Talk with Wang Feng: Bullish on functional NFTs; The only gap between Element and OpenSea is time
Wang Feng said that the biggest mistake he made in the past year was that he thought he would be successful soon and regretted missing the opportunity in the Solana NFT marketplace.
Author: Jessy, @ChainCatcher_
Wang Feng is surely a traditional internet industry tycoon. He joined Kingsoft as senior vice president in 1997, once the biggest rival of Microsoft in China and founded Linekong Interactive in 2007, a famous game developer and distributor in China, brought to the Growth Enterprise Market of HongKong Stock Exchange in 2014. Despite his accomplishments in the traditional internet field, he marched into the blockchain industry in 2018. Before Element, he founded a blockchain media called“Mars Finance”, with its content model quite similar to “Coindesk”. Benefiting from his achievements in the traditional internet industry, Mars Finance has attracted much attention since its inception, with a high valuation of 200 million dollars after two rounds of funding. Its trump card column “Ten Questions by Wang Feng” boasts quite a clout in the field with the Men of the Industry including Vitalik, the founder of Ethereum and Zhao Changpeng from Binance once invited.
In mid-August, the aggregated NFT marketplace Element 2.0 has been launched. Wang Feng’s speech I Want the Whole Team to Hear My Throbbing Heartbeats on Twitter Space has become viral once published. This is a rare case where he again attracts attention from the market with this eye-catching article since his series of articles Ten Questions by Wang Feng several years ago.
His public statement this time may reflect his attitude of turning and rushing to the Web 3 field. In 2017, Wang Feng gained public attention when he resigned as CEO of Linekong Interactive in high-profile, completely handing over the game company that accompanied him for ten years to his former entrepreneurial partner, while he found Mars Finance and Consensus Lab. Then he launched businesses such as CocoFinance, MarsTradingMaster, and Martbit, which however were forced to be shut down or transformed due to domestic policies and other factors.
What very few people would know is that his Twitter ID is “小隐于链”, (in English it means living as a hermit in chains). It hints at a sense of living in solitude and waiting for opportunities. Wang Feng rose to fame when he worked for Kingsoft, and then created his own business from scratch and made Linekong Interactive get listed. He has always been a star for the community of entrepreneurs, grabbing much attention from media reports. However, he never received any interviews since he stepped into the blockchain industry despite his fame in this field through the article Ten Questions by Wang Feng.
In April 2021, Wang Feng announced the establishment of Element, and within a month, he completed an $11.5 million financing led by Sequoia Capital, SIG, Dragonfly Capital, and many other capitals. In the past year or so, almost all his thoughts and energy have been put into this NFT trading platform.
Since the last year’s NFT Summer, OpenSea has kept a dominant position in the NFT market, and though crypto exchange giants such as Coinbase and FTX tried to take a share of the spoils in a high profile, most of them failed. In such a market with intense competition, Element, though keeping a low key for a long time, showed an impressive performance with its new version launched. Its trading volume and user number have kept being first on BNB Chain for a long time, and its data on Ethereum has outperformed SudoSwap in recent seven days.
At this important point, ChainCatcher invited Wang Feng for an exclusive interview to talk in detail about his experience in the NFT industry and Element’s development. Wang Feng said that the biggest mistake he made in the past year was that he thought he would be successful soon and regretted missing the opportunity in the Solana NFT marketplace.
But he believes, despite that Element lags behind OpenSea in many aspects of the data, their main difference just lies in that OpenSea starts earlier than Element. Element plans to outperform OpenSea in the aspect of usability of tools, and seek new opportunities from changes. He thinks that with the domain assets such as ENS, SpaceID, and .bit becoming popular choices for speculation, the opportunity for functional NFTs arises. And the next wave of GeamFi products would gain momentum sooner or later. People just need to find customization tools for new assets and pursue better user experience, by doing so, they will be rewarded by the market. Since the market always favors doers.
Here is the original conversion:
ChainCatcher: When NFT got popular for the first time, you were not optimistic about it. When did you start to change your mind? What was this process specifically look like? And what actions did you take?
Wang Feng: I started my career by doing software product design and game production, so I still favor doing things related to applications and user experience. I don’t really believe in such abstract pies in the sky, and before 2021, I paid more attention to a series of applications on DeFi. In fact, I only started to trade digital currency during the DeFi period.
