VC幣退潮後的清醒反思：代幣的下跌不會讓正在打造的產品貶值

Original author: R 48

原文翻譯：TechFlow

If you opened this article, you are probably interested in the tokens that venture funds invest in. I hope you do not consider the thoughts and opinions expressed here as investment advice.

All risks associated with buying or selling assets are borne by the reader.

Disclaimer: The “VC tokens” mentioned by the author are those tokens with low circulation in the analysis and expected to have a series of unlocks leading to valuation dilution.

To be precise, it is low flow-through/high fully diluted valuation (FDV).

背景

Since the beginning of the year, every ordinary crypto-world resident has realized the importance of this year, as the growth season has especially motivated those exchanges that are ready to make 3-4 listings per week. In fact, everything was going well until the market started to correct.

I divide the greed and disappointment phases into two time periods:

1. Greed. November 2023 – March 2024.

2. Disappointment. March 2024 – July 2024 (We are in this phase now, same sentiment).

greedy

Greedy periods are characterized by a sustained flow of capital from one category to another. Almost all assets are rising. Here are some examples of pump and dumps:

The overall positivity is supported by $BTC, which received an ETF in January and surged from 40k to 70k in a matter of months. Altcoins are also booming, with newly issued tokens receiving positive support from speculators and investors who snap up every last coin.

What the market lacked during this period was liquidity. There was so little money that while one ecosystem grew, the other was languishing, and once the first was pushed to its limits, liquidity was redirected to the next, and the cycle continued.

ETH —> Sol —> Avax or Sui

From a category perspective, there arent many choices:

L2 —> AI —> BTC-fi (and BRC-20) —> Game-fi —> Meme

While it cannot be said that this is cyclical, it is certain that every category has shown growth during these six months.

Havent seen any negative tweets related to FDV, like $TIA. It had a market cap of $200M when listed on Binance, while FDV is at $2B.

$TIA l 1 D l Price Performance

Market makers take full advantage of this and it is not difficult to sell such charts to the community. So, let’s summarize:

Greed

— Low liquidity

— Performance of the main categories (the well-known ones)

disappointment

The period of disappointment gradually began with the surge of $PEPE in February of this year. At the time, the market was experiencing its second meme season, which was more intense than the previous one. Although Binance listings were still relatively good, the growth of new tokens ranged from 200%-300% to 50%-100%. The idea of buying new cheap tokens was still viable, but the interest in them gradually began to wane.

The first sign that the market was overheated was the launch of L2 solution Starknet ($STRK), which raised significant skepticism about the prospects of a token that ranks in the top 15 cryptocurrencies by FDV. This raises a simple question: “Where can it go from here?”

Source: Viktors channel

As the market went haywire, $BTC decided to test the strength of a new wave of altcoins, and the results were… disastrous. Bitcoin dropped by about 15%, while tech tokens plunged by 30-40%.

The first signs of weakness in the altcoin market forced users to look for alternatives, and they found them in memes. In my opinion, the recovery of the meme season began on March 11, 2024, the moment when the indicators on pump.fun began to grow exponentially. The result of such growth is the successful launch of new categories of memes, such as:

WIF, BOME, MEW, MICHI, BRETT, BONK (in no particular order).

Source: Dune

Crypto Traders (CT) clearly see the accumulation of capital in the meme and its strong retention during the declines of Bitcoin and Ethereum. This leads to a conclusion: “Where there is attention and money, there are the biggest gains.”

Furthermore, impressive results from speculators provide additional support for memes. By weighing each factor and observing the strong rise in memes during the first half of the year, we can now see that every major event in the world has been memed on the Solana blockchain.

As for tokens funded by venture funds, the situation is dire. Crypto traders have come to this conclusion for several reasons:

• Worrying Market Cap/FDV ratio.

• Bad token economics (small cliff, high release).

• High profits for venture capitalists (assuming a startup raises $50 million FDV but enters the market with $1 billion, that’s 20x net profit for an average project on a secondary exchange).

• Market pressure from airdrop candidates (selling tokens immediately after receiving them).

What did we end up with?

Severely diluted tokens, huge multiples for the fund, very few tokens in circulation (subsequent unlocks will destroy the price), and huge FDV.

