump Dice—was successfully tested on-chain.

In August 2016, the white paper and crowdfunding plan were released.

On September 26, 2016, the "First Blood" project launched its crowdfunding to create a decentralized esports platform.

This crowdfunding only accepted Ether payments and reached the fundraising cap of 5.5 million USD within "10 minutes," issuing 79,103,203.39 tokens coded as "1ST," raising 465,312.999 Ether. Some analysts later attributed this to the "Power Hour" reward set by the project team. The crowdfunding, originally planned to last 28 days, offered a ratio of 1 Ether to 100 1ST tokens for participation in the last week, while the ratio was 1:170 for participation in the first hour of the project launch. Such a significant difference naturally stimulated participants to prepare in advance to obtain rewards.

In fact, the domestic blockchain asset exchange Yunbi began pre-crowdfunding, raising a total of 30,000 Ether from nearly 500 users. Due to the limitations of smart contracts, only about 250,000 Ether could ultimately be invested, resulting in 42,499,983 tokens. This crowdfunding by "First Blood" set a record for the speed of crowdfunding in the blockchain field.

The "First Blood" team uses the Ethereum blockchain and Oracles to handle and settle players' funds through decentralized smart contracts, addressing disputes in esports. The system introduces a decentralized arbitration system (DAMN) and a Jury Voting Pool (JVP) concept. Observers in the game act as witnesses, providing data for the jury (JVP), making it difficult for cheaters to escape in this ecosystem. The pain point addressed by the project is that the current esports prize systems lack guarantees, with many players absconding with funds. By utilizing the smart contract platform on the blockchain to facilitate matches, select winners, collect deposits, and leverage the wisdom of the crowd to resolve cheating and game disputes, players can use virtual tokens to participate in virtual game competitions, all without trusting third-party regulatory institutions and without worrying about match results or fund disputes, as everything is handled according to the contract.

Three days after the crowdfunding ended, on September 28, 2016, the Yunbi exchange listed "First Blood" for trading. It is nearly impossible for assets issued in traditional forms to achieve such speed when going live on trading platforms. However, in this case, since asset registration, issuance, and ownership transfer information are all recorded on the blockchain, transactions, ownership transfers, and settlements can be compressed into a single step, greatly improving trading efficiency.

A report in 2016 stated that blockchain technology is expected to save nearly 2 billion USD in the clearing phase of capital markets. The globally renowned consulting firm Accenture reviewed the existing capital markets and believed that blockchain technology would significantly shorten the clearing time for capital markets, such as corporate bonds, OTC derivatives, equities, syndicated loans, and private debt instruments, with most transactions expected to be cleared within 24 hours, greatly enhancing efficiency.

As digital assets become a global asset due to worldwide participation, exchanges are distributed around the world, and price differences between different exchanges can provide arbitrage opportunities for global speculators.

Of course, even within domestic exchanges, price differences can occur. For example, during the explosive market at the end of May 2016, the price on Huobi was 200 RMB higher than on other exchanges, and a few days later, OKCoin's price led again. If operated correctly, one could achieve about 10% profit with low risk or even close to zero risk. It is reported that during that market, some professional arbitrageurs made 30,000 RMB profit from a 300,000 RMB principal, and although the absolute amount was not large, considering the investment cycle, the profit margin was still much higher than other financial management products. Arbitrage methods can generally be divided into spot arbitrage, futures arbitrage, and cash-futures arbitrage.

Spot arbitrage refers to buying spot assets on a platform with a lower price at the same time and selling them on another platform with a higher price. After the transaction, the quantity of digital currency remains unchanged while the amount of RMB increases, or the amount of RMB remains unchanged while the quantity of digital currency increases.

Futures arbitrage refers to opening a long position on a contract with a lower price while opening a short position on another contract with a higher price at the same time. The two contracts can be on the same platform or different platforms, betting that the two prices will converge within a certain time (generally referring to the delivery period). This method is not risk-free, but as long as the price difference is large enough, the win rate is very high.

Cash-futures arbitrage is similar to futures arbitrage, except that the lower price side is the spot, meaning buying cheaper spot assets and opening a short position on a high-premium futures contract, betting that the two prices will converge within a certain time. Based on the actual situation over the past two years, it is common for futures prices to be slightly higher than spot prices on days with market activity, and one needs to patiently study the patterns before opening positions.

Cost and Risks of Price Arbitrage#

Price arbitrage is not without costs, so the price difference must be large enough to take action. Taking spot arbitrage as an example, the costs mainly come from withdrawal fees. When withdrawing RMB, platforms usually charge a fee not exceeding 0.3% (the rate is higher for trading competitive coins on Bit Era).

Moreover, arbitrage profits are generally calculated in digital currency units. If the price of the spot is in a downward trend, it is possible to earn digital currency but lose total market value. Therefore, most investors participating in arbitrage are generally long-term bullish on digital currencies.

In addition to costs, there are also risks. Spot arbitrage can actually be further divided into simultaneous trading and non-simultaneous trading. Simultaneous trading is like having 100,000 RMB, placing 25,000 RMB and 25,000 RMB worth of digital currency on platform A, and placing the same on platform B. Once the price difference is large enough, trading on both sides simultaneously incurs almost no time difference, and profits are foreseeable, but the downside is low capital utilization. Non-simultaneous trading means fully buying the spot on the lower price side, immediately sending the digital currency to the higher-priced platform, and selling it all. The risk here lies in the time difference; withdrawals often take an hour or even longer, during which the price may fluctuate dramatically, leading to potential losses. The advantage is high capital utilization, and profits are calculated in RMB.

However, simultaneous trading also has a variant, which is to bet based on experience that one platform's price will be higher than another's. For example, if one predicts that OKCoin's price will be higher than Huobi's, one can place 50,000 RMB worth of digital currency on OKCoin and 50,000 RMB on Huobi, effectively doubling capital utilization. However, if the prediction is wrong, the opportunity will be lost.