Before that, I bought my first BTC at $3,000 and then just hoarded it. The same thing happened with buying ETH. So I myself missed out on EOS and didn’t buy into BNB or FTX, though our Consensus Labs was an early investor in FTX with great returns.
In the summer of 2019, CZ called me that Binance invested $1 million in Mars Finance and gave our team BNBs, whose price was only a few dollars at the time. I said I just wanted dollars, CZ told me to get BNBs and exchange them for dollars myself. So we exchanged them for dollars with almost no thought. Initially, I only believed in BTC and ETH, and it was only after DeFi got hot that I became really interested in cryptocurrencies and trading, and I started to believe that blockchain technology would go far and there would be a lot of developers get involved to drive the development of applications.
It’s safe to say that without DeFi, I wouldn’t necessarily have been able to hold out for the opportunity of NFTs. It was only after I got hooked on DeFi that I started to build a team to do the things related to decentralized applications, and I made effort to encourage my team to get involved in DeFi and NFTs. You have to play it to know the taste of it.
My attention to the ERC721 protocol starts from Linekong Interactive, a game development company I founded myself and listed in Hong Kong at the end of 2014. One day in the fourth quarter of 2017, I saw a blockchain game called Cryptocat and quickly deployed seven people to imitate and design a similar product, and that’s when my technical partner started participating in blockchain with me, and I didn’t expect that we never stop ever since then. That project was run on a public chain designed by a Chinese team, and a version was provided in about less than ten days. So, I was kind of one of the first players in NFTs.
We didn’t expect that the ERC721 protocol would become fully-fledged as it is today. What people are most afraid of is that you give up after you have done something, and you have no feelings about it when people mention it again later. So we gave up after touching it, thinking that the time was far from ripe to make games on the blockchain. And almost at one time, Animoca Brand, who has the same gaming background as us, got involved. They invested not only in Cryptocat but also in OpenSea, which sold Cryptocat, and later SandBox.
During our exploration on DeFi, we had considered marching on the lending market. For example, my technical partner had studied deeply some protocols like Compound, AAVE, and several other major lending protocols, and I had taken many lessons from some startup teams around me who were doing lending protocols. So I was more sure about these things. With a technically prepared team, it was not too scary to start an NFT trading protocol and marketplace. In fact, our development team soon wrote our own first-generation trading protocol.
ChainCatcher: In the early vision, what was your positioning and goal for Element? What is the biggest difficulty of this process?
Wang Feng: I will answer it in four steps. Each step is a mind-change for us.
First, from the product development level. We originally planned to start an NFT trading platform based on its self-owned protocols, with a protocol encapsulated into a marketplace, to operate transaction data. However, it required a lot of workloads and implementation effort to develop a mature NFT trading platform. You not only have to deal with Web3 technology stacks such as trading protocols and on-chain data cleaning but also have to do a lot of work on the practical Web2 features. This process requires the product development team to continuously polish the product. It takes time to build a good product.
Second, most of our team members are experienced in making applications and games. When we looked at our product with OpenSea as a benchmark, the first thing to be improved came to our mind was a better experience. However, three months after the product was launched, we understood that the basic value of a trading platform not only lies in the traffic but also in the solution of good liquidity.
Third, at the early stage of our entering the market, we did consider making an OpenSea completely for the Chinese market, but we soon found out that Web3 may not have such a so-called national or regional market. It is different than Web2, where we may have a region-targeted product in web2 such as Taobao in Chinese and eBay in America. Blockchain is the new Medditernian civilization, where each chain can be seen as a Greek state. Today’s Ethereum may be the Roman Republic in the crypto world.
OpenSea succeeded on Ethereum, Magic Eden succeeded on Solana, and I can certainly figure out a way to do it on BNB Chain. So, we soon launched a version supporting BNB Chain, which was then evolved to be adapted by more EVM-compatible chains. In the fourth quarter of last year, the only ecosystem that many GameFi favored at that time was BNB Chain, and with the active cooperation of some GameFi projects, our data on BNB Chain stabilized. With such progress, we started to take more time to address the Ethereum market, which led to our final decision to pursue a strategy of an aggregated product supporting many chains.