This situation is made worse by the sheer number of these tokens. Each project markets itself as the best solution to solve N problems of cryptocurrency. This worked last fall for the following reasons:

1. Liquidity is not diluted by memes.

2. Projects are not waiting in line to start, but waiting for better conditions.

Chart source

Icon source

The peak of disdain for “VC tokens” was during the rise of Worldcoin ($WLD), which market makers have been accumulating since its launch. Worldcoin is a project led by Sam Altman himself, who owns OpenAI (the company from which ChatGPT was created). Crypto traders used $WLD as a proxy for betting on OpenAI’s growth, trying to take advantage of every new update in their trading strategies.

ChatGPT new update? $WLD takes off.

Example of FUD about Worldcoin, 來源

With only 1.14% of tokens on the market, this creates ideal conditions for market makers to manipulate.

Source: Viktors TG channel

On paper, $WLD is currently ranked as one of the top ten crypto assets.

The argument for VC tokens was solidified in April, when the altcoin market began to experience a second phase of intense sell-offs, and the same month saw a direct conflict between developers/VCs and the forces behind memes. While I can’t say for sure who won, the influx of users into pump.fun showed that traders and speculators preferred memes to bland infrastructure. In addition, the price dynamics of the latest listed tokens were bleak, and almost no one was willing to buy anything.

來源： X

總結：

• Crypto Trader (CT) Behavior in Greedy Phase:

a. FDV doesn’t matter; what matters is the hype of the project and the number of tokens at launch (the fewer the easier it is to hype).

b. A new token that fits the current narrative (btc-fi, ai, game-fi, social-fi…) is attractive regardless of its token economics (consider Shrapnel).

c. Prefer risk taking over balanced analysis.

• Crypto Trader (CT) Behavior During Disappointment Phase:

a. Listed tokens are not profitable; looking for alternatives, found in meme, because all listed tokens are traded, 100% belong to the community with significant cough.

b. Look for catalysts that favor the meme sector (FDV/low circulation).

c. The disappointment with infrastructure tokens is not due to their technical complexity, but rather to the lack of liquidity. Something that is down is difficult to sell to the community.

This provides a rough context for the past 7-8 months. My main question is: “How strong is the argument that new tokens won’t recover and show their performance?”

What happened in the last cycle?

In order to conduct a robust analysis, I think we need to look back in history and assess the overall context in which altcoins have developed. The more data I gather, the richer the article will be.

Listing

I often hear the argument that “Binance now lists a lot of projects, significantly diluting liquidity that didn’t exist before.”

Initially I thought this argument made sense and required no further analysis.

However, I decided to independently analyze the number of tokens that Binance has launched on the market, and the results surprised me.

Produced by ChatGPT

Preliminary calculations allow for a possible 2-3 point deviation in either direction, which is an acceptable level of accuracy.

After some thought, I concluded that the above argument stems from the author memorizing 5-10 projects that survived the bear market and performed well.

However, in reality, there are many projects that are launched, hyped, and then wither. Due to the short life cycle of tokens, their memory fades over time, which is called survivorship bias, while those projects that achieve product market fit (PMF) and maintain demand are remembered.

Try it, which tokens do you remember from 2020-2021? For me, SOL, AVAX, FTM, UNI, LDO come to mind. However, there are actually ten times more tokens; they either did not reach PMF or shrank rapidly.

Based on this information, we cannot say that the last cycle consisted of N successful projects.

Here are some examples of tokens from the last cycle:

More examples below:

• $ALICE, $SKL, $ROSE, $AKRO, $AUDIO, $ORN, $ILV, $MASK.

You can view the charts of these projects yourself.

I have a question for you: Have you heard of these projects? Are you currently using any of them?

Bear markets tend to eliminate tokens with weak products or poor token economics, but every token has a chance to prove itself during a bull market. Among these projects, some are infrastructure and some are applications.

You may ask, what about the number of tokens in the market?

These projects were actively backed by venture capitalists and it was obvious at launch that they had low circulation / high FDV. However, this did not stop them from showing exponential growth when investors and teams started unlocking tokens from the TGE (Token Generation Event).

