Author: BlockBeats
Last weekend, the contradiction between VC coins, exchanges, and retail investors reached a recent peak under the catalysis of two long articles by He Yi, co-founder of Binance. On June 20, the token of a project called Lista DAO was listed on the platform for open trading as the second Launchpad project on Binance Megadrop. As Lista DAO team members include former Binance employees and the project's predecessor had also received investment from Binance Labs, many users were optimistic about LISTA and participated in secondary trading. However, in the overall market weakness, LISTA did not bring any surprises to retail investors but instead fell all the way, which seemed to be the last straw that broke the camel's back. The market's anger gradually spread from dissatisfaction with VC coins to Binance's frequent listings while ignoring the interests of secondary users.
On June 21, He Yi responded in an article, stating, "Even if Binance does not list new projects, funds will still flow due to token unlocks, meme coins, etc."; "Some VCs are indeed the core reason for the virtual high prices, but VCs generally have a 7-year lock-up period from LP fundraising, with management fees + dividends; VCs generally unlock after TGE one year later (not all), so many VC projects in the coin circle are also going bankrupt, and some VC LP investments in the coin circle may also go to zero."
The next day, He Yi once again reviewed the milestone developments in the coin circle from ICO, IEO to DeFi nesting, and stated, "Today, the market has indeed changed again. The self-harming evolution of the L2 project and the fur-flying studio has turned into a farce, and the fur-flying era may be coming to an end."
The two long articles pointed out the current market situation: the prosperity of the ICO period that retail investors expected (shanzhai bull) has not reappeared, and the long-awaited airdrop period has fallen through; in a situation of tight market liquidity, the contradiction between retail investors and exchanges and VCs has intensified. Retail investors generally believe that VCs hold tokens at low chips and the unlocking of tokens floods the market with selling pressure. On the other hand, exchanges frequently list new coins, exacerbating fund outflows, but the new coins perform poorly. Once retail investors take over, they will be "harvested."
As a result, He Yi's long articles sparked a two-day debate, and many industry insiders expressed their views, which BlockBeats has summarized as follows:
Support for Binance
Data Compilation KOL killthewolf.eth
You bought a bag of rice at the supermarket, and the next day the rice depreciated. You blame the supermarket owner for recently stocking too many new varieties of imported rice, causing the depreciation of the rice in your hands. I think this logic is a bit one-sided. The fundamental reason for determining the price of rice is still the supply and demand relationship. You can blame the manufacturer for constantly producing new varieties of rice, or blame the village for not having new people moving in to increase the demand for rice. But the supermarket is just a middleman from start to finish and cannot determine the price of rice. Moreover, there are countless supermarkets in this village, and Binance is just one of them. Even if Binance refuses to list new varieties of imported rice, there will be a bunch of supermarkets vying to list them. This is the operating law of the world.
KOL, Senior Practitioner Zijing
I have observed that the recent public opinion on the issue of ZKSync's listing on CEX is very serious. But I can't understand it. CEX is not a law enforcement agency. Apart from being able to have some deterrent effect on the rug behavior of the project party to a certain extent, CEX has no obligation to supervise whether the project party is doing evil or insider trading. One sister's statement here is still very objective, "Even if Binance does not list these projects, these projects exist." If users really want to buy, they can buy on the chain, not just on CEX. The listing on CEX only provides a channel. CEX needs traffic, and wherever there is traffic, there are potential new users. CEX should also appear where there is traffic, and there is no problem with this from a business logic perspective. CEX only provides convenience for users to buy coins, but it does not change, nor should it affect, users' buying and selling decisions.
In addition, whether it is Binance or OKX, or any other major exchange, they cannot determine whether a project is doing evil. So please take care of your own wallet and do not let the listing on a large exchange determine your underlying trading principles. If the retail investors can reach a consensus and resolutely resist the project party's evil behavior, not providing any liquidity to such projects, without buying orders, no matter how strong the market maker is, without market acceptance, it will eventually go to zero. At this time, there is no need for users to advise, and at the right time, the major CEX will also abandon it, which should be its destiny. But things have gone against their wishes. There are too many speculators in this market, who always believe that they are the smartest one between information asymmetry and market sentiment, and they have to bear the consequences of their own thinking, whether it is profit or loss.