Fourth, because each ecosystem has different supporters and different operation strategies, we once thought about whether to use different strategies for different brands and finally, we insisted on using one brand, that is Element, to make a marketplace with all chains integrated, which can show our sincerity to our users and investors. Therefore, our home page has the login entrance for different public chain markets.
ChainCatcher: From the middle of last year to now, what do you think are the main changes or new trends that have happened in the NFT industry? For this reason, what strategic adjustments has Element made?
Wang Feng: In fact, from the beginning of last year, many people misjudged the market. Many of the first players in this field mainly saw opportunities in pure art assets, and I was not sure about that at that time. I had been focusing on making online games for ten years, and of course, I understood the value of art design to products, but I didn’t really cognitively understand and could judge the pure art market. I understood the mass market better. At that time, Opensea hadn’t become dominant, and many art platforms were getting more attention, for example, Beeple was getting a lot of hype then. Meanwhile, Axie game and the game public chain Flow were gaining momentum, and not so many people were making PFP NFTs.
I believe the biggest market in the future is Ethereum. Just take the NFT market as an example, if the current OpenSea dominance has been maintained, there is always a chance for us to break it. We can’t get around this tough issue, and to compete with OpenSea, we have to partner with it first. So this is when we realized that the very wonderful competitive partnership in the crypto market comes from the composability. We started thinking about doing aggregated orders in late 2021, with some detours being made during the process, and basic product planning started to be formed after March 2022. During this period, both the trading-and-mining-based marketplace LooksRare and GEM have inspired me a lot. We have to figure it by ourselves how to make trading depth in an NFT market. No external force can help us.
I don’t think that just finding good assets and LaunchPads will make a good trading platform. If you don’t address the trading depth from the product design, any asset that comes in would eventually flow to the OpenSea market. Many trading platforms enter the market and actually just do what issuers do. Even if you work with Yua Mikami or Ronaldo, still the products all eventually converge into OpenSea’s secondary market. It is not to say the issuance is bad, in fact, the most profitable ones last year were precisely the teams that did NFT issuance. But we are making the NFT trading market, not asset issuance. If you want to be an issuer, you don’t need to take so much effort to write a good trading marketplace, you just need to do NFT branding, find IP projects, write bot scripts and build communities. That’s enough.
ChainCatcher: Element now has become one of the quite representative Chinese projects and an important competitor for other NFT trading platforms. How will you grade Element’s current achievement? Can you share with us some of your most impressive scenes in this process?
Wang Feng: Whenever I started a business, I was worried that I couldn’t make it. I have a higher standard for myself than others, something like a mental illness according to my friend in Silicon Valley. I don’t know how to score it. If I even cannot be persuaded by the product, then I should not recommend it to others. So I would feel shameful the product doesn’t do well.
Objectively speaking, Element 2.0 is already a highly usable NFT trading platform. I basically don’t use OpenSea anymore, and neither do many people around me, gradually from three months ago. That is why we started recruiting in the communities. In the last month, there were always people saying they couldn’t go back to OpenSea after using Element. This is one of the most gratifying things I’ve heard.
On a pure product and technical level, Element’s strengths are mainly in four dimensions that are asset integrity based on full chains, deep aggregation of orders, tool usability, and real-time data tracking. Because of its root in decentralized infrastructure, the NFT trading platform has many commonalities with DeFi, such as both being driven by one underlying protocol. But at the same time, our community and product operation team is giving us strong feedback that the NFT marketplace is more and more similar to the mainstream CEX. For this reason, many of our technical team’s workloads are also off-chain. People who are not personally running an NFT trading platform will think of these factors simply.
ChainCatcher: As a Chinese project, one of the biggest challenges is to expand the global market. What are the obstacles encountered in this regard? How international is the team at present? What special strategies have been adopted to expand the global market?
Wang Feng: First, is to find people beyond China, and we have four people based in the US. We find people we trust, and then divide the market into chains, languages, and regions to refine the operation. We must find local people to cover each geographical market, especially senior people who have experience and understanding of NFT. For the North American market, our colleague, the fourth one coming from OpenSea’s comes to help us expand the North American market. They are familiar with resource connections in ecosystems, such as collaborating with Coinbase Wallet, and Metamask.
The second is to take care of relations with creators. Our creator community director is also a creator. The creator circle is important. Currently, we have gradually started collaborations with selected artists from Outland and NYC.
