Chengdiao Fan - Crypto’s Future: From Liquidity to Utility - TOKEN2049 Singapore 2025

Hello everyone. Um it's a pleasure to present here. I'm Chengdiao Fan, one of the two founders of Pi Network. It's actually our first time attending Token 2049. Uh although Pi has been a layer one blockchain that has been built and developed for more than 6 years.

And uh we took a very different approach to crypto and building for a long time before opening. Actually, we recently went to open network in February and that was probably when um many of you heard about Pi Network. Today, I'm going to talk about um something on high level and then scope down. Sharing my personal thoughts about the crypto's future and uh analyzing current industry trends and its challenges, uh what we should focus on next and what Pi has done in that regards. To talk about crypto's future, uh we have to talk about the future of the world.

And with the AI breakthrough, it's really um hard to dispute that our future will not be a AI-driven one. But while these all advancement in AI bring exciting news, it also create concerns in our society, not just in Web3, but the commonly discussed. For example, the role of human labor. So when AI is so good at producing so much, human labor becomes less relevant in the production process. And yet human labor has been used as a metric to distribute societal wealth to majority of the people in the society for centuries, ever since industrialization.

If labor becomes irrelevant, what will be the magic the society use to distribute our societal wealth? Also, AI will probably create a unprecedented amount of wealth. How can this a large amount of wealth be distributed in the equitable and accessible way to ensure human well-beings? These are questions that concerns every one of us. And these are the questions our generation needs to figure out very soon.

And that's where I think blockchain comes in. For me, the intersection of uh the two technology, AI and the blockchain, goes beyond the typical topics about decentralized computing or decentralized data. These are also important questions and problem to solve as well. But for me, the ultimate utility of blockchain is societal distribution and redistribution system. The unprecedented amount of AI production and value created will rely on scalable, accessible, and auditable way of distribution by blockchain.

On the other hand, let's analyze what are the current trends of crypto. We have seen flourishing DeFi. We have seen so much so many innovations in DeFi infrastructure and designs. And but the the mechanism that used to be exclusive to people with capital, people with money, or institutions. And people are tired of being left away behind of entering the value capture mechanism of the world at the in the last batch.

They want to participate early. And they want to participate on a fair terms. So, that's what the flourishing DeFi really demonstrate, the public eagerness of participating in the world's value capturing process. Does this sound like a familiar feat to the problem that AI proposed? The fact that the DeFi distribute value way beyond the labor, the reliance on labor as a metric.

And that is why I think blockchain is the scalable solution to deal with the problems AI created. However, there is a big problem currently in crypto. There is no value, no real value to be captured for most of the DeFi mechanisms. There are some, but for most of them, there's no net value increase. There's no additive value creation.

These processes are mostly for value extraction. And value extraction means reallocating the same set of wealth in this set of hands to another set of hands in the closed system. From white paper to NFTs, from mini games to memes, the DeFi trends just press down the time and effort it requires to launch a token that is accessible by the public. How to solve the problem? We need to shift from liquidity transaction focus to utility focus, because the real net value increase will only come from real use cases and utilities.

And there are generally only two paths to that. One is moving existing production on chain. Second is creating new productions directly on chain. For the first, moving existing production on chain, these are something that a lot of crypto folks colleagues are actually working on. Tokenization of different assets, um uh world uh real world value real world assets moving on chain, stable coins capture the payments process in the old production process.

For this path, what Pi has done is solving the first problem that real world assets move on chain, which is KYC and identity verification. For real world assets really moving on chain, the first problem needs to solve is ownership. Who owns what and who transfer what to another? And we actually developed a native KYC solution that covers almost all geolocations and scalable enough to have already KYC and verify identity of 15 million users out of our overall engaged uh 16 million users. So, Pi blockchain on its mainnet is only having KYC people.

And this make it ready for any web3 or financial related services to integrate on top of Pi. But I want to today focus more on the second path, creating new um production on chain. The reason is because existing um production moving on chain have a bunch of challenges, including, you know, high dependency on external environment, regulation change, incumbents in traditional economy adopting web3 technology. Not to mention that the existing production, if they already existed, the value capture mechanism already occurred off chain, not through a DeFi way. So, that's why I want to encourage and focus on the new productions directly on-chain.

And for that, Pi has done a bunch of things. I will pick, you know, two to introduce. First, Pi has created Pi community has created a large social network of over 60 million engaged users. These are not downloads or registrations. They're engaged users.