Another variant can even avoid withdrawal fees by not withdrawing, waiting for the price difference to decrease or invert before exchanging back. For example, if platform A's price is 1% higher than platform B's, one can sell digital currency for RMB on platform A, buy digital currency on platform B, and when the prices on A and B are equal or B is higher than A, sell digital currency on platform B for RMB and buy back digital currency on platform A. This way, the amounts of RMB and digital currency will increase, and the risk approaches zero.

While zero risk sounds appealing, the reality is often not so simple. There has always been a looming sword over digital currency history: the risk of exchanges. In early August 2016, the exchange Bitfinex was hacked, losing nearly 120,000 Bitcoins, and Bitfinex later decided that the loss would be borne by the traders, causing many arbitrageurs to lose their investments in that incident, with many even losing their principal.

For reference by those involved in quantitative trading.

OKCoin China: https://www.okcoin.cn/about/rest_getStarted.do;

OKCoin International: https://www.okcoin.com/about/rest_getStarted.do;

Huobi: https://github.com/huobiapi/API_Docs/wiki;

BTCC: https://www.btcc.com/apidocs;

Yunbi: https://yunbi.com/documents/api/guide;

Bit Era: http://www.btc38.com/help/document/2581.html;

China Bitcoin: https://www.chbtc.com/i/developer;

Bitcoin Trading Network: http://www.btctrade.com/api.help.html;

HaoBTC: https://github.com/haobtc/API_Docs/wiki;

BitVC: https://www.bitvc.com/help/api;

Coinbase: https://developers.coinbase.com/

Kraken: https://www.kraken.com/en-us/help/api;

Bitstamp: https://www.bitstamp.net/api/;

BTC-E: https://btc-e.com/api/3/docs.

In addition to the above official application programming interfaces, there is also a website that packages these APIs and provides a platform for distributing trading strategies, including both paid and free options. This platform is called BotVS, serving quantitative traders, and the website is https://www.botvs.com/.

Introduction to Coin Crowdfunding#

Coin crowdfunding (Initial Coin Offerings, ICO), also known as token crowdfunding, originates from the term IPO in the securities industry. After an IPO is completed, the company becomes a publicly listed company. Similarly, ICO is a unique crowdfunding financing model in the digital currency community, where startups use the internally generated digital cryptocurrency (native tokens) as a form of entrepreneurial financing to reward investors.

Coin crowdfunding is a new phenomenon. In fact, ICO is so new that as of the writing of this book, there was no related entry for ICO on Wikipedia. ICO is also a form of "public offering," but compared to IPOs, there are three main differences.

First, the subject of ICO issuance has shifted from shares (securities) to digital currencies.

Second, ICO currently lacks corresponding securities legal regulation and is considered a new phenomenon. Investors participating in ICO do not need to register with any government agency, and their rights are not protected by law, which carries certain risks.

Third, if the issuance method uses Bitcoin rather than fiat currency, ICO can achieve global financing, meaning that no matter where you are on Earth, as long as you have Bitcoin, you can become an investor in the project. However, the securities industry's IPO cannot achieve this. All IPOs have corresponding national, securities affairs regulatory, and investor qualification restrictions.

Generally speaking, investors participating in ICO expect that after the digital currency project goes live, its native tokens can be listed on digital currency exchanges, allowing investors to sell the tokens obtained from the ICO on exchanges to realize investment returns and exit. Of course, investors can also trade tokens privately, but it is difficult to determine the reasonable price of the tokens in that case.

Coin crowdfunding has become a popular new way to invest in digital currency projects in recent years. Startup teams can quickly raise initial operating funds for their projects, and the entire ICO process also attracts attention and coverage from media both inside and outside the industry, effectively promoting the project. Investors can also participate in projects they like with zero barriers. After all, not everyone interested in digital currencies has the capability to develop a brand new project themselves.

Currently, most ICOs raise funds in the form of Bitcoin or competitive coins, and some projects raise funds in fiat currency on crowdfunding websites, such as the Yuanjie ICO.

To mitigate legal risks, most ICO projects will rebrand themselves as "software pre-sale tokens" or use names like "crowdfunding," "crowdsale," or "donation." Some ICO projects also publish disclaimers to inform potential investors that this is not a securities sale. Whether judicial authorities in various countries can distinguish it from securities sales remains uncertain. So far, no ICO digital currency project has ended up in court.

History of Coin Crowdfunding#

The first ICO project in digital currency history was Mastercoin, later renamed OMNI, which was crowdfunded on the Bitcointalk forum. Mastercoin is a second-layer token built on the Bitcoin blockchain, aimed at helping users create and trade cryptocurrencies and other types of smart contracts. The Mastercoin ICO was launched in June 2013, allowing investors to purchase MSC by sending Bitcoin to the Exodus address, with each Bitcoin exchanging for 100 MSC, raising over 5,000 Bitcoins. According to statistics from Coinmarketcap, the current market value of OMNI (as of September 2016) is approximately 2.74 million USD, with each OMNI priced at 4.95 USD.

Following this, in December 2013, the second digital currency ICO project appeared on the Bitcointalk forum—NXT, which raised 21 Bitcoins, approximately 6,000 USD. NXT is considered a second-generation digital currency, with a completely new codebase and a 100% proof-of-stake (POS) design replacing proof-of-work (POW), making it the first PoS blockchain system that avoids many of the flaws of first-generation digital cryptocurrencies, such as energy consumption and vulnerability to attacks. It has a one-minute confirmation time and a total supply of 1 billion. At that time, the project was very successful for ICO investors, with NXT's market value exceeding 100 million USD at its peak in January 2014. NXT has thus become the most successful ICO project in the eyes of investors. According to Coinmarketcap, its current market value is approximately 21 million USD, with each NXT priced at 0.021 USD.

