BounceBit Founder's Article: Decoding the Current Crypto Conundrum, Seeing Through the Essence of Things and Social Traps
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BounceBit Founder's Article: Decoding the Current Crypto Conundrum, Seeing Through the Essence of Things and Social Traps
When most of the funds are on CEXs, entrepreneurs need to invent and design products that can leverage these funds—this is the essence of CeDeFi.
Navigating Web3 tides with focused insightsBounceBit has been around for over half a year now, making it one of the faster-growing projects in the industry. With the recent market downturn, most people feel lost and uncertain. So I’d like to take this opportunity to share some frontline insights from building the project. Many past articles analyze things purely from an economic perspective—directly tied to money. But examining market cycles through sociology and psychology is also fascinating. This piece will offer a very direct analysis—please bear with me if any part feels provocative.
Seeing Through to the Essence
In the crypto space, it's easy to fall into misconceptions or get confused. Because money is so central, many people end up acting against their inner convictions. For example, you might invest in a project even though you know deep down it’s flawed—simply because everyone else is hyping it. Or a startup team may push forward with an idea they know won’t work, just because the concept is currently trending. Almost every participant in this industry has experienced this. During bull markets, people happily go along with the illusion; when the tide turns, they start complaining about being misled. In reality, seeing through to the essence of things helps us avoid such traps. Therefore, for every role in this ecosystem, understanding the core truth is critical.
Take the BTC ecosystem as an example. Its essence lies in people’s desire for BTC asset appreciation. This demand manifests in wealth management, mining, or arbitrage—and is driven by expectations of the next bull run and the ambition to accumulate more BTC. The essence isn't about building app chains on the BTC network. The notion of a "BTC-based application ecosystem" is largely an illusion. If even ETH—a chain designed from day one for applications—struggles to sustain real demand, how can BTC possibly succeed? Once we see this clearly, our product development should center on BTC CeDeFi, because generating yield on BTC inherently relies on CeFi, not on creating games or social platforms on the BTC chain. I believe the essence of crypto and blockchain is finance. Thus, all products and projects must focus squarely on financial instruments. SocialFi and GameFi are distractions born from failing to grasp this essence—what I call “illusory behaviors.” These categories might succeed occasionally, but their logic chains are too long and heavily dependent on luck. You might ask: if finance is the core, why didn’t DeFi take off this cycle? We’ll address that later.
Cultural Clash Between Asia and the West
There’s constant debate on Twitter about Asian versus U.S.-based projects—this is my second point: cultural conflict. Since crypto is so closely tied to money, we often analyze differences between Asian and Western cultures through an economic lens. But the key difference lies in the mindset of “paying for dreams.” Most Western projects appear far-fetched and unrealistic. Something that could be built in Asia within a week might secure hundreds of millions in funding and take years to develop in the West. As a result, people endlessly mock these Western projects on Twitter—yet once launched, they still rush to buy in.
From a cultural perspective, Western societies celebrate heroism. Most Hollywood movies follow the same pattern: a hero defeats all enemies and ultimately triumphs. From childhood, Westerners internalize the belief: “I am the hero (like Spider-Man or Iron Man), and I can create and achieve my dreams.” This cultural trait shows up in crypto as grandiose projects led by highly social, charismatic founders who speak confidently and believe deeply in their mission. You can see this clearly on Twitter—just check what the big project founders post daily. Driven by world-changing visions, Western projects tend to focus on infrastructure, because a single DApp is too small a story for their heroic narratives. This mindset has enabled great technological innovation—think Elon Musk. However, in crypto, many of these heroes fail precisely because they don’t understand the fundamental nature of the space.
By contrast, Asian culture is relatively conservative, emphasizing “doing more, talking less.” Asian projects are typically understated, delivering practical, usable applications without heroic flair. Looking at Bitcoin’s development path culturally: Asians laid the groundwork (through mining), while Westerners took charge of storytelling and promotion. Bitcoin remains the only project that perfectly blends Asian and Western cultures. Other projects—including Ethereum—tend to resonate strongly in either the West or Asia, but rarely both.
The Illusion of Upward Mobility Networking
When money is central and substance is lacking, socializing becomes paramount. This industry places enormous value on networking—which explains why so many build personal brands on Twitter and attend conferences. Why are there so many events, always featuring the same faces, yet everyone still attends? Because people are afraid—afraid of missing out. When everyone else is doing something and you’re not, anxiety sets in. That’s why teams pour resources into events and social activities. Everyone engages in upward mobility networking: connecting with influencers, whales, miners, and KOLs, seizing every chance to meet them.
But here’s the problem: the so-called crypto elite wasn’t formed through decades of competition and merit. Many reached the top purely by luck. So after climbing a certain distance through networking, reality hits hard, prompting soul-searching. The truth is, the upper echelon isn’t as glamorous or powerful as imagined. Recently, this flaw has become glaringly obvious: widespread backlash against VCs. In fact, VCs are a symbol of upward networking—projects seek VC backing, and retail investors judge projects based on which VCs invested. But since most VC-backed projects have declined this year, people now clearly see the emptiness at the top of the crypto food chain. Another phenomenon is inflating TVL: TVL is deeply tied to “upward networking” because it correlates directly with money. A high TVL makes a project seem dominant—yet such projects often collapse quickly and pay a steep price.
To me, these recent trends are positive. People are realizing that upward networking isn’t as magical or beneficial as once believed. Sometimes, a simple reminder from a group chat friend or an ordinary conversation offers far deeper insight. Many breakthrough ideas come from casual talks with friends—not from gala dinners at conferences. A message from a community member might prove more valuable than a VC research report. A project that never attends conferences might actually be the most impressive.
The CeDeFi Submission Experiment
CeDeFi is the space BounceBit operates in. Today, I won’t dive into our product—I’ll analyze the sector from sociological, economic, and psychological angles. First, CeFi and DeFi have existed for years, and their strengths and weaknesses are well known. Western-led DeFi projects shone brightly in the last cycle, chasing the dream of fully decentralized global finance (the heroism I mentioned earlier). Yet over the past few years, we’ve learned clearly: pure DeFi is unattainable. Crypto CEXs are primarily controlled by Asians, who excel in product execution and face fierce competition. Asian-led CEXs and CeFi were drained by DeFi in the last cycle and simultaneously faced increasing regulatory pressure.
From a sociological standpoint, CeDeFi represents a fusion of Eastern and Western approaches. A clear example: in the previous cycle, DeFi largely ignored Asian CeFi power—CEXs had to beg for listings. This cycle, Ethena—a purely Western team—needs deep collaboration with Bybit. This shift is healthy. Western teams showing less heroism and Asian teams embracing more innovation is a good sign.
Another angle: “Where is the money in the industry?” I believe the biggest shift this cycle is the location of capital. On-chain funds are inactive; DeFi projects are stagnant. As I write this, ETH gas fees are below 1 Gwei. Meanwhile, proof-of-reserves for CEXs led by Binance continue rising—the latest report shows reserves exceeding $100 billion. Applying the logic above: the essence of crypto is finance, and the essence of finance is using capital to generate returns. When most capital sits in CEXs, entrepreneurs must create products that leverage this capital—that’s the essence of CeDeFi. Of course, BounceBit and Ethena only scratch the surface. The entire CeDeFi space holds vast untapped potential. Take Binance’s $100 billion reserves: that’s a massive pool. CeDeFi builders should find ways to make this capital “circulate.” Only when money starts moving again will the bull market return.
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@jack_venture
