The era of "picking up money" is over, and it will become increasingly difficult for retail investors to make money through crypto assets such as Bitcoin

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MarsBit
05-28
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In the past year, have you encountered any Rug Pull projects? Have you encountered the "buy-to-peak" due to the shill of KOLs? Or suffered losses due to increasingly rampant phishing attacks? Or have you bought newly launched tokens on the top platforms and then kept falling?

It is estimated that many users can relate to this and have been affected by at least one of these scenarios. It can be said that this should be a reflection of the investment experience and true state of mind of most ordinary investors in the past period of time:

Whether it is the on-chain security issue or the asset shrinkage problem, it is hard for users to guard against it. Many pitfalls that were common in the past have even begun to be industrialized. To put it bluntly, almost even the "roots of leeks" have been uprooted.

This article will review the increasingly numerous pitfalls in the crypto world in recent times, and whether there are still opportunities for ordinary users to make money in the crypto industry?

01Ordinary users’ “fancy ways to lose money”

1) Industrialization trend of Rug Pull

First of all, the schemes used by Rug Pull to run away with the money are becoming more and more sophisticated , and the most outrageous one is the ZKasino case:

On April 20, a community user found through comparison of the Wayback Machine historical pages that ZKasino deleted the sentence "Ethereum will be returned and can be bridged back at this point." from the Bridge funds section of its official website.

At the same time, community users were unable to withdraw funds, the ZKasino official Telegram was banned by administrators, and social media also stopped updating. The total amount of funds abducted was over 20 million US dollars.

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But what’s interesting is that just one month ago in March, ZKasino just announced that it had completed its Series A financing with a valuation of US$350 million. The specific amount was not disclosed, but several trading platforms and VCs participated in the investment…

In addition, zkSync, which is jokingly called the "Rug Chain", not only has frequent ecological project security incidents, but also has an increasingly obvious industrial trend of taking advantage of hot topics and quickly completing harvests, just like the rug pull that occurred in the zkSync ecological DEX Merlin, which has the same name as Merlin, not long ago, affecting millions of US dollars in funds.

I can only emphasize again that the many projects in the current zkSync ecosystem are indeed uneven. While participating in and experiencing the zkSync ecosystem, everyone must remain vigilant and guard against risks at all levels.

2) Increasingly rampant hacker/phishing attacks

The most eye-catching case in the field of on-chain security recently is undoubtedly the "phishing attack with the same first and last numbers" that everyone seems to have become accustomed to:

A whale address was attacked by a phishing attack with the same first and last address, resulting in a loss of 1,155 WBTC, amounting to more than 400 million yuan! Although the hacker chose to return the funds due to various factors, it still revealed the extremely high risk-return ratio of this phishing behavior: "If you don't open a business for three years, you will make a living once you open one."

Moreover, similar phishing attacks have become industrialized in the past six months. Hackers often generate a large number of on-chain addresses with different first and last numbers as a reserve seed library . Once a certain address transfers funds with the outside world, they will immediately find the address with the same first and last numbers in the seed library, and then call the contract to make a related transfer, casting a wide net and waiting for the harvest.

Because some users sometimes directly copy the target address in the transaction record and only check the first and last few digits, they fall into the trap. According to Yu Xian, the founder of SlowMist, phishing attacks targeting the first and last digits are "like a net attack by hackers, and those who are willing to take the bait will take the bait. It's a probability game."

This is just a microcosm of the increasingly rampant hacker attacks. For ordinary users, in the colorful world of blockchain, tangible and intangible risks are increasing almost exponentially, while personal risk prevention awareness is difficult to keep up.

In general, there are endless forms of attacks on chains, wallets, DeFi, and even social engineering attacks are prevalent, making DeFi security risks like an asymmetric one-way hunt: for technical geniuses, it is undoubtedly an inexhaustible free ATM, but for most ordinary users, it is more like a sword of Damocles that may fall at any time. In addition to being vigilant and not participating in authorization casually, it is also more of luck.

And so far, C-side risks such as phishing and social engineering attacks are the most common ways for ordinary users to lose money in Web3, and due to the additional risk points of smart contracts, the problem is becoming more and more serious.

