Author: Matt Ye, Founder of Lorenzo

Introduction:

When the industry starts to collectively question itself, with asset quality declining, innovation stagnating, scams rampant, and mainstream institutions remaining on the sidelines, are these phenomena really just cyclic issues?

The founder of Lorenzo approaches the problem from a deeper perspective, pointing out that the issues in the cryptocurrency industry are fundamentally not about projects, technologies, or individuals, but about the form of civilization itself. From the anarchic black market of DeFi to the feudal order dominated by CEX, and then to Wall Street's capital colonization, he attempts to restore the three evolutionary stages of civilization within the crypto world and poses a more critical question:

What will be the next form of civilization in cryptocurrency?

The common evaluation within the community today is: the assets are poor, and the people are poor. To summarize, it basically boils down to the following questions:

1. Why is the quality of native cryptocurrency assets continuously deteriorating, with the entire industry rapidly moving toward securities trading?
2. Why has innovation in cryptocurrency stagnated? Why is there nothing that truly excites people anymore?
3. Why do serious participants in finance, law, and the real economy refuse to regard cryptocurrency technology as a legitimate tool?
4. Why does the cryptocurrency space produce more scammers per capita than any other industry in history?
5. At the same time, why are there many pure idealists—those with near-religious faith, willing to fight for it for years? For example, researchers and developers pursuing pure decentralization.

I believe that anyone and any product is a product of civilization. The type of civilization will produce corresponding technologies, goods, systems, and people. Therefore, when we feel that these dimensions exhibit systemic problems, the issue must lie within the civilization and systems themselves, rather than specific appearances. After all, it is well known that studying medicine does not save Chinese individuals, and importing foreign guns and cannons cannot save the Qing dynasty.

Does the cryptocurrency space have a civilization form? Naturally, it does.

First Form: The Anarchic Black Market of DeFi

A purely on-chain environment is essentially a black market, a dark forest without rules or systems.

In the dark forest, the rational strategy is not to build, but to steal as much value as quickly as possible and then disappear; this is the optimal solution under game theory.

If we assume that others are hunters without rules or bottom lines, the longer you stay, the greater your risk exposure. Even if you are a successful "big cut," continuing to play will eventually result in someone stronger or more unscrupulous taking you out. So your optimal solution is: to do whatever it takes to make a big profit, and then vanish before anyone else can act against you.

This is why rug pull is the most primitive business model in cryptocurrency. Every rug pull, every disappearing anonymous team, every project handed over to community members by chance—these are not coincidental; they are inevitable operations of the market under incentive structures.

It is the same in the face of crime; "Not your keys, not your coins" might be a strategy against financial hegemony, but it clearly is not a good security philosophy. Once assets are stolen, it turns into a technical version of victim-blaming: "Why didn’t you manage your private keys well?" This avoids the questions that a civilized society should raise: Who is responsible for building a system that an average person can use safely?

Second Form: The Feudal Empire under CEX

When the high costs caused by black market chaos become unbearable for even the most radical participants, power begins to concentrate in CEX (including centrally-managed DEX). Under the empire governed by CEX, it will enforce its own laws and institutions, significantly reducing the trust costs for participants. CEX will do its utmost to ensure the safety of custodial assets, and most CEX will sanction explicit illegal activities. Although the assets available for listing may not be perfect, they have at least passed a certain level of screening, which is much better compared to the 99.9% of on-chain launchers that zero out within three days. When a certain asset performs poorly, most people's first reaction is still "How did this coin get onto xxx exchange?" which reflects faith in the CEX brand.

However, the feudal system has its own issues; it generates a new form of planned economy based on cryptocurrency technology. The direction of resources and funding in the entire industry, that is, the "core narrative," is planned according to the aesthetic of up-listing dictated by exchanges, but true innovation cannot be planned; thus, it naturally stifles a lot of innovation in an invisible way. Data fabrication and resource rent-seeking common in planned economies can also be found in the planned economy of the cryptocurrency space, with every cycle rallying the entire industry to support a narrative before cyclically returning to zero. Any project not aligned with the aesthetic of CEX up-listing, or assets/businesses that might threaten the position of CEX, will not receive any liquidity from exchanges.

Third Form: Wall Street Colonization

When institutional money enters the market, the industry rejoices, believing it has gained recognition from the mainstream world. However, what actually occurs is that the most seasoned plunderers in human history discover a land with no institutional framework, where retail investors have no recourse for being cut and can only acknowledge their failure to perform due diligence.

They are not here to build; they are here to colonize and harvest. ETFs, tokenized U.S. Treasury bonds, securities platforms—this is not called maturity; it is called annexation. Wall Street will certainly provide rules to the cryptocurrency space, but these will be Wall Street's rules, designed to protect Wall Street's capital. And the big shots on Wall Street do not care about innovation in the cryptocurrency space, do not care about the survival of the cryptocurrency community, nor will they use cryptocurrency technology to revolutionize their own systems.

Cryptocurrency technology is revolutionary, but mature cryptocurrency civilization has yet to arrive

So now we answer those five questions:

1. The poor quality of native assets and the rush toward securities trading: Financial products are also products of civilization, which proves that the products of sovereign nation civilizations are superior to those of cryptocurrency civilizations. In traditional finance, a security needs to undergo thorough market competition and verification and must comply with financial regulatory laws, none of which exists in the cryptocurrency space. Trading securities on-chain is not an evolution of the cryptocurrency industry but rather a sideways admission of the failure of the native crypto economy—good assets must be imported because they cannot be generated internally.
2. On the stagnation of innovation: The trust costs of the black market are too high to form effective large-scale cooperation; therefore, large-scale innovation cannot occur. The planned economy of the feudal system means that a large portion of industry resource distribution is in the hands of a very small committee rather than being driven by sufficient market competition, and this structure itself does not support the emergence of extensive innovation. Projects aimed at exchanges are just rational strategies operating within this system.
3. On why serious industries keep their distance: They understand the technology, but they do not trust the environment. There is no accountability mechanism, no consensus that can be formed and enforced. When something goes wrong, the reaction is to run away rather than resolve the issue. Staying away from cryptocurrency is not prejudice; it is a correct response to an environment where "accountability is structurally absent," as the saying goes, "A gentleman does not stand under a dangerous wall."
4. Why are scammers rampant: Because in the black market, scamming is a rational strategy. There is no enduring reputation to protect, no peer group with the authority to expel you, and no laws to track your on-chain behavior. The environment creates a multitude of scammers. One might as well ask: Why do some people still build honestly?
5. On why idealists coexist: Because in the absence of institutional foundations, faith is the only alternative. In an environment that is constantly shifting, belief is the only lasting asset. Scammers and idealists are not moral opposites; they are two reactions to the same layer of deficiency—one fills the void with plunder, the other with faith.

Five questions, the same answer: The problem with cryptocurrency lies in the backwardness of civilization and the absence of excellent systems

This leads to a sixth question: What will the next form of civilization in cryptocurrency be?

I have a perfect answer in mind, but due to space constraints, I cannot elaborate here. If you are also a practitioner concerned about the fate of the cryptocurrency space and agree with the views expressed in this article, you are welcome to discuss.