Talking about stablecoins with Xiao Feng again: Return to the essence of technology and avoid misunderstandings

On July 18, the GENIUS Act was signed into law by President Trump, triggering a high level of attention to stablecoins worldwide. After some pioneers in the blockchain industry have called for a decade and the mainstream public opinion has repeatedly changed its attitude towards this field, the relevant discussion has finally broken the circle. For a time, whether it is the Internet industry, the traditional financial sector or the macro-policy discussion circle, stablecoins have become the hottest topic. People have begun to rethink the impact and impact that the large-scale application of digital currency will have on the Internet, artificial intelligence, finance and even the geopolitical and economic situation. However, under the heat, a large number of cognitive confusion, information distortion and even misleading views have emerged, and they have been widely spread through self-media, causing some cognitive misunderstandings. The root cause is that these discussions are too general, without considering that stablecoins are one of the products of blockchain technology innovation, and without discussing the nature and application of stablecoins from the perspective of technical logic. For this reason, I talked with Dr. Xiao Feng again and discussed this issue.

Meng Yan: Dr. Xiao, since our last conversation, the situation has advanced rapidly as expected. Now that the GENIUS Act has been passed, I have observed that the attention paid to stablecoins in the Chinese community has rapidly increased, almost to the point of being hotly discussed by the entire population. A friend of mine just came back from Hong Kong and told me that everyone in Hong Kong is hotly discussing stablecoins, and it is really "never seen such a situation before". You are in Hong Kong, so you must feel it more deeply.

Xiao Feng: It is indeed a situation that has not been seen in many years. Not only is there discussion, but the actions are also very active. Hundreds of companies and institutions are lining up to participate in stablecoins, and news about RWA-related actions is also updated every day. We are now receiving many cooperation intentions every day. The significance of the GENIUS Act is not only to clearly establish the legitimacy and sovereignty of the "US dollar stablecoin" in the US legal system, but also to convey a clear signal that blockchain and crypto assets are beginning to move from the gray area to the mainstream financial system, and a new revolution in financial infrastructure has officially started. As a global financial center, it is not surprising that Hong Kong has shown such sensitivity in this new trend.

I do feel a little emotional when I see this situation. As a historical experience, being proactive and bold in the face of new technologies can almost always bring huge returns. History almost always stands on the side of optimism and aggressiveness in new technologies.

Meng Yan: But I also see some hidden worries - this wave of stablecoin opportunities came very suddenly, and many people were not prepared at all before, and there was a gap in cognition. Many people even just heard about stablecoins three months ago, swallowed them whole, heard them from hearsay, and knew only a little, and began to regard themselves as experts on self-media, amplifying the volume and spreading many opinions, some of which I think are probably misleading.

Xiao Feng: I have seen a lot of self-media content recently, and I feel the same way. Of course, first of all, I am still very happy about the current atmosphere of discussion. Isn't it what we have been looking forward to for so many years that the whole society is hotly discussing stablecoins? Now, this industry is ushering in a great era. In the next few years, stablecoins, RWA, token economy, currency-stock linkage, and the integration of crypto and AI will be very lively and exciting.

However, at this time, we should be calm and look back to consolidate our cognition. According to past experience, when spring arrives and the temperature rises, it is easy to breed all kinds of specious cognitions and concepts. Some sensational and erroneous views are easy to spread and sow the seeds of risk in the market. Cognition and concepts are very important. The ups and downs of the crypto market in the past, the industry's misguided path, and people's repeated emotions are actually the result of wrong concepts.

The first thing is to have a proper estimate of the environment. Many people think that the US legislation has been passed, and the crypto industry in Hong Kong and even China will be fully liberalized soon, and even start to lay out on this premise. This is definitely unrealistic. There are still many regulatory issues to be resolved, which takes time. The final solution must be that there is no rule without rules, and it is impossible to let it go. Let me give you an example. After stablecoins leave the banking system, will it make money laundering more convenient? Therefore, any responsible regulator will definitely put forward very strict requirements for anti-money laundering of stablecoins.

