Shen Yu: The metaverse will be a major transformation for human civilization
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Shen Yu: The metaverse will be a major transformation for human civilization
Original article by Cobo Labs—Shen Yu's perspective: The metaverse will be a major transformation for human civilization
Navigating Web3 tides with focused insights
Cobo Labs is the cryptocurrency research lab of Cobo, Asia-Pacific's largest crypto custody platform and most preferred financial asset management service provider among institutions.
We focus on innovative projects, cutting-edge cryptographic digital technologies, global regulatory trends, market fundamentals, and volatility factors—aiming to help market participants and crypto enthusiasts lower their cognitive barriers to entry.
Core contributors include:
- Shen Yu (Mao Shixing), Co-founder and CEO of Cobo, Co-founder of F2Pool
- Changhao Jiang, Co-founder of Cobo, former Senior Scientist at Facebook
- Lily Zhuo, COO of Cobo, former Chief Legal & Compliance Officer at a renowned $40 billion fund
- Alex Zuo (Zuo Changbo), VP of Asset Management at Cobo, former Co-founder of TokenInsight, lead manager of the industry’s largest FOF
We also welcome lifelong learners with a research-oriented mindset and scientific methodology in the field of cryptocurrency to join us in contributing insights and research perspectives to the industry!
This is the 2nd article from Cobo Labs.
Introduction: Previously, Cobo co-hosted its first Metaverse Art Life event with ChainNews, inviting Shen Yu to explore Cryptovoxels together—an experience that sparked enthusiastic discussions across the industry. This time, responding to invitations from Cobo VIP users, Shen Yu appeared again at a private Cobo VIP sharing session.
At this internal Cobo session, Shen Yu addressed popular questions from crypto enthusiasts about NFTs, the metaverse, and the differentiation of Cobo’s DeFi fund products. Below is Cobo Labs’ condensed summary of the full discussion.
Also, there’s a bonus section at the end~
Under the Hype of NFTs and the Metaverse, ETH Will Capture the Industry's Explosive Growth
During this session, Shen Yu once again discussed the interconnection between NFTs, the metaverse, and ETH.
According to Shen Yu, there is now broad consensus among participants that "NFTs are the foundational assets of the metaverse."
The current consensus recognizes two types of NFTs: those built on ETH and those on other blockchains.
However, NFTs on other chains have relatively low recognition. This implies that if NFTs are indeed the base layer of the metaverse and most NFTs are issued on Ethereum, then the logical and infrastructural foundation of the future metaverse will likely develop on ETH or its sidechains. As such, ETH stands to capture the explosive growth of the entire industry—even though both NFTs and the metaverse remain in very early stages.
Over the past month, NFTs have brought significant momentum to ETH, with many hot new NFT projects emerging. Coinciding with the EIP-1559 upgrade, the surge in NFT minting and trading has led to substantial fee burn—surpassing even top DeFi protocols. In effect, ETH has already begun capturing value from the NFT boom.
Nevertheless, NFTs are still in their infancy. Currently, liquidity is strong during bullish markets but extremely weak during downturns, with limited daily trading volume. For NFTs to achieve sustainable long-term development, solving the liquidity challenge is essential.
Currently, we are seeing promising trends such as NFT fractionalization, NFT-backed lending within DeFi, and the synthesis of NFTs into ERC20 tokens. From this perspective, the future looks bright.
After all, the metaverse is a massive concept—one that could represent a major civilizational shift for humanity. It may eventually transform how people communicate, collaborate, and experience life itself.
Key Questions and Differentiation of Cobo DeFi Funds
How Do Cobo’s Three DeFi Fund Products Handle Volatility, Drawdowns, and What Sets Them Apart?
Background: Cobo recently launched a pre-sale for its DeFi fund products—personally led by Shen Yu—for overseas institutions. The offering received strong interest, allowing institutional clients to freely combine products based on their risk-return preferences.
