Detailed explanation of VC model coins and exchange operation logic, where does the money flow?

Original author: shaqima, crypto KOL (X: @Daji_ 357 )

Where did the funds go? Why don鈥檛 exchanges like your coins? Arrogance is not unsolvable. We can find a way out by learning from past experience.

There have been many different opinions on this topic recently. I have conducted a comprehensive reflection from the perspective of the flow of the entire capital market, as well as exchanges and VC business models.

I will share it here using easy-to-understand logic and examples.

History tells us that the current situation is not unsolvable.

The content is divided into several categories:

1. Current market capital distribution and population distribution

2. VC model coins and the operating logic of exchanges

3. Why do exchanges dislike your coin?

4. How to break through in the future? Let鈥檚 look at the lessons learned from the past

If you want to know why the exchange doesn鈥檛 like your coin, you must first understand the exchange鈥檚 operating model and the role it plays in the crypto ecosystem (capital market).

1. Market capital distribution and population distribution

From a broad category, the capital market can be divided into primary and secondary. If it is further subdivided, various ecosystems, sectors and different forms of capital products (NFT, Token, inscription, rune…) will appear.

The population can be generally divided into two categories: Chinese and overseas.

Since the policy was implemented, the Chinese have very few options for exchanges. Therefore, for the Chinese, the exchange is not begging you to come, but the attitude is that if you don鈥檛 come, you have nowhere to go. Moreover, with the emergence of the wealth-creating effect, people will come.

Of course, there is not just one exchange, but each exchange has found its own unique core competitiveness in the market.

Some choose to focus on security, some focus on building and promoting a new ecosystem, some choose to survive with some secondary assets that are not favored by the top exchanges, and some even go to compete for the cake of the primary market…

Therefore, regardless of the form of the asset, from the perspective of the exchange, B can be classified as:

C: Ordinary assets in the primary market (risk is uncertain, need to research, understand and then make decisions)

B: Good assets in the primary market (with potential, but still with risks, analyze the benefits before making a decision)

A: Excellent assets in the primary market (with excellent endorsement background, low risk and certain returns)

Therefore, Class A assets are what everyone is scrambling for, Class B assets are selected by the top exchanges, and Class C assets are basically not looked at. Just play in the primary market by yourself.

Let鈥檚 summarize it briefly with an example

The ABC here are like candidates. The exchange is divided into top undergraduates, undergraduates, and junior college students.

Excellent candidates can bring benefits to the school and are naturally liked by everyone.

If you are not outstanding, but you have connections and can bring value to the school, it is the same.

We can also accept those with average grades who can afford the money. After all, schools also need to make money. However, the number of places is limited. But dont be discouraged, there are other schools that are more welcoming to you than us.

If you are a poor student, even if you give money, there is a hidden danger of disrupting the school atmosphere. If you bring discredit to the school, it will not be worth it. You might as well fend for yourself, or go to a junior college. There are always schools that are willing to take risks and want to earn your money.

The threshold is thus formed. Therefore, the project party also needs to take the exam.

Of course, these are the obvious ones, but what are the hidden operations?

If you are an overseas student, even if your grades and abilities are average, but you come to me, you can make me famous in the overseas market. Of course, you are welcome.

Therefore, in the current capital market, projects dominated by Chinese people have to rely on strength to win. If you dont want to win, it depends on your background and connections. After all, the Chinese market is already saturated. I am not afraid that you will not choose me. After all, if you dont choose me, you have nowhere to go.

For exchanges, overseas markets are the main goal for increasing revenue.

After accepting projects that are relatively popular overseas, you can bring in overseas users. Once you can keep them, you can continue to expand your own revenue.

At this point, the crowd and the funds become clear at a glance.

To go deeper, when a new narrative emerges, first look at the proportion of the population within it.

If the users are mainly overseas, we will give you the privileged channel first and lower the threshold. It is OK if you dont make money, as long as you can bring people here. I can make money from them later.

If the users are mainly domestic, it depends on your ability and strength.

The narrative is novel enough, and we are not old-fashioned people. We should praise it when it is necessary, but the conditions are still indispensable. When your ecosystem is large enough and the profits are considerable enough, we can talk about cutting.

Therefore, under the condition of being fearless, it is better to have nothing than to have something bad.

After talking about the external environment, let鈥檚 look at the internal structure.

2. VC model coins and the operating logic of exchanges

For the sake of simplicity, lets not talk about those who were born with a silver spoon in their mouths. Lets start with the common projects.

After a narrative is constructed, it needs to survive in the market, which means traffic. When it is not popular at the beginning, it needs data to support its respectability, so in the latent stage, everyone starts from the same starting line.

If you have achieved a little success, there will naturally be powerful people who will extend an olive branch to you. If your own conditions are not strong enough, it will be difficult to fight alone. You need to stick together to keep warm.

At this time, your basic traffic will begin to expand through these olive branches.

When the traffic expands to an ideal stage, you will be qualified to attend a prestigious university.

Then you need to talk about the return. After all, no one will give you nonsense if you don鈥檛 have money.

From the beginning, you had 100% of your own money, and you gave some to the olive branches and some to the famous schools. Now you touch your trouser pockets and find that there is not enough to give to the brothers who helped you when you were not famous!

What to do? Witch is a good thing.

Recently, there have been many so-called witch hunts. Its a joke that these can be tolerated in the crypto space.

So, according to the above logic.

The project owner plays the role of technical conception and implementation. (Of course, there are also people who make money purely by conception, but that was in ancient times)

VC plays the role of Wang Po. They must help you build momentum, give you money when you are short of money, and help you build your reputation through personal connections.

The exchange acts as a traffic amplifier (liquidity).