If we're looking at downloads, it's a few hundred million actually from both of our app stores. Why did we create such a social network? It It serves multiple purposes for real new production creation and real utility. If you are a real product person, you understand the need of users. You need to have real users to test and give you feedback when you're building a product.

You need the user iteration to tell you whether your product actually solve a problem of human need. And that is the environment which we try to create for Pi so that we create the environment suitable to give rise to potential real products that is, you know, independent of the all the hypes. Also, um we also have actually embraced the AI um revolution. The reason for that is we know AI is going to change the world and we know that apps we're using today will be very different. A new batch of apps will will replace the current one because of AI.

They're either AI generated or AI powered. Since we know that there will be a new batch of AI applications created, why don't we make them created on-chain? In my view, there's a very short historical window in which currently the AI infrastructure breakthrough make it possible to have AI applications. At the same time, the AI application layer is still in infancy. That give us opportunity to get those AI applications directly created on chain.

If we miss this window, the AI industry and the world would move on created their own applications off chain. We have to do the same convincing job in the first pass, convincing them to move on chain. And creating a large social network is a resource collectively created by Pi community. And this is a resource that the world demands because every product, whether it's AI or non-AI, Web2 or Web3, they all want user attention and users. So, we want to invite AI applications to build on top of Pi so that this layer of AI application actually, from day one, start on chain.

And that also allow the DeFi follow up from that all of this DeFi advance, you know, infrastructure actually being able to capture the value those new productions exist. The second thing Pi did for AI initiative is we recently released a app studio. The app studio is actually a platform um Pi released to enable non-technical people being able to create apps, not just create creating apps, but deploy apps and being accessed by users. It's a whole wide pipeline of product creation. So, different from typical vibe coding uh platforms that are still rely on the person have some technical understanding to follow the instruction to deploy to servers.

In this platform, non-technical person can actually use in user interface to deploy those apps onto the servers. So, he turns code into products. And beyond that, how can we turn product to business? We provide the access to users of these apps directly in Pi social network. By doing so, we create this pipeline of facilitating using AI to help non-technical people being able to own and run online businesses.

And again, that's another model different from the typical labor for wages. That is also another model future human beings can rely on AI to produce value and the value accrued by AI production is in the hands of humans instead of working for wages. Now, back to the high level of the industry. As I mentioned, we need to have additive value creation and utility needs to really crack down so that we can actually get there so that all this advanced that decentralized DeFi makes sense. But, we actually have a huge challenge.

To me, this challenge comes from the same superpowers of DeFi. What do I mean? The DeFi's power powerfulness is actually creating a incentive distortion that inhibits utility building and innovation. What I mean is people in crypto have too early and too short access to a large amount of wealth. And when you're presented of opportunity for as a builder, whether you release a meme to raise a bunch of tokens or to raise a bunch of money versus do the hard work, do the development of a very complex product, may or may not actually being able to fundraise and get your product in the market and also succeed, what would you choose?

You would have choose the faster turnaround. You would choose to opt into the easy way. But value creation is always harder than value extraction. Value creation relies on product innovation that takes time and takes effort and takes perseverance. And in our industry, if the culture is always a, you know, facilitating, incentivizing short-term return, little efforts, then who is left to do the hard work?

And that's why I'm saying the superpowers of DeFi, of crypto, are currently misaligned to not facilitating utility creation. And this also have other aspects of problems as well, including curse of resource, having a lot of resources early on, actually force not forcing team to optimize resources for success, or talent misdirection. Directed a lot of talent of the industry to solve problems like how to trade faster and more smarter. So, here, we need to not only make DeFi accessible, but also make sure that the powerful tools of DeFi are aligned to create utility because utility and real product innovation is the sustainability of crypto because cycles will run out. Narratives will run out.

It's the ultimately whether this industry generate any net value or not. And I think the Web3 technology will really have disruption when crypto superpowers is aligned in the right direction for utility creation. For today, actually at Pi, we're releasing actually a bunch of DeFi tools to millions of millions of users on testnet including DEX, PiDEX, AMM, and liquidity pools. And this type of DeFi tools is on the testnet for developers to test and also for millions of users to actually educate themselves about DeFi and improving the overall literacy, financial literacy, of a general audience so that they can better understand those tools, be able to participate. And so we're here, we're building, and we urge the industry to peers also join forces to think about utility, to incentivize utility building, so that we can make our industry great.

Thank you.