Interview with Cobo Co-founder Shen Yu: What to Watch After Bitcoin ETF Approval?
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Interview with Cobo Co-founder Shen Yu: What to Watch After Bitcoin ETF Approval?
In the previous cycle, the crypto industry faced a counter-cyclical downturn for the first time, and under the influence of the "perpetual bull market" mentality, the deflation of bubbles occurred at a faster pace.
Navigating Web3 tides with focused insightsWritten by: Cobo Global
In our recently released Cobo Argus 2023 Year in Review, we reflected on Cobo Argus’ achievements over the past year—especially its data performance. From 2023 to 2024, Cobo Argus' TVL grew from $24.42 million to $240 million, achieving a year-over-year TVL growth of 874%.
This time, we turn our focus to Shen Yu, co-founder and CEO of Cobo, for an insider’s retrospective on the evolution of Cobo Argus—the DeFi asset management product under the Cobo umbrella. Unlike the previously published annual review, this is a more internal perspective. As an institutional-grade DeFi asset management tool, Cobo Argus was originally created to meet internal team needs. How does Shen Yu, both as a user and product initiator, view the development journey of Cobo Argus over the past year? How has Cobo Argus iterated alongside the maturing DeFi market? And how will its next phase of development align with the evolving demands of DeFi? As users engaging in market-making, liquidity provision, and arbitrage within DeFi continue to grow, Cobo Argus will increasingly focus on providing them with finer-grained permission management tools.
As someone who has lived through multiple market cycles, Shen Yu also reflects on the previous bull run: What distinguishes the last cycle from this one? What different market characteristics have emerged? And how should we respond?
Beyond reflection, there's also Shen Yu’s vision for the future: Which sectors and trends is he currently watching closely? And what long-term (5–10 year) scenarios does he envision for the crypto industry?
As a provider of secure, compliant custody wallet solutions tailored for institutions, Cobo has always prioritized regulation and compliance—a factor Shen Yu believes will be pivotal in shaping the next stage of the entire crypto industry. What upcoming regulatory developments should we keep an eye on?
Finally, Shen Yu shares the most impactful book he read over the past year, his go-to crypto media outlet, how he manages information overload to focus only on what matters, and the tool he uses most frequently when investing.
Key Takeaways:
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The U.S. Financial Accounting Standards Board (FASB) crypto accounting rules are expected to take effect by the end of 2024, boosting corporate willingness to hold digital assets and expanding off-exchange leverage capabilities.
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Once BTC ETFs are approved, key follow-up areas to monitor include:
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Other ETF derivatives beyond BTC;
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Digital asset reserve moves by smaller nations;
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Crypto usage in daily life across developing countries and high-inflation regions.
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The prior cycle marked the first time the crypto industry faced a counter-cyclical environment, compounded by “perma-bull” mentality, leading to faster deflation of bubbles.
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From Bitcoin’s inception until last year, we were in inflationary cycles—this is the first time experiencing a tightening (interest rate hike) macro environment, and its impact on the industry is unprecedented.
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Ethereum ecosystem growth was expected; Solana’s surge driven more by trading activity; Bitcoin ecosystem innovation emerging bottom-up came as a surprise.
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The DePIN sector remains early-stage; long-term adoption faces at least two major challenges: network effects and regulation.
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AI and IoT development depend heavily on blockchain middleware and foundational infrastructure advancement.
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A likely future scenario in crypto: AI agents, robots, and IoT devices granted limited authority to transact and operate digital assets—this stage may take 1–2 full cycles to arrive.
Full Interview Transcript:
What Should We Watch After BTC ETF Approval?
On the regulatory and compliance front, what upcoming events deserve our attention?
The first key point is the approval of BTC ETFs.
In March 2023, many North American banking channels to crypto were severed. In early 2024, the primary focus is ETF approval, which would open up a new, compliant channel for traditional finance capital to enter the crypto space.