Since witnessing the success of NXT, a large number of ICO projects emerged from the end of 2013 to early 2014. This period coincided with the explosive rise of Bitcoin, the leading digital currency, and many hoped to replicate Bitcoin's success through ICOs. Unfortunately, most ICO projects failed due to poor development management, excessive hype, or fraud.

Another ICO project that caused a stir in the domestic digital currency scene at that time was Bitshares. The design and architecture of Bitshares are relatively complex, and its development history and market performance have been tumultuous, causing significant controversy both domestically and internationally. It was once touted as one of the "three musketeers of second-generation tokens" (the other two being NXT and CounterParty). Bitshares is a blockchain-based financial service platform that supports an open-source, decentralized exchange system for virtual currencies, fiat currencies, and valuable physical assets. Any individual or institution can freely transfer, lend, trade, issue assets, and smart currencies without authorization, and can quickly build decentralized, low-cost, high-performance exchanges for virtual currencies/stocks/precious metals, leveraged futures exchanges, acceptance gateways, asset management platforms (crowdfunding), etc. In short, it allows everyone to become an exchange. In August 2014, Bitshares reached a market value of 86 million USD at its peak. However, after complex mechanisms and price speculation, the confidence accumulated in Bitshares collapsed, leading to a prolonged downward trend. According to Coinmarketcap, its current market value is approximately 15 million USD, with each Bitshares priced at 0.005 USD.

Other influential ICO projects include MaidSafeCoin, Ethereum, and NeuCoin (NEU).

MaidSafe was founded in 2006 and is located in Troon, Scotland, aiming to decentralize the internet. It has been working on the SAFE project for eight years (longer than Bitcoin's existence). On April 22, 2014, when MaidSafeCoin began its crowdfunding, it was originally planned for 30 days, but due to overwhelming investor demand, it was sold out in less than five hours. This crowdfunding primarily used Mastercoin for payments, raising a total of 6 million USD, with 4 million USD coming from Mastercoin and 2 million USD from Bitcoin. The total amount of SafeCoin warrants issued during this crowdfunding was 429,496,729 (accounting for 10% of all future output). Initially, the proxy coin used was MaidSafeCoin, which was recorded on the Bitcoin blockchain. Once the complete SAFE (Secure Access For Everyone) network is operational, MaidSafeCoin will be exchanged for Safecoin at a 1:1 ratio. Safecoin is created and protected by the SAFE network, aiming to decentralize the internet and promote the development of numerous applications using this network, including decentralized cloud storage and secure, unhackable software. According to Coinmarketcap, the current market value of MaidSafeCoin is approximately 42 million USD, with each MaidSafeCoin priced at 0.09 USD.

Ethereum is the most successful ICO project in digital currency history. In July 2014, the Ethereum project, a blockchain-based smart contract platform, began its ICO crowdfunding, with its corresponding native token being Ether (ETH). Ethereum has a built-in scripting language that is more powerful and Turing-complete than Bitcoin, supporting many advanced features such as currency issuance, smart contracts, decentralized trading, and fully decentralized autonomous organizations. The Ether token exists as fuel to drive the operation of smart contracts built on the Ethereum blockchain. The ICO was a great success, ultimately raising 31,529 Bitcoins, valued at approximately 18.4 million USD at the time. Despite delays in the launch date, under the leadership of the genius Vitalik Buterin, the Ethereum project succeeded. Currently, Ethereum's total market value is close to 800 million USD, making it the second-largest digital currency project by market capitalization after Bitcoin.

Three Types of Token Structures in Coin Crowdfunding#

With the development of digital currency crowdfunding, increasingly complex token structures have been invented, including three categories: application tokens (Appcoin), equity tokens (Equity Token), and debt tokens (Debt Token).

Application Tokens#

Application tokens are the most common and widely used ICO tokens, also known as user tokens (User Token). Application tokens are the basic trading tokens generated within a blockchain economy. When users conduct transactions within that blockchain economy, they need to consume these tokens, similar to the role of game coins used in an arcade. Application tokens include Bitcoin, Ether, Litecoin, Ripple, and the entropy (ETP) of the domestic blockchain project Yuanjie (Metaverse).

Equity Tokens#

Equity tokens are used to address the equity identity of blockchain projects and can be understood as shares of the project. Equity tokens represent ownership of the blockchain project and thus have functions similar to company shares, such as dividends and voting rights. The Singapore-based blockchain gold trading platform Digix conducted crowdfunding by issuing an equity token called DGD. DGD is an asset based on Ethereum, representing equity in DigixDAO, characterized by being backed by physical gold. DGD holders have the right to participate in company decision-making through voting and will also receive a portion of the digital gold DGX transaction fees as dividends. On March 30, 2016, DigixDAO raised 5.5 million USD in a public ICO for global investors, completing the fundraising in just 14 hours, which was expected to last a month. The domestic project Antshares is a similar equity token.

Debt Tokens#

Debt tokens are primarily used to address the liquidity issues of blockchain applications. For example, when a blockchain application suddenly becomes popular or even explodes, a large influx of new users may require a significant amount of application tokens for transactions. However, the vast majority of application tokens are held by existing users. To avoid drastic price fluctuations of the internally generated application tokens and to prevent existing users from dumping their tokens (similar to the release of large shareholders after an IPO), debt tokens come into play. Users who purchase debt tokens can sell them, exchange them for application tokens, or transfer them to others. Moreover, debt tokens can earn interest during the holding period. Currently, a global example of issuing debt tokens is Steemit. Their debt token, Steem Backed Dollar (SBD), can be exchanged for their application token, STEEM.

