In the past few days, some new coins in the secondary market have collectively declined, seemingly reflecting the market's uprising against the current cycle's "narrative first, financing second, TGE later" VC industrialized coin minting path? It's worth pondering why retail investors would rather participate in high-risk PVP conspiracy coin gambling on-chain, yet keep their distance from VC-endorsed new coins. Here are my thoughts:
1) First, I must admit that the previous VC-led industry innovation-driven model has evolved into an industrialized assembly line of "financing, issuing coins, and launching". For some time, glamorous whitepaper narratives + top-tier luxurious investment lineups + seemingly impressive massive financing figures + top-tier farming expectations have become liquidity harvesting weapons pushed to the market, severely overdrawing market trust.
While it cannot be generalized, when a pile of projects that rarely fulfill promises and have no wealth effect are pushed to the market, the market now irrationally labels them as VC scams;
2) The main fatal problem with VC coins lies in their pricing mechanism, when a project completes multiple rounds of financing, the valuation at TGE has been layered up, which leads to two inevitable results: first, retail investors' entry cost is too high; second, early investors have a strong motivation to sell. This undoubtedly designs a "death trap" for new coins. Following this logic, some projects are more likely to have downward space after TGE, and unilateral decline will also involve negative market short sentiments, forming a vicious cycle.
In comparison, those on-chain community coins that start from zero and have low market value, despite high unknown risks, many retail investors still reluctant to touch VC coins with high downward expectations and certainty;
3) A market environment with liquidity drought will cause more fatal damage to VC coins. Imagine when all participants know that selling first after TGE is the optimal strategy, and all feel that shorting is a rational choice, all VC coins will face extreme market selling difficulties upon listing. Encountering an overall market liquidity drought, VC coins will likely become "sacrificial" objects.
This is like a "prisoner's dilemma", where project parties' generous airdrops will be met with selling pressure, and reluctance to release tokens will be criticized by public opinion, no matter what, resulting in: lack of sufficient buying support;
4) Everyone knows the problem, so how to crack the VC coin trust crisis? The core issue is how to reconstruct the interest balance point among project parties, VCs, and communities, for example:
1. Start with low valuation, leaving enough room for growth: Project parties and VCs should accept lower initial valuations, making TGE the true value starting point rather than the peak, giving the market sufficient growth expectations; (Recently seeing many financings are still large shows the problem is far from intensifying)
2. Partially de-VC: Introduce community participation in specific stages, through DAO governance, IDO, fair distribution, etc., reducing VC's dominance in token allocation and increasing community weight;
3. Differentiated incentive mechanism: Design additional incentives for long-term holders, truly returning value to project ecosystem participants and builders, not short-term speculators, which requires further upgrade of airdrop mechanisms;
4. Operational transparency: Project parties should pick up the initial periodic public disclosure of development progress and fund usage accountability mechanism, rather than purely conducting one-sided market promotion before and after TGE;
Above all.
Actually, VCs have made outstanding contributions in the process of Crypto industry trending towards maturity. Talking about VC coins with color change doesn't mean completely de-VC-izing. An industry without VCs would also be an unbearable disaster with conspiracy groups running rampant.
Currently, the Crypto market's financing ecosystem still needs reconstruction. VCs should transform from passive "arbitrage intermediaries" to active "value enablers". Essentially, the current VC coin dilemma only reflects an overly involution market and is a manifestation of Crypto market's increasing maturity, which raises higher requirements for ordinary investors on how to identify quality projects and invest rationally.
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