Innovation in the blockchain industry

15 Dec 2022

Innovation is generally divided into two types, the first is technological innovation, and the second is model innovation. Technological innovation is mainly to develop a new technology to solve the current problems. Generally it focuses on the technical level, so it is necessary to make things and functions that were not available before. For example, Bitcoin has opened up new technologies such as blockchain, Ethereum has developed smart contracts and EVM virtual machines, UniSwap has developed the AMM market-making method, and other technologies such as cross-chain and NFT are technical innovations.

Technological innovation is the basis of innovation, and model innovation is based on the technological innovation. It mainly focuses on the optimization of rules and economic models, such as DEFI's various deposit pledges and Staking, liquidity mining, various GameFi combined with NFT and blockchain games, AMM market making that supports cross-chain and various machine gun pools, etc.

From a fundamental point of view, technological innovation is of innovative significance, while model innovation is mainly to optimize the past economic models and participation methods, and then make the actual product different from others in terms of experience, thus making the industry shine until a round of large-scale bull market is generated, of course, both technological innovation and model innovation are essential in the process of innovation, and the two are in a complementary relationship.

At present, most of the innovations in the blockchain industry are actually in favor of model innovation. Although model innovation can enable the industry to develop rapidly, due to fierce competition, it is possible that most of the projects may fail, and only a few powerful projects remain in the market. Technological innovation is unavoidable. Since the birth of Bitcoin, there has been very little technological innovation. Most of the projects are biased towards model innovation, and more of them copying previous technologies, apply new concepts, and then create hype in the market. In fact, it may be done by the same group of people.

The concept of DEFI began to appear in 2019, and the currency circle has been popular in 20 years. If you look back, in 17 years, some celebrities in the currency circle began to put forward the concept of "open finance", Open finance actually moves the traditional financial play to the block chain. For example, our current loans, pledges, transactions, leverage, etc. The foremost difference is that DEFI relies on the blockchain and the banks does not rely on the blockchain.

Then if we refer to the traditional financial gameplay, then defi may have financial products such as "bonds", "funds", ETFs, stock financing, and anchored fixed assets in the future.

Similarly, GameFi is a continuation of 17 years of crypto cats and 18 years of chain games, while Metaverse is the integration of online unique games and VR technology . Model innovation such as ICO is also modeled on the traditional stock market IPO. After 17 years of popularity, no one has mentioned it now. This kind of fact often gets a wave of speculation in the market, and it is difficult to continue. More "disruptive" blockchains applications eventually disappeared. In fact, if we look at some popular ICO projects that appeared in 2017, we can found that most of the concepts involved in the project have now gotten a lot of hype.

Technological innovation often requires a certain amount of accumulation to erupt completely, and it is difficult to be recognized by the market in a short period of time. Even if it may be hyped in a short period of time then it is not sustainable, because the corresponding technological innovation ecosystem can not be created in a short period of time.

For example, layer2 have been discussed for many years, but the ecology of layer2 on Ethereum has not yet matured, and after waiting for half a year the market funds leaving the DeFi market and turn to GameFi and Metaverse , which also shows the difficulty of technological innovation.

Similar cases such as NFTs and new Defi projects are not actually favored by capital as soon as they appear, but after continuous screening and market acceptance, they can explode. In fact, many factors will Affect the development process of the project, such as capital attention, policies, etc. In addition, it is not easy for most blockchain projects to solve the problems faced by traditional industries.

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