Of course, a blockchain application does not necessarily have to use only one type of token. Bitcoin, Ether, Litecoin, Ripple, and the domestic Yuanjie only use application tokens. The domestic Antshares blockchain project, the distributed file service Sia, and the blockchain gold trading platform Digix use both application tokens and equity tokens. Steemit has all three types of tokens mentioned above.

Domestic ICO Projects#

In 2016, the main digital currency crowdfunding projects in China included Yuanjie and Antshares.

On August 5, 2016, the domestic blockchain project Yuanjie officially launched its ICO, managed by the crowdfunding website under Babit, with subscriptions in RMB. Yuanjie is a decentralized protocol based on blockchain technology, combining a service framework of smart asset networks (S.P.web), digital identity (D.I.), and value intermediaries (Oracle), developed by the Weiyou team led by Chuhua Hu, aiming to provide an open digital value transfer platform based on trusted assets. By September 5, at 24:00, this ICO raised a total of 14.74 million RMB, far exceeding the successful benchmark of 10 million RMB, with 418 participating investors.

On August 8, 2016, the domestic blockchain project Antshares began its second phase of crowdfunding, targeting the equity token Antshares, with a total of 24 million shares, subscribed in Bitcoin, and the crowdfunding site was the official Antshares website. Antshares is a decentralized network protocol that digitizes the assets and rights of the physical world using blockchain technology, facilitating registration, issuance, transfer trading, settlement, and other financial services through a peer-to-peer network. Antshares can be used in equity crowdfunding, P2P lending, digital asset management, smart contracts, and other fields. By digitizing assets, it enables the property rights of any physical asset to become programmable, achieving atomic-level transactions and real-time settlements. Antshares is an open-source system that follows the MIT open-source protocol. If you are interested, you can download, copy, or modify it on GitHub to create new versions. As early as October 2015, Antshares completed its first crowdfunding, raising 2,100 Bitcoins. This round of fundraising ended on September 7, with Antshares ultimately obtaining 5,539 Bitcoins, equivalent to over 22 million RMB, with 1,360 participants.

In summary, the main places for releasing ICO projects in the digital currency space include international forums like Bitcointalk, domestic forums like Babit’s crowdfunding site, and projects that conduct ICOs directly on their official websites without relying on third parties, such as the domestic Antshares. With the increase in ICO projects, the official posts and materials released have become increasingly rich, generally including at least key information about the project, such as white papers, project positioning, strategic goals, ICO timeframes and plans, project development ideas and strategies, source code release and launch arrangements, team introductions, project features, investor rights protection, and other relevant ICO details.

Investors wishing to participate in a digital currency ICO project should conduct thorough research in advance. The risks inherent in digital currency crowdfunding are significant, and careful consideration is essential before investing.

Reliable Blockchain Technology, but Many Unreliable People and Things#

However, this does not mean that all investments related to it are reliable. There are many projects in the market that use the banner of "Bitcoin" or "virtual currency" to defraud people. If the project you are involved with has the following characteristics, please be cautious and avoid them.

● Coins that claim high returns. Digital currencies are entirely priced by the market, and it is impossible to promise returns; they can rise or fall at any moment. Any digital currency that claims or promises high returns can be considered a trap.

● Recruiting members with commissions, such as how much commission is earned for bringing in a member. This characteristic has nothing to do with digital currency and is a unique operating model of pyramid schemes. Please stay away from any project with this type of operation.

● Withdrawal restrictions. Although mainstream digital asset exchanges may have daily withdrawal limits, this is mainly a response to anti-money laundering policies. If a trader's identity can be verified, most exchanges can lift restrictions or raise limits. However, if a niche digital currency exchange claims that the withdrawal limit is only 5%, be cautious, as it is likely to abscond with funds.

● Claims of cooperation with listed companies. Some digital currencies claim to cooperate with listed companies, but almost none of the mainstream digital currencies have such partnerships, as most mainstream digital currencies operate on public blockchains based on decentralized principles. While it cannot be said that digital currencies cooperating with listed companies are necessarily scams, investors must conduct thorough due diligence on the relevant companies if they wish to participate; otherwise, it is better to stay away.

So, does that mean that digital currencies without any of the above characteristics are definitely safe? Of course not. There are still many so-called digital assets that use the name "blockchain" to deceive people. Here are a few more points to consider.

● So-called digital currencies without "wallets." If a digital currency's balance can only be viewed by logging into the other party's website and has no client, it is almost impossible for that digital currency to be related to blockchain.

● Even if there is a client, if all client versions do not have a "synchronization" process, then it is definitely unrelated to blockchain. Taking Bitcoin as an example, if it is a third-party "light wallet," it is normal not to have a synchronization process, as it is designed for user convenience. However, the official wallet requires several days or even weeks to synchronize before it can be used normally, which is determined by the working principle of blockchain. Therefore, if a certain digital currency has a client, but all client versions do not require synchronization, it is highly likely to be a scam project masquerading as blockchain.

● Even if a certain digital currency is indeed based on blockchain, and its client is similar to the official Bitcoin client, requiring synchronization to use, it does not mean that this digital currency will not abscond. Since Bitcoin is open source, it is possible to create a clone coin by modifying a small amount of code, and hiring someone to do it only costs a few thousand RMB.

To determine whether a blockchain digital currency can exist long-term, the following data should be considered.

The number of nodes, meaning how many computers globally run the nodes of that blockchain; at least hundreds of nodes are needed to consider it widely accepted by the market.

● Hash power (if the mining method is POW), also known as hash rate; the hash power must be large and stable; otherwise, if it is subjected to a "51% attack" or difficulty attack, the digital currency faces the risk of termination.

● Whether there are enough exchanges to trade that asset, meaning whether it is convenient to exchange with fiat currency. If there is only one exchange where that digital currency can be traded, it is advisable not to purchase it.

