Written by: Matti, Zee Prime Capital
Compiled by: Yangz, Techub News
Translator's note: Whether you are an experienced veteran who has gone through several cycles or a newcomer just entering the industry, when facing Trump's victory, you must be somewhat perplexed by the Web3 industry that is constantly flashing hot spots or "wealth opportunities". One moment it's the new animal-themed Memecoin ignited by big shots like Musk and V-God, the next it's the thousand-fold myths created by AI proxies. Of course, there are also a stream of positive news, such as the continuous inflow of funds into the US Bitcoin spot ETF; the major listed companies led by MicroStrategy continuing or starting to build their own "Bitcoin strategic reserves"; and the positive regulatory signals such as the Trump team considering setting up the first crypto policy-related position in the White House.
All of these are exuding a bullish atmosphere, and Bitcoin is also marching towards the 10,000 USDT mark. But what lies beneath the surface of the bull market? Matti from Zee Prime Capital pointed out the "undercurrents" in the current industry, that is, "the most entertaining outcome is the most likely to happen", and "opportunism is the strongest heresy in cryptocurrencies."
The following is the full text compilation.
If you left the cryptocurrency industry in 2022, or you haven't really left, but have been attracted by various surface narratives, speculating on Memecoins and chasing the potential generational wealth, occasionally reading some industry articles. Then you should want to know what's happening beneath the surface. Or, what have you missed?
In this era, there seem to be two phenomena that overshadow the world.
Musk's Razor: The most entertaining outcome is the most likely to happen (Note: Occam's Razor principle states that in solving problems, the simplest, most direct explanation or solution should be prioritized)
What was once entertaining has become serious, and what was once serious has become entertaining
The first point is quite obvious. From the standards of 2016, to have Musk manage a US department called "DOGE" (Department of Government Efficiency) would be unthinkable. But now, 8 years have passed, and nothing is impossible.
As for the second point, it is actually a manifestation of the first point. The US election has become a real-life reality show called "America". Politics has become entertainment, war casualties are live-streamed, movie plots are used to convey agendas, and social media posts can also be prosecuted.
One of the minor symptoms of "what was once serious has become entertaining" is money. More precisely, Memecoins. They call it a magical internet currency, Funnymoney, a real-time online meme lottery.
Not everyone can become a meme and profit from it, but everyone can get infinitely close to that goal by rushing into Memecoins.
Clearly, sovereign nations will massively build Bitcoin reserves (following a batch of innovators like El Salvador and Bhutan), not hastily sell like Germany did in August, leaving the public perplexed. Looking back, it's also obvious that people shouldn't expect a country that decides to continue shutting down nuclear power plants while waging a proxy war with its former largest energy supplier to make economically rational decisions.
Meanwhile, Michael Saylor is working to eliminate the root of all bubbles, trying to beat sovereign nations in this competition on Wall Street.
However, these are Financial Times-style news that readers don't really care about. What's bubbling beneath the surface? What has been brewing for a long time and is driving the surface bull market?
If you don't know who the user is - you are the user
For industry insiders, cryptocurrencies have become a way of life. It's a terrible thing to admit, but it's an undeniable fact. This way of life is the sum of consuming high-quality crypto brand products, a life of repeatedly transferring funds, losing money, but still hoping to "retire in glory" without much effort. To put it in Mable's words (perhaps not as direct):
"This is a way of life where 'the present' and 'the now' are the most important, because the impact of any person or thing is almost instantly reflected in what we are experiencing. The concept of an ultimate outcome is almost obsolete, because the world has truly become an endless game."
As the cycle changes from "seasons" to "weeks", the development of the cryptocurrency industry is becoming faster and faster. The so-called "altcoin season", now has become the "altcoin week". The narrative rotation is faster than ever, and there are more distractions to choose from.
The cryptocurrency industry has truly entered the protopia world of Kevin Kelly, "today's problems are caused by yesterday's technological successes, and the technological solutions to today's problems will create tomorrow's problems".
Cryptocurrencies are in a state of endless development. The gradual improvements that used to take a long time to manifest can no longer be seen, but now, just a little push, a small amount of liquidity, and the expectation of political inclination can turn the total volume into a financial frenzy.
Everything in cryptocurrencies is mediated by money. It is money, the super-financialization of attention. And everyone is a user, even if they don't realize it.