In addition, there are relatively large misunderstandings and even errors in the understanding of stablecoins, RWA and blockchain. This incident happened suddenly. It is true that many people "just entered the industry and stood on the cusp of the trend". They have enthusiasm and traffic, but they have a deficit in cognition, and they have no time to make up for it, so their judgment is relatively rough. We also have the responsibility to point out this situation.

Discussion of stablecoins cannot be separated from their technical attributes

Meng Yan: I see that most of the discussions about stablecoins now only talk about the financial narrative of stablecoins, and rarely talk about technology. Do you think that the technology of stablecoins and blockchain has matured to the point where it can be ignored? In the process of communicating with many traditional financial professionals, I found that most of them have no or very little experience in using blockchain products, are unfamiliar with DeFi, and have no experience of losing keys or being attacked by hackers. However, when talking about building stablecoin applications and systems, they are super confident in their words, as if blockchain is already a tool that they can use at will. Many people walk into a dark forest that they are actually completely unfamiliar with with a kind of "regular army" arrogance, and their minds are full of the familiar processes, models and regulatory frameworks in traditional finance, thinking that they can "translate" to the chain. But they ignore the fact that blockchain is a brand-new computing paradigm, and its operating logic, system boundaries, risk structure and user behavior are completely different from traditional finance. They seem to be completely unaware that blockchain is far from mature in technology and still faces many challenges in user experience, security, compliance support and other aspects. The chain is full of crises, from private key management, smart contract vulnerabilities, to phishing attacks, cross-chain bridge attacks, Oracle manipulation, to regulatory arbitrage and gray capital flows, any link may become the detonation point of systemic risk. If you don't understand these technical details and don't master the real on-chain operation logic, your beautiful business strategies and imagined ecological closed loops are likely to be defeated by a tide of user complaints, compliance accidents and security incidents once they enter practice.

More importantly, blockchain technology itself is still in a period of rapid evolution. Today's leading protocols and products may be subverted by a new generation of architecture tomorrow. Modular blockchain, zero-knowledge proof, account abstraction, on-chain governance, re-pledge economy, MEV management... These key technical routes and mechanism designs are still constantly refreshing the original cognition. For those of us who have been working in the industry for more than ten years, if we don't study for a period of time, our knowledge may become outdated and our designed solutions may fall behind. If we don't fully understand and track technological progress, it is impossible to win in such a fierce global competition.

Xiao Feng: Your reminder is very important. Recently, I have seen many biased or fundamentally wrong comments on stablecoins and RWA tokenization. The root cause is that they are separated from the underlying technical logic. Everyone should understand that blockchain technology, distributed ledgers, and new financial infrastructure came first, and then there were various tokens, including stablecoins, and then there were RWA and DeFi.

I am a typical financial person. I am a PhD in economics trained after China's reform and opening up, and I have been engaged in the financial industry since I started working. So I can give some sincere advice to my financial colleagues, that is, we must attach importance to the research of technology, and the discussion of stablecoins cannot be separated from the technical attributes, otherwise it will easily become a castle in the air.

I first came into contact with blockchain in 2013. At that time, I was really attracted to it. After in-depth research, I found that there was an extremely subtle and powerful fit between the innovation of blockchain in the underlying technical architecture and the deep structure of the financial system. In the past ten years of practice, I have more deeply realized that this industry is a technology-led industry at this stage. You can have financial intuition, but if you don't understand technology, you will soon get stuck in practice. So in the past ten years, I have spent a lot of time learning the underlying principles and cutting-edge technologies of blockchain.