Behind every successful scam, there will be a user who stops using Web3, and the Web3 ecosystem will have nowhere to go without any new users, which is also one of the biggest damages to the crypto industry.

3) KOL’s fancy shill

For most ordinary users, paying attention to the social media shill of various crypto KOLs is an important source of obtaining Alpha passwords.

This also gave rise to the so-called “KOL Round” - as a role with greater influence on secondary market investors, KOLs can even obtain shorter unlocking periods and lower valuation discounts than institutional VCs:

For example, Monad Labs recently completed a new round of financing with a large valuation of US$3 billion, and people familiar with the matter said that some industry KOLs were allowed to invest at a maximum of one-fifth of Paradigm's valuation.

So, can following KOLs’ shill really guarantee a steady profit? According to a study conducted by Harvard University and other researchers on the performance of crypto-related returns mentioned in about 36,000 tweets posted by 180 of the most famous crypto social media influencers (KOLs), covering more than 1,600 tokens, the conclusion was not satisfactory:

When a KOL tweets to shill for a certain token, the average one-day (two-day) return rate is 1.83% (1.57%). For crypto projects outside the top 100 by market value, the return rate is 3.86% after one day of calling for orders. The earliest time that the returns begin to decline sharply is five days after the tweet is released. The average return rate from the second to the fifth day is -1.02%, which indicates that more than half of the initial gains were eliminated within five trading days.

Crypto assets 4) VC Token continues to fall after listing

A VC Token with high FDV (fully diluted valuation) and low circulation, or a Memecoin that is completely a “on-chain meme” and responsible for its own profits and losses. Which one would you choose?

The market trend has begun to change recently, and the Meme trend has emerged as a new force, boosting the extreme prosperity of transactions on the Solana and Base chains. Just like PEPE, which has firmly established its position as the leader of the new Memecoin, it has set a new historical high. In fact, in today's market environment, in addition to short-term speculation, the general public's call for fairness represented by Meme has gradually become a trend, and funds are voting with their feet.

Corresponding to this are the VCs with extremely high FDV and falling trends after a series of listings on the head platforms recently. Typical representatives include AEVO, REZ and even BN Megadrop's first project BounceBit's Token BB, etc. Since their listing, they have ended with negative lines almost every day, and all users who entered the market have been deeply trapped.

In contrast, discussions and doubts about Memecoin and VC will inevitably become the mainstream of the community again. Meme at least has user flow to bring continuous incremental funds and attention, while new projects with valuations of billions of dollars are all outdated concept products wrapped in grand narratives or old gameplay, which will inevitably be disliked by the community. This also sounded the alarm for VCs and project owners who are accustomed to path dependence.

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02Where will ordinary players go?

In the article " Web3 is sleepless, will the "blooming era" of the crypto world never end? ", it was mentioned that "what we love is not "Blossoming", but the era full of opportunities".

I believe that many friends in the crypto industry have thought about this: if we had the opportunity to go back to 10 years ago, how would we participate in this wave of the times?

Hoard BTC? Become a miner? Found another Bitmain? Or become an early employee of BN? The best options seem to be countless. The past ten years of the crypto world were truly a golden age that broke through the limits of imagination and gave birth to waves of industry legends and bigwigs.

No matter what, the question of whether to make money or not is an eternal topic in the Web3 world and the lifeline of Web3 development.

When trading platforms, market makers , VCs, project owners, and KOLs all start to make money, but most ordinary users continue to lose money, it means that the deep-seated structural problems of the entire market have become distorted to a certain extent and are destined not to last long.

Again, behind every "fancy way of losing money", there may be a group of users who stop using Web3 products, stay away from VC Tokens, and choose to embrace Memecoins that are more fair and grassroots. This in itself is a form of resistance by funds voting with their feet.

Before some Web3 ecological applications truly run through the value closed loop, ordinary users will have "nowhere to go". Of course, this may be the "twists and turns" that are necessary for the development of Web3, and the crypto industry is still moving forward by trial and error.

Source
Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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