Storage Risks#

If investors are computer enthusiasts, they may consider storing their invested digital currencies on their own computers, which means that even if an exchange is hacked, absconds with funds, or goes bankrupt, their rights will not be compromised.

However, self-custody of Bitcoin also has its pros and cons. If not handled carefully, it can also lead to the loss of digital currency. In mature exchanges, digital assets are stored by knowledgeable professionals, and unless a crisis of trust occurs, their security is generally very high.

If investors choose to self-custody digital currencies, they must be aware of the technical traps discussed below (using Bitcoin Core as an example, but some principles apply even if it is not Bitcoin Core). These traps come from real cases.

If Bitcoin is stolen, given the immutable nature of blockchain, and since there has never been a precedent for recovering confirmed Bitcoin transactions through hard forks, it is impossible to retrieve Bitcoin that has already been confirmed through technical means. If one wishes to recover stolen Bitcoin, a relatively feasible solution is to find the perpetrator and demand a return through public relations, legal means, etc. If the perpetrator cannot be identified, the difficulty of recovery becomes very high. Currently, apart from the DAO case of Ethereum, there are no other cases to reference. Of course, there is another situation where your Bitcoin is entrusted to a platform, and if the platform is hacked, it may compensate for the loss, but this entirely depends on the platform's strength and reputation.

Liquidity Risks#

For investors, liquidity risk refers to the possibility that you may not be able to quickly sell your investment assets for cash (in fiat currency) without causing significant impact on market prices. In simple terms, when you want to buy or sell, you find that you cannot buy or sell.

Liquidity risk can be broken down into three aspects: bid-ask spread, market depth, and market and asset characteristics.

The bid-ask spread is the difference between the highest buying price and the lowest selling price in an exchange's public quoting system.

In a public quoting system, there will be a series of quotes from high to low. Unless the buying price equals the selling price, these quotes will not execute. Therefore, facing such a quoting system, each buyer must quote at least the lowest selling price when placing an order to hope to execute at the current best (lowest) selling price. Similarly, if a seller wants to sell the asset quickly, they must quote at least the highest buying price when placing an order to hope to execute at the current best (highest) buying price. Thus, theoretically, if a trader sells the asset immediately after buying it, the net loss on paper is the difference between the current highest buying price and the lowest selling price, which is also a crucial concept in stock, bond, commodity, and foreign exchange trading.

The following shows the bid-ask spread for Bitcoin on the domestic exchange OKCoin, which is 1.00 RMB.

It is evident that the bid-ask spread for Bitcoin trading on OKCoin is small, and the market capacity is good, easily accommodating buy and sell orders in the hundreds of thousands without causing significant impact.

Market and Asset Characteristics#

The characteristics of the market itself and the asset itself can also affect liquidity, such as bond maturity, new stock listings, or delistings.

For example, newly listed assets on exchanges will inevitably have high trading volumes in the first few months, resulting in very good liquidity, as people tend to prefer new things. As prices stabilize gradually, trading activity decreases, and liquidity returns to normal. Additionally, some exchanges may promise to provide certain fee discounts or rebates to incentivize investors to place orders, which can attract more investors to provide liquidity to the market, increasing the bid-ask spread and market depth, thereby reducing liquidity risk and enhancing its appeal to other investors. The liquidity of an asset is not always stable at a certain level; for instance, during periods of sharp price increases or decreases, or during long periods of sideways movement, liquidity conditions can vary significantly between day, night, and early morning. Some investment products have a strong time component, such as options and futures, so in the days leading up to expiration, the price volatility of contracts will be much greater than usual, which will also affect market liquidity.

The above analysis is only for assets that are listed on exchanges and have publicly available quotes at all times. However, some assets are not traded on exchanges at all, and there are no publicly available quotes for reference, making liquidity risk an issue that investors must pay close attention to. The previous chapters of this book introduced various asset forms related to digital assets; apart from digital currencies, most assets are not listed on exchanges (such as assets from crowdfunding ICOs), so these assets cannot be sold at any time at the investor's discretion.

Regarding liquidity risk, the key message we want to share with investors is, "No risk, no return." However, this does not mean that if an asset has high liquidity risk, we should avoid it. Investors should carefully consider the liquidity risks of their investments and not treat it as the sole consideration.

Risks of Crowdfunding Projects Running Away#

The term "crowdfunding running away" refers to the situation where the initiator of a crowdfunding project absconds with the raised funds after the fundraising ends. Running away with crowdfunding is not unique to the digital currency industry; it is a common phenomenon in the internet finance sector, where crowdfunding and P2P platforms often face similar issues.

Currently, the domestic digital currency industry's crowdfunding ICO is booming, and understanding the strength, integrity, and social connections of the project team may help reduce the risk of future investments going to waste. Additionally, the digital currency industry should establish norms to ensure that the crowdfunding process is transparent, subject to regulation, uses multi-signature for fund usage, or introduces third-party supervision to reduce reliance on core individuals.

Honestly, the risk of crowdfunding running away is challenging to analyze and avoid in advance, unless you choose not to participate in crowdfunding. Below are two examples: the Kaomao incident and the domestic GLB platform running away, to help readers understand the uncertainties in crowdfunding projects and raise awareness of the risks of crowdfunding running away.

Kaomao Incident#

In March 2015, Kaomao, the head of the well-known mining machine manufacturer ASICMINER, went missing, suspected of absconding, and has not been seen since. The stock of Kaomao's company, which once had a 50-fold increase, collapsed and went to zero.

Kaomao's real name is Jiang Xinyu, who attended the first middle school in Shaoyang, Hunan Province, and in 2001, he was admitted to the Young Scholars Program at the University of Science and Technology of China with an excellent score of 11th in the nation. He obtained a master's degree in 2009 and a Ph.D. from the USTC-Yale Joint Research Center for Trusted Software. Due to his official ID on the Bitcointalk forum being Friedcat, he is known as "Kaomao" in the Bitcoin community.