I am still learning today. I also keep reminding entrepreneurs around me that you don’t have to write code, but you must have technical judgment. Especially in the field of DeFi, the future competition is not a competition between licenses or brands, but a competition between protocols, architectures, and system efficiency. Whoever can continuously iterate in terms of account system, cross-chain capabilities, clearing and settlement efficiency, privacy protection, on-chain compliance, risk control modules, etc., will be able to occupy a stronger market position. On the contrary, if you don’t understand blockchain technology and don’t keep up with the pace of technological evolution, then your strategy may be a castle in the air. This is not an exaggeration, but a true portrayal of today’s industry competition. In this context, technology is not just a competitive advantage, it is a lifeline. If you can’t see this underlying logic, you may seriously misallocate resources in business practice. Your seemingly beautiful ideas will definitely stumble and hit walls everywhere in practice.

Meng Yan: Yes, the nature of stablecoins is determined by their technical attributes.

Xiao Feng: In fact, the nature of every currency in history is strongly influenced by its technical attributes. There have been three crucial attribute changes in the history of currency development. The first is natural attribute currency, which has a history of thousands of years. Whether it is shells, silver or gold, its value is based on the scarcity and natural endowment of its physical existence. The second is legal attribute currency, which has a history of hundreds of years. Its value is given compulsory force by national legislation and relies on national credit endorsement. The third, which is the current booming digital currency with Bitcoin and stablecoin as its banner, is a technical attribute currency. Its value is guaranteed and endorsed by digital technology systems such as cryptography, blockchain (distributed ledger), digital wallets, and smart contracts.

So when we study stablecoins, we should never forget its origins and cannot confuse cause and effect. The first is the innovation of blockchain technology, the second is the innovation of distributed accounting methods, and the third is the emergence of new financial market infrastructure based on blockchain and distributed ledgers, and then there are stablecoins, RWA, and token economics. This is not subject to human will. The United States has only seen this trend and followed it. The U.S. legislation has given crypto legitimacy and compliance endorsement. Next year will be the first year that traditional financial institutions, traditional funds (including pensions), and traditional investors will begin to enter the crypto market through legitimate channels.

If you do stablecoins without understanding blockchain, you will "wear new shoes and walk the old path"

Meng Yan: It is precisely because of such an obvious trend that many traditional institutions are now enthusiastic. However, I have recently participated in many discussions on stablecoin payments and RWA projects. I feel that many people underestimate the disruptive impact of stablecoins and blockchain on the financial model level. Their design basically does not take into account the characteristics of blockchain, a new infrastructure. To put it bluntly, it is "wearing new shoes and walking the old path." In their minds, stablecoins are just a tool. The people are still the same people, the things are still the same things, the model is still the same model, the process is still the same process, and the entire system is still doing the same thing in the original way, that is, using stablecoins and blockchain in a specific link to improve efficiency and reduce costs.

This reminds me of the early days of Internet e-commerce. In the late 1990s, the Internet had just emerged, and people's biggest doubt about the Internet was that "there was no business model". E-commerce was one of the few Internet business models that people could figure out at the time, so many companies wanted to do e-commerce. However, their understanding of e-commerce was to treat the Internet as a tool, a new sales channel, an improved and efficient telephone sales, and simply add a "mall" channel on the portal website and an e-commerce department, thinking that this was considered e-commerce. The business process did not change, the organizational structure did not change, and the way of thinking did not change. It was not until the rise of platforms such as Amazon and Taobao that people realized that the Internet was not a tool, e-commerce was not a tool, and that the entire consumer behavior, inventory logic, fulfillment system, and traffic distribution had changed. Then in the following ten years, the traditional retail model was suppressed by e-commerce and was subverted piece by piece, with almost no ability to fight back. I remember that in 2013 and 2014, many bosses complained bitterly and regretted that they did not understand e-commerce back then.

Today is the same. Stablecoins are definitely just tools at the beginning, but they are by no means as simple as tools. Once billions of users install digital wallets and start using stablecoins, they will gradually discover that stablecoins are not only payments, but are connected to a whole set of on-chain financial systems and economic structures. This structure does not require a complex account system. The user entrance is a "wallet" rather than an "account"; the interaction method is a smart contract rather than manual approval; the connection method is an on-chain agreement rather than an intermediary matchmaking. Under this model, the "intermediary power" that many traditional institutions have in the original system will become invalid, and new entrances and hubs will rise rapidly. The stablecoin economy is not just about transforming the old system with new tools, but about using the new system to eliminate the old system, absorb the old system, and ultimately reconstruct the operating logic of the entire financial industry. This is the deep change that we should really pay attention to.

