Author: Kevin, the Researcher at Movemaker
The VC allocation in the above projects generally ranges from 10% to 30%, which has not changed much compared to the previous cycle. Most projects choose to distribute tokens to the community through airdrops, which they see as a reasonable community distribution method. However, in reality, users do not hold the tokens received from airdrops for a long time after receiving them, but tend to sell them immediately. This is because users believe that the project party often hides a large number of tokens in the airdrops, so there is a huge selling pressure in the market after the TGE. The concentration of token holdings is not conducive to the effectiveness of airdrops. This phenomenon has existed for the past few years, and the token distribution method has not changed much. The performance of token prices shows that VC-driven token prices perform very poorly, often entering a unilateral downward trend after token issuance.
Among them, $SHELL is slightly different. It allocates 4% of the tokens through IDO, and the IDO market value of the project is only $20 million, which is different from many VC-driven tokens. In addition, Soon and Pump Fun choose to distribute more than 50% of the total token supply through fair launch, and combine a small number of VCs and KOLs for a large-scale community fundraising. This way of giving back to the community may be more easily accepted, and the proceeds from community fundraising can be locked up in advance. Although the project party no longer holds a large number of tokens, they can repurchase the tokens in the market through market making, which not only sends a positive signal to the community, but also allows them to recover the tokens at a lower price.
The End of the Memecoin Bubble Frenzy: Liquidity Vortex and the Collapse of Market Structure
The transition from a market balance state dominated by VC-driven Builders to a pure "pump" token issuance bubble model has led to the inevitable zero-sum game for these tokens, ultimately benefiting only a few, while the majority of retail investors are more likely to suffer losses and exit. This phenomenon will exacerbate the collapse of the primary and secondary market structure, and the rebuilding or accumulation of holdings may take longer.
The atmosphere in the Memecoin market has plummeted to an extreme. As retail investors gradually realize that the essence of Memecoin is still inseparable from the control of the conspiracy group - including DEXs, capital parties, market makers, VCs, KOLs and celebrities - the issuance of Memecoin has completely lost fairness. The drastic losses in the short term will quickly affect users' psychological expectations, and this token issuance strategy is approaching a stage-wise end.
Over the past year or more, retail investors have made the largest profits in the Memecoin track. Although the Agent narrative has driven market enthusiasm by promoting a culture of open-source community innovation, the fact is that this wave of AI Agent craze has not changed the essence of Memecoin. A large number of Web2 individual developers and Web3 shell projects have quickly occupied the market, leading to the emergence of a large number of "value investment" AI Memecoin projects.
Community-driven tokens are controlled by the conspiracy group, and prices are maliciously manipulated to achieve "fast-tracking". This approach has seriously negatively impacted the long-term development of the project. The former Memecoin projects used religious beliefs or the support of minority groups to alleviate the selling pressure of the tokens, and achieved an exit process that users could accept through the operation of market makers.
However, when the Memecoin community is no longer protected by religion or minority groups, it means that the market sensitivity has declined. Retail investors are still expecting to get rich overnight, they are eager to find tokens with certainty, and hope to see projects with deep liquidity at the opening, which is a fatal blow to retail investors by the conspiracy group. The bigger the bet, the more lucrative the returns, and this return has begun to attract the attention of teams outside the industry. After these teams have obtained the benefits, they will no longer use stablecoins to buy cryptocurrencies, because they lack faith in Bitcoin. The drained liquidity will be permanently lost from the cryptocurrency market.
The Death Spiral of VC Tokens: Inertial Traps and Liquidity Strangulation under the Consensus of Shorting
The strategies of the previous cycle have become ineffective, but there are still a large number of project parties using the same strategies due to inertia. Distributing a small portion of tokens to VCs and maintaining high control, allowing retail investors to buy on exchanges. This strategy has become ineffective, but the inertial thinking makes project parties and VCs unwilling to change easily. The biggest drawback of VC-driven tokens is that they cannot gain an early advantage at the TGE. That is, users no longer expect to obtain ideal returns by buying tokens through issuance, because users believe that the project party and the exchange hold a large number of tokens, resulting in an unfair position for both parties. At the same time, the VC return rate has dropped sharply in this cycle, so the VC investment amount has also begun to decline, coupled with the unwillingness of users to take over on the exchange, the issuance of VC tokens faces great difficulties.
For VC projects or exchanges, going public may not be the best choice. The liquidity drained by celebrity tokens or political token teams has not been injected into other tokens, such as Ethereum, SOL or other Altcoins. Therefore, once the VC tokens are listed on the exchange, the contract fee rate will quickly become -2%. The team will not have the motivation to pull up the price, because the goal of going public has been achieved; the exchange will not pull up the price either, because shorting new tokens has become a market consensus.
When the token is immediately in a unilateral downward trend after issuance, the higher the frequency of this phenomenon, the more the market users' cognition will be strengthened, and the "bad money drives out good money" situation will occur. Assuming that in the next TGE, the probability of project parties who issue tokens and immediately dump the price is 70%, and the willingness to provide market making support is 30%. Under the influence of the continuous appearance of dump projects, retail investors will develop retaliatory short-selling behavior, even if they know the risk of issuing tokens and shorting is extremely high. When the short-selling situation in the futures market reaches its extreme, the project parties and exchanges will also have to join the short-selling ranks to make up for the unrealized target returns through dumping. When 30% of the teams see this situation, even if they are willing to provide market making, they are unwilling to bear such a huge price difference between futures and spot. Therefore, the probability of project parties who issue tokens and immediately dump the price will further increase, and the teams that can create a positive effect after issuance will gradually decrease.