In fact, many of our current volunteers are from diverse regions such as Taiwan, Japan, Korea, Canada, France, and Australia, who are already NFT Traders themselves and understand the business better than ordinary users. Our relationship with them will be steadily built on a referral-based cooperation system, and Element has taken the lead in adopting this referral mechanism.
ChainCatcher: From some data sites, the data of Element still show some gaps from the top NFT marketplace such as OpenSea in terms of trading volume and user volume. What do you think has led to the gaps?
Wang Feng: Actually, the only gap is time. We reached 1% of them, and the goal right now is to reach 10%. OpenSea was already a giant with a valuation of $13 billion in the last round. They entered the market five years earlier than us, so we need a little time.
If new assets do not rise, and everyone just comes to compete for the existing PFP market, should investors also not invest in new trading markets? They still should. We should polish Web3 products to make them good before the next new asset class emerges and develops. In terms of research and development, we have gone from less than ten people in the earliest days to over twenty people invested so far. If we get more investment, we will invest more in protocols, tools, and data services to convince people to use them. In today’s bear market, it is lucky to have a product team with enough funding, able to make things, and willing to listen to the ideas of the community.
There’s no making without breaking. Because OpenSea is in the absolute dominant position in the Ethereum market, we decided to aggregate OpenSea and other existing leading trading platforms in the Ethereum market at the beginning of the year. The aggregated protocol released by Element2.0 has been recognized by many users.
In terms of trading experience, we also plan to first catch up with OpenSea in terms of tool usability and then seek new opportunities from changes. I think opportunities will rise for functional NFTs from the domain name assets like ENS, SpaceID, .bit, etc. In particular, Space ID, an ENS in the ecosystem of the BNB chain have been very active recently. Based on features of domain name NFT, we provide customization, such as the enumeration categorization and effective sorting based on the combination of numbers and letters.s Also, our products boast advantages in transaction batch dealing. So with these advantages, Element got about 75% of the secondary market share. I’ve already seen over 8,000 transactions on the same day.
Starbucks’ combination of its rewards program and NFT is also a landmark event. I reckon more offline and Web2 institutions will enter to issue NFT Access Passes, and equity assets are likely to have a chance to rise. Passes will develop far beyond a meme, but rather their utility value or their ability to break the circle will stay hold. The next wave of GameFi products will rise sooner or later. We just need to focus on finding new asset customization tools and providing a better user experience, the market will always reward doers.
Element has ranked fourth at its highest
ChainCatcher: You have said that OpenSea is going too slow in terms of product, why do you think Element can compete with OpenSea from the perspective of tool?
Wang Feng: In terms of product iteration speed, we are definitely faster than OpenSea. But as a later player, we can’t simply copy it. There are only two ways, one is product differentiation, for example, doing aggregation and tooling as the main market, which requires a bit of hard work and will be verified by market users. The second is to make operational innovations. We initially chose the first road, with inspiration coming from the DEX market, which transformed from the Uniswap AMM model to the aggregated trading model of 1Inch. We think there is market space for the aggregation of trading products, and this is more suitable for our technical and product design team. When the problem of product is solved, the operation team can freely take moves.
ChainCatcher: Nowadays, multi-chain expansion is a strategic direction for most projects. Element also supports Polygon, BNB Chain, and other networks, with the official website showing Solana will be supported, which has not been launched yet. OpenSea has become one of the main NFT marketplaces for Solana after its launch in May this year. So what are the reasons behind these decisions?
Wang Feng: We have put a lot of energy into BNB Chain, and although there is a lack of high-quality PFP-type products on BNB Chain today, we think the NFT market that relies purely on PFP will be outdated one day, and the potential of BNB Chain in the NFT market is still underestimated. We hope to maintain our leading position in the BNB Chain market, trying to be the absolute number one. This may take some time.
In addition, we still plan to enter the Solana market with aggregated transactions. In fact, there are always opportunities. We are also making some contact with such as Aptos, the new public chain leader in the Move-using chains. We will see.
ChainCatcher: Looking back now, did you make any mistakes during this year?
Wang Feng: If I can go back, I should go straight to Solana public chain market.