Questioning Binance's Inaction
Individual Investor AmyWang
In the previous bull market, there were at least small-cap projects with market values of tens of millions or hundreds of millions when they were listed. Binance's users had a wealth creation effect, and as a leading CEX, it has a great role in promoting the industry's benign development and can form a positive cycle. This round of VC coins currently looks like a remake of the 2000 Internet bubble, with a large number of infrastructure projects with not many actual users being listed at billions of dollars, and ultimately the exchange users foot the bill. I sincerely hope that the new plan to support small and medium-sized innovative projects listed as soon as possible, activate the potential new protocol ecology, and inject hope and confidence for positive development into the industry and the market.
Crypto KOL bit壹
After a new project is listed on Binance, it is difficult for ordinary retail investors to make money if the performance is poor. And Binance continues to frequently list high-market-value new coins. The opportunity for ordinary retail investors to make money on Binance is becoming less and less. Of course, you can say whether the price performance is good or not is the project's business, and Binance is just a trading place and does not interfere with the price of the coin. But it cannot be denied that with the influence and traffic of Binance as the top exchange in the crypto world, the frequent listing of coins by Binance objectively dilutes a lot of attention and liquidity. Of course, you can also say that even if not listed on Binance, these projects will be listed elsewhere, and Binance is just an exchange providing trading. But given Binance's current position in the minds of retail investors, Binance is not just an exchange. Of course, you can say that being responsible means controlling the listing speed and taking on the leadership role in the industry. You can say this is a kind of moral coercion. You are a businessman and should speak in business terms, but you should not forget that a few months ago, you wrote letters calling on everyone to sign and call for support for CZ's legal case in the United States, and actively signed letters and made videos, appealed, and this is all vivid. If Binance were an unknown small exchange, I believe no one would bother, but Binance is the exchange with the majority of trading volume in the crypto world, and its every move has a very big impact on the crypto circle. We supported Binance, supported CZ, and supported the leading exchange in the industry because at that time, Binance was a leading exchange with industry responsibility.
Binance's Listing Frequency and Market Liquidity
Binance's listing frequency is too fast, and it is mass-producing high-value VC projects to the market. The market liquidity simply cannot bear so many tens of billions or hundreds of billions of VC projects. Is Binance listing based on the spirit of prioritizing interests or the spirit of fairness in cryptocurrencies? Of course, as an exchange and a commercial company, pursuing profits is normal, but as a leading native cryptocurrency exchange, it should not only focus on profits but also correctly guide the industry's development and convey the spirit of native cryptocurrencies. The mass listing of high-value VC projects dilutes the already limited liquidity. The poor on-chain activity of VC projects with valuations of tens of billions of dollars upon listing raises questions about Binance's listing reputation system. Is it a breakdown of Binance's values after CZ's departure?
The principle of "water can carry a boat, but also overturn it" has been passed down through generations in China. The overall evaluation of Binance has sharply declined in the new cycle, and Binance should take this seriously. The essence of an exchange is to serve a wide range of users for trading, but the closer it is to capital, the further it is from users. Native cryptocurrency exchanges in the crypto circle should stand tall and not become the white gloves of the web2 world's capital. Retail investors see Binance as a monopoly and expect it to uphold its bottom line.
Other Perspectives and Analysis
Founder of BixinGroup Xingkong
Many retail investors question VC coins, but they don't understand that without VCs stepping on landmines first, it would be them facing the consequences. I have encountered many projects bypassing VCs and directly raising funds from KOLs because they are easier to deceive and bring their own traffic. The VCs following the trend is a normal strategy, but it's hard on the VCs' LPs, who are the ones actually investing money. Ordinary retail investors can at least experience the pain of losing money, but the LPs don't even know how to lose money.
In this game, VCs are actually the weakest of the big retail investors. It's not the big retail investors who are crying foul, but the platforms that steadily earn fees from handling transactions and listings. It's a treacherous world. Think about it, in a situation where even exchange employees can get rich, where does their money come from? It's your money. The most important thing is still the VCs' money.