According to Shen Yu, Cobo’s DeFi fund products are divided into three categories: the first is the low-risk “Whale,” the second is the medium-to-high-risk “Swordfish,” and the third is the high-risk “Bloody Fish.”
Whale is a low-risk product that generally avoids leverage and rarely experiences drawdowns. Even under extreme market conditions, any drawdown would be limited to intraday levels. Stablecoins might briefly fluctuate by one percent or a few basis points; in rare cases of systemic stablecoin risk, the platform would intervene to maintain stable returns.
Swordfish is a medium-risk product involving some liquidity provision (LP) market-making. Impermanent loss can occur during periods of high volatility, but Cobo employs an automated system for risk hedging. This explains why Swordfish requires full custody rather than user self-management.
Individual users lack the timeliness needed for effective risk hedging, whereas Cobo’s automated system can trigger stop-loss mechanisms under predefined conditions. Under normal circumstances, stop-loss costs are around a few basis points. However, during extreme on-chain conditions—such as high gas fees and large slippage—drawdowns could reach a few percentage points.
This product may use leverage to enhance returns—a common practice in DeFi. While leverage introduces risks during volatile markets, the platform actively manages it using dedicated tools to reduce exposure when necessary. This process may incur gas costs and slippage, resulting in drawdowns of a few basis points up to a few percentage points.
Bloody Fish is a high-risk, high-reward product with more pronounced drawdowns. Ideally, drawdowns are controlled within 50%, although this level hasn’t been reached yet. Given its potentially high hourly returns—sometimes several percent—so long as the system runs smoothly for a few hours without extreme events, major losses are unlikely. Even in extreme scenarios, the system responds quickly with rapid stop-loss execution.
Under normal conditions, Whale—assuming no stablecoin risks or proper hedging—can achieve nearly zero intraday or weekly drawdowns, aside from minor slippage during entry/exit. Swordfish typically sees drawdowns of around 0.5% to a few basis points. Bloody Fish, in the worst case, could see drawdowns of 30–50%.
Regarding investment horizons, Shen Yu offered guidance for Swordfish and Bloody Fish: “Both Swordfish and Bloody Fish operate in 3-month cycles. DeFi innovations emerge constantly—Cobo currently has dozens of projects queued up for evaluation. Market热点 remain abundant, new public chains continue launching, and cross-chain protocols are gradually going live. We can already foresee several DeFi opportunities in the second half of the year. As long as one deeply engages with this space, opportunities persist. Over the long term, achieving 30–50% annual returns remains feasible. For ultra-high-yield products like Bloody Fish, annualized returns could reach thousands or even tens of thousands of percent—but such performance may not last long and depends on exceptional cases and timing. Individual mining strategies under Bloody Fish have short lifecycles—sometimes just days—but these opportunities continuously emerge, requiring constant discovery and iteration.”
Bonus
Shen Yu, Who Once Said He’d Retire at 30—Is He Planning for Retirement Now?
Shen Yu’s response: This industry is simply too fascinating. Every day brings exciting new developments. Take NFTs, for example—just a five-day-old idea can suddenly reshape the entire landscape of NFTs over the past few months, driving significant conceptual upgrades. It’s an incredibly fast-evolving and growing field that deeply attracts and captivates me, pushing me to keep learning and exploring diverse knowledge areas. Personally, it greatly enriches my experience.
In truth, isn’t life all about seeking varied experiences? Perhaps the experiences of my remaining years will unfold entirely within the metaverse—a realm built upon blockchain infrastructure. That’s why I find this industry so compelling.
I once said I’d retire at 30, thinking that after more than a decade in the industry, it would have matured enough. Now, over ten years later, I’m still deeply fascinated by it—still staying up late every night, researching and exploring what’s new each day.
I’ve always enjoyed novel things, but neither the internet nor hardware industries offer the same speed of innovation and iteration as our sector. They don’t provide the dopamine rush or the constant sense of growth. As long as the industry continues evolving rapidly, I won’t be retiring anytime soon.
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