Web3 has developed to the point where it is no longer like the guerrilla model of the past, but a regular army operation. If it wants to have a big development, it must match the entire regulatory framework. (The following interviews only represent the personal views of the interviewees)
Article author: 0x9999in1
Source: MetaEra
Recently, MetaEra Hong Kong Zone was launched, and the "Hong Kong Crypto New Policy Two-Year Anniversary Celebration" series of activities took the lead in the launch. An important part of it is "High-end Dialogue: Hong Kong Web3.0 Influential Leaders". The person interviewed in this issue is Professor Lin Chen, Associate Vice-President of the University of Hong Kong.
Introduction
Professor Lin Chen is currently the Associate Vice-President of the University of Hong Kong, Associate Dean (Research and Knowledge Exchange) of the Faculty of Economics and Business, Chair Professor of Finance and Stewart Foundation Professor of Finance, Director of the Center for Financial Innovation and Development, Director of the Doctor of Business Administration (DBA) Program, and Associate Director of the HKU-Standard Chartered Foundation Fintech Academy. He is also a member of the Hong Kong SAR Government's Third Generation Internet (Web3.0) Development Task Force, an Advisory Committee Member of the Hong Kong Monetary Authority's Institute of Financial Research, and a Fintech Advisory Committee Member of the Hong Kong Securities and Futures Commission.
Highlights
● Web3 is not just limited to cryptocurrency speculation and price gossip. Now it has a bigger vision and it can truly become the third generation of the Internet.
● Only by solving practical problems can its business model achieve large-scale development.
● Web3 has developed to the point where it is no longer like the guerrilla mode of the past, but a regular army operation. If it wants to have a big development, it must match the entire regulatory framework.
● If RWA can rise, it can drive the development of both on-chain and off-chain at the same time. There is no question of who will replace whom, but rather everyone will work together to achieve a win-win situation.
● Compared with the vision it wants to achieve, the current Web3 industry is still in its early stages to me.
● Taking advantage of the Hong Kong Special Administrative Region’s advantages to conduct trials first, I believe there is great potential for the development of Web3.
Full Interview
MetaEra: As a teacher, how do you think talent training and education in the field of Web 3.0 should be conducted to meet the needs of today's rapidly developing industry? The University of Hong Kong has launched the "Web3 Global Elite Program" to the public. I would like to know what results have been achieved and whether there will be any new actions or plans?
Lin Chen: When I talked about blockchain and cryptocurrency in 2017, people in the industry may have had some narrow views or prejudices about it. I feel that the transition from Crypto to Web3 actually represents a greater vision and ideal for the industry! It is not just limited to cryptocurrency speculation and chasing ups and downs. Now there is a bigger vision. It can truly become the third generation of the Internet, and there can be a fairer mechanism to better distribute the economic benefits generated by the system to holders, including users, developers, and contributors. At the beginning, we hoped that this fair mechanism could be self-supervised and self-regulated, and there would be a very good governance mechanism to form a community to achieve such a vision.
The introduction of the term Web3 is a big improvement over the simple digital currency and cryptocurrency in the past. In the financial circle, we mention the term financial literacy, which means that the lack of financial knowledge will lead to many mistakes in investment and financial management. In the Web3 world, it is still necessary to popularize education in this area. Whether it is writing code or developing smart contracts, for the general public, their understanding of the Web3 ecosystem is very limited.
Even if everyone is in the Web3 circle, everyone has different perspectives. Some people focus on blockchain technology, while others focus on the rise and fall of digital currencies. Therefore, everyone's perspective will be limited to their own area, and they may not necessarily have an overall macro understanding of Web3. The "Web3 Global Elite Course" we launched is to overlook the entire industry from a higher perspective, and will also include sector development, regulatory dynamics, technological breakthroughs, industry empowerment and other content, but will pay less attention to the rise and fall of digital currencies. Because the rise and fall of currency prices are also closely related to major global events, such as the launch of new financial instruments and even the US presidential election, we hope to make the logic and story behind it clear. Based on this consideration, we launched two "Web3 Global Elite Courses". Due to time constraints, the third "Web3 Global Elite Course" has not yet started.
