Author: Ryanqyz, Crypto KOL
Editor's note: Since 2024, the market has experienced several ups and downs. Retail investors lost money, VCs cried poor, and many project parties ran away. The violent bull market that everyone expected did not arrive as expected. The Bitcoin ETF has been up and down since its approval, and the Altcoin are even more difficult to describe. Recently, the core developers of Ethereum have raised questions, have they entered the wrong industry? What happened to the blockchain? Crypto KOL Ryanqyz conducted a comprehensive review of VCs, project parties, new and old projects, exchanges, etc. in this cycle on X, trying to find the reasons for the current situation. The full text is reproduced as follows:
What exactly happened in the blockchain industry?
About VC:
- All VCs with normal rhythm in the last cycle have made money. These VCs have increased the size of their funds by 3-10 times in this cycle and raised funds again, resulting in too much money on hand. However, there are not enough good projects, but they must be spent, so projects with a little bit of appeal will increase rounds of financing to raise valuations and get money they don’t need. Old projects that died three years ago can also come out and get a new round of VC financing. This has also greatly increased the VC cost of good projects and the psychological expectations of coin holders.
- VCs are not stupid, and project owners are not stupid either. It essentially becomes a game of cutting LPs.
- Other projects cannot issue tokens after investment, and people look at each other in confusion during meetings. Finally, a good project issues tokens, so we quickly focus on PR. We can only unlock and sell tokens after 6 or 12 months. If we haven’t unlocked them before, we have to find a way to sell/hedge them.
- In short, if VCs don’t make money, LPs suffer the most.
About the new project:
- Because mature founders invest the same amount of time in small and large projects, and sell their coins the same way, so they only work on large projects.
- Big projects = high valuation = infra
- Infra appears in large numbers, but there are no applications/real income on them, so they can only subsidize/inflate the volume themselves.
- Where does your own money come from? VCs come from there, it’s free anyway.
- Because we have understood the Playbook for listing and opening, and have a clear goal of selling coins at the opening, we will open with a high valuation, and then sell the least coins to get the most money. Then the market buying will dry up, but we still have to sell coins. It is impossible not to sell coins. After the first wave of buying ends, a coin can only fall, and the end time is generally 1-3 days, and it basically cannot last more than three days. After that, create fluctuations and continue to sell coins. If the market is good, occasionally appear on the list of gains, and then continue to sell coins.
- In short, the first principle of doing a project is to sell coins; very few projects create value (or cheat) through protocol income. Some projects that inflate volume and make money are also fake user projects. They are equal to zero when they are launched, and there is no transaction volume. For such projects, market value is meaningless.
About old projects:
- Dead projects use the relatively high-quality Captable they invested in three years ago to raise funds again (in fact, they have no contact with those funds anymore). Most of them use KOL Round, and a few look for funds to take over. In order to be listed on BN, they continue to raise funds to brush up data, but there are still no real users and no real use cases. In fact, they can't be listed on BN, so there are two ways: bribe other exchanges/DEX to list the currency.
- Listing a coin on DEX = zero, bribing the exchange = zero (the bribe money must be earned back by selling coins)
- In short, this type of project can only be reset to zero, because they are unlikely to do it well.
About the head exchanges:
- The service provided by the exchange to the project party is equivalent to the pool on the chain. Adding a pool to a coin is definitely a good thing for the project. Therefore, the project must pay the exchange, which is understandable and in line with business common sense.
- The exchange has people who need to please, that is, the big players. Projects that are in the interests of the big players need to be listed, so LRT must list projects that are in its own interests, so those that have invested, those with users, new things, and those that can compete with other exchanges can be listed.
- Because liquidity is king, listing on an exchange has become the most important part of doing a project. The exchange plays an important role in user education and liquidity provision, and should be given an important position and matching profits. Then he will quietly accept your principal :)
In summary, doing a project has become about creating an illusion. There is no need to make anything, as long as the coins can be sold, because the essence is to create a mob and then sell the coins.
In this case, there is no difference between VC coins and meme coins.