I feel that many people's estimates of this point are seriously insufficient. Many people overestimate the short-term impact of AI. For example, some companies rushed to lay off employees last year, replaced jobs with AI, and even went to the media to promote it. As a result, they had to recall employees a few months later. However, when faced with stablecoins, they easily underestimate their disruptive nature. When they see stablecoins, they will think in their minds that my process can use stablecoins in this way, and my business can increase support for stablecoins in that way, but it is difficult to realize that after the deep application of stablecoins, his process, his business, and even his department and his role may be redundant.

Xiao Feng: In my opinion, the crux of the situation you mentioned is still the lack of understanding of the underlying technology of blockchain, or distributed ledgers. Because distributed ledgers actually change the underlying infrastructure of our financial system. Many people seriously underestimate the impact of this matter. They think that I don’t care how you change below, I will do what I should do above. But blockchain is not a "painless upgrade" technology. It is a kind of technological change that affects the whole body. All superstructures must be reconsidered. This is called subversion. To truly understand stablecoins, we need to sort out their development background. Stablecoins are based on distributed ledger technology. Distributed ledger technology is the third iteration of human accounting methods in thousands of years. The first was single-entry bookkeeping. Judging from the clay tablets in the Sumerian region that have been discovered so far, the single-entry bookkeeping method was used, which only recorded income and expenditure. Around 1300 AD, double-entry bookkeeping appeared in Italy, which not only recorded income and expenditure, but also assets and liabilities. In the more than 700 years since then, the calculation method has only been optimized, and no new iterations have appeared.

It was not until the emergence of the Bitcoin blockchain in 2009 that a new method of calculation, namely distributed accounting, first appeared. The biggest difference between distributed accounting and previous accounting methods is that the previous accounting methods all recorded their own accounts, which belonged to private ledgers. For example, a remittance from Beijing to New York involves the participation of multiple institutions, and it is necessary to align all the information on the private ledgers of these institutions, which takes a certain amount of time and cost. However, a distributed ledger is a public ledger. Whether it is global institutions or individuals, they all record accounts on the same ledger. Therefore, there is no need for many institutions to align information. The two parties to the transaction can directly complete the payment in a peer-to-peer manner. This is the biggest difference between the two calculation methods.

After the emergence of the Bitcoin blockchain, stablecoins began to appear in 2014. In the process of continuous engineering experiments, continuous maturity and continuous optimization of distributed ledger technology, two trends have emerged: On the one hand, since 2009, people have created Bitcoin, Ethereum, etc. "out of thin air" on the blockchain, which are called "digital natives." On the other hand, since 2014, the emergence of stablecoins represented by USDT has marked the emergence of another trend, namely "digital twins". The so-called digital twin refers to the introduction of an asset that already exists in the real world, such as the US dollar, into the blockchain and tokenizes it, that is, mapping the existing assets to the chain in a digital way.

At the same time, with the approval of the launch of Bitcoin ETFs by the United States and Hong Kong last year, a new phenomenon has emerged: digital native assets have been transferred from on-chain to off-chain, that is, the asset itself is still on the chain, but its financial expression, such as ETF shares, has entered the trading system of the traditional financial system. Bitcoin ETFs are listed on the New York Stock Exchange (NYSE) and the Hong Kong Stock Exchange (HKEX), and investors can invest and buy and sell them according to the mechanism of stock trading. Bitcoin itself exists on the chain, while Bitcoin ETFs exist off the chain. Therefore, in this process, the conversion between On-Chain and Off-Chain, as well as the interaction between digital twins and digital natives are involved.