In addition, I would like to say that Web3 education will be accepted by more and more people. The "Web3 Global Elite Course" is to bring together all those who are interested in Web3. The students are very professional, including some celebrities in the circle. Now we realize that it is not only necessary to educate Web3 practitioners, but also to provide popular education to a wider group of people. These are some of my thoughts on Web3 education.
MetaEra: Would you recommend your own students to participate in Web 3.0 investment transactions/entrepreneurship projects?
Lin Chen: Many of them are already doing these things. The size of Web3 is still a very small piece compared to the global asset management industry and the entire financial ecosystem. Some large companies will also allocate assets, but it does not mean that they will go all in on Web3. They may allocate 5% or even 1% on Web3, which may have a very big impact on the Web3 ecosystem.
MetaEra: In your current personal work and research, will you still focus more on traditional finance, or will you devote more energy to the research of Web 3.0? How do you balance the proportion of the two in your current work priorities?
Lin Chen: This is how I look at this issue. As a scholar, I will track the direction of financial innovation. Our approach may not necessarily be to see which application is the hottest in Web3, or whether it has 100 times or 1,000 times of growth space, although these are things that everyone is paying attention to. But from the academic perspective of Web3, what pain points can Web3's new play, new business model, new products or new technologies solve in real social life? Because only by solving practical problems can its business model be developed on a larger scale. In addition, we will also pay attention to financial stability. Similar events that affect financial stability have occurred in Web3, which are actually the same as the problems that are easily observed in the traditional financial circle. Our research on financial stability will not necessarily distinguish between the two, but will try to study a certain new thing, why it has emerged, what practical problems it has solved, whether it has systemic risks, and how to correct it if so. The overall goal is that we hope that new tools or new products can produce practical benefits, and will not make the entire financial ecosystem more fragile, and have a certain degree of resilience.
Web3 has developed to the point where it is no longer like the guerrilla mode of the past, but a regular army operation. If it wants to have a big development, it must match the entire regulatory framework.
MetaEra: What core elements do you think traditional finance should focus on first in welcoming the Web 3.0 wave, and which aspects are better to start from?
Lin Chen: Stablecoins and RWAs have one thing in common, which is the concept of putting physical assets on the chain. Most mainstream stablecoins still use the US dollar as the underlying asset. The concept of putting the US dollar on the chain in stablecoins is basically in line with the concept of putting physical assets on the chain.
In fact, both of them allow people on the chain to better access assets off the chain, that is, my funds do not need to be off the chain, I can hold them on the chain, including US dollar assets, treasury bonds, real estate, precious metals, etc., all belong to the RWA concept. After funds and assets are on the chain, it is easy to form a closed-loop ecosystem of their own. The inflow and outflow of funds on and off the chain is the most costly and difficult part. If the funds on the chain can form a system, various types of off-chain assets can be configured on the chain, which can solve the problem of effect and cost, and then its rise itself has its own reasons.
In addition to stablecoins and RWA, there are actually a large number of DeFi applications in Hong Kong, including DEX, lending derivatives, pledge, etc. From a certain perspective, many applications are very creative, and there are many things that traditional finance can learn from, and the incentive mechanism design is also very good.
If the regulation is more relaxed, Web3 will have different strategies, different business models, and a more prosperous ecosystem. However, this will also generate certain risks, so a balance needs to be found between regulation and risk.
MetaEra: Private RWAs are gaining popularity in Hong Kong. How do you view the role and potential of RWAs in promoting the digital transformation of traditional financial assets? What are the advantages of developing RWAs in Hong Kong?
Lin Chen: Since physical assets are put on the chain, it obviously cannot be completed by relying solely on the governance mechanism or smart contracts on the chain, because the assets are off-chain. Therefore, if RWA is to develop, it must be coordinated between the off-chain and on-chain. The approval, management and update of off-chain assets must be completed by off-chain institutions. If RWA can rise, it can drive the development of both on-chain and off-chain at the same time. There is no one replacing the other, and everyone cooperates to achieve a win-win situation.
