JPMorgan's blockchain is inferior to Ponzi in the eyes of retail investors

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-bc092b6617-dd1a6f-69ad2a.webp)

** Seemingly calm blockchain, there is always something new. **

A few days ago, JPMorgan Chase launched the first collateral settlement service using blockchain technology, which is a new experiment in the application of traditional Wall Street institutional blockchain, when the market is hot, it is just a corporate news that is easy to ignore. However, with the continuous turbulence of the market and unspeakable expectations intertwined this year, and the narrative of the crypto industry visibly reduced, the development of digital assets has once again reflected the eyes of Wall Street.

What are institutions doing? If you look closely, traditional institutions such as Morgan, Wells Fargo, and Citi are all using blockchain applications in internal corporate processes or financial transactions, and these unrelated movements are ignored by most users.

From the perspective of the industry, Wall Street institutions and bottom users are separated, and institutions that are far away may promote technological development or experiment with emerging applications, but for bottom users, it is difficult to convert into predictable value benefits, which is an invalid action, even inferior to the bloody stage watered by Ponzi Water.

In the midst of the dividing consensus, blockchain is still on its own.

01 What are institutions doing?

On October 10, global banking giant JPMorgan Chase said it had launched the first blockchain-based customer collateral settlement network TCN, with the first trading parties being BlackRock and Barclays, where BlackRock tokenized its share in the Money Market Fund (MMF) and transferred the tokens as collateral for over-the-counter derivatives trading between the two institutions to Barclays to complete the transaction.

Although the real application is the first to land, just in September this year, JPMorgan Chase was rumored to be studying and exploring a blockchain-based digital payment and settlement system. According to people familiar with the matter, JPMorgan Chase designed and developed a relatively complete infrastructure architecture for the system, but the project needs to be based on digital deposit tokens, that is, a digital version of customer deposits, which is temporarily difficult to advance due to regulatory turmoil in the United States.

From the perspective of JPMorgan’s layout in the blockchain, it can also be said that it has deep roots.

JPMorgan was the first to foresee the effectiveness of blockchain technology among traditional institutions, and back in 2015, when JPMorgan Chase formed a new product division to evaluate the bank’s potential technology providers from cloud to big data solutions, blockchain caught its attention in the process. When Morgan scanned the industry’s well-known blockchains, he found that from the general-purpose Ethereum to the formation of digital assets, from the then booming Ripple to the Hyperledger, which is considered the easiest to use, none of the projects can truly meet the complex financial conditions and needs of the banking industry.

In order to improve efficiency, Juno was just a private chain at that time, completely controlled by JPMorgan Chase, but due to the lack of technical maturity, in 2016, Morgan abandoned this pilot and opened Juno as an industry co-construction to the Hyperledger Foundation.

After the second largest product is the Quorum permissioned blockchain, after experiencing Juno’s pilot, JPMorgan Chase adjusted the private chain architecture to a permissioned chain, or alliance chain, and the product at this time has preliminary industry attributes. As a project that integrates the Ethereum Virtual Machine (EVM) and sidechain, Quorum architecture and technology are highly dependent on Ethereum EVM and Solidity smart contract language, which is inevitably constrained by Ethereum, and for bank developers, the technical complexity is difficult to follow, so Quorum, although still running, is only embedded in Morgan’s blockchain landscape as the underlying layer of the product, and is not well known.

In 2019, JPMorgan once again launched JPM Coin, an internal stablecoin anchored to the US dollar, which enables instant transaction settlement between customers in the wholesale payments (large payments between banks or countries). The system, which offers transactions denominated in dollars and euros, has processed about $300 billion.

After laying the foundation and payment system, Morgan continued to swing back and forth in blockchain strategic exploration and brand protection, until 2020, Morgan finally bet on blockchain, in October 2020, Morgan officially created a blockchain subsidiary Onyx, with Quorum as the technical core, launched blockchain payment-related information exchange service Link, DLT clearing system Coin s, Onyx digital asset platform, sharing platform technology development Blockchain Launch, At this point, Morgan’s blockchain territory has officially taken shape, kicking off its prelude to the development of blockchain.