In 2024, we need to observe how AUM evolves post-approval, what ETF-based derivatives emerge, and how asset management frameworks develop across different countries following ETF launch.
Additionally, we should watch whether ETF approvals expand beyond Bitcoin to include Ethereum and other major cryptocurrencies. Such expansion would send a strong positive signal—that large-cap blockchain assets like Bitcoin and Ethereum are now being accepted similarly to traditional assets and integrated into balance sheets.
Beyond BTC ETFs, several other critical events in 2024 warrant attention:
1) The implementation of FASB crypto accounting standards, expected by the end of 2024, will significantly impact banks and corporations by allowing crypto assets to be recorded on balance sheets.
Once effective, enterprises can record their crypto holdings at fair market value on financial statements, better reflecting true asset values. This will strengthen corporate appetite for holding digital assets.
In fact, during the 2021 cycle, some traditional companies began buying Bitcoin and Ethereum as part of treasury reserves—but since crypto couldn't be listed on balance sheets, they had to account for them indirectly, making it difficult to accurately reflect revenue and financial changes.
If this trend expands, we’ll see ripple effects on the banking side—banks could begin treating digital assets as alternative investments or support collateralized lending (using crypto as collateral to borrow fiat), enabling better off-exchange leverage rather than relying solely on high-risk on-chain leverage.
2) Monitor digital asset reserve moves by small nations. Will central banks of smaller countries start accumulating digital assets (as a substitute for gold)? I believe this could become a significant trend in the near term.
3) Track everyday crypto usage among ordinary people in developing nations and high-inflation regions. Younger generations, especially Gen Z, are already widely using digital assets in daily transactions. Will this trend accelerate? And if so, what new regulatory risks and challenges might arise? These are crucial questions.
Economic Cycles
Compared to the last cycle, what’s different this time?
There isn’t a fundamental difference compared to previous cycles, but specific manifestations vary:
1) This cycle saw faster bubble deflation, resulting in rapid bankruptcies across many companies and institutions.
While every bear market sees corporate failures, the 2022 downturn unfolded much faster, eliminating excesses differently than before. Many businesses were overly optimistic during the last bull run (“perma-bull” mindset), adopting aggressive strategies that accelerated the crash. For institutions, this caused severe shocks and swift collapses. Naturally, the past year and a half has been tough for industry participants.
2) Additionally, this marks the first time the crypto world experienced a rising interest rate cycle. From Bitcoin’s birth until last year, we were in inflationary periods—this is the first counter-cyclical phase, and the first time we’re feeling the macro-level impact of rate hikes on the industry.
3) On a personal note, the last bear market didn’t feel as cold or hopeless as previous ones.
As Cobo’s co-founder, what insights do you have on surviving prolonged bear market winters?
The focus in a bear market should be primarily on risk management and control. Specifically, managing cash flow and preparing thoroughly for black swan events—not operating under a “perma-bull” mindset.
DeFi vs. Traditional Finance
Is decentralized finance simply replicating the development path of traditional finance?
Essentially, yes.
DeFi rapidly recreates products that took traditional finance 200 years to mature—doing so in a decentralized way, leveraging native composability on-chain to iterate and test quickly.
Where does DeFi differ from traditional finance?
Compared to traditional finance, DeFi is far more efficient and fully transparent.
Efficiency here means faster iteration—roughly 50 to 100 times faster. The entire 200-year history of modern finance can be tested and iterated upon in just two or three years within crypto.
Moreover, because DeFi runs on blockchain, all code is open-source—an open box. In contrast, traditional finance operates as a black box, often hidden even within individual firms, making it hard to understand how the system truly works. With DeFi, anyone willing to spend the time can study and understand its mechanics.
Thus, if DeFi has flaws or bubbles, they surface faster, burst quicker, and allow rapid learning through trial and error.
Future Outlook: Sectors and Trends to Watch
Which sectors and trends do you find promising for the future?
