Hashkey Capital Managing Director Deng Chao: 10 Key Insights on Web3 Creation and Investment
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Hashkey Capital Managing Director Deng Chao: 10 Key Insights on Web3 Creation and Investment
Deng Chao's 10 Key Insights on Web3
Navigating Web3 tides with focused insightsOn September 24, Wuvang Island's Web3 Coach virtual salon "Wuvang Sheng" hosted Daniel Deng, Managing Director at HashKey Capital, to share his insights on “building” and “investing” in Web3. The session minimized jargon and used plain language to help Web2 practitioners better understand Web3.
Wuvang Island collaborated with bfrenz DAO to summarize the livestream into 10 key insights from Daniel Deng (aka "Chaoge") about Web3. This content is exclusive—enjoy!
Yingmu from Wuvang Island in conversation with Daniel Deng, Managing Director at HashKey Capital
01. What mindset shifts do professionals from Web2 big tech companies need when embracing Web3?
Blockchain users have already exceeded 300 million.
Web3 can only reach its next stage when more experienced, capable, and technically skilled people from Web2 enter the space. Many coming from Web2 carry the光环 of past success, so it’s essential to mentally prepare for differences between Web2 and Web3—differences that span from foundational logic to evaluation criteria. The most obvious difference is centralization vs. decentralization.
- Attributes: Web3 has both financial and commercial attributes.
- Business Models: While models may appear similar, they differ fundamentally. For example, in traditional banking, borrowing requires an intermediary—the bank—but on-chain, protocols replace intermediaries, enabling higher efficiency. Some users who experience this prefer not to return to traditional banks. In Web3, power shifts from platforms to users, giving users greater voice and control.
- Product Design: Ideas matter most in Web3—you don’t even need hardware or a formal company. Ethereum provides the platform; a strong idea attracts builders.
- Fundraising: Web3 projects are less dependent on capital and traditional VCs. Some projects actively avoid having dominant stakeholders.
- Platform-User Relationship: Take gaming: traditional games criticize Web3 games as hard to use, while Web3 gamers complain, “You just treat me as a cash cow.” This shows that while Web2 games focus on user experience, Web3 games aim for shared progress and ownership—not treating users as machines but as partners.
- Marketing: Airdrops in Web3 are essentially distributing project ownership. Put differently, marketing budgets traditionally drawn from a company’s balance sheet now come from equity—giving away ownership instead.
02. How should one approach赛道 selection?
From an entrepreneur’s perspective, opportunities in public chains aren’t large right now—but this doesn’t mean there aren't still many opportunities at the underlying blockchain technology layer, especially in Layer1 and Layer2, where the tech stack remains immature.
Infrastructure is still very early-stage. Just like digital asset custodian banks are mature in the U.S., they’re still underdeveloped in Asia.
It’s hard to generalize which赛道are worth investing in—it depends on the team’s background and strengths.
03. Are there successful Web3 startups founded by ex-big-tech employees?
Yes, many—ranging from gaming and social to infrastructure. Projects backed by giants like Tencent and Alibaba also exist. Entrepreneurship requires long-term thinking rather than short-cycle views—for instance, Bitcoin investors entering at $60k might perceive market bubbles.
Many blockchain teams today are led by Chinese founders. Though often low-key, they wield significant influence in the industry. Asian teams excel in execution and commercial implementation, while Western teams tend to lead in creativity. Web3 is attracting increasing numbers of Web2 talent, pushing the industry toward real-world applications with growing advantages. Believe in Asian teams—their potential is limitless.
04. Are there still innovation opportunities based on existing infrastructure capabilities?
There are still many opportunities in chain performance. First, in technical direction—Ethereum’s roadmap, scalability solutions—are constantly evolving. Second, in engineering—code development. Ethereum welcomes exploration into alternative technical paths.
However, I believe cross-chain may not end up being such a big need. From a user perspective, once someone is embedded in one ecosystem, switching becomes difficult. It’s likely blockchains will eventually converge, making cross-chain less compelling.
Beyond performance, areas like secure computation and privacy at the foundational layer remain critical needs.
05. On Centralization vs. Decentralization
Whether to centralize depends entirely on the project.
For foundational infrastructure like public chains, decentralization is ideal—the more distributed, the stronger the network trust.
For application-layer products, some degree of centralization may be necessary. The closer to regulated domains, the more centralized things become. For example, some decentralized exchanges are now receiving regulatory licenses.
The base layer uses decentralized technology, but commercial applications often require centralization (to interface with reality, not purely idealistic), so it cannot be generalized.
06. What kind of founders are you most optimistic about?
This is hard to generalize—there’s no single archetype.
Success depends on multiple factors. The project itself matters, and different layers (base tech / middleware / applications / crypto finance) have different requirements. Founders need deep understanding of their product and business (technical expertise), as well as the ability to commercialize it (business design). Founders act as integrators—knowing how to build products, promote them, mainstream them, and even engage with regulators.
Crossing industries is like crossing mountains. For those transitioning from traditional fields into Web3, it’s crucial to let go of past path dependencies. Stay open-minded and observe the industry objectively.
07. Will China’s domestic Web3 regulations and policies change?
Hard to predict—different regulators have different priorities.
Global blockchain regulation overview: three tiers. The U.S. leads far ahead, with the clearest framework and strictest rules—many global regulators watch the U.S. Second tier: Singapore, Hong Kong, Japan, Switzerland, France, UK—have clearer frameworks and are slightly ahead of the U.S. Third tier: places aiming to leapfrog, like Dubai and Malta.
Different regions have different laws. Places like Hong Kong adopt bottom-up, business-driven approaches—industry grows first, then pushes regulation. Mainland China takes a top-down approach, with broader macro-level considerations.
I don’t recommend doing token-related businesses in mainland China, as regulators remain cautious about anything involving tokens.
08. What are good channels and media for staying updated on Web3?
"A Guide to Virtual Asset and Blockchain Investing" summarizes the industry knowledge graph, component modules, investment frameworks, and methodologies—worth checking out if interested.
Some influential figures personally impactful to me: Chris Dixon (a16z partner) offers forward-looking industry perspectives; Matt Huang (Paradigm partner) brings deep, unique analysis on projects; Ryan Selkis (founder of Messari) publishes over 100-page annual reports, helping readers identify key players and trends each year—great for mapping the industry landscape.
Learning is like building a house: start with structure (framework), then add bricks (details)—this makes learning far more efficient.
09. The application value of oracles in Web3
Their main role is connecting on-chain data with applications. Chainlink has done well, but widespread commercial adoption remains distant. Significant opportunities remain across application domains and middleware layers.
Current tech infrastructure still can’t support large-scale commercial volume, so we need more people building middleware and core tech layers. If competing, either go head-to-head or differentiate—just like blockchains, whether general-purpose or niche-specific. Opportunities exist, depending on your strategy and direction.
10. Suggestions for seed round funding mix
Depends on where the project sits.
If highly community-oriented, raise funds within the community—start with airdrops, attract users first, then discuss tokens. Once the token has value, the project gains pricing power and thus funding sources.
If leaning toward traditional commercial applications, equity financing dominates. Previously, 70%-80% of fundraising was via tokens, 20%-30% via equity. Now, demand for equity financing is rising as more projects move toward real-world applications requiring interaction with traditional systems.
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