In the past decade of distributed ledger technology practice, if we regard it as a social engineering experiment, we can see the changes and gradually prove the value of these technologies.

Based on distributed ledger technology, financial market infrastructure has also undergone significant changes since 2009, which are based on the transformation of distributed accounting. Financial market infrastructure mainly includes a series of mechanisms such as payment, trading, clearing and settlement. So what is new about the new mechanism compared with the old mechanism? What are the characteristics of the old mechanism and the new mechanism?

The financial infrastructure assets we rely on currently adopt the central registration, central depository, central counterparty transaction and central settlement model, which requires at least 3 institutions to cooperate to complete the clearing and settlement of a transaction. However, on the distributed ledger, since all participants record accounts on the same ledger, the transaction model is transformed into a point-to-point transaction, and any two people can complete the transaction directly without the need for an intermediary.

The settlement model of the existing financial market infrastructure is net settlement, while the settlement model on the distributed ledger is transaction-by-transaction settlement. In other words, once the transaction is confirmed, the settlement is completed and the payment is made. From the perspective of the stock market, the New York Stock Exchange will launch a 5×23-hour trading model at the end of this year, reserving one hour for clearing after the end of trading hours; while Nasdaq will launch a 5×24-hour trading model in the future. However, Nasdaq cannot achieve this goal within this year because under the old financial infrastructure, the transaction process must be suspended for a period of time for clearing. In contrast, Hong Kong's virtual currency exchanges have achieved 7×24-hour transactions without holidays, precisely because of the different types of ledgers, which leads to different financial market infrastructures. This is also one of the backgrounds of stablecoins, that is, they are built on new financial market infrastructures.

Since the launch of the Bitcoin blockchain mainnet in January 2009, this distributed ledger-based system has been running uninterruptedly and stably for more than 16 years. Even if it is only viewed from the perspective of large-scale engineering practice, it can be regarded as a new generation of financial market infrastructure (FMI) that has undergone countless rigorous "destructive tests" and is fully capable of being put into production.

Many people think that no matter whether you are a new FMI or an old FMI, don't you have to support efficient, secure, and reliable payment, transaction, clearing, and settlement rules, systems, architectures, and regulatory frameworks? What impact does it have on my business model?

The impact is very large! The reason why FMI based on distributed ledgers is called "new generation" is that it subversively reconstructs three core rules.

• First, decentralized transactions, eliminating central counterparties (CCPs) and realizing true peer-to-peer (P2P) transactions.

• Second, full settlement on a transaction-by-transaction basis, abandoning netting and adopting a gross settlement model.

• Third, delivery versus payment (DvP), no longer relying on netting settlement, and realizing atomic synchronous transfer (Delivery vs Payment) of assets (such as tokens) and funds (such as stablecoins) through smart contracts, ensuring that the finality of transactions is achieved instantly.

This architectural revolution has brought significant advantages, with greatly streamlined links, significantly reduced costs, and geometrically improved efficiency. Reality confirms this efficiency gap: At present, the intraday trading volume of the New York Stock Exchange (NYSE) and Nasdaq has fallen below 50% of the total trading volume of US stocks. Emerging channels such as after-hours trading and dark pool trading continue to erode the share of traditional exchanges. Although the two major exchanges have announced to extend trading hours to meet the challenges, the NYSE's stock clearing can only be close to 5×23 hours (about 1 hour of clearing window is still required every day) no matter how it is optimized, due to the traditional FMI clearing and settlement system (such as the current T+2 clearing system in the United States), otherwise the system will fall into chaos. Crypto asset exchanges, relying on the new generation of FMI, have long achieved 7×24 hours of all-weather, global trading capabilities. This is a vivid reflection of the difference between the old and new financial market infrastructures.