First and foremost: Layer 2. How can L2s scale effectively—whether Ethereum L2s or Bitcoin L2s? This remains a core challenge we must solve long-term: enabling chains to deliver robust foundational services while reducing costs.
Second: Solutions based on smart wallets, AA wallets, and MPC wallets—these lower barriers for users to access blockchain protocols and assets. In particular, combining AA wallets with PassKeys may address essential usability issues ahead.
Third—and further out—is what comes after solving the above two challenges.
I believe the ultimate future of crypto may diverge from common expectations. Instead of mass adoption of human-operated on-chain wallets, we may see AI agents, robots, and IoT devices becoming primary users. These machines could be linked to cryptocurrency addresses and granted limited authority to conduct transactions—exchanging data and executing trades upon human authorization. This stage is still distant; AI and IoT advancements depend on progress in blockchain middleware and foundational infrastructure—processes requiring time and cycles. I estimate reaching this phase will take about 1–2 full market cycles.
Over the next 5–10 years, these three areas are my top focus.
What challenges do you see ahead for crypto? Or specifically in 2024?
Currently, two major challenges stand out.
One is application breakout revealing blockchain performance bottlenecks—this highlights problems that need solving.
This will define the next cycle’s theme: scalability. The solution is clear—adopting low-cost, scalable L2 architectures. On this front, I believe we’re already in the delivery phase, undergoing early validation. The key question now is market and technical selection—who will dominate and capture the broader market?
Next phase: Once infrastructure matures and performance improves, we’ll welcome widespread application use cases.
We can be certain: Mass-scale applications will come. Uncertain is: Among the many potential use cases, which will emerge as the killer app? And when—will they begin surfacing within the next one or two years?
How do you view the crypto revival fueled by Solana memes and claims that 'Solana will flip Ethereum'? What’s your take on the DePIN narrative?
Although Solana suffered greatly due to the FTX collapse, over the past year I’ve seen a dedicated group consistently building on the ecosystem. Whether Solana can eventually surpass Ethereum remains to be seen—we need to observe whether this momentum continues and whether the ecosystem achieves deeper growth.
Recently, Solana’s popularity has largely stemmed from short-term price movements—essentially normal trading-side behavior, which I won’t comment on further.
Regarding DePIN, I’m not particularly bullish. If executed well, it could add real value—but current implementations appear too early-stage.
For DePIN to succeed, I believe it faces at least two major hurdles:
First, it must achieve network effects. Currently, it’s too early—network effects are hard to form, and it’s unclear whether they ever will.
Second, if network effects materialize and scale grows, regulators will inevitably take notice, creating complex compliance challenges.
Overall, I see DePIN currently in a “meme” phase.
What’s the likelihood of a multi-chain landscape? Besides Ethereum, are there other public chains or ecosystems you’re bullish on?
Ethereum’s evolution around L2s and subsequent application rollouts is largely expected.
But the Bitcoin ecosystem’s performance this cycle surprised me—particularly the grassroots-driven innovation happening within it. I’ll be paying close attention to experimental efforts in the Bitcoin ecosystem, hoping for breakthroughs and progress this market cycle.
Product Retrospective: Cobo Argus
Please summarize Cobo Argus’ development journey over the past year.
Cobo Argus originated as an internal security tool used by the Cobo team. Later, we realized others shared similar needs—especially during the bear market, when hacks surged and DeFi exposed numerous risks. So we decided to commercialize this internal tool, transforming it into an enterprise-grade solution offering foundational permission-splitting capabilities—a more scalable approach to secure asset management, a rare capability in the industry.
During the bear market, we productized some of the core competencies accumulated during the last bull run, establishing an infrastructure layer that enables continued iteration in DeFi asset management. Cobo Argus serves as a scalable foundational infrastructure for DeFi asset management.
So, what exactly is Cobo Argus’ core competency?
Simply put, Cobo Argus is a permission-distribution tool built atop Safe multisig, enabling efficient collaboration across teams. Specifically, frequent low-risk operations can be delegated to bots, drastically reducing manual workload and increasing operational efficiency, boosting overall compounded returns—because at its core, DeFi profits from compounding yield.