Crypto KOL Chuanmu
Binance's approach is difficult to break. Binance collaborates with its own factions, institutions, and project parties to create new coins for harvesting, entering the game as investors and obtaining chips. Then, a portion of the chips is given to BNB whales to form a community of shared interests. Before listing, free quotas are given to KOLs of all sizes to handle promotion. Once a negative public opinion arises, the BNB whales and KOLs, who are fed by the new coin, will collectively work to reverse the public opinion. Unless a new influential tech guru with traffic builds a new exchange, fee-free, with trading and order mining for platform tokens for a year, it's hard to change anything. There is no one to break the monopoly, and now retail investors are all piglets, being monopolized. They have the most trading volume and user base, so they can only be in a state of being harvested.
Crypto KOL Bit Fool
Having been in the crypto market for many years, I have never taken money from Binance, so I can be objective. Binance's PR should not treat my posts as negative, because I have a long-term and objective perspective that benefits the industry and Binance.
One sister's summary of the ICO, DEFI, and IEO eras also reflects the chaotic nature of those times. ICO and DeFi have many pitfalls. The dividends were more significant at that time, but retail investors were also extremely vulnerable to losses. IEO, on the other hand, had a very high success rate. Good projects were difficult to obtain, and there were many studios competing for lottery wins and KYC industry chains, making it difficult for honest and straightforward retail investors to make money. Retail investors are always the most vulnerable and in need of protection, regardless of the era.
Binance's role today is a multi-headed monopoly platform that combines various important roles such as an exchange, brokerage, securities regulator, clearing and settlement institution, primary market investment and acquisition, and a listed company group. Everyone should carefully read this sentence. In the traditional securities market, each of Binance's roles is subject to strict regulation. Each role, without regulation, has the ability to do evil. Such enormous power inevitably corresponds to enormous industry responsibility. What are these responsibilities? This is a question that Binance needs to consider, as it concerns Binance's long-term development.
CZ said he is "building". Binance's role is not that of a project party but a multi-headed monopoly platform that combines various important roles such as an exchange, brokerage, securities regulator, clearing and settlement institution, primary market investment and acquisition, and a listed company group. Binance is far beyond the project party's role, and its responsibility is not "building". In fact, Binance has never focused primarily on "building". Its main focus has been on maintaining its leading position as an exchange. The community has never expected Binance to "build" anything. A good referee is precisely someone who does not play on the field.
The discussion about VCs and fur-flying studios is just a small wave in the historical tide. VCs provide funding for the primary market, which is an ancient industry. Studios make money by brushing orders and providing false data to the project party, which is also an ancient practice. Generally speaking, the securities market cracks down on VCs' last-minute stock purchases and abnormal changes in equity before listing. The securities regulator also rigorously investigates data fraud by project parties. The current aversion to VC coins and the conflict between fur-flying studios and project parties is a process of rebalancing. It is hoped that in this process of rebalancing, exchanges led by Binance will join in, sacrificing some of their short-term interests to promote healthier industry development.
Rational discussion is welcome, but we do not want KOLs who take money from Binance to come and criticize. If you don't care about retail investors or industry development and only care about your 400U, you are not as brave as Bit Fool. In conclusion, using Stephen Chow's line: "With great power comes great responsibility, and you cannot escape it."
Web3 Entrepreneur Little Guy
This industry will not change; we can only change positions. Today, He Yi's article mentioned that the ICO logic of 2017, the IEO logic of 2021, and even the fur-flying strategy of 2023 are no longer suitable for the current market. As a whistleblower, she is also reminding everyone that it's time to change the past logic of making money, indicating that the market has truly reached a turning point.
Fur-flying will not disappear: The definition of fur-flying itself is broad. It is not just about simply mass-listing and obtaining chips but also a way of thinking, a way of continuously seeking arbitrage opportunities and scaling up new asset issuance opportunities in this market. The way of obtaining early-stage chips will only change, not disappear. It's just that the era of simple, crude, and brainless mass-listing is gone.
What remains unchanged: Everyone is concerned about how the future will change, but it's better to think more about the industry's next five years. Which parameters will not change, and then we only need to continue to refine these unchanged parameters so that we can have a first-mover advantage when new opportunities arise. For example, the four elements of the fur-flying track: research, funds, technology, and manpower. Regardless of how this track changes, it cannot do without these four elements.
