Memecoin and VC Token, which one will you choose? Before 2022, everyone would probably not hesitate to choose star projects with high visibility and high valuation backed by well-known VC institutions. Now, in just two years, the trend has changed, especially the small trend set off by Ordinals in 2023. , quickly grew into a powerful anti-VC wave in the crypto world.
Even since the first half of this year, Memecoin has been leading the way in comparison with the market performance of VC Token, attracting a large amount of attention and capital inflows in a short period of time. The voice of the general public for fairness represented behind it has gradually become a trend. Then Behind this, are funds voting with their feet, or is it a short-term illusion within the market?
01. VC Token’s “Two Heavens of Ice and Fire”
The first half of 2024 is almost an intensive redemption period for a series of former "king-level" star projects, from Wormhole to Polyhedra Network, from Starknet to LayerZero, and from Zksync to Blast, all of which are eagerly anticipated by community users and wooly parties. Airdrop project that has been going on for a long time.
However, the price performance after actual realization is not satisfactory, especially after the industrialization of Airdrop, a large number of community users/Lumao Studio have helped these star projects obtain extremely beautiful paper data, thereby pushing up the project valuation. At the same time, the increasingly exaggerated FDV caused by its own VC financing has also paved the way for the sell-off risk of its early liquidity.
For example, the recent issuance of new VC tokens such as W (Wormhole), ZK, ZRO, and STRK are basically a piece of cake - the FDV is extremely high and the trend keeps falling. It has ended with a negative line almost every day since its listing. All users are deeply ensnared.
Just based on statistics in late June (not counting the recent sharp decline), PORTAL and SAGA have fallen by about 80% compared to their opening prices, and W, ZKJ, STRK, OMNI, and ALT have also fallen compared to their opening prices. Both fell by more than 50%.
Source: @terryroom2014 /X
From a data perspective, for ordinary users, the era of this glamorous VC Token, where “you can easily earn high profits by buying it” has come to an end.
At least for the recent new Tokens, buying them in the secondary market is almost more cost-effective than the later financing valuation, and there are even signs of an inversion of valuations in the primary and secondary markets:
Latest information as of July 10:
ZRO has raised a total of US$3 billion in history, and its current total market value is only US$3.8 billion;
W has raised a total of US$2.5 billion in history, and its current total market value is US$2.9 billion;
ZK has raised a total of US$1.25 billion in history, and its current total market value is US$3.1 billion;
ZKJ has raised a total of US$1 billion in history, and its current total market value is US$1.2 billion.
But what is interesting is that Dune statistics show that even when the market continues to decline, major VCs still have dozens or even hundreds of times of floating profits on the book value of these Token investments. The overall VC profit has not been realized. The profit is still as high as 7 times.
Hitesh.eth, co-founder of DYOR, has also compiled statistics on the top 10 "VC Tokens" with overall VC return rates on the market. Basically, they are the main force in the current market, which has also greatly affected the market's confidence. Big blow.
But at the same time, although secondary market investors such as ENA, DYM, and SAGA have suffered heavy losses, VCs are still able to lock in profits of more than 10 times - the highest ENA has a return rate of about 100 times, and the lowest ALT has more than 10 times. , the experience of VCs and secondary market investors can be described as "ice and fire".
02. Memecoin “devours” the market
Compared with the falling trend of the star VC Token on the online trading platform, the price performance of the secondary market of on-chain assets such as Memecoin has been outstanding, almost "devouring" the entire market, becoming the Web3 culture at this stage. symbol.
Among them, whether it is emerging Memecoin leaders such as PEPE and FLOKI, or GME and other public chain new Memecoins, wealth passwords are constantly emerging several times or even dozens of times, which once made people dream back to the market environment during the 2020 DeFi Sunmmer. .
Especially since April this year, the volatility of new star VC Tokens that have been intensively launched has dropped, making it difficult for secondary market traders to profit from them. The market's FUD sentiment towards VC Tokens has become more serious, and Memecoin has shown its unique charm. Relying on community consensus, it attracted a large amount of attention and capital inflows in a short period of time.
In contrast, although VC Token has strong background support, its performance has not fully met investor expectations in the rapid changes in the market.
