Author: Fairy, ChainCatcher
Editor: TB, ChainCatcher
The once bustling KOL fundraising rounds have now become a "nightmare" for many KOLs:
"Last year, I invested in more than 10 KOL rounds, all of which lost money. Most of them didn't even issue any tokens, they just disappeared."
"Let me put it this way, these rounds basically didn't make much money for most KOLs."
"Last year, I invested in more than a dozen, and in the end, only 2 were successful. The 5000U I put in only got me 400U back."
Thinking it was a low-cost way to participate in quality projects and achieve wealth appreciation, the result turned out to be a complete loss. Some people lamented helplessly: "We lost face and money."
KOL rounds seem to be quickly becoming a derogatory term, from a "wealth code" to a "capital hunting ground".
The "persona" of a win-win, the imbalanced result
KOL fundraising was initially designed as a mutually beneficial early-stage financing model, aiming to build a win-win ecosystem for both project parties and KOLs.
Project parties leverage KOLs' influence to quickly boost their visibility, attract early traffic, and build an active community to drive long-term project development. KOLs, in turn, can participate in early-stage investments at a relatively low cost, and if the project succeeds, they not only can get returns but also enhance their industry influence, achieving both fame and fortune.
However, the reality of the market is not so ideal. The imagined "win-win" has gradually become a one-sided harvesting game.
High valuations, long lock-up periods, and low returns have gradually become the three hallmarks of KOL rounds, and many project parties' goals are no longer long-term building, but short-term cashing out.
A mess, the KOLs have also gradually lost their way in this game, and even been inversely harvested.
Why have these KOL rounds been a complete loss? Let's hear what the KOLs themselves have to say:
- Lack of persistent narrative support
@realChainDoctor said, "This round didn't have a particularly persistent narrative (hot spot)."
Projects without long-term hot spots are essentially just "paid promotion rounds", and once the market heat subsides, the project will struggle to maintain its valuation, and the investment returns will shrink significantly.
- High valuations + long lock-up periods, becoming a "designated trap"
@blockphd7 said, "KOL rounds are basically designated traps, with high valuations + long lock-up periods."
The valuations of KOL rounds are generally inflated, and the lock-up periods are also long, limiting liquidity. Project parties often promise to "bring friends on board", but in reality, it is precise harvesting. Some project parties even use linear release mechanisms to gradually dump the market, forcing KOL round investors to eventually "buy in and sell out" at a loss or even exit at a loss.
- The space in the primary market has been severely compressed
@0xcryptowizard said, "Coin speculation is prioritized, and the space given to the primary market and KOLs is now directly compressed to 2-3 times the expected, with a one-year lock-up plus cliff."
This design greatly compresses the profit space for investors, resulting in a lower return rate than the bull market secondary market.
- The market environment has deteriorated, and project parties' fundraising behavior has increased
@yuyue_chris said, "The market environment is bad, and in November and December, when the market was at its peak, a large number of project parties tried every means to raise funds, especially by finding people around them and selling through OTC while making retail investors the exit liquidity. There are also scams, using the name of investment to raise funds, and rug..."
Many project parties lack long-term planning, dump immediately after launch, and follow the strategy of "doing more projects, small cuts are safe". This short-term mindset has made the returns on KOL rounds extremely unstable, and it's even difficult to recover the principal. And with the deterioration of the market environment, project parties resort to unscrupulous means to raise funds.
- KOL capabilities are limited, and there is information asymmetry
@yuyue_chris said, "Although KOLs need to discern the quality of the project themselves, most KOLs are just large-scale retail investors, without the ability to fully discern the authenticity of the information, so they are deceived and slaughtered based on false news and false information."
Can KOL rounds still be played?
According to @YeruiZhang, KOL rounds can be roughly divided into three categories:
- Slave rounds: Generally, the maximum return is 2 times the principal or just the return of the principal
- Investment rounds: Risks and returns coexist, with the possibility of both big wins and big losses
- OTC shill rounds: Discounted token purchases after TGE
Slave rounds have harsh terms, suitable for small-scale investors who hope to accumulate connections and strive for more quotas. The returns are limited, but the requirements for eyesight are relatively low, and the core strategy is to establish relationships with project parties and strive for more quotas.
Investment rounds require an "irrevocable" mindset, with a deep understanding of the project's underlying logic, team background, and market prospects. KOLs need to have pricing capabilities to avoid falling into traps due to overvaluation. This is also the category most prone to "incidents".
The key to OTC shill rounds lies in the hedging strategy, and KOLs need to have a deep understanding of liquidity.
These three categories all have their unique risk and return models. Overall, the KOL rounds of primary projects test the investors' eyesight, while the KOL OTC rounds of secondary projects test the understanding of liquidity. However, the most important thing is the KOL's ability to negotiate prices. If the pricing is not done well, it's all just talk.
Nowadays, the threshold for the KOL ecosystem is getting lower and lower, and fans can be faked, and barriers can be broken. The more this is the case, the more likely they are to be targeted. Currently, many KOLs choose to stay away from KOL fundraising, and some retail investors have also clearly stated that they "will not invest in KOL rounds".
Of course, KOL fundraising is not entirely devoid of quality projects. In the future, KOL rounds may not completely disappear, but they must return to rationality. When the speculators withdraw, only those with true value capture capabilities will be able to survive in this game.
