Since 2024, the meme coin craze has swept this cycle, with market funds clearly shifting from VC-backed Tokens to community-driven MEME coins. However, the recent enthusiasm for meme coins has clearly declined, and investors seem to be gradually returning to non-meme Tokens.

Ella Zhang, the head of CZ's family office YZi Labs (formerly Binance Labs), said in an interview with BeInCrypto on the 14th: "While the community-driven narrative provides investors with a fairer entry point, due to weak fundamentals, they (meme coins) have lost momentum over time."

From the end of the first quarter, people's interest in VC-backed Tokens began to decline, while the popularity of meme coins soared, leading to the so-called meme coin frenzy.

VC Tokens have "fallen out of favor" in this cycle, and the degree of pursuit for low-liquidity, high FDV VC Tokens has clearly declined. According to Dune data, the benchmark for unrealized profits of VCs has dropped significantly to only 3x. This figure is in stark contrast to the benchmark in previous cycles, when venture capital returns were as high as 563x.

Investors have turned to high-liquidity meme coins and Altcoins to obtain a fairer Token distribution, refusing to be the bag holders when VCs dump their holdings. The degree of pursuit for low-liquidity, high FDV VC Tokens has clearly declined.

Capital flows back to non-Altcoins

However, Ella Zhang said the trend of traders flocking to meme coins is currently slowing down, and they are returning to the Altcoins supported by VCs.

"According to CoinMarketCap data, this trend is currently slowing down. The ratio of meme market capitalization to non-meme Altcoin market capitalization has been declining, indicating that capital is gradually flowing back to non-Altcoins.

We believe this is a natural market cycle - while community-driven narratives can generate momentum, long-term value ultimately comes from strong fundamentals."

Without fundamentals, value cannot be sustained

For Ella Zhang, the success of meme coins is destined to be temporary, as most meme coins lack fundamentals.

While 40,000-50,000 new crypto Tokens are created every day, the average lifespan of liquid meme coins is 1.3 hours, and only about 5% of meme coins have a market capitalization exceeding $10 million.

This is not to say there are no good meme coins, but for any asset to have lasting/growing value, overall, it needs one or more underlying services, businesses, products, technologies, or innovations to drive price appreciation.

Without fundamentals, value cannot be sustained.

VCs must adapt to the fair-launch Web3 landscape

Although VC-backed Altcoins are regaining ground, Ella Zhang believes these projects should learn from the meme coin craze and adapt to the principles of fair launches.

"VCs must adapt to the evolving Web3 landscape, which is increasingly driven by community-centric, fair-launch principles, which have become the native culture in the crypto space.

VCs that adapt to this shift by supporting projects with real utility and a focus on fairness and transparency will be better positioned to thrive as the market continues to evolve."

Ella Zhang also said that project teams should not completely abandon VCs. In many ways, they can balance the advantages of VC capital, fair Token distribution, and the desire for community ownership.

CZ calls for projects to create a slowly-released Token economy

Regarding CZ's proposal last month on what he believes to be a sustainable ideal Token economics, he believes that the initial 10% of Tokens should be unlocked and sold in the market, and subsequent unlocks must meet all of the following conditions:

1. 6 months after the previous unlock.
2. Only when the Token price has maintained at least 2 times the previous unlock price for 30 consecutive days prior to the unlock date.
3. A maximum of 5% of Tokens can be unlocked each time.

Ella Zhang explained: "CZ is calling for long-term builders to focus on a slowly-released Token economy and achieve significant milestones - this refers to projects starting with low float and gradually increasing supply based on significant milestones, ultimately becoming high-float projects."

Ultimately, she concluded, "It all comes down to fundamentals in the end."

Projects with strong fundamentals will continue to grow, while those with weak fundamentals will ultimately disappear.