I took 400 Ethers to buy 4 Crypto Punks in September last year, and I missed Bored Ape which at that time was less than 10 Ethers. Now the former one fell and rose, without even a price change, but the latter rose 15 times in the same period. If I had delved more into social sentiment and DC groups back then, I might have made a more rational judgment.
But the biggest mistake we made last year was mistakenly thinking we would succeed soon. The thing more fatal than a mistake is the suffering of bearing the pain of making it. For a start-up team, the greatest difficulty is not that people give you a direction, and you rush to it to see whether you can make it. The hardest part is whether you can choose a path that you can stick to. Especially when you know that standing out and being different is the key, but it’s really hard to find things that have long-term value, with adequate timing, ability, and funding. Sometimes we can only look up to the sky and wait to be kissed by fortune.
In school, we often feel confident when doing multiple-choice questions, and choose the right answer without thinking; once have open-ended questions, we bite the pencil and feel helpless. But in reality, it is more difficult to do multiple-choice questions than to do the latter.
ChainCatcher: Nowadays, the horizontal and vertical integration of mergers and acquisitions in the global NFT market is very obvious, does it put pressure on you? If OpenSea integrates GEM in the future and Uniswap also integrates Genie in the front end, what impact do you this will bring to the NFT market?
Wang Feng: Actually, I am very happy to see these two M&A cases, a positive signal we see in the market.
For all the aggregated trading platforms, only we do not sell, and we also support multi-chain, with GEM only running on Ethereum.
ChainCatcher: At present, the trading share of several independent NFT trading aggregators in the whole market is still relatively low, why is it difficult for trading aggregators to win the majority of users despite their best liquidity? What do you think are the main concerns and issues users have when buying NFTs?
Wang Feng: I think that aggregated trading will have a larger and larger share of the market.
Our users are traders, called “collectors” in the art market. But in today’s market, there are more typical profit-driven traders. Different types of traders focus on different sides, and have different preference on type and investment length, which all contribute to the decision-making of traders.
ChainCatcher: In terms of improving liquidity, X2Y2 and LooksRare have adopted transaction mining, which helps a lot to improve the trading volume and influence, although the signs of rigging are obvious. How do you see the sustainability and practical role of this model?
Wang Feng: LooksRare and X2Y2 entered the market by using trading rewards at the beginning of this year, and quickly gained the market share. We relied on the product, so took more clumsy moves in the market than they did. At that time, we were moving towards a model of offering aggregated protocols. And I was not bullish on them for a while, but I noticed that both of them were constantly iterating their operational strategies, including rotating changes in invitation rewards and transaction rewards, which I admired.
But in essence, I have never thought that trading platforms should make transaction mining the core strategy of product operation. While it is a very effective cold start solution, a user’s interest in choosing from multiple asset values is moved to face the inequality created by any asset, choosing between the direct cost of trading and the benefits of mining. Therefore their main interest in this platform is to get the best deal. It’s kind of like sprinters or swimmers taking dope, but they can’t take more. Have you ever seen anyone doping in a marathon?
We will not make transaction mining part of our core product. However, we do not refuse to do some time-limited operational bonus campaigns. But I don’t think it’s smart for a trading platform to write transaction mining into the economic model. It hard to know whether such a team has a long-term desire to do things. You have worked hard to develop a trading platform, but its token assets are not distributed to real trading users, nor to investors who support you, but to a dozen of dominant miners. In the end, you as a trading platform have to mine yourself, which is to quench a thirst with poison.
The long-term solution to the liquidity of a trading market should still lie in the professional ability of the product to provide transaction services, such as improving transaction efficiency, aggregated price comparison system, and also the ability to cooperate with assets, brand, and reputation. Still a marathon athlete never takes dopes.
ChainCatcher: In the medium and long term, what are your market goals for Element? Any specific plans to share with us?
Wang Feng: Element has two directions, one is to become a very mature NFT trading marketplace, and the other is to be fully community-driven, with ELE DAO launched to run more businesses.
In terms of operational efficiency, these two are in conflict. Therefore, our development is still product-centered, with rapid product iteration and an emphasis on community feedback.
ChainCatcher: Element is going to issue tokens and set up DAO, what role will ELE tokens play in enhancing platform liquidity and attracting new users? At present, many DAOs are actually pseudo-decentralized, so what degree of decentralization do you hope to achieve?