Living in a protopia, living in a state of development, you may not even realize that you are living in it, because you are forced to upgrade every day. Even if you don't consider yourself a newbie, you are a newbie every day. "The momentum of technological development compels us to chase the latest technology, and the latest technology always disappears when the next update appears, so the sense of satisfaction will constantly slip from our hands."
In 2017, on-chain transactions through order books (a shoutout to Ethredelta) were a bad experience, and AMMs were considered inefficient. In 2018, the problem was that no one wanted the tokens. By 2020, the market realized they could make money by exchanging tokens on Uniswap without permission, and get rewarded for providing liquidity. Cryptocurrencies have entered a state of endless development.
The trend is positive, but it's better to just give the "ticker"
What I know is that each time is different, but also not. The difference is that the subtle nuances of each frenzy are beyond the imagination and expectations of most people. We cannot predict where it will take us, especially considering the multitude of ecosystems and applications developing in various directions.
My most optimistic guess is that the pace of change will accelerate, some waves will return, and path independence will become the most valuable resource for navigating such an environment. The so-called L1 or L2 ecosystems will become less important, as the trend becomes application/use case driven.
Among all the current use cases, I'm most interested in the "proxy" and "DeSci" themes, as they complement the existing DeFi and Memecoins industries. The synergistic dynamics may lead to a Cambrian explosion of new use cases, some of which may be more flashy than substantive, but I still hope other use cases can bring real change.
If value can flow freely between DeFi, DeSci, and proxies, we can truly productize "investment progress" and wrap it in all kinds of memes. This way, it will self-reinforce and expand the cryptocurrency market to unforeseeable places.
We need cryptocurrencies to create new markets and promote positive-sum games. And this may be the reason why major companies in the industry are exploring these themes, as they can quickly generate real-world impact. Anyone currently can't imagine that Memecoins will become real-world assets.
It is worth noting that, like every frenzy, the demand for brilliant ideas will generate a constant stream of counterfeits, gimmicks, and scams.
The so-called heresy is not actually heresy
The triggers for innovation may only become apparent in retrospect, just as in a utopia, the gradual accumulation of progress becomes clearly visible in a short period of time. What follows is that verification will blind people, and hunger will lead to power, which will ultimately develop into arrogance.
Bitcoin was once the entry-level drug of the cryptocurrency industry, but it is no longer so. At least for retail investors, it is no longer the case. Memecoins, as a monetized attention market, are becoming the access point for new users. But they are just a momentum trade and have no foresight. It is a shock value that replaces the shock value. No insight can predict this. They are as fleeting as any social media post. They are a new media form that redefines social media.
Just recently, people have also realized that Memecoins can be attached to a vision and given a real role. The connection between GOAT and The Terminal Of Truth is the first example of linking Memecoins to the role of an AI agent. This was followed by Luna (AI agent, not Terra Luna) and Eliza, although their expressions are quite generic, this is enough to indicate that there is a design space for experimentation.
A few days ago, I discovered a Memecoin bound to an AI agent that can control robots globally, including driving robots and streaming robots (disclaimer: Frodobots are a portfolio company of ours, and we hold SAM). If people continue to iterate at this pace, the game will still be interesting. All of this only proves that we are now at the peak of the cryptocurrency entertainment era. (Meme) coins are the medium of consumption for people.
However, for the time being, the term "agent" is just a generic surface decoration, and it is essentially a kind of automated "babysitter". Nevertheless, it still provides novelty and expands the imagination. In addition to the so-called "cult" promises, it also forces a certain degree of innovation.
Terms like "religious believers" or "heresy" are used carelessly, but what I want to say is that the cryptocurrency industry has only one heresy, and that is the belief in "up only". Interestingly, this is a religion that maximizes rational economic choices while making irrational financial decisions. True heresy has never called itself heresy.
So, whether or not you've been in the industry these past few years, you may have overlooked the fact that cryptocurrencies are actually becoming a consumer product. It creates a new medium that allows people to consume in an era of dopamine-driven attention fragmentation, and its value is to some extent ephemeral.
All of this rides on the tailwinds of the economy and politics, and the most interesting result is two-way. Wealth can be lost in an instant, and the greatest opportunities always lie in asymmetric outcomes. What seems most promising today may not have looked like an opportunity yesterday, and the greatest threats are often overlooked.
Opportunism is the strongest heresy in cryptocurrencies.