The project owner earns the profits of his/her own business through technology and ideas. The VC earns his/her own low-priced chips through his/her own connections and resources. The exchange gets low-priced chips through his/her own traffic.

After the chips are allocated, the next step is how to sell them better. (I won鈥檛 mention market makers too much here, the logic is the same.)

After talking about VC, let鈥檚 look at exchanges:

After all, exchanges are the first group of people to start businesses. They have built a convenient trading environment through technology, without the complexity of the primary market. At the same time, everyone feels that there is a certain degree of risk reduction here.

Once the technology is ready, people need to come. In the initial survival stage, various project parties are needed to bring people in and conduct subsidy activities to attract people to come and stay, so as to make their own venues popular.

One day you realize that everyone in the village plays at your place, and there are no other places within a few hundred miles. Naturally, you won鈥檛 promote it too hard.

The next thing you need to think about is how to attract tourists from farther away to visit your place.

So essentially everyone is carving out their own pool based on the entire market, and when they are fully grown, they will naturally start to cherish their feathers. In other words, how can you let others just pick up the vegetables you planted?

3. Why don鈥檛 exchanges like your coins?

The idea that your own children are good no matter how you look at them needs to be abandoned in many cases.

Many times, most projects only meet the traffic requirements, but fail to meet the revenue requirements.

As the old saying goes, you must have a good reason to be a good teacher. For the exchange to accept you, you also need to have a good reason to be a good teacher.

Let鈥檚 examine a project from the perspective of an exchange:

1. Is the traffic large enough? If your traffic is large enough, it is what I want. I can talk to you easily.

If there is only a small amount of traffic, then look at other options.

2. Can you bring profits? The profit from trading volume is the last resort for the exchange and is also the bottom line for those projects with large traffic.

Direct benefits are the most real. If you cant see the money, why would the exchange provide you with traffic in exchange for liquidity? You take the money and leave, and the exchange is in a mess.

So, when the chips are given or the money is given, this is the real thing.

Master Huang, how can we suppress the bandits without money?

So, no matter how big the project is, the exchange can obviously use free support to help you realize your dream. Why do you still need to use your own real money to support your dream?

Everything comes down to profit. The rules that are in the open are always used to bully people, while the rules that are in the dark are used to get things done.

You think the children you have chosen have met those so-called requirements, but in fact, it is just a dream. Moreover, more often, we should evaluate the advantages of the project from an objective perspective. It is not the case that if you see a foreigner, you will think that all of them are foreigners. This is deceiving yourself.

4. How to break the deadlock in the future? Let鈥檚 look at the lessons learned from the past

The market is a product of buying and selling, and exchanges only simplify the path of buying and selling so as to get a piece of the pie. When the crowd is large enough, the profit will naturally be large.

However, the market is never an infinitely large pie, so it is impossible for an exchange to monopolize the entire market. This is the norm.

When things develop to a certain stage, they will always face challenges of the current stage.

I don鈥檛 care what the reason is for Binance鈥檚 current behavior, but it is true that Binance has encountered a bottleneck.

Exchanges cannot have all three options of innovation, profitability, and security.

At the current height and in such a difficult situation, even Binance cannot completely monopolize all groups in the market.

On one hand, there are risks, on the other hand, there is the upward interest game, and on the other hand, there is the downward traffic competition. There is always a trade-off.

As it stands now, compliance and security may be Binance鈥檚 top priority, thus losing vitality and innovation.

The recently emerging MEME focuses on fairness and being as close to decentralization as possible, but it also means one thing: it has kicked away many of the roles in the original ecological food chain.

This chain can no longer operate under the previous model. This means innovation.

This is not the first time this has happened. In 2021, BYAC, as an emerging product of NFT, the exchange played a more hype in the first half and followed in the second half of this carnival.

Therefore, in this emerging market, many other trading scenarios such as Opensea have also emerged.

The laws of the market cannot be completely controlled by a single individual

Therefore, at the current stage, whether it is pump or unisat, the emergence of these platforms also plays a more important role in the new link.

In the future, more emerging assets will bypass these so-called leading platforms and shine. When they have sufficient traffic, token assets will be derived and return to these platforms to jointly promote the entire ecological market.

The current Binance is no longer a small boat with strong maneuverability. Although the giant ship needs to be stable, it will not deprive the small boat of its existence value.

Therefore, at the current stage, whether it is MEME or other emerging things, they are all opportunities for more small boats.

Taking this opportunity, more giants will appear. In the final analysis, even if the MEME track deprives certain roles of conventional VC model tokens in the future, it will not be the object of choice for these VC-favored exchanges.

This does not mean that there will not be an exchange belonging to MEME.

Everyone has different standards for evaluating excellence. In a market with thousands of different people and thousands of different faces, when the demand is huge enough, more opportunities will arise.

NFT or Pump, Brc 20, Rune, will not grow after being rejected by Binance

In the great torrent of history, exchanges are just one of the passers-by. Binance has accomplished its current feat in a few years, which also means: there will always be successors.

The current problem is a dilemma, but it is also an opportunity for exchanges and teams with ideas.

The fall of any giant ship is a heavy blow to the industry, and everyone needs to pay for it. There is no need to destroy it, but it can only be said that with the upgrading and development, many people are no longer its customers.

But it doesn鈥檛 mean that this market no longer exists.

Binance still has core competitiveness in terms of withdrawal and security of large funds.

When it is unable to carry everyones expectations of driving the industry, other up-and-coming companies will naturally emerge.

After all, the catfish effect can sometimes stimulate industry development.

From an ecological perspective, Binance cannot stop cyclical operations. From the perspective of individual investors, by maintaining the same trading logic as the exchange, they can still earn ideal returns.

Looking forward to the emergence of a surprising solution to the problem.

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