Introduction:

Here's a recap of the insightful dialogue from Klein Labs' recent space event on the topic "Exploring the Future of DeFi and L2", held on Dec. 14th 1:00 p.m. UTC.

This AMA discussion featured industry luminaries from Qitmeer Network, METABIT Network, Fameex, Ascendant, Momentum Capital.

The insigtful AMA discussed current crypto market trends, innovations in digital assets like inscriptions and asset tokenization, and advancements in layer 2 scaling. They were optimistic about the future of decentralized finance, blockchain applications, institutional adoption, and crypto's mainstream integration, fueled by technology and evolving regulations. However, they noted challenges in security, interoperability, and accessibility that need to be addressed for web3 to reach its full potential. They emphasized blockchain's promise in decentralizing various economic sectors beyond just finance.

Recap:

1. Guest Self-Introduction and Project Overview

Qitmeer Network: A public blockchain based on the Meta Consensus Protocol. It is an Islamic finance project and community-driven public chain that prioritizes privacy protection and ecosystem building to provide solutions for DeFi and services.

METABIT Network: A derivatives trading platform and cross-platform tool for digital assets. It is a centralized exchange founded in 2018 and launched in 2020, aiming to deliver secure, reliable, user-friendly, transparent trading services for global clients.

Fameex: A derivatives trading platform and cross-platform tool for digital assets. It is a centralized exchange founded in 2018 and launched in 2020, aiming to deliver secure, reliable, user-friendly, transparent trading services for global clients.

Ascendant: The first web3 astrology ecosystem incubated by BMB chain. They have launched their beta AI Astrologer on Telegram and are close to launching their first Community Pass called Cosmic Path which has various benefits like AI+PoW token earnings.

Momentum Capital: A San Francisco-based crypto-focused fund with over $50 million AUM. The fund size is $35 million and invests globally in the decentralized finance space.

2. Projects Q&A Session

• Host: Recently, Bitcoin's strong performance has dominated the market spotlight, attracting more capital inflow. With the surge in BRC-20 and BTC ecosystem tokens, can you share some DeFi projects in the Bitcoin ecosystem that you are currently bullish on?

Momentum Capital: Shared that the overall crypto market tends to see a huge surge around major events like Bitcoin halvings. He is quite bullish on decentralized finance in general without naming specific projects. As the DeFi trend has been growing heavily over the past couple of years with more infrastructure layers and layer 2 solutions being built, he expects DeFi volumes to pick up momentum again soon.

Ascendant: Payed more attention to inscriptions projects on Bitcoin like RSK, Stacks and Sats that provide community benefits and enable more people to contribute. He is also bullish on seeing more entertainment applications launched on Bitcoin's Lightning Network as many DeFi and DEX projects from Ethereum are now copying over.

• Host: Recently, inscriptions have become very popular, with many public chains launching them in succession. Do you think inscription assets are a good business innovation? How do you foresee the development of inscriptions in the next phase?

Qitmeer Network: Saw inscriptions as an interesting innovation because it provides flexibility for different projects to leverage inscriptions and attach data to various public blockchains, not just Bitcoin. Inscriptions can help develop the AI industry through data optimization. Recently inscriptions have been used for NFT projects to create unique, non-replicable data assets controlled by a central authority, increasing security and interoperability.

METABIT Network: Believed inscriptions have gained attention due to their potential to tokenize real-world assets on blockchains. Key business innovations include increased liquidity as traditional assets become more fractionalized and liquid, greater accessibility to global investors by reducing geographic restrictions, and improved transparency and security from blockchain's immutable records.

• Host: After the breakout success of BRC 20, many feel that a bull market is returning. In the next bull market, what role do you think RWAs will play, and will they lead the development of the bull market?

Fameex: Believed RWAs will play an important or even leading role in the next bull market because they provide advantages like lower costs by removing intermediaries, faster and more efficient trading compared to traditionally illiquid assets, increased transparency on-chain, and new investment targets to attract both crypto and traditional investors.

Ascendant: Expected RWAs to act as an entry point and break down barriers for mainstream web2 users to get involved in web3, thus triggering positive market sentiments. As crypto assets associated with real-world, materialistic assets gain adoption among institutions and retailers, Kuntell foresees significant trading volumes entering the market.

Momentum Capital: Saw two key strengths of RWAs contributing to the next boom. Firstly, they connect crypto to the real world which so far has focused heavily on DeFi applications. Secondly, many underlying RWAs are regulated assets like US Treasuries. Increased regulation comprehension helps regulators outline appropriate crypto regulation to facilitate the entry of institutional investors and their capital.

• Host: Since the rise of crypto currencies, Real World Assets (RWA) have gained significant attention in the crypto space. Do you believe that RWAs can attract traditional finance audiences to pivot towards the crypto track?

Fameex: RWAs can absolutely attract traditional finance to crypto based on the advantages they provide - transparency, efficiency, liquidity, self-custody, and serving as a bridge between traditional assets and crypto. This exposure helps traditional investors learn about crypto investing.

Ascendant: A major benefit of RWAs is bringing in big traditional money, though regulations need to be clearer around asset tokenization and operations to resolve conflicts between traditional systems and crypto. As issues get addressed, RWAs have potential to attract more institutional capital within 6-12 months.

Momentum Capital: Highlighted earlier that RWAs can break down barriers for mainstream web2 users to participate in crypto investing, as traditional money requires structured products they can understand. RWAs attached to real-world assets like real estate and art will likely draw significant volumes from institutions and retailers going forward.

• Host: How is the development of L2 progressing, and what are your expectations for the future of L2?

Qitmeer Network: Summarized progress on several major L2 solutions - Bitcoin's Lightning Network is seeing increased adoption and capacity improvements to handle complex applications. On Ethereum, solutions like Optimism, zkRollups and Plasma are addressing high fees and congestion by processing transactions off-chain. Developers are also exploring new approaches like validity proofs for efficiency gains. Overall, L2 solutions should significantly improve capabilities, reduce fees, and see increased adoption across blockchains.

METABIT Network: Shared that Fitzman Network combines L1 foundation with high-speed L2 subnets designed for different performance needs, utilizing proofs of authority, rollups and zero-knowledge proofs. Their Amara subnet uses proof-of-authority for fast 1-2 second block confirmation times to suit NFT and gaming applications. Over time they plan to develop additional rollup and zk-proof based subnets for diverse use cases, ultimately enhancing efficiency, security and promoting digital economy adoption.

3. Summary

The guests engaged in vibrant discussions shared optimistic outlooks on crypto market growth, emerging digital asset innovations, and layer 2 scaling advancements that can expand decentralized finance and blockchain adoption. However they acknowledged still significant barriers around security, interoperability, regulation and user accessibility. The promise of blockchain lies in its continued evolution to not just decentralize finance but enable trustless coordination globally across sectors.

About Klein Labs

Klein Labs is a pioneering community-oriented Web3 accelerator and research-driven venture capital firm. It was founded by a passionate team of engineers, data specialists, crypto enthusiasts, and investors hailing from prestigious institutions like Stanford University, CMU, Cornell University, Google, and Microsoft. We boast a strong culture of collaboration, an ardor for crypto-economics, and an optimistic view of the future of the internet and AI.

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