In July 2012, Kaomao founded the company and announced plans to manufacture ASIC mining machines. According to information, "Kaomao" registered the company name as "Shenzhen Bitfountain Information Technology Co., Ltd.," with its registered address in the Nanshan Internet Industry Base in Shenzhen, engaging in online technology development and sales of computer software and hardware, e-commerce; the registered capital was 50,000 RMB, with two shareholders each holding half.

In August 2012, Kaomao published an IPO to establish ASICMINER on the Bitcointalk forum, issuing a total of 400,000 shares, of which the public held 163,962 shares, and Shenzhen Bitfountain held 236,038 shares, with the original shares priced at 0.01 Bitcoin each, allowing shareholders to receive dividends. On August 7, 2012, ASICMINER successfully conducted a virtual IPO on the GLBSE exchange.

Kaomao used his developed mining machines to mine, creating the world's first mining farm composed of ASIC mining machines. By the end of February 2013, within just one month, Kaomao enabled shareholders to recoup their costs. By July 2013, this mining farm was able to mine nearly 40,000 Bitcoins per month, worth over 10 million RMB.

Stimulated by massive dividends, the virtual stock of Kaomao's company skyrocketed. In just one year, Kaomao's company reached a market value of over 130 million USD.

However, on October 24, 2014, Kaomao announced the sale plan for Kaomao's hash power contracts on Bitcointalk.org: the hash power would be provided by Kaomao, while sales and management would be handled by RockMiner, with the sales website being Havelock Investments. Details can be found in the "Full Translation of Kaomao's First Batch of Bitcoin Hash Power Contract Announcement." AMHash is a project in collaboration between RockMiner and AsicMiner, where RM acts as AM's underwriter, responsible for selling hash power and building and improving the AMHash platform, handling the collection of funds and dividends, and addressing customer inquiries.

On February 28, 2015, the Kaomao Bitcoin cloud hash power platform AMHash posted an announcement on the Bitcointalk forum stating that due to AMHash not receiving BTC payments from ASICMINER (Kaomao's company), dividends had to be suspended. Some netizens posted dividend records on the forum, claiming that dividends had stopped since February 10, indicating that problems had already surfaced.

On March 2, 2015, AMHash continued to post on Bitcointalk.org, stating that Kaomao's 3.546P hash power farm had been seized since December 25, 2014, and Kaomao informed AMHash that a new farm would be redeployed to restore hash power, but no information about the new deployment had been received.

On March 3, 2015, RockMiner's head "Crazy Xiaoqiang" announced on Weibo that Kaomao had gone missing since January 25, and his family had reported the case, with the specific reasons unknown. All issues needed to wait for Kaomao to appear, as others currently had no funds.

After Kaomao's disappearance on March 3, rumors circulated online that Kaomao had transferred 20,000 Bitcoins.

On March 4, 2015, it was discovered that Kaomao's office in Shenzhen was already empty.

On March 8, 2015, Crazy Xiaoqiang disclosed details related to AMHash, including negotiations with Kaomao at the project's inception and the payments made to Kaomao during the project's progress.

On March 12, 2015, the ASICMINER management team stated that due to Kaomao's disappearance, the company would be temporarily managed by David Fan, and due to unforeseen events, the AMHsh hash power managed by the RockMiner team could no longer be obtained. They expressed apologies for any losses caused by third parties and promised to do their utmost to minimize losses.

From then on, Kaomao, a legendary figure in the mining machine industry, seemed to have evaporated. Kaomao's disappearance ultimately caused significant harm to investors, with countless Bitcoin investments turning into vapor.

GLB Platform Running Away Incident#

On October 26, 2012, the head of the Bitcoin futures trading platform GLB absconded, and the website became inaccessible. The homepage displayed a message stating, "The website has been hacked; please remit the specified amount to this account, or we will delete all data on the website." This phenomenon, disguised as a hacker intrusion, was perceived by users as "self-directed." At the same time, users were kicked out of the official GLB QQ group—this was their only contact channel with the trading platform.

The GLB website was established on May 27, 2012, and was closed in the early hours of October 26, claiming its headquarters was located in Hong Kong, with approximately 4,500 trading members. It was said to have a betting function with 10x leverage, while another Bitcoin futures exchange, 796 Exchange, only offered 2-4x leverage, making it a player-versus-player betting platform.

After the incident, users from Dongyang City in Zhejiang Province reported the case to local police, who subsequently launched an investigation. Meanwhile, platform users formed a QQ group for rights protection. The number of people in the GLB incident rights protection QQ group reached 500, with losses exceeding 30 million RMB.

Using technical means, the GLB server was examined, and after formatting the server, data was recovered; administrator information was found in the database, which helped identify the real suspects. Additionally, Bitcoin players went to verify the authenticity of the GLB office address in Hong Kong.

It was discovered that the customer service in the GLB website QQ group and the so-called chairman's QQ avatar were all stolen from others. Furthermore, the address left for their French branch was found to be a café.

This means that the company had a poor track record and numerous flaws from the very beginning, with various forms of deception. As a result, under the temptation of making quick money with 10x leverage, some people still took the risk.

The core of digital currency is blockchain, and blockchain technology supports the security of the entire encrypted digital currency. Based on current market reactions, the attention attracted by blockchain technology is not insufficient but somewhat excessive. The success stories of early Bitcoin holders resonate with the ambitions of other market entrants to "turn the tables." However, the gap between ideals and reality may exceed most people's imagination. Additionally, capital markets can be divided into primary and secondary markets. In the primary market, new securities are issued to meet institutional investors' demands. In the secondary market, already issued securities are traded between the public and institutions. Typically, capital markets do not include commodity futures markets. However, we are surprised to find that exchanges around the world, whether in the primary or secondary market, whether in commodity futures or financial futures, have invested heavily in researching blockchain technology. It is undeniable that the successful application of blockchain will significantly improve settlement efficiency.

