Han Feng: A true stablecoin should be similar to BTC and not rely on TradFi.

Deng Tong, Golden Finance

In 2025, AI Agents, stablecoins, and others have sparked widespread discussions, and recently, the fluctuations in the cryptocurrency market have attracted general attention. In this context, Golden Finance invited an independent researcher from Harvard University, a fellow of the National Academy of Artificial Intelligence in the United States, and the first angel investor of ELA for an exclusive interview. Han Feng talked about the differences between this crypto cycle and previous ones, which sectors of the crypto narrative will see an explosion in the future, discussed market trends, and introduced the Bitcoin stablecoin BTCD.

Han Feng pointed out:

• This cycle is fundamentally different from previous cycles. BTC has truly entered the ranks of mainstream assets, showing the rise and fall patterns of mainstream assets.
• I am more optimistic about the future narrative of AI Agents. Only after the combination of crypto assets and AI agents will the economic value created by Satoshi Nakamoto truly be realized.
• A true stablecoin should be like BTC, not relying on the traditional financial system.
• I don't think the crypto market is turning bearish. I believe that the more chaotic the situation, the greater the development space for digital assets represented by BTC.

Golden Finance: As an experienced crypto OG who has been in the industry for many years and has gone through multiple crypto cycles, what is your biggest feeling about this current cycle?

Han Feng: This cycle is fundamentally different from previous cycles. First, this bull market is driven by the entry of large funds from the United States. Previous bull-bear transitions were based on internal rules of the crypto sector and were directly related to the large-scale liquidity of retail investors: an increase in liquidity means a bull market, and various assets rise. Especially in 2017, even various worthless tokens were rising. However, liquidity can dry up due to incidents of explosion within the industry. For example, in 2014, Mt. Gox was hacked, losing about 850,000 BTC; in 2022, the FTX explosion and so on, which directly undermined market confidence and led to a drying up of liquidity, resulting in the arrival of a bear market.

The signal for the start of this bull market is the approval of the BTC ETF. Subsequently, Trump returned to the White House and introduced a series of policies that provided continuous momentum for this bull market. It is an undeniable fact that mainstream financial forces have entered the cryptocurrency space, and their involvement has made BTC less prone to extreme volatility. Even though the overall market has been sluggish in recent days, BTC has only dropped about 20%, whereas in the past, it might have seen declines of up to 50%. Perhaps in another 40 days, there is still a possibility for BTC to reach a new all-time high. Although the current BTC has not yet achieved the stability of gold, it is already much more stable than before.

Secondly, the determining factors of this round of bull market are much more complex than before. Previously, it was only necessary to look at the liquidity in the crypto space, but now it is important to pay attention to the Federal Reserve's attitude towards crypto assets; the attitudes of listed companies and mainstream funds towards crypto assets; and even to monitor the international situation, among others. BTC has truly entered the ranks of mainstream assets, showing the rise and fall patterns of mainstream assets. Therefore, I believe this bull market will be relatively long, and the bear market will come slowly; crypto assets have already entered a new stage of development.

Golden Finance: The narrative of cryptocurrency is constantly changing, from ICOs, ETH Killers, DeFi, GameFi, Memecoins, L2, BTCFi, stablecoins, RWA, DAT, and so on, many of which have been debunked. What is your view on various cryptocurrency narratives? Which ones do you have confidence in?

Han Feng: The cryptocurrency world has had meme attributes since its inception. Taking BTC as an example, traditional investors once broadly viewed it as a Ponzi scheme, lacking any real value to support it. In the early days of the cryptocurrency world, liquidity and market sentiment were the main factors influencing market trends. This also explains why, even though many projects are false propositions, investors flock to them. However, now BTC has entered the realm of national strategic asset reserves in the United States, completely moving out of the barbaric era. Although many propositions in the industry once had meme attributes, the practical process has been extremely valuable.

I am more optimistic about the future narrative of AI Agents and believe that future AIs will have self-awareness. In a few years, AI behavior may not necessarily be controlled by humans, but it will definitely be open and transparent. We can view BTC as the simplest form of an agent economy; the BTC network itself relies on BTC to buy computing power, buy miners' bookkeeping, and buy the overall operation and maintenance of the network. In this way, the BTC network has functionalities like tamper-proofing. Although the energy consumed by the BTC network exceeds that of many countries and has been criticized, it has created over $2 trillion in value, surpassing the GDP of most countries worldwide. Clearly, it still has greater potential for growth.

A fraud-free, autonomously operating, and highly efficient economic system will eventually surpass the current GDP of humanity, which stands at 105 trillion dollars. Satoshi Nakamoto's Bitcoin white paper explains how to create a globally free economic model, which will truly realize the value of the economy created by Satoshi when combined with AI agents. Although it is still on its way and has faced failures, it will ultimately succeed, which is the most fundamental view I have on the future development prospects of the crypto field. The stablecoin based on BTC that we issued at Harvard will further provide the foundational conditions for the large-scale development of the AI agent economy.

