In the past few 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, and TGE last" in the VC industrialized coin creation path. It is worth pondering why retail investors would rather participate in high-risk PVP conspiracy coin games on-chain, while keeping their distance from new coins endorsed by VCs. Next, I will share my thoughts:

1) First of all, it must be acknowledged that the previous round of VC-led industry innovation-driven models has evolved into an industrialized assembly line of "financing, issuing coins, and launching." For some time now, the glamorous white paper narratives + top-tier luxurious investment lineups + seemingly impressive financing figures + expectations of massive returns have become liquidity harvesting weapons pushed to the market, severely overdrawing market trust.

Although it cannot be generalized, when a pile of projects that rarely fulfill their promises and have no wealth effect are pushed to the market, it leads to the current irrational market perception of VC scams;

2) The main fatal issue with VC coins lies in their pricing mechanism. After a project completes multiple rounds of financing, the valuation at TGE has already been inflated layer by layer, resulting in two inevitable outcomes: first, retail investors face excessively high buying costs; second, early investors have strong motives to sell. This undoubtedly creates a "death trap" for new coins. Following this logic, some projects are more likely to experience downward pressure after TGE, and unilateral declines will drag the market into negative sentiment, forming a vicious cycle.

In contrast, community coins that start from zero on-chain and have low market caps, although they carry significant unknown risks, many retail investors are still reluctant to touch those VC coins with high downward expectations and certainty;

3) A market environment with exhausted liquidity will deal a more fatal blow to VC coins. Imagine when all participants know that selling out immediately after TGE is the optimal strategy, and everyone believes that shorting is a rational choice, all VC coins will face significant market sell-off dilemmas. In a situation where overall market liquidity is exhausted, it is highly likely that VC coins will also become the "sacrificial" targets.

This is akin to a "prisoner's dilemma," where generous airdrops from project parties will face selling pressure, while withholding tokens will be criticized by public opinion, leading to one outcome: a lack of sufficient buying support;

4) The problem is clear to everyone: how to break the trust crisis of VC coins? The core issue lies in how to reconstruct the balance of interests among project parties, VCs, and the community, such as:

1. Starting with low valuations to leave room for growth: Project parties and VCs should accept a lower initial valuation, allowing TGE to be the true starting point of the project's value rather than its peak, providing the market with sufficient growth expectations; (Recently, seeing many large financings indicates that the problem is far from being exacerbated)

2. Decentralizing some processes: Introduce community participation in certain special processes through DAO governance, IDO, fair distribution, etc., to reduce the dominance of VCs in token distribution and increase community weight;

3. Differentiated incentive mechanisms: Design additional incentives for long-term holders, truly returning value to participants and builders of the project ecosystem, rather than short-term speculators. This requires further upgrading and reforming the airdrop mechanism;

4. Transparent operations: Project parties should revive the initial mechanism of regularly disclosing development progress and fund usage, rather than merely conducting one-sided market promotions before and after TGE;

That’s all.

In fact, VCs have made significant contributions to the maturation process of the Crypto industry. Talking about VC coins with disdain does not mean a complete move away from VCs. An industry without VCs, where conspiracy groups run rampant, would also be an unbearable disaster for the industry.

The current financing ecosystem of the Crypto market still needs reconstruction. VCs should shift from being passive "arbitrage intermediaries" to active "value enablers." Essentially, the current predicament of VC coins only reflects the excessive internal competition in the market and is also a manifestation of the maturing Crypto market, which poses greater demands on ordinary investors regarding how to identify quality projects and invest rationally.

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