The word "boring" may be the most appropriate adjective, or a temporary "consensus", to describe the market's sentiment.

Author: Lao Bai, Partner of ABCDE Research

Cover: Photo by Martin Martz on Unsplash

It seems that this is the longest Twi update break for me. The reason is simple - as a blogger who never takes ads, writing requires a desire to express, and the market in the past few months has made it difficult to generate this kind of feeling. While the lackluster performance of the secondary market accounts for a significant portion, the impression given by the primary market may be the main reason for this lack of desire to express.

However, I have observed some phenomena recently and have some thoughts, which may be quite lengthy, so I plan to split them into three or four parts and publish them separately, with the main topics being "The Primary Market Perspective of East and West VCs", "New Signs of RWA", and "Some Noteworthy Things on ETH and Solana".

Let's start with the first topic today.

Over the past few weeks, I've chatted with a few of my Asian counterparts and found that we have all, without exception, entered a "pause" or "conservative" investment mode.

Our latest investment was in January, and similar cases of two to three months or even longer without a single investment are common among my peers.

As for the market sentiment, the word "boring" may be the most appropriate adjective, or a temporary "consensus".

This sense of boredom is not entirely linked to the secondary market. I clearly remember that after the Luna collapse, although the secondary market was sluggish, when discussing good expansion projects, ZK, innovative DeFi, GameFi, and AI, everyone was still excited. But this excitement has gradually faded since entering 2025. The secondary market's indifference to any narrative lasting only a few days has naturally had an emotional transmission effect on the primary market, but the more concerning worry is - have we entered a stage where the "low-hanging fruit" has been largely picked, and we are now facing a prolonged period of adjustment, exploration, and transformation, accompanied by corresponding intense pains and a dark period?

Regarding this topic, I will elaborate further at the end, as the current state of Western VCs differs somewhat from that of the East.

The trigger was a DeFi project we invested in the Pre-seed round last year, which is now raising a Seed round. Originally, I thought that given the current state of the primary and secondary markets, just being able to raise the full amount would be satisfactory. But to my surprise, they ended up over-subscribing by several hundred million dollars, with several European and American VCs scrambling to pour money in. This result shocked me greatly. While the project itself is not bad, it's not at the S-level either. Why are European and American VCs still "firing away" while we Asians are "muted"? What are the reasons behind their willingness to pull the trigger on this valuation?

We discussed this internally and made some irresponsible guesses, such as:

1. The establishment time of European and American VCs is different from ours in Asia, so their exit cycles are different, leading to different investment decisions.

2. Asian VCs may have a bit of the "small-town exam-taker" mentality, either aiming to outperform their peers in terms of returns or at least beat BTC (though I believe few can achieve this in the current market situation). The European and American counterparts seem to have a stronger aura of idealism and long-termism, or rather, as long as they can logically explain to their LPs why they invested in this valuation, the obsession with returns is secondary.

3. Pure deployment of fund demand, investing in this round to quickly raise the next round, with management fees as the main priority.

The specific reasons are unclear, so I can only speculate for now. In the coming weeks, I will meet with a group of European and American VC partners and researchers to not only exchange views on the market but also directly ask them about the above question. Once I've collected the information, I'll update it on Twi.

Then let's turn back to the issue of low-hanging fruit. I also want to take this opportunity to discuss the future direction of Crypto with everyone.

First of all, neither personally nor as ABCDE, has our long-term Bullish belief in Crypto ever wavered. This can even be considered a kind of "faith", otherwise we wouldn't be engaged in this profession full-time. But in the medium to short term, we are indeed at a crossroads, one that I'm not sure is similar to the one before the Defi Summer of 2019, so I'm putting it up for discussion with everyone.

The trigger was some of the points made in a recent AllianceDAO podcast that resonated with me a lot:

1. Qiao said his current feeling is similar to 2019, not knowing what Crypto will come up with next, until the 2020 Defi Summer appeared, which gave him a new perspective.

2. They believe that Crypto has only found one Product-Market Fit (PMF) over the years, and that is finance, more specifically trading (DEX, CEX, Perp), lending, stablecoins, and Minting (asset issuance, e.g. Pumpfun).

3. They gave a lot of advice to their AI x Crypto startups, saying that if the Crypto elements in the project are too forced, it's better to just drop Crypto and do pure AI instead. As a result, 30% of the projects actually dropped Crypto and became pure Web2 projects.

Regarding 1 - Although I had already entered the Crypto space in 2019, I was simply speculating on coins at the time. To be honest, I'm not sure if VCs had this kind of "boredom" feeling back then, but from my impression, at least IEOs were still thriving, EOS was exploring directions, Starkware proposed the ZK concept, and many of the Defi Summer projects in 2020 should have been established and invested in 2018-2019. Theoretically, the primary market sentiment should have been better than now. In other words, the belief in "the big thing is coming" should have been higher than it is now.

About 2 - It is a response to 1, and is also my biggest Concern in the medium and short term, that is - whether we have reached a crossroads different from 2019, where the low-hanging fruits have been largely picked.

If the biggest PMF of Crypto in Utility is finance, then the DeFi Summer + the subsequent years of iterative micro-innovations have basically reached a boundary today.

And the opposite of Utility, which is also what Crypto excels at - the narrative direction, MEME is undoubtedly the best representative, and Pump.FUN in 2024 has also pushed this direction to a boundary.

And in the past few years, when Utility and narrative were uncertain about what to do, our circle could at least roll Infra. From ETH to EOS to Solana, and then to Aptos, Sui... I wonder if we have also reached the boundary in the expansion of blockchain Infra, with Solana's Firedancer this year, and Monad and MegaETH most likely to be launched on the mainnet as well.

About 3 - At a crossroads where all three paths have reached their boundaries, is the only path left "the modularization of blockchain", which is related to the third point mentioned above, and I also heard similar Insights in the YC Podcast.

The modularization mentioned here is not the kind of modularization like Celestia, but to abstract the blockchain technology as a whole into a module, and integrate it as a function into a Start-Up, similar to AI.

Most of the Crypto projects we see now are completely based on Crypto, or in other words, Crypto for the sake of Crypto, rather than to solve a problem in the real world. Well-sounding called Crypto Native, or not so well-sounding, just staying within the circle and self-entertaining.

The Web2 AI investment circle may also have similar problems, with many projects looking like "AI for the sake of AI" rather than solving a specific real-world problem.

Will the primary market in the future see some kind of fusion or convergence of Web2 and Web3? A project must exist to solve a problem in the real world, and in the process of solving the problem, it will incorporate Crypto elements where needed, and AI elements where needed, but the original intention and purpose are completely unrelated to Crypto and AI. Just like Meituan Waimai uses 5G, platform software, big data, AI task allocation... but it is essentially a project born to solve the problem of eating.

If the next big stage of Crypto is in this form, will everyone find it boring? Can the current form of the Crypto VC, exchanges, studios and other industrial chains based on Crypto Native be sustained?

The increasing number of Payment and RWA-related projects in the primary market these days are somewhat in line with this idea of 3, and I've just done some research on Ondo's Global Market and talked to a few RWA projects, so the next article will specifically talk about the new direction of the RWA track.

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