What do you think about ReFi? 【Question Answer】
Today, we will answer the questions received in the Q&A form that was opened for recruitment a few days ago.
Good morning.
I'm Mitsui, a web3 researcher.
Today, I will answer the questions that have been submitted to the Q&A form that we started recruiting for the other day. I also plan to create regular question and answer sessions, so please feel free to ask any questions you may have!
What do you think about ReFi?
The range of answers is wide, so I'm not sure if my response will be appropriate, but personally, I really like the concept of ReFi and I think it has great potential. However, I believe that without two more stages of innovation, sustainable and influential projects may not emerge.
I am currently working on a project in the ReFi field myself and conducting research on ReFi projects around the world. I have already researched over 100 ReFi projects. As a rough categorization, there are currently two main types of ReFi projects: "Financial Inclusion" and "Carbon Offset".
Financial Inclusion, such as Celo, is a project that aims to provide a blockchain-based financial system to people who do not have bank accounts, especially in developing countries, and those who do not have access to traditional financial services. This area has clear challenges and there is a demand, so there are many growing projects in this field.
On the other hand, (I choose my words carefully), businesses aiming for financial inclusion face difficulties in monetization because their target audience does not have abundant assets. Even if a commons is created, a scheme is needed where the central company continues to generate revenue and the economic scale expands, even if the central company does not profit. For example, even if DeFi protocols are operated in a decentralized manner, they still attract significant funds. The accumulation of funds contributes to credibility and the value appreciation of native tokens.
Financial inclusion projects in ReFi are great ideas, but it seems that it will take time to create a large economic sphere.
Carbon offset initiatives aim to use blockchain to streamline processes such as measurement (MRV) and the issuance of carbon credits in the carbon offset market. This area is said to have a growing market and it is also compatible with blockchain technology, so I am also paying attention to it.
However, this area relies heavily on rule-making by governments and organizations such as the United Nations. Public opinion also plays a role, but I believe that the most significant factor is rule-making at the national level. Once this is established, the market will rapidly expand. However, the current situation is still vague, so monetization is difficult. Additionally, since this industry is driven by government-led rule-making, lobbying activities are considered essential for businesses. This movement is quite different from the decentralized nature, making it challenging.
Therefore, I am also interested in entering the carbon offset field within ReFi, but I am proceeding gradually, taking the timeline into consideration.
In summary, both financial inclusion and carbon offset initiatives (and others) have the potential to become large market sectors, but they currently do not meet the requirements for growth. As it has been an area that has not been resolved so far, simply using blockchain technology is not enough to overcome the many barriers. Therefore, I believe that more widespread adoption of technology, public awareness, and the advancement of tokenomics will lead to the emergence of ReFi projects that are both socially impactful and successful as businesses.
How much do you think web3 will thrive in 2024?
From the perspective of the web3 industry, I think people will feel that it has revived compared to 2023, but from the general public's perspective, I think it is still at a level of minor excitement. Even if there are two layers of widespread adoption and excitement in the startup community, I don't think it will reach the level of excitement in the startup community yet.
Of course, there was a surge in excitement in the startup community with the NFT bubble, but I think there will be another surge when web3 becomes widespread. However, I don't think it will reach that level in 2024.
The reason is that it is still in the stage of hardware development. In 2024, it is the year when the infrastructure for building web3 with a user experience similar to Web2, such as multi-chain compatibility, AA, protocol dunks, and L2, will be established. From there, it will finally lead to a competition in software application development, and the birth of a killer application that reaches the hands of users is expected to be in 2025 or later.
What would you do for a web3 business in Japan?
It depends on whether there is a need to continue living in Japan, whether being Japanese is the only requirement, or whether you want to leverage unique strengths specific to Japan. It also depends on how much you want to succeed.
If you want to succeed globally, I think it would be better to move abroad. The quality of the network, the scale of fundraising, and the speed are significantly different.
And recently, I have come to think that web3 is a world of scale. It's not a winner-takes-all situation, but...
If you think about it calmly, which token would you buy or use, the one for a DEX that is used by 10,000 people or the one that is used by 1 million people? Unless it's for a windfall profit, most people would choose or use the latter. If a DEX doesn't have high liquidity, the fees will be high, and it will also be secure in terms of security.
From this perspective, stronger tokens will be purchased more, protocols will be used, security will be enhanced, and tokenomics will be strengthened.
Therefore, projects that are aiming for mass markets rather than local usage need to be prepared to compete in a fiercely competitive global arena, regardless of whether they are focused on being Japanese or Japan's strengths.
Regarding Japan's unique strengths, they are not that significant. IP is strong, but you don't have to be Japanese to collaborate with IP holders. Azuki, which is famous for its anime-inspired NFTs, is not founded by a Japanese person. On the contrary, Japanese people can also work on projects in collaboration with foreign companies.
So, whether you are Japanese or it's about Japan, it's not so relevant. It is important to thoroughly consider how big of a project you want to create, how much you want to succeed, and which location is appropriate for you to fight for that.
For example, if you want to succeed as an entrepreneur in Japan, it would be better to come to Tokyo. It is not impossible to succeed in regional areas, but the events held in Tokyo, the people you can meet, and the level of enthusiasm are completely different.
Although I haven't seen everything in the world yet, I believe that the relationship between regional areas and Tokyo will occur in a similar way to the relationship between Japan and other countries on a global level.
The intention of the question may have been to know about specific genres, but genres vary over time, so I wrote my opinion about how to fight.
Above, I have written completely personal opinions. I tried to write down my thoughts as they were, so I apologize if the text appears scattered and disorganized.
If the response is positive, I plan to continue doing this regularly in the future, so please feel free to ask any questions!
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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Author
mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
Contact
The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
Telegram：@mitsui0x
*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.