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-c969d39598-dd1a6f-69ad2a.webp)

JPMorgan Chase blockchain layout, source JPMorgan Chase official website

**According to Tyrone Lobvan, head of Onyx’s blockchain division, other financial institutions running nodes and tokenized assets on Onyx so far include Goldman Sachs, DBS, BNP Paribas and others, which also described that JPMorgan Chase can provide credit and repurchase services to institutional customers through Onyx, providing collateral in the form of tokenized treasury bonds to borrow money, with significant efficiency gains, and even completing $1 billion in borrowing within 3 hours. **

On the whole, blockchain, as a distributed permissioned ledger, has the characteristics of less friction, divisible trust, and liquidity creation in finance, so for the Wall Street structure, in addition to the use of cryptography, blockchain also plays a significant role in efficiency improvement, and is widely used in process optimization, especially in the rise of tokenization in the current RWA boom.

According to gyro statistics, in addition to Morgan, Goldman Sachs, DBS, UBS, Santander, Societe Generale, Hamilton Lane and many other traditional institutions have begun to explore the track, taking UBS as an example, which conducted a RAW pilot on Ethereum as early as 2021 and successfully issued $50 million in tokenized debt securities in December last year.

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-3be19384bf-dd1a6f-69ad2a.webp)

RWA layout of some mainstream institutions, source public information

As of the end of September this year, there were 93 blockchain financing events with a single amount of more than 100 million yuan, with a total amount of 23.642 billion yuan, of which the advantages of the infrastructure track were highlighted, with an amount of 6.722 billion yuan, accounting for 28.43%, ranking first among all tracks.

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-29f8ffbf66-dd1a6f-69ad2a.webp)

In 2023, the proportion of the world’s large-scale blockchain financing field exceeds 100 million yuan, source: Gyro Research Institute

It can be seen that large institutions that seem to be far away from the underlying application are most concerned about the underlying technology and tokenized application, but this view, in the minds of industry users, is diametrically opposite.

02、What do market users care about?

**Back to the crypto space, this year’s market, without ups and downs and grandeur, is more appropriate to use the word dead. **

From the perspective of the external environment, frequent wars, inflation is difficult to suppress, after several tough operations, the effective interest rate of the US federal funds has soared to the range of 5.25% ~ 5.50%, a new high since 2006, the liquidity of risk assets is significantly withdrawn, corresponding to the sharp rise in anti-inflation assets, gold prices once jumped to 2085.4 US dollars / ounce, which is regarded as the retail price of Japanese gold Tanaka precious metals industrial gold counter sales price on September 5 exceeded the 10,000 yen per gram mark, It reaches 10,100 yen per gram. In terms of technology, AI has returned strongly, and large models have become popular, once again seizing the financing survival space of Web3 projects.

**From the perspective of the internal environment, unrepresentative applications have emerged, hot spots are extremely limited, the Hong Kong-Singapore dispute has gradually stopped, and the topic of BlackRock ETF speculation alone has been lingering like cold rice for at least 3 months, and the market “fairy jump” fake news continues. **According to BlockBeats’ incomplete calculations, the number of project parties, exchanges and communities in the cryptocurrency industry was suspended from 9 in 2021, 17 in 2022, and 27 in 2023. In 2023, the growth of outage projects is accelerating, from an average of 1 per month to a maximum of 5 per month.

Internal and external bearish superposition, the market is naturally not good-looking. BTC continued to hover at $26,000 after bottoming out at the end of '22, and even after breaking through $30,000 in the good of institutional ETFs, it quickly retreated, now at $27,261, down 58% from last year’s high. In terms of the market value of stablecoins, as of October 16, the total market value of stablecoins has fallen for 19 consecutive months, falling to a new low of $120.9 billion, the lowest level since September 2021, and in the latest week, in addition to a small increase in USDT, the market value of the three major centralized stablecoins such as USDC, BUSD and TUSD continued to decrease, with a total impairment of more than $500 million in a week, and the level of market purchasing power is worrying.

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-f68beb0f5c-dd1a6f-69ad2a.webp)

Changes in the market capitalization of mainstream stablecoins, source Coingecko

In this context, emotions are flooding the market, Meme coins are prevalent, for crypto users, the biggest market this year is Bitcoin inscription NFT, single-handedly driving the unilateral market up, the hottest application is Friend.Tech, because everyone can issue coins. **No matter how technical terms such as Layer2, ZKP, abstract account and so on, users seem to see only changing price trends and currency prices, and the ups and downs of the market drive users’ swaying hearts, almost killing their eyes in the hormones of high gambling. **

There is also discussion in the industry about this.