綜上所述

1. Low Circulation/High FDV is part of the life cycle of any altcoin as it searches for Product Market Fit (PMF). One nice thing about the current market is that most investors have a one-year cliff followed by a two-year unlock period.

2. Survivor bias of projects compared to those that did not achieve PMF is not a valid argument.

3. After comparing Binance listings, a simple conclusion can be drawn: Binance has become more cautious about projects (although the effect was not significant from March to July), and lists Tier 1 (2) projects, and of course projects through its own incubation.

Where are we now and what happens next?

First, I want to point out that we are not even 1% off track in the new token cycle. Here are some comparisons:

• $UNI, -50% and -79%. See the Trading view chart 了解詳情。

• $SOL, -68% and -79%. See the Trading view chart 了解詳情。

• $NEAR, -59%. See the Trading view chart 了解詳情。

• Price performance since the TGE event.

Based on these charts, is it a bad idea to buy $UNI if the token is down ~50%? Or $SOL which is down ~70%?

Argument: A drop in the value of the token does not devalue the product that developers are building.

In my opinion, tokens are a necessary means of attracting attention. Product growth in the crypto space occurs through several avenues:

1. The token price rises. The community begins to question whether the token’s growth is related to the uniqueness of the product. What narrative drives the token?

2. Possible backdated reward actions.

3. Recommendation = promotion of a product by an influencer (important). Again, there must be a monetization element.

In a weaker market environment, short-term declines are normal for both weak and strong projects.

About current projects?

I would like to point out that I could be wrong, and that’s normal. There will always be a portion of projects that are launched for cashing out (like $SAGA, which does not have a single line of blockchain code). Therefore, before determining the future price trend of a new token, I would like to add some filters:

1. Simple, clear, average (app user) product.

2. Broad user base, applications do not rely on tokens.

3. Strong team, ecosystem, and investors.

4. Alignment of tokens to narratives.

I’m not saying every token released in 2023-2024 will perform strongly. While that’s possible with high market liquidity, I don’t like spreading my money around on boring and complex protocols (have made mistakes with overvalued projects like $NGL, $MASA and other garbage).

Lets assume a list of tokens and briefly analyze them:

1. ZRO (LayerZero) — Infrastructure for transferring money between one blockchain and another. Cheap, fast, efficient. Brian made >50m in 2 years of running the protocol, with no tokens.

2. $ZK (zkSync) — An L2 solution designed to scale the Ethereum ecosystem. zk technology ensures secure and fast transactions. More information about zk can be 成立 here, as well as Vitalik’s thoughts . Top teams and ecosystems, you can evaluate the metrics here.

3. $OP (Optimism) — Also L2, but with a different transaction processing method (optimistic rollups) . Based on OpStack, the 幣庫 team launched their own L2 blockchain — 根據 , which currently ranks in the top three of all 推出 rollups.

One could argue that these tokens are useless, they don’t have any utility, nobody needs them, etc. The 2020-2021 cycle shows that none of that matters until greed gives way to disappointment. In turn, I’d say we haven’t even reached greed yet, and the fall-spring 2023-2024 scenario is just the beginning in my humble opinion.

Let this tweet support my point.

Here are some considerations for TA (Technical Analysis):

• German coin shortage

• Mt. Gox Compensation in Progress

• FTX to Repay $16 Billion to Crypto Users

• A pro-crypto president has a 70% chance of being elected

• The Vice President is a Pro-Crypto Millennial

• The global liquidity cycle has just begun

• Inflation is cooling down rapidly

• September rate cut almost certain

• Stocks continue to rise

• AI speculation drives economic bull market

• BTC ETF Becomes the Most Successful ETF Ever

• ETH ETF to launch next week

• Trump to Speak at Bitcoin Conference Next Week

• Solana ETF application pending approval

• Larry Fink Promotes Bitcoin as “Digital Gold”

• Cryptocurrency becomes a bipartisan issue

來源： X

I don’t know how much my or your portfolio will grow, the purpose of this post is to do a comparative analysis of altcoins in this cycle and past cycles. Also, to analyze the trends of meme coins.

To me it doesnt matter who is right, what matters is who makes money and who doesnt.

This article is sourced from the internet: A sober reflection after the VC coin ebb: The decline of tokens will not devalue the products being built

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