1. Is the cost-effectiveness of application scenarios high?

2. Who will pay or share the costs of upgrading existing systems?

3. Uneven interests;

4. Forming industry standards will take time;

5. Scalability/performance issues;

6. Government regulation;

7. Regulatory issues;

8. Legal risks;

9. Challenges to digital cryptography affecting its security;

10. Simplicity and cross-platform operability.

Since its establishment, Ethereum's vision has been evolving and expanding. Although blockchain remains an important component, it is just part of the broader "Web 3.0" described by Ethereum CTO Gavin Wood—a more secure, trustworthy, and open internet born to replace inefficient solutions with decentralized technology for consensus, finance, auditing, tracking, and utilization. Alongside the Ethereum blockchain, we see a matching set of underlying and high-level protocols developed by both the Ethereum team and third parties, including Solidity, Whisper, IPFS, zero-knowledge proof systems, account management systems, and dedicated browsers, all sharing a common goal: to restore the internet to its rightful state.

Even before the Snowden revelations, we recognized that entrusting our information to companies on the internet was akin to courting danger. However, in the post-Snowden era, we clearly understand that large organizations, interest groups, and even some government agencies are attempting to expand their power. Thus, we realize that entrusting our information to any one organization is inherently harmful. The revenue models of these organizations require them to know as much user information as possible, and realists will recognize that the potential for these trusted organizations to abuse their power can hardly be overstated.

The protocols and technologies of the internet, and even the entire internet itself, are merely the beginning of great technologies. They have helped create rich, cloud-based applications such as Google Drive, Facebook, Twitter, and countless other games, online shopping, banking, and more. However, in the future, most of these core technologies will be reconstructed based on our new understanding of the interaction between society and technology.

Web 3.0, or what can be called the "post-Snowden era" internet, is our reimagining of existing web services but using a fundamentally different multi-party interaction model. We publish information that we deem public; we place information that we believe should reach consensus onto a consensus ledger; we keep private information confidential and never disclose it. Communication always occurs over encrypted channels, with endpoints having only anonymous identities and no traceable information (such as IP addresses). In summary, we need to design systems like this because, in an internet that has long surpassed traditional human social boundaries, trust-based behavior is fragile.

The post-Snowden era internet has four components: static content publishing, dynamic messaging, trustless transactions, and a complete user interface.

First, we already have many decentralized encrypted information publishing systems. Currently, two systems have implemented most of the necessary functions: Freenet and BitTorrent. Part of this system allows individuals to publish their websites (or DApps using new technologies) in a very large and immutable manner. Images, page templates, most text, and code belong to this part. This content will have an address, and anyone else can download it.

Like BitTorrent, we can incentivize others to maintain and share information. Combined with other technologies in Web 3.0, we can make the incentive mechanisms more efficient and precise. Since the infrastructure of the incentive mechanism is built into the protocol, Web 3.0 will not suffer from distributed denial-of-service attacks.

The second part of Web 3.0 is an identity-based, anonymous underlying messaging system. It is used for communication, whether for private communication between two individuals or broadcasting from one person to many.

As a communication system, it is fundamentally similar to the internet itself. However, it has two key differences from the internet. First, if a message is private, it will always be encrypted, so no eavesdropper can determine what is being communicated privately. Second, the physical location of the message endpoints is cleverly hidden, so eavesdroppers cannot even collect "metadata": this information, once deemed useless by the information security industry and thus not considered private and unprotected, is actually very useful, costing billions of dollars to collect on communication infrastructure.

In Web 3.0, this messaging system allows individuals to communicate securely and protect privacy, enabling everyone to receive real-time updates and publish information without needing to trust these messages: you cannot trust any message as "true" unless it comes from the identity it claims to represent.

The third part of Web 3.0 is the consensus engine. The consensus engine is a means of reaching agreement on certain interaction rules, and future interactions will be executed automatically and accurately according to pre-agreed terms. It is a comprehensive social contract that gains strength from the network effects of consensus.

The effects of breaches being visible to everyone else are key to creating a strong binding social contract and reducing breaches. A reputation system with Facebook or Twitter-like functionality is more effective than one without such functionality because users care greatly about how their friends, partners, or colleagues evaluate them. An extreme example is whether and when to add one's boss or date as a friend on Facebook.

The consensus engine will be used for the credible publication and modification of all information. This will all be achieved through a fully universal global transaction processing system, with the first instance being the Ethereum project.

Traditional web (Web) has not fundamentally solved the consensus problem but has relied on centralized trust institutions, such as ICANN (Internet Corporation for Assigned Names and Numbers), Verisign, and Facebook, leaving only private and government websites and the software built on them.

The fourth component of Web 3.0 is the technology that integrates the above three parts—a "browser" and user interface. Interestingly, it will look very similar to the browser interfaces we are already familiar with and love. It will have an address bar (URI bar), a back button, and most of the interface space will be used to display DApps (decentralized applications).

The "browser" of Web 3.0 will have some surface differences from current browsers. The traditional client-server URL looks like "https://address/path," while the Web 3.0 address looks like "goldcoin" or "uk.gov." Domain name resolution will be executed through a contract based on the consensus engine, allowing users to easily redirect or expand. The new domain name resolution method will allow for multi-layer domain name resolution. Background DApps will play an important role in the user experience of Web 3.0.

Once the initial synchronization process is complete, page loading times will drop to zero because static data has already been pre-downloaded and updated to the latest version, while dynamic data (transmitted through the consensus engine or peer-to-peer messaging engine) also remains current. When in synchronization, the user experience will be very reliable, although the information displayed may be outdated.