Through multisig checks and pre-authorization controls, Cobo Argus reduces operational risks such as phishing attacks and signature scams prevalent over the past couple of years. Cobo Argus essentially implements risk management at the smart contract level via pre-authorization on-chain.
Additionally, the new bot (single-signature) feature enhances rapid response during DeFi emergencies.
Unlike stock markets, DeFi operates 24/7 across borders, with critical events often occurring overnight. Moreover, DeFi is highly volatile, and its composability can trigger domino-like cascades, potentially collapsing entire markets. This takes a heavy mental toll on investors, keeping them constantly on edge.
Cobo Argus’ layered architecture allows certain fund-threatening events to trigger alerts and authorize bots to act. When extreme conditions occur (e.g., predefined thresholds breached), bots automatically withdraw funds from vulnerable smart contracts back into multisig wallets.
Previously, wallets had only one highest-privilege key. Every emergency required immediate action from that single person—someone needing to monitor chain risks 24/7 while safeguarding the master key. This role carried immense responsibility, high risk, and extreme fatigue.
With Cobo Argus’ underlying permission-splitting, bots can be granted limited authority to respond swiftly to risks—eliminating the need for human intervention. This lets DeFi professionals finally “sleep soundly.”
Who is Cobo Argus designed for?
Both DeFi teams and large individual holders benefit from Cobo Argus, improving operational efficiency.
For teams and institutions, this permission-splitting capability enables highly secure scaling of internal collaboration.
For individuals, specific actions can be delegated to bots for automated execution, enabling fast, automated responses to risk events—staying ahead of threats. Previous methods relied on external event-triggered alerts followed by manual response, which is much slower. An apt analogy for Cobo Argus is a decentralized version of bank dedicated wealth management—its DeFi nature meaning large funds are managed via a transparent asset management tool.
What is Cobo Argus’ strategic plan for 2024?
The main goal for 2024 is to refine Cobo Argus’ user experience to better serve mainstream users. Currently, it caters more to power users, leaving some friction for ordinary users.
Specifically, we aim to make the trading module more universal and user-friendly—a substantial amount of work lies ahead. Additionally, given the wave of new DeFi protocols emerging, Cobo Argus plans to integrate with more of them in 2024.
Why prioritize refining the trading module next?
In my view, there are currently three types of users in DeFi.
First, asset managers who use DeFi as a transparent wealth management tool, earning visible yields.
Second, market makers who provide liquidity and perform arbitrage on DeFi protocols—they need better tools to manage liquidity positions on-chain.
Third, general users who treat DeFi as a mature financial toolkit—primarily utilizing trading and lending modules.
Our initial module primarily served DeFi asset managers—the original core demand behind Cobo Argus.
As the volume and TVL of asset managers grow, so does the number of users conducting market-making, liquidity provision, and arbitrage in DeFi—many of whom engage in cross-platform arbitrage between centralized and decentralized systems. This brings new demands: they need granular permission tools, particularly for transaction-side operations, requiring fine-grained control down to the function level.
Personal Recommendations
Please recommend a memorable book you read over the past year.
The Pyramid of Money—a short, accessible read that broadens perspectives and helps anticipate future trends. It explores monetary evolution and presents a framework for how crypto, as top-tier money, could generate derivative credit money. I strongly agree with this thesis and believe the future is moving in this direction.
Your go-to crypto media? How do you manage time and filter noise to focus on what matters?
CoinSummer has an internal AI-powered daily brief that aggregates trending content using AI tools. Recently, we’ve opened up a simplified public version.
Every day, I spend 5–10 minutes reading it during my commute. Articles needing deeper analysis get saved for later review at the office—this routine keeps me efficiently informed.
The tool you use most frequently in DeFi investing?
Obviously, Cobo Argus—what else would I use? lol
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