Wang Feng: If we officially launch ELE tokens, we hope to provide incentive tokens to users and the market. But we will not take token financing. Our investors are all using equity capital. We took an $11.5 million investment from Sequoia Capital, SIG, and DrangonFly last year, and in the future, our tokens will be reserved for users, shareholders, and teams.
As for the full plan of ELE DAO, we need some more time to get prepared and seek opinions from investors and the community, with a community forum to be open.
ChainCatcher: Opensea was said to plan IPO listing, and is now also very centralized in terms of management, making it bashed by criticism that it is against the spirit of crypto. As a very centralized project, it has become the largest NFT marketplace. So is decentralization really important for the long-term development of the project?
Wang Feng: A platform’s position in the market is decided by users. Users can vote by foot. We don’t attract attention by criticizing OpenSea, and there is no reason to criticize it, and I have never seen Binance publicly criticizing Coinbase
On the contrary, what I am more and more sure of is that the NFT trading market will be the co-existence between semi-centralized and decentralized market operations, which, to a large extent, has many similarities with the current digital currency trading market ecosystem. After doing NFT trading ourselves, we are more able to understand how awesome Coinbase is. Many things are connected in tradings.
ChainCatcher: The NFT marketplace of Coinbase has been criticized for its low trading volume since being launched, quite not meeting the market expectation. Why do you think it faced such a negative response from the market? What problems do you think exist in the NFT development strategy of Coinsbase?
Wang Feng: The problem Coinbase encountered in the NFT market is almost the same as the problem most digital currency exchanges encountered when they entered the NFT market, that is, over believing traffic and capital advantage to be the key competitive ability. In fact, the core competitive capabilities of any market are the focus, differentiation, and cost leadership, which is Michael Porter’s view of the three elements of competition. I don’t see Coinbase doing the right thing. In terms of product, the only difference between them and OpenSea is probably a more elegant interface, and in terms of the technical solution, they just integrated version 4.0 of the 0x protocol released this March. It feels like their NFT team doesn’t do many things.
In addition, the centralized trading market and the decentralized trading market are two disconnected markets in the crypto world. It’s a bit like Yahoo saw Google come out and thought that writing a search box on the content portal would be enough to defeat it. However, the real thing lies in the technical solution and operational concept, instead of the traffic advantage, capital, and existing defined brand.
ChainCatcher: At present, the speculation in the NFT field is very serious, and Vitalik also thinks that the crypto industry is currently too heavily financialized. What do you think the main non-financialized scenario of NFT should look like? What do you think about the recently popular Soul Bound Tokens (SBTs)?
Wang Feng: I understand Vitalik’s concern very well. Blockchain was born out of a hypothetical experiment on currency, which then triggered a more revolution in financial scenarios. But blockchain is more than just finance, a topic being said over and over again. At one time there were still people who believed that blockchain is anti-counterfeiting. I think blockchain is based on a decentralized mechanism, and its most innate advantage is that it keeps books one by one, and can be written and read, but not changeable. SBT is such a product.
In fact, our current Web3 identity is confined to the Web2 historical scenario which it is committed to breaking. So it is often jokingly called Web2.5/Web2.8. For example, most NFT artists rely on centralized platforms like OpenSea and Twitter to promise the initial provenance of the identity. There is no original identity in the crypto world, with all credentials determined by giants in Web2. If we revisit digital existence today, we will mockingly find that global users are still living in George Orwell’s metaphorical 1984 and Animal Farm, where only the big brother is replaced by global social giants. Even our token-voting DAOs today often rely on Web2 infrastructures, such as having to adopt social media accounts to resist Sybil Attacks.
What should be paid more attention to than SBT is the more underlying DID, the so-called original crypto identifiers. The latter is a decentralized passport, and the former is stamped visas on the passport. A passport can have many visas. I am more interested in DID, the cornerstone of the future application for the new digital society.
ChainCatcher: public data show that the current market volume of NFT has been less than one-tenth of its peak. And many people believe that the NFT market has turned bear, what do you think the next stimulus or incremental market of the NFT market may come from?
Wang Feng: Accesses Passes, functional NFTs, and GameFi, which are integrated with the traditional economy, may have a new round of opportunities.
The bull market will come after the bear market. If we can still have 10 times more users in the bear market, we will not worry about when the bull market will go back.