As a Web 3.0 user, all interactions will be conducted in an anonymous and secure manner, with many services still operating in a trustless manner. For services requiring third parties, Ethereum's tools will provide users and DApp developers with the ability to decentralize trust among multiple entities, greatly reducing the need for users to trust any single entity.

This transformation will occur gradually. In Web 2.0, we will see more and more websites using Web 3.0-like technologies in their backends, such as Bitcoin, BitTorrent, and Namecoin. This trend will continue, as the security of a system depends on its weakest link, so these websites will eventually transition to providing end-to-end security and trustless interactions through Web 3.0 browsers.

DAO#

In a general sense, the concept of "Decentralized Autonomous Organization (DAO)" refers to a virtual entity with a certain number of members or shareholders that relies on a majority (e.g., 67% or more) to decide on spending and code modifications. Members collectively decide how to allocate funds. The methods of allocating funds may include bounties, salaries, or more attractive mechanisms, such as rewarding work with internal currency. This fundamentally replicates the legal meaning of traditional companies or non-profit organizations for enforcement using cryptographic blockchain technology.

A DAO can consist of one or more contracts, supported by a group of like-minded individuals who provide funding while holding "shares" in the DAO. The operation of a DAO is entirely transparent, does not require human management, and is no longer controlled by votes or founders and shareholders. As long as the DAO can provide valuable services to users and maintain a balanced budget, it will continue to exist on the network.

However, it is possible to move directly toward the DAO goal from day one, but it may also evolve gradually. Similarly, integrating certain parts of a DAO into traditional organizations is also feasible.

If a DAO is the ultimate model where autonomous agents (Autonomous Agents) work through artificial intelligence or smart programs, we can imagine an evolutionary path for a DAO, with each stage building on the functions of the previous stage, as shown below:

• Participative—users voluntarily and independently participate in a loose task.

• Collaborative—users collaborate to add value to the target project.

• Cooperative—users expect to receive some shared benefits.

• Distributed—these functions begin to spread through value addition across a larger network.

• Decentralized—further scalability is achieved by injecting more power to the edges.

• Autonomous—autonomous agents, smart programs, continuously improving artificial intelligence, and AI algorithms will provide self-sustaining operations and value creation.

There are six interrelated components:

(1) Scope

(2) Stake

(3) Value

(4) Governance

(5) Gains

(6) Technology

Users are at the core of the DAO evolution, so the infrastructure should support user actions. Note that participative/collaborative/cooperative functions are user-based, while distributed/decentralized/autonomous functions are architecture-based.

1. Types of Ownership Rights

There are three ways to participate in a DAO. You can purchase shares/digital currencies/tokens, or shares/digital currencies/tokens can be granted to you, or you can earn shares/digital currencies/tokens in other ways.

Earning shares is interesting because it includes both active and passive earning. An example of actively earning shares is participating in a bounty program for a project, such as finding bugs, developing software, white-hat activities, or any tasks required by the DAO.

A typical example of passive earning shares is sharing something, such as sharing your computer's computing power, hard drive, or even your data.

2. Units of Value

As a shareholder, there are various ways to receive benefits from the DAO. Of course, the most traditional way is to receive shares, but value can also be distributed to shareholders in the form of points, tokens, rewards, or cryptocurrencies. Note that tokens can have multiple purposes; they can represent the right to use a product or ownership related to some intrinsic value.

3. Governance

Proper governance is not an easy task, but it is essential for success.

Autonomy does not mean lawlessness, so you need to consider the different components that constitute governance. Can shareholders participate actively (e.g., voting, management, rule creation, rule inspection, decision-making, reporting, management) or passively (e.g., feeling valued and respected, being compensated fairly)? Regardless, governance is the way an organization operates.

4. Value Appreciation

Traditionally, we redistribute company profits in the form of profit sharing or dividends. However, in a DAO, these benefits can include voting rights/some rights or being granted a special status. Ultimately, the internal capital appreciates in the form of cryptocurrencies, leading to value growth.

5. Cryptographic Technology

Blockchain and cryptographic currency-based protocols and platforms are what make consensus mechanisms possible. They are open-source decentralized consensus and decentralized trust protocols that enable the immutability, verifiability, and accuracy of all transactions and smart programs.

These protocols can be designed for general purposes (e.g., Ethereum, Bitcoin) or for specific goals (e.g., Skuchain designed for decentralized supply chains, MaidSafe designed for decentralized storage). The technology platform includes three parts:

(1) User data layer, assuming data is owned by users.

(2) Smart programs, which are essentially transaction engines.

(3) Application programming interfaces (APIs) that interact with various value-added services.

6. Innovation in Value Creation

A key goal of a DAO is value creation, and to achieve this, user behavior should be able to increase the value of the DAO, reflected in the appreciation of cryptocurrencies.

This is where the creative talents of entrepreneurs come into play, and it is where business models are formed. The use of value without creating it is wasteful and will lead to failure.

However, it should be noted that many DAOs will still be in the theoretical foundation stage, and thus the conceptual preview here is merely the first step toward the development of DAOs. A new DAO is like a startup; it needs to adapt to the market, require a business model, and attract many users. Before a DAO gains market recognition, it resembles a science fiction story; the success of a DAO depends on the market, not just on conceptual previews.

We must believe that creating a DAO is a gradual and progressive process. I believe that in practical implementation, DAOs will have different degrees of purity, such as a company being 60% DAO model.

If you think establishing a DAO is very easy, you are mistaken. In the future, there will be different ways to establish DAOs and different operational methods.

Through the concepts of Web 3.0 and DAO, it seems that Ethereum and blockchain will bring a completely new social operating system.

In this era, there is no shortage of entrepreneurial crowds struggling to survive, but there is also poetry and a distant horizon.