In the past two days, some new coins in the secondary market have collectively declined, seemingly reflecting a market uprising against the current cycle of "narrative first, financing second, TGE later" - the VC industrialized coin-minting path? It is worth pondering why retail investors would rather participate in high-risk PVP conspiracy coin trading on the 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 tokens, and launching". For some time, glamorous whitepaper narratives + top-tier luxurious investment lineups + seemingly impressive massive financing figures + expectations of top-tier token farming 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. After multiple rounds of financing, the valuation at TGE has been repeatedly elevated, leading 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 bring negative short sentiment, forming a vicious cycle.
In comparison, although on-chain community coins starting from zero with low market value have significant unknown risks, many retail investors are still unwilling to touch VC coins with high downward expectations and certainty;
3) A market environment with liquidity drought will cause an even more fatal blow to VC coins. Imagine when all participants know that selling first after TGE is the optimal strategy, and everyone thinks shorting is rational, all VC coins will face extreme market selling difficulties. 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, ultimately resulting in: lack of sufficient buying support;
4) Everyone understands the problem, so how to resolve the VC coin trust crisis? The core issue is how to reconstruct the interest balance among project parties, VCs, and communities, such as:
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 numerous large financings indicates the problem is far from intensifying)
2. Partially de-VCize: 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 mechanisms: Design additional incentives for long-term holders, truly returning value to project ecosystem participants and builders, not short-term speculators, which requires further upgrading of airdrop mechanisms;
4. Operational transparency: Project parties should revive the initial periodic public disclosure of development progress and fund usage accountability, rather than purely conducting one-sided market promotion before and after TGE;
Above all.
Actually, VCs have made remarkable contributions in the process of Crypto industry maturation. Talking about VC coins with color does not mean completely de-VCizing. An industry without VCs would also be an unbearable catastrophe 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 sign of Crypto market maturation, which raises higher requirements for ordinary investors on how to identify quality projects and invest rationally.