Increasingly effective: In addition to these four elements, there are also factors such as influence, ecological niche, circle, expertise, judgment, and so on. What will not change in the future is that the greater your influence, the higher your resource distribution rights, and the scarcer resources will lean towards you. The higher your ecological niche, the closer you are to the source of information, and the higher your chances of winning the same opportunities as others. The higher the quality of your circle, the better your growth rate and the resources you obtain.
Inward Seeking: In the game of poker, we should focus more on the quality of decision-making rather than the outcome of a single hand. By adding time as a weapon and continuously optimizing the quality of our decisions, with sufficient decision-making reasons, even a slight increase in win rate compared to others can lead to vastly different long-term results. The core logic is to seek inward and not focus on parameters beyond our control.
Evolutionary Path will not Change: If we observe the history of the internet's development, we will find that over the past 20 years, the trend of class solidification will not change. 2% of people will have 98% of the resource allocation, such as Tencent. Even for the same person, the results after joining in 2005, 2010, and 2018 are completely different, and this cannot be changed by individual will.
Our industry will also follow this path, and the situation of class solidification has gradually emerged. For us as individuals, if we do not want to be continuously exploited as the lower class in the future, we need to focus on our growth rate, which should far exceed the industry average. We need to accumulate our own influence, professional capabilities, and ecological niche because the future trend is towards organization, and certain long-term profits will be consumed by professional organizations.
My Current Response Strategy: Operating with light assets to comply with the anti-fragile model. The current stage belongs to a turning point in the fur-flying track and also a turning point in the industry. During this turning point time window, I will use a lighter approach to manage the team and reduce operating costs. When a new "right-side breakthrough" point appears, I will continue to scale up the operation. This is a difficult stage in poker, where you can't seem to hit your range no matter what. At this time, you need to learn to wait patiently for your range, but before this time comes, avoid consuming more gas, and most importantly, do not leave the table.
The law of survival of the fittest in any industry will not change, and what we can do is change positions. Arbitrage and fur-flying opportunities will always exist in the crypto industry, and what we need to do is to have chips on the table when the opportunity arises.
Crypto KOL CryptoMaid
The fur-flying era has ended, but different groups of people are not talking about the same thing.
Ordinary users say: Fur-flying no longer makes money, the era has ended.
Investors say: They are unwilling to use their own money to pump the initial circulating supply, forcing themselves to open short positions as a hedge, covering the project party's cash-out.
Project parties say: Relying on fur-flying user data to fabricate, deceive investors, and now that the deception is no longer effective, the era has ended. The consensus is broken. One problem is that this model's Ponzi attributes are too low, ultimately leading to a PvP mutual cutting, with no one taking the other's position. Ponzi can make everyone paper-rich and attract users from outside the circle. Everyone knows that Edison tried over a hundred materials before finding tungsten to make the light bulb. Few people know that before finding tungsten, he had already raised funds for over ten rounds. If he didn't find tungsten in the end, all the previous experiments would have been Ponzi.
Investor Kay Capital
VC coins and high MC/FDV are superficial; the deeper layer is the average cost of chips. If the average cost of chips for a coin/stock is 1%-10% of the current price, then a second round of upward movement in the medium term would be a miracle. The weighted average cost of chips for VC coins after the release of chips is too low.
Crypto KOL Neso
After first-tier exchanges such as Binance and OKX faced criticism for listing VC coins, they may accelerate the listing of meme coins with medium to small market capitalization to win over retail investors' reputation and trading volume. Pay attention to targets with a market capitalization between 1-5 billion, over 10,000 holders, a decent community base, and have undergone thorough washouts.
Crypto KOL PumpLUO
Many people question the high valuation and unlocking of institutional VC coins, but they have fallen into a trap. The most significant harm to the market and the exchange is the leverage in contract trading! 1. Diverting funds. 2. Separating liquidity. 3. Naked shorting, derivative products of contract trading that have no relation to the coin itself. 4. Rapidly depleting retail investors' funds (crazy opening of carry trade strategies and VIP policies).
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