There is an advantage in the development of RWA in Hong Kong. There are many good targets in Hong Kong. For example, the Hong Kong Monetary Authority wants to put charging piles on the blockchain in the sandbox, which can actually generate relatively stable cash flow in the entity. What I want to express is that Hong Kong is not short of good ideas or good assets, but how to implement it specifically, how to promote it to the society, and how to develop a regulatory framework that matches it may require more details to be considered.
MetaEra: How do you evaluate the atmosphere and vitality of student organizations in the field of Web 3.0? Taking 0xUClub in Hong Kong as an example, we have seen the active participation and significant influence of student groups in the industry. At the same time, students from the University of Hong Kong and the Hong Kong Polytechnic University have also shown great enthusiasm in related activities and entrepreneurial projects. For these young enthusiasts of Web 3.0, what actions or development paths do you think they should focus on at this stage? What opportunities and challenges will the development of the Web 3.0 industry in Hong Kong bring to Hong Kong students?
Lin Chen: The current Web3 industry is still in its early stages compared to the vision it wants to achieve. Especially this year, the Federal Reserve issued spot ETFs based on Bitcoin and Ethereum spot, and it has just been formalized into the formal financial circle. The road ahead will definitely be broader.
In terms of challenges, whether it is exchanges, ETFs, stablecoins, or RWA, Hong Kong is still very close to the international frontier, but it still has not achieved a very large scale. If we talk about the impossible triangle in Web3 as a whole, if only the Scalability is not up to par, for young students and entrepreneurs, this is actually not a big problem, and there may be a lot of room for development.
In addition, if a large number of students want to pursue career development in Web3, then job opportunities are relatively limited. We cannot expect college students to start a business right after graduation. Although Web3 entrepreneurship has happened many times, it is not necessarily a universal thing. Of course, we have also noticed that more and more Web3 companies want to recruit on campus, and we also welcome everyone to come to the University of Hong Kong to give students a chance to choose. I believe this is a two-way choice. More and more young people entering this industry will definitely bring new ideas, new creativity and new technologies, and can also promote the further development of the industry. While further developing, it will also attract more young people to come in, thus forming a positive cycle.
MetaEra: Two days ago at the ForthTech event, you shared Hong Kong’s strategic positioning in the global Web 3.0 ecosystem. Can you further elaborate on Hong Kong’s role in the Web 3.0 field and its future development potential?
Lin Chen: I hope that Hong Kong can be a global leader in at least a few or one of the many tracks. Just like we said before, Hong Kong is an international financial center because Hong Kong has the highest IPO financing amount every year. If Hong Kong can open up a new path in Web3 asset management, I believe that the financial development of Hong Kong and the industry development of Web3 will be a win-win situation. Now, various talent programs attract hundreds of thousands of people to Hong Kong every year. Assets such as stablecoins or RWA can be opened to people at different levels, allowing the entire Web3 to play its role under the big framework of Hong Kong asset management. Then the size of Hong Kong itself can also play a good role in promoting the development of Wbe3. So I think Hong Kong still has great potential to be a Web3 wealth management center.
Of course, asset management is just one of the tracks. If there are breakthroughs in technology or business models, I think that would be great. At present, I feel that all aspects are being explored and tried.
Moreover, Web3 is developing very fast. Even if Hong Kong is not leading now, it does not mean that it will not be in the future. Hong Kong's advantage is that it can attract a large number of high-end talents, and it can also attract a large number of talents with capital allocation needs to gather in Hong Kong, so this place is not lacking in popularity. In addition, with the cooperation of supervision, the developed products can reach more types of people. So I think there will be an opportunity to ignite the fire of Web3 in Hong Kong in a very short time. Taking advantage of the advantages of the Hong Kong Special Administrative Region to explore first, I think there is great potential for the development of Web3.