About ETH:
- The big players changed their mindset and switched to POS. Anyway, it is not POW, nor is it a cryptocurrency speculation idea, nor is it a deposit and payment idea. It is just a freeloading idea.
- Large investors do not participate in real construction, which refers to construction that has a direct positive impact on the price of ETH, including but not limited to making memecoins, pulling high-quality memecoins, creating a unique ETH cult culture, etc. In short, they do nothing.
- The only two reasons to buy ETH this cycle are re-staking and ETF, but this has nothing to do with retail investors, so ETH essentially has no good, strong, and immediately clear reasons to buy.
- ETH still has the most developers, the most nodes, and the most ecological projects. It is still the most robust blockchain. However, these projects on ETH have ulterior motives and want to sell their own virtual coins to retail investors so that they can only make money. In short, it is not easy for retail investors to make money on ETH.
About SOL:
- Big investors stick together, have a big picture, and understand what retail investors are thinking.
- The scale of large investors is 400,000 - 2mil SOL. They spend 10,000 SOL to make a so-called cult meme coin or find someone they know to make a meme coin. It's so easy. They work together to pull up the meme, make a lot of small pools of meme coins, and send them to 100-500mil. Retail investors are dazzled by so many meme coins and have crazy FOMO. KOLs earn attention by shill and complete wealth transfer, and these coins really rise.
- KOL forms a gradient and shill range, Hsaka, Ansem and other top streamers are in one tier, some with 100k followers are in one tier, and others (these are mainly KOCs) are in another tier, shouting coins of different market value ranges, about 500mil +, 100-500mil, 10-100mil, and lottery players below 10mil. This increases the vitality of the SOL ecosystem and allows retail investors to carry their SOL
- Because retail investors all hold SOL, the SOL maxi army is naturally formed, and the SOL flip ETH sentiment is rampant among retail investors. These people get the pleasure of memecoin, forget the rollback risk of SOL, and that the memecoin in their hands is essentially air.
- SOL enters the positive feedback loop stage, the main character shill, retail investors continue to FOMO, continue to shill and continue FOMO.
- When will it end? I don't know. It will end when everyone is disgusted with memecoin.
- In short, SOL has become the best casino and the best casino chips in this cycle, and everyone needs SOL
judge:
- The memecoin supercycle is established, 20 memecoins appear in the top 100 market capitalization coins, and a large number of memecoins are between 100-300mil, mainly on SOL.
- Successful memecoin focus CEX appears
- The project will continue to open with a high market value, but the opening valuation will be significantly lowered. The PR draft says that a large number of project parties have rationalized their valuations (some project parties have already done so, and the results are good from the online perspective. They have a big picture and are careful about their reputation).
- VCs can only look to Web2 for funding in the next round. They are very jealous of the industry, but reporting to LPs will be painful. High-quality real-use case projects that do not over-finance from VCs (or even do not raise funds at all) begin to emerge, using other more decent ways to transfer benefits.
- Audit/security companies that truly create value are slowly starting to be valued, and high-quality audits are becoming an important part of the industry: BlockSec, Hexagate, Hypernative
- For non-meme projects, the market will return to favoring projects with real revenue, real monopoly, and real use cases (hopefully they will have innovative ways to link tokens to businesses)
- The next round is the real application cycle
To my readers:
- Buy BTC, put it in a cold wallet, sell some when the grandpa and grandma come, buy some when your parents call you an idiot, keep the rest, don’t tell anyone
- Find ways to get money from VC/project parties: do projects/provide services for projects
- Find ways to get money from other retail investors: provide services to retail investors
- Don’t buy VC coins, especially high-market-cap VC coins (end result: can’t outperform BTC)
- Try to buy 10mil - 100mil of SOL memecoin and sell it when it reaches 100-500mil
- Not participating in old projects, there are reasons why no coins were issued in the last cycle
- Verify all the information you see and want to know more about it. If you cannot verify it, it is considered false.
- Identify valuable content accounts and give them more interactions (