The unwillingness to lose control of the tokens has resulted in a large number of VC tokens at the TGE having no progress or innovation compared to four years ago. Inertial thinking has a stronger grip on VCs and project parties than imagined. Due to the dispersion of project liquidity, the long VC unlocking cycle, and the constant turnover of project parties and VCs, although this TGE method has always had problems, VCs and project parties have shown a numb attitude. A large number of project parties may be establishing projects for the first time, and when faced with difficulties they have never experienced before, they tend to develop survivor bias, believing that they can create different value.
Dual-Driven Paradigm Shift: On-Chain Transparent Game Solving the Pricing Deadlock of VC Tokens
Why choose the VC+community dual-driven model? The pure VC-driven model will increase the pricing error between users and project parties, which is not conducive to the early price performance of token issuance; while the completely fair launch model is easy to be maliciously manipulated by the conspiracy group behind it, resulting in the loss of a large amount of low-priced tokens, and the price fluctuates within a cycle in a day, which is a devastating blow to the subsequent development of the project.
Only by combining the two, with VCs entering the project in the early stage, providing reasonable resources and development plans for the project party, reducing the financing needs of the team in the early development stage, and avoiding the worst outcome of losing all the tokens due to fair launch and only getting low-certainty returns.
Over the past year, more and more teams have found that the traditional financing model is becoming ineffective - the routine of giving VCs a small share, maintaining high control, and waiting for the exchange to pull up the price is difficult to continue. With the tightening of VC pockets, the refusal of retail investors to take over, and the increase in the listing threshold of major exchanges, a new set of plays more suitable for the bear market is emerging: Combining with top KOLs and a small number of VCs, pushing the project forward with a large-scale community launch and low-market-value cold start.
Projects represented by Soon and Pump Fun are opening up new paths through "large-scale community launches" - endorsing top KOLs, directly distributing 40%-60% of tokens to the community, and launching projects at valuations as low as $10 million, raising hundreds of millions of dollars. This model builds consensus FOMO through the influence of KOLs, locking in returns in advance, and exchanging high liquidity for market depth. Although the short-term control advantage is abandoned, the compliant market-making mechanism can be used to repurchase tokens at low prices during the bear market. Essentially, this is a paradigm shift in the power structure: from the VC-led game of musical chairs (institutional takeover-exchange dumping-retail buying), to a transparent game of community consensus pricing, where the project party and the community form a new symbiotic relationship in the liquidity premium.
Recently, Myshell can be seen as a breakthrough attempt between BNB and the project party. 4% of its tokens were issued through IDO, with an IDO market value of only $20 million. To participate in the IDO, users need to purchase BNB and operate through the exchange wallet, and all transactions are recorded on the chain. This mechanism brings new users to the wallet while allowing them to have a fair opportunity in a more transparent environment. For Myshell, the market-making operation ensures a reasonable price increase. Without sufficient market support, the token price cannot be maintained in a healthy range. As the project develops, from low market value to high market value, and with the continuous enhancement of liquidity, the project gradually gains market recognition. The contradiction between the project party and VC lies in transparency. After the project party issues tokens through IDO, they no longer rely on the exchange, which can solve the contradiction in transparency between the two parties. The token unlocking process on the chain becomes more transparent, ensuring that the conflicts of interest that existed in the past have been effectively resolved. On the other hand, the dilemma faced by traditional CEXs is that after token issuance, price crashes often occur, causing the trading volume of the exchange to gradually decline, while through the transparency of on-chain data, the exchange and market participants can more accurately assess the real situation of the project.
It can be said that the core contradiction between users and the project party lies in pricing and fairness. The purpose of fair launch or IDO is to meet users' expectations for token pricing. The fundamental problem of VC coins is the lack of buying power after listing, and pricing and expectations are the main reasons. The breakthrough point is the project party and the exchange. Only by fairly sharing the tokens with the community and continuously promoting the construction of the technical roadmap can the value growth of the project be realized.
As a decentralized community organization, Movemaker has received millions of dollars in funding and resource support from the Aptos Foundation. Movemaker will have autonomous decision-making power, aiming to efficiently respond to the needs of developers and ecosystem builders in the Chinese-speaking region, and promote the further expansion of Aptos in the global Web3 field. Movemaker will first build the Aptos ecosystem in a community + VC dual-driven way, including the deep integration of DeFi, artificial intelligence and blockchain, innovative payments and stablecoins, and RWA.
About Movemaker
Movemaker is the first official community organization authorized by the Aptos Foundation and jointly initiated by Ankaa and BlockBooster, focusing on promoting the construction and development of the Aptos Chinese-speaking ecosystem. As the official representative of Aptos in the Chinese-speaking region, Movemaker is committed to building a diverse, open, and prosperous Aptos ecosystem by connecting developers, users, capital, and many ecosystem partners.
Disclaimer
This article/blog is for reference only, representing the author's personal views and not the position of Movemaker. This article does not intend to provide: (i) investment advice or investment recommendations; (ii) an offer or solicitation to buy, sell or hold digital assets; or (iii) financial, accounting, legal or tax advice. Holding digital assets, including stablecoins and NFTs, is extremely risky, with large price fluctuations, and may even become worthless. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. For specific questions, please consult your legal, tax or investment advisor. The information provided in this article (including market data and statistics, if any) is for general reference only. Reasonable care has been taken in compiling these data and charts, but no responsibility is accepted for any factual errors or omissions expressed.