Golden Finance: You recently proposed the Bitcoin stablecoin BTCD. Can you help us explain the specific mechanism and use cases? How does it differ from common stablecoins like USDT?

Han Feng: The creation of USDT was to allow the liquidity in the cryptocurrency market to be directly reflected on the blockchain. Currently, the liquidity of major exchanges is mainly represented by traditional stablecoins such as USDT and USDC. Therefore, the advent of stablecoins is extremely significant for the entire cryptocurrency industry.

But the revolution brought about by USDT and USDC has only changed half of the game. In fact, compared to traditional currencies, there has been no technological innovation, only conceptual innovation. According to Satoshi Nakamoto’s originalism, a true stablecoin should be like BTC, which does not rely on the traditional financial system. This concept I proposed has been widely recognized by Harvard scholars, which led to the application for project incubation at the Harvard Innovation Center, initiating the exploration of NBW (New Bretton Woods).

Under the original Bretton Woods system, the US dollar was issued pegged to gold, which can also be understood as the dollar being the earliest stablecoin backed by gold. The dollar made significant contributions during the first round of global trade globalization, and its good performance led everyone to trust the dollar. However, in 1971, the two became decoupled, leading to a subsequent global debt crisis.

The new Bretton Woods system we propose is a global currency system that is anchored to a true hard currency, cannot be arbitrarily inflated, and is free. We unanimously believe that BTC is the only choice. It is clear that it is no longer just a financial experiment; its scale is already greater than that of most listed companies and countries, and its future development prospects will surpass gold, becoming a hard currency.

BTC-based stablecoins are fully decentralized financial assets that do not rely on the existing banking system. There are several challenges involved:

First of all, the BTC mainnet does not have smart contracts. Stablecoins such as Maker DAO's DAI, Circle's USDC, and Tether's USDT all require smart contracts. In 2023, we hoped to build Layer 2 on BTC, that is, to implement smart contracts via BTC Layer 2, but it felt very difficult because the smart contracts of BTC and ETH are not compatible. Therefore, starting from last year, we decided to abandon the concept of smart contracts and primarily focus on the BTC mainnet.

We noticed that the BTC mainnet has a timestamp that can lock BTC. This creates a prerequisite for anchoring. Therefore, we first allow BTC to be locked on the mainnet through a protocol, and then use zero-knowledge proofs to demonstrate the locked status to smart contracts on other chains, equivalent to staking assets in other contracts.

Secondly, stablecoins issued through smart contracts, like Maker DAO, all have liquidation mechanisms. Maker DAO was the first mover; its logic is simple: once the value of a cryptocurrency falls below a certain price, a violent liquidation mechanism is triggered.

Although everyone eventually acknowledged the stablecoin it issued, the violent liquidation mechanism is extremely unfriendly to users. Additionally, because the BTC mainnet does not have smart contracts, violent liquidation is not possible. Therefore, when we designed BTCD, I was the first to propose abandoning the concept of violent liquidation.

As an alternative to the clearing mechanism, we propose the concept of being able to buy hedging contracts in advance. Based on our observations, BTC has not experienced a 50% drop within 90 days in the past three years. With the current stabilization of BTC prices, I buy 50% of the options and collect 1%-2% in insurance fees in advance. Even if BTC experiences a drastic decline, I can profit from the hedged BTC futures securities that I purchased. This can replace the traditional violent liquidation method. In the event of a disconnection, this money can be used to repurchase stablecoins.

Under this concept, we replaced the violent liquidation mechanism with BTC futures, and after the major crash on October 11, BTCD is still operating smoothly.

Golden Finance: Since October 11, the cryptocurrency market has continued to decline, and many believe the crypto market has turned bearish. What is your perspective as an OG?

Han Feng: I do not believe the cryptocurrency market is turning bearish. According to traditional indicators in the crypto circle, once liquidity dries up, it will turn bearish, and it does indeed seem like we are entering a bear market. However, we need to consider not only the liquidity and market sentiment in the crypto space but also international issues. The reason for the current decline in the cryptocurrency market is the chaotic international situation.

I believe that the more chaotic the situation, the greater the development space for digital assets represented by BTC.

Golden Finance: In addition to narrative and technology-driven factors, the crypto market is also influenced by macro factors such as regulation and Federal Reserve monetary policy. What is your view on the current global regulatory environment and macroeconomic factors?

Han Feng: Due to the entrance of mainstream capital and events such as the Federal Reserve's interest rate cuts, the impact on the cryptocurrency market will become increasingly significant. Although regulation remains strict in some regions, “the green hills cannot hide the flow to the east”; in the current chaotic international situation, stablecoins based on BTC will play an important role: traditional stablecoins like USDC and USDT are based on the US dollar, and once the United States imposes financial sanctions, they cannot be used normally, but stablecoins based on BTC can operate freely.