But it's not just that. What blockchain brings to the financial industry is the same as what the Internet brings to the publishing, media, communications, film and television, education and retail industries. It is not a simple efficiency tool, but it will change the entrance for users to access financial services, change business processes, reconnect the relationship between the market and various roles in the industry, change the value chain of the financial industry, and lead to major changes in the way we do finance. Now the stablecoin economy is no longer "replacing a link in the old system", but building a new system, a new market, and a new industry network. This structural change will completely devalue some institutions, and will also breed a group of new platform-level organizations and new financial applications. At least four have already appeared:

• First, Bitcoin, as a new asset allocation tool, its application scenarios are expanding from family wealth allocation to corporate cash management, and even leaping to national strategic reserves.

• Second, stablecoins, as a revolutionary payment and settlement tool, have been legalized. The annual on-chain transaction volume in 2024 exceeded 16 trillion US dollars and is still growing rapidly. China's cross-border e-commerce is an important beneficiary of the cross-border payment dividend of stablecoins. The proportion of overseas buyers using stablecoins for payment continues to rise, and the number of stablecoins received by Chinese merchants has also surged.

• Third, DeFi (decentralized finance), an efficient financial investment tool. By the end of 2024, the total value locked (TVL) of DeFi protocols will reach approximately $190 billion. The DeFi lending market is active. For example, the annualized interest rate of USDT on-chain lending is stable at around 8%. Its revolutionary nature lies in that lending and borrowing on the blockchain is automatically executed by smart contracts, eliminating the intermediary links of traditional finance. This not only greatly reduces the trust cost and operational risk, but also increases the capital turnover efficiency to more than 10 times that of the traditional lending model, and the clearing and settlement efficiency has achieved a qualitative leap.

• Fourth, asset tokenization (RWA), that is, the "real world asset tokenization" that has been popular in the market recently, aims to map traditional financial assets and even physical assets to the blockchain.

• I think no matter who it is, no matter what kind of stable currency system he designs, if it is separated from these perspectives, it is very likely to be backward as soon as it comes out, or even not be done at all.

The programmability of stablecoins brings huge complexity

Meng Yan: People who have just joined the discussion of stablecoins in the past few months may not have enough time to understand the already very rich on-chain ecology, DeFi, the so-called "composability", the token economy, and the extremely complex and dangerous security environment on the chain. Therefore, it may be difficult for them to understand how many possibilities will be immediately opened once stablecoins and RWA assets are on the chain, whether positive or negative.

Xiao Feng: For the problems you mentioned, the key is to start from the technology and pay special attention to understanding the opportunities and challenges brought by the openness and programmability of stablecoins. Because stablecoins and other tokens, including future RWAs, are open and programmable.

When many people talk about stablecoins and RWA now, they put them on an "island" for discussion, as if stablecoins are a more efficient payment tool, and RWA is a registration system that puts offline assets on the chain, as if as long as it is technically feasible and compliant, the "horse will continue to run and the dance will continue to dance." But they may not realize that these assets are programmable. Once these assets and currencies are on the chain, they do not exist there statically, but will immediately be deeply coupled with the entire chain ecosystem through programs, and involved in a highly automated dynamic system that is far more complex than traditional finance.

From the perspective of DeFi, once stablecoins are on the chain, they will almost immediately be used to participate in lending, market making, re-pledge, liquidity mining, leverage operations, and even complex derivatives design. If a stablecoin does not have a sufficient risk model, does not establish reasonable boundary conditions with the DeFi protocol, and does not have a plan to deal with extreme events such as flash loans, it may be manipulated and exploited in a short period of time, and even cause systemic risks. Similarly, once RWA is used as collateral on the chain, it may also become part of the on-chain financial game. If the basic data is not transparent, the valuation is not clear, the ownership is controversial, and there are compliance issues, then this "sick entry" asset will not only fail to create liquidity, but will pollute the entire ecosystem and become a potential source of risk.

From the perspective of token economy, stablecoins and RWA are not neutral. They will produce complex dynamic coupling with functional tokens, governance tokens, incentive tokens, etc. In the past few years, on-chain projects have developed a complete set of operating logic based on token design, including liquidity incentives, user growth, governance incentives, etc. Many newcomers to the discussion do not understand this model at all, and have not seen the market's amplification effect on incentive mechanisms-it can quickly detonate an application or quickly overwhelm a system. If RWA and stablecoins are not well designed, once a trust crisis occurs in such a system, the entire value chain will break at an extremely fast speed, causing huge losses to participants.

