Author:The Black Swan
Compiled by: TechFlow
I used to be a corporate engineer, spending my commute every day, always dreaming of escaping the 9-to-5 shackles. I often spent time imagining my ideal future - lying on the beach, carefree about money, fully pursuing my interests.
I encourage everyone to do the same: vividly describe your dreams, whether it's starting a business or spending more time with family.
Now is the perfect time to seize opportunities, especially as the crypto market is about to see growth. Every challenge you've faced has prepared you for this moment. Believe in yourself and boldly pursue your dreams.
My Personal Journey
It may be hard to believe, but I used to be a regular engineer with not a high net worth. I was the typical high-achieving corporate employee, commuting 1 hour to the office every day and pretending to work. To be honest, I did complete a lot of tasks, but this was not the life I was seeking. I disliked being told by an employer what to do and where to work, and having to work weekends for bonuses. However, I always had my ideal life vividly pictured in my mind. I would say that about a quarter of my waking hours were spent daydreaming about future success. This was not a task, but my default mental state.
In your daily activities - whether walking, exercising, or commuting - vividly imagine your ideal life:
Imagine yourself relaxing on the beach
With a vast ocean view in front of you
Holding a refreshing cocktail
With a beautiful companion by your side
Without financial worries - most importantly, imagine reclaiming all the time you used to spend working for others.
So you don't necessarily have to picture a beach scene. Maybe you just dream of quitting your 9-to-5 job. But imagine what you truly want to do. Who will you spend time with? Perhaps you want to start a business? Or maybe you just want to be more involved in sports, spend more time with your kids, or devote yourself to hobbies.
Make this visualization a daily practice. While it's no guarantee of success, the potential benefits are worth trying. Who knows? It might work for you too.
Get ready for challenges, because next year could be the most important of your life. A bull market is coming, and venture capitalists, regular people, entrepreneurs, and retail investors are all preparing to pour massive resources into our industry. This is your moment to seize opportunities and create a better future for yourself and your family.
Over the past two years, you've struggled through the bear market, facing challenges and setbacks as you navigated the difficult crypto trading environment. Although some have made you grand promises, you've also experienced some painful losses. But remember, every effort you've made has prepared you for this moment.
Sometimes, making money seems effortless, while at other times it requires courage and determination. You've just been through a challenging phase, and now you're entering a period full of potential. It's time to set higher goals and pursue your financial milestones. Now is the time to focus your energy and determination on achieving your main objective - success. I believe in you!
Now, let's discuss the issues in this industry and why regular investors and traders have consistently struggled to succeed in this cycle.
Industry Challenges
There is a recurring phenomenon in the crypto industry: DeFi protocol projects raise massive amounts of funding, only to disappear after a brief period of operation. This is not limited to a few projects, but unfortunately is widespread across the crypto space.
The core of the problem lies in the utility token model, which has become the standard for many crypto projects. While this model benefits the founders, it can be detrimental to regular investors, angel investors, and hedge funds.
The key features of the utility token model are:
No equity distribution (unlike the stock equity provided through SAFE agreements in traditional companies)
The tokens themselves have no intrinsic value (surprisingly, 98% of tokens are like this)
The tokens are assigned arbitrary "utility"
The founders and the project itself have limited accountability
Comparison to Traditional Startups
Unlike traditional startups, where investors typically receive equity and certain shareholder rights, crypto projects often operate in regulatory gray areas. This lack of regulation can lead to:
Reduced accountability for the project team
Limited legal recourse for token holders
Higher risks for investors
The crypto space has seen numerous high-profile cases of projects disappearing after raising large amounts of funding. Most recently, Friend.Tech was completely abandoned after the founders quickly amassed a significant fortune. Do you remember the hype around the $FRIEND token in early May?
The chart shows a 97.5% decline since issuance. The remaining holders are likely just people who forgot they held the token. In addition to the concerning token distribution model, there are other issues worth noting. Many projects have received valuations of over $1 billion from venture capital firms, greatly limiting the opportunities for regular users or investors to profit significantly.
Cobie has written a detailed article on this, and I also briefly mentioned it in my April newsletter. It's important to understand that early investors like the venture capital firms that supported Ethena's initial $20 million raise have seen their investments multiply by 500x.
This raises an important question: will these early investors continue to hold, hoping for even higher returns, or will they gradually sell to lock in profits? (The answer is: they will sell!)
Many low-liquidity, high FDV projects seem structured to transfer wealth from regular users to venture capital firms and project team members. This arrangement may undermine the decentralization and democratization principles that blockchain technology initially promised.
Almost all tokens can be viewed as meme coins to some extent. Their value relies more on collective belief and speculation than on intrinsic utility. Take the AAVE token as an example. While it is associated with the popular AAVE decentralized lending exchange, the primary function of AAVE is for governance voting. It does not directly reflect the economic value of AAVE, nor does it generate fee income for holders.
Yet, its market capitalization has reached billions of dollars due to its perceived importance. OP, the token of Optimism, is a typical example. Although Optimism is a leading Layer 2 scaling solution for Ethereum, the OP token is primarily used for governance. Most of the voting power is concentrated in the hands of the team and venture capitalists, which raises questions about its decentralization.
Nevertheless, OP has already achieved a multi-billion dollar valuation. Apart from the gas tokens of Layer 1 blockchains, the value of most tokens is derived from collective belief rather than actual utility.
Their value depends on a shared belief that they represent the growth and success of their associated protocols or projects. This phenomenon highlights the speculative nature of the crypto currency market.
Conclusion
In the crypto industry, it is common to see DeFi projects raise large amounts of funding only to disappear after a brief period of operation, primarily due to issues with the utility token model.
Unlike traditional startups, these crypto projects often lack accountability mechanisms and investor protections, operating in regulatory gray areas.
High-profile cases of abandoned projects, such as Friend.Tech, highlight the significant risks faced by token holders and investors.
Additionally, early investors and venture capital firms often reap disproportionate benefits from these projects, which may undermine the democratization principles initially promised by blockchain technology.
Ultimately, most tokens are similar to meme coins, their value deriving more from collective belief than intrinsic utility or economic returns.
That's all for today.
See you on the order book, anonymous.