03, the industry consensus and disagreement

In the speech of Twitter big V Yuyue, most institutional practitioners and retail investors in the market have serious differences in cognition, institutional practitioners pay attention to the underlying technology, quite a high arrogance, and retail investors do not believe in the so-called unrealized technical narrative because they do not understand, pay more attention to the actual price rise and fall, which also causes a disconnect in the market, institutions do not participate in the market, so the launched projects no one pays, retail investors do not pay attention to technology, so the local dog and gambling are prevalent, the industry’s information gap is intensifying, This has come to the current situation of layering up and down.

! [JPMorgan’s blockchain is inferior to Ponzi in the eyes of retail investors] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-5a2682c082-dd1a6f-69ad2a.webp)

Discussion from Twitter, source @yuyue_chris

In reality, it does. In addition to the traditional investment institutions involved in crypto, Paradigm and a16z, many traditional institutions still have many prejudices in the field of crypto. **

JPMorgan Chase & Co., CEO Jamie Dimon, who has been studying blockchain for several years, criticized cryptocurrencies such as Bitcoin in testimony before the U.S. Congress in 2022, likening them to Ponzi schemes, saying that “blockchains must be separated, it’s real, DeFi is a real ledger, and tokenization can be used to do real things.” He “personally thinks Bitcoin is worthless.” Tyrone Lobban, head of the department, also admitted that “99.9%” of conversations with customers are about tokenized forms of traditional financial instruments, not cryptocurrencies. According to the latest news, from October 16, JPMorgan’s British retail bank Chase will ban customers from trading cryptocurrencies due to increasing fraud and scams.

Even if BlackRock, Proshare and other institutions actively apply for ETFs, they only put Bitcoin and Ethereum and other consensus currencies into the portfolio, as an intermediary to absorb benefits and meet the diversified needs of customers, but will not go deep into the actual ecology of encryption, only to win and not lose trading is its main purpose, high-quality applications, projects can enter and enter, retail investors are not in the scope of consideration.

Among them, even more outrageous is the FTX and the like, the celebrities in the currency circle who used to enter and exit the White House and shout “encryption is the future” finally confessed under the strict control of supervision, and the description at the hearing was appalling, cashing out loans in the name of the company, arbitrarily generating insurance money figures, arbitrarily misappropriating customer assets, selling, manipulating the market, just a common thing, the interests of users? It is not clear and does not understand.

All this constitutes a special ecology of the blockchain industry. As part of financial technology, in the foresight of the trend, Wall Street elites collectively poured in, overseas ivy is not rare, risk control, quantification, technology has become daily talk, and as part of the vision of decentralization, encryption is open to everyone, the complexity of technology and no threshold has caused a sharp contrast, retail investors come to make money, do not care about Ponzi, even structured products, only focus on TVL and earnings on the surface. Institutions also come because of interests, either with high value in the belly, or as ants in the eyes, and the fault line caused by this is difficult to fill easily. **

Under Yuyue’s post, some people used 18 or 19 years to compare the current situation, which also attracted countless feelings of embarrassment. The explosion in 19 years is the IEO model opened by Binance and the capital disk model opened by VDS, Bell Chain, and giant businessmen, the technical concept is disjointed, small circles prevail, capital trading means emerge endlessly, and there are no bright spots in addition, and the concept of Defi, NFT, and Layer2, which is now taken for granted, was only embryonic at that time.

** Some people sarcastically said, “Suit and leather shoes go to the slums and ask why don’t you like to eat meat?” How do I need to answer? ”**

The innovation of technology and the landing have never been very different, the emergence of technology does not mean the landing of technology, and in the field of long-sleeved good dance and good use of narrative encryption, it is even more so, retail investors who have been deceived by many new concepts, it is difficult to contact to believe and apply, it is understandable. For institutions and projects, it is the responsibility of their resources and capital to put a correct attitude, take off Kong Yiji’s robe, listen to the voice of the market, and implement more realistic applications.

Perhaps only when the technology actually lands so that users can directly feel the difference, the innovation of technology can really benefit users, but at that time, is the crypto world still decentralized? Or is it just another area that wealth groups control?

** What makes people more helpless is that even if it is currency speculation, the window of opportunity for retail investors is shrinking, and the wealth effect of grabbing between project parties and institutions is no longer much. **

Bibliography:

Stuart Popejoy and Will Martino: Understand JPMorgan’s blockchain product layout;

CNBC：Why big banks like JPMorgan and Citi want to put Wall Street on a blockchain；

Decrypt:JP Morgan Crypto Lead: ‘99.9% of Conversations Are About Tokenized Assets, Not Crypto’