From the perspective of the security environment, the security environment on the chain can be said to be extremely harsh. Yu Xian, the founder of SlowMist, compared the world on the public chain to a dark forest. I think everyone who has lost assets due to attacks has a deep understanding of this, but many people in traditional finance have not experienced it personally. Some of them have experience in alliance chains or private chains in the past few years, but lack understanding of the complexity of public chain systems. In fact, their stablecoins, RWA assets and smart contracts, once they are on the public chain, will face various attacks, including smart contract attacks, cross-chain bridge vulnerabilities, oracle manipulation, wallet phishing, MEV pumping and other attack methods. This is not a theoretical possibility, but a reality that happens every day. On-chain security is not just as simple as code auditing. It involves the operating logic of the entire protocol, data interaction with external systems, and unexpected feedback from all user behaviors. Once a risk event occurs, there is no customer service, no stop loss, no retracement. The only guarantee is that it is robust enough in advance. Every security loophole may have to pay an unbearable price to discover and make up for it.

From the perspective of compliance, the programmability of stablecoins and RWA is both a major opportunity and a new challenge. Compliance in the traditional financial system mainly relies on post-audit, manual processes and centralized control, but when all assets and transactions are on the chain, these methods are difficult to adapt to the highly automated, cross-chain collaborative, and globally circulated chain ecology. Programmable assets can complete complex behaviors such as on-chain lending, re-pledge, and leverage operations within a few seconds, and traditional compliance processes simply cannot respond in time. What's more troublesome is that different jurisdictions have different compliance requirements, which means that stablecoins and RWAs in global circulation must face multiple regulatory conflicts. But challenges also breed change. The so-called "Programmable Compliance" is to embed compliance requirements into smart contracts through code to achieve rule pre-setting, real-time verification, and automatic execution. This provides the possibility of designing a new regulatory framework that is compatible with the on-chain ecosystem in the future. As long as the regulatory logic is clear and the data is available on the chain, the "code is regulation" model can be realized, laying the foundation for the safe, efficient and compliant circulation of stablecoins and RWAs around the world. Future supervision is likely to shift from "visible hands" to "rules that can be written into code."

So I want to say that once stablecoins are truly connected to the on-chain ecosystem, things will become very complicated, far from being as simple as saying a few application scenarios on paper. The aspects we talked about today are actually just a few of them. In the future, new problems and challenges will continue to emerge around the technology, security, economic incentives, and compliance adaptation of stablecoins. This must be a continuous exploration process that requires the entire industry to learn together, constantly trial and error, and evolve together.

Cognitive upgrade must be driven by innovation

Meng Yan: I think you have grasped the key point by summarizing the cognitive problems of stablecoins and blockchain from the perspective of technology. But I also have a concern. The large-scale application of stablecoins is rapidly unfolding, and in this process there will definitely be a large number of new problems and new phenomena that we did not expect, which are beyond our current cognitive scope. Existing theoretical preparations alone may not be enough.

Xiao Feng: I totally agree. Cognition is never achieved overnight, especially in a new system as complex and evolving as blockchain, many problems can only be manifested in a real environment. We cannot exhaust all variables in advance through discussion, and we must rely on the practical cycle of "cognition-innovation-cognitive feedback-re-innovation" to constantly refresh our understanding. For Chinese entrepreneurs, this is actually a once-in-a-lifetime opportunity. We have sufficient technical accumulation and global vision. As long as we seize the opportunity of this paradigm shift of stablecoins, organize ourselves, start businesses and practice together, it is entirely possible to carve out our voice and dominance in the global stablecoin economic system. Only in practice can cognition take root and deepen, and truly become the productivity that drives the evolution of the new financial system.