Chainfeeds Summary:
This article will delve into the "four-lose dilemma" that is undermining the Altcoin market, examine why past repair mechanisms have failed, and propose possible rebalancing strategies.
Article source:
https://mp.weixin.qq.com/s/EEram8qYcOKTlEqrOBm6yg
Article Author:
IOSG Ventures
Opinion:
IOSG Ventures: For the past three years, the entire industry has relied on a seriously flawed mechanism: low-circulation token issuance. Projects issue tokens with extremely low circulating supply, often only a single-digit percentage, artificially maintaining a high FDV (fully diluted valuation). The logic seems reasonable: less supply means a stable price. However, low circulation cannot remain low indefinitely. As the supply is gradually released, the price inevitably crashes. Early supporters become the victims; data shows that most tokens have performed poorly since their launch. The most insidious aspect is that low circulation creates a situation where everyone feels they are getting a good deal, but in reality, everyone is losing money: centralized exchanges believe they are protecting retail investors by requiring low circulation and strengthening control, but instead, they incur community resentment and poor token price performance. Token holders initially thought low circulation would prevent insider dumping, but ultimately, they neither achieved effective price discovery nor avoided being negatively impacted by their early support. Project teams believe that manipulating low circulation can sustain high valuations and reduce dilution, but if this practice becomes a trend, it will destroy the entire industry's fundraising capabilities. What centralized exchanges should stop doing is demanding extended lock-up periods to hinder normal price discovery. These extended lock-up periods, while seemingly protective, actually hinder the market from finding a fair price. Token holders have the right to demand: predictability of token release schedules and effective accountability mechanisms. The focus should shift from arbitrary time locks to KPI-based unlocking, using shorter, more frequent release cycles linked to actual progress. Token holders should stop: overcorrecting due to historical lack of rights, engaging in excessive control, and scaring away top talent, exchanges, and venture capitalists. Demanding uniform long-term lock-ups for all insiders while ignoring the differences between roles hinders fair price discovery. Obsessing over so-called magic holding thresholds creates fertile ground for low-liquidity manipulation. Token holders have the right to demand: strong information rights and operational transparency. Token holders should understand the business operations behind the token, regularly learn about progress and challenges, and know the true situation of capital reserves and resource allocation. They have the right to ensure that value is not lost through opaque operations or alternative structures, and that the token should be the primary IP holder, ensuring that the value created belongs to the token holders. Finally, token holders should have reasonable control over budget allocation, especially for major expenditures, but should not interfere with day-to-day operations. Project teams should stop: Issuing tokens without clear signals of product-market fit or actual token use. Too many teams treat tokens as a less desirable form of equity, even lower than venture capital, yet without legal protection. Issuing tokens shouldn't be just because all crypto projects are doing it or because they're running out of money. They have the right to demand: The ability to make strategic decisions, take bold bets, and manage daily operations without needing DAO approval for everything. If they want to be accountable for the results, they need the power to execute. Venture capitalists should stop: Forcing every invested project to issue a token, regardless of its legitimacy. Not every crypto company needs a token; forcing token issuance to mark holdings or create exit opportunities has flooded the market with low-quality projects. Venture capitalists should be more rigorous, realistically judging which companies are truly suited to a token model. They have the right to demand: Those who undertake extremely risky investments in early-stage crypto projects should receive corresponding returns. High-risk capital should have high returns when it bets correctly. This means reasonable shareholding ratios, a fair release plan reflecting contribution and risk, and the right not to be demonized upon successful investment exits.
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