Written by: Jademont Zheng, Co-founder and CEO of Waterdrip Capital

The current state of the entire encryption industry is something that most people did not anticipate a few years ago.

Batch deaths of Web3 token projects.

Almost no founder of a token project has not experienced rights protection, lawsuits, or community liquidation. It cannot be denied that some of these founders genuinely wanted to create good products and ecosystems, but when an avalanche occurs, few can remain unaffected.

Top CEXs gradually losing industry influence.

Even though trading volumes continuously reach new highs, they essentially resemble traditional brokerage firms, responsible for transactions but no longer holding the power of asset issuance and pricing. Compared to capital market infrastructures like Nasdaq, the gap is actually widening.

Primary market investment institutions collectively retreat.

It's not that there’s a lack of funds, but rather a lack of exit mechanisms. Some institutions tacitly allow project parties to manipulate token prices, completing value transfers together with projects; others simply leave the