Source: dune.com
What’s more interesting is that Dune statistics also show that in this round of Meme super cycle, the number of actual holder addresses on the chain of the top 46 Memecoins has indeed been growing significantly in the past 90 days:
Among the 46 Memecoins, except for 4 that are experiencing a decline in growth (FLOKI only declined slightly), the number of holders on the chain of the remaining 42 Memecoins has generally achieved double-digit or even more than 100% growth. This data is undoubtedly It reflects that the market's attention and enthusiasm for participation in these Memecoins are indeed rising sharply.
Moreover, the relative number ratio of buyers/sellers in the past 30 days is basically above 1, which also indicates that investors are relatively optimistic about the future trend of Memecoin and are willing to invest more funds to obtain potential profits.
In short, unlike many previous encryption projects with large financing and VC-led narratives, which have high barriers to entry and are more oriented towards crypto OGs and on-chain whale(rich elites), Meme brings more common people beyond OGs and whale. An opportunity for the public, especially so that the general public can participate fairly and share the dividends.
Therefore, in comparison, discussions and doubts about Memecoin and VC will inevitably become the mainstream of the community again. Meme will at least bring continuous incremental funds and attention through user flow, and in the near future, it is estimated to be worth billions of dollars. The new projects that are worth the money are all outdated concept products that try to hide the grand narrative or old gameplay. It is understandable that they are disliked by the community.
03. Social resistance behind the Meme wave
In fact, if we carefully examine the current market environment, we will find that in addition to short-term speculation, the general public's call for fairness represented behind Meme has gradually become a trend, and funds are voting with their feet.
To put it bluntly, the rise of the Meme wave actually represents, to a certain extent, community users and the market’s correction of the traditional “financing-cash-out” model in the past two years: the previous star projects relied on top VCs to build games, combined with high-end The gameplay of using technical narrative to carry out high-valuation and large-amount financing, and finally attracting the community to pile up a series of beautiful on-chain data through the so-called "Airdrop" is basically over.
Especially since this year, long-awaited projects such as ZKsync and LayerZero have caused major Airdrop-related controversies such as "Witch Attack" and "Rat Warehouse" in the community. This basically means that the Web3 world is gradually entering the "post- "Airdrop Era" - When star projects begin to regard Airdrop as an arrogant power for resource allocation, Airdrop is no longer a mutual complement between community users and projects.
For this reason, the rise of Memecoin is precisely because they are often not bound by the traditional set of primary and secondary market takeover rules. Although this also means that its risks are higher and price fluctuations are more violent, for ordinary users At least there is one more choice.
If we deeply analyze the reasons behind the ebb and flow of Memecoin and VC Token, the objective market conditions are almost clearly visible:
The first is the selling pressure caused by high valuation and low circulation. After all, today’s star projects almost all use high FDV and low actual circulation as the issuance rules. This creates a potential unstable factor and the selling cycle is extremely It takes a long time and puts huge pressure on the market;
Secondly, users are gradually becoming immune to technical narratives, especially from L2 to Restaking. After experiencing many projects, especially celebrities’ rendering of technological innovation, users have become more rational and prudent, and are no longer easily fooled by those Moved by technical narratives that seem inscrutable but actually lack substantial breakthroughs;
In addition, the effect of high-frequency capital withdrawal cannot be ignored. Similar to the large-scale IPO withdrawal phenomenon in the stock market, the community has recently been controversial about whether the intensive launch of celebrity projects has led to a large amount of funds being withdrawn from the market, reducing the market's funds. Liquidity is severely affected;
After all, real money and practical voting will not deceive people.
To a certain extent, the alliances and entrenched interests between VCs in the crypto world and the Web3 industry have reached a stage that clearly needs to be broken (extended reading "Who is "controlling" Uniswap? Taking turns to stage a "house of cards" Where will DeFi go? 》), and users’ spontaneous pursuit of real money-making effects and hot spots is understandable.
After all, in this market full of temptations and opportunities, users instinctively tend to those opportunities and hot trends that can bring tangible benefits. Once the existing projects cannot meet this demand, they will express their dissatisfaction and resistance in various ways. , in order to seek better investment returns and market environment.
This also sounded the alarm for VCs and project developers who are accustomed to path dependence.
