Participate in both, but do not develop emotional dependence on any token.

Author: hitesh.eth

Compiled by: Deep Tide TechFlow

I have not conducted in-depth research on either aspect, so I will provide a neutral perspective based on my observations and the data I have seen.

There are many misconceptions about these two types of tokens that need clarification. Do not blindly trust the narratives pushed by a few influencers.

Here are some of my insights.

VC Tokens: Long-term Investments with Solid Foundations

The definition of VC tokens is simple: more than 51% of their supply is allocated to the team and investors. Sounds fair, right?

Upon closer examination of the token economics of most infrastructure projects, such as $EIGEN, $SUI, $APT, $AVAIL, $ZK, $SEI, etc., you will find that a significant portion of the supply is used for community and ecosystem growth.

This is crucial. For infrastructure projects, the health of the ecosystem is the driving force behind all development. dApps will migrate to new chains when the incentives are attractive enough. Currently, dApps like Aave, Uniswap, and Curve dominate the market. The primary challenge for new ecosystems is to attract these major players while nurturing new innovations and incentivizing developers. Incentives are key to driving this process.

We see projects like #SUI and #APTOS cleverly utilizing the resources of their ecosystems. Their fundamentals are gradually showing signs of growth. This growth will inevitably spark market enthusiasm, as funds allocated for ecosystem development are also used to incentivize marketers and content creators, thereby increasing the project's visibility.

This creates a feedback loop. Top-down incentives drive the entire marketing funnel, while retail investors follow the hype from the bottom up.

The unlocking of investor funds will proceed as planned, but do not misunderstand the strategy of venture capital. They are in it for long-term benefits. Like retail investors, they seek high returns. When 30% of the supply is focused on long-term growth, they will not exit when returns reach 10 times.

They know how to shift market attention and create positive feedback loops. Take $SUI as an example. A few months ago, retail investors were disappointed, but as the price began to rise after grants and announcements, $SUI is now back in favor.

Retail investors need assurance, security, and lower risk. Tokens backed by venture capital, especially those with a strong commitment to ecosystem growth and improving on-chain metrics, can meet these needs.

Memecoins: Snipers in Short-term Frenzy and Liquidity Traps

Memecoins are typically fully released during Token Generation Events (TGE). But can everyone fairly access these popular meme tokens?

Not really. The issuance of meme tokens is often dominated by snipers. They quickly buy up cheap tokens, leaving you as their "bag holder."

Then, a community begins to form, the price charts rise, and influencers buy up tokens in large quantities from the market. The rules of the game are the same for everyone, but the beliefs differ. You might exit when the price doubles, while influencers hold out for 10 times and rationalize their holdings. They often collaborate with venture capitalists who are conducting secret operations.

Their goal is to make retail investors believe so strongly that they no longer consider taking profits. When liquidity is quietly siphoned off from decentralized exchanges and big players profit and exit, retail investors will only then realize what has happened. At this point, you will understand that Memecoins and VC tokens are not that different after all.

Strategy: Participate in Both, but Do Not Become Too Attached to Any

Retail investors love to chase trends, and meme tokens are the trend. If you want to trade these tokens, do so at your own pace, rather than following an influencer's advice. At the same time, do not completely abandon VC tokens. Market narratives can change rapidly, and your funds may get stuck in meme tokens while VC-backed tokens are on the rise.

The key is to stay alert. Participate in both, but do not develop emotional dependence on any token. Most tokens will eventually go to zero. Be ready to exit at the right time to avoid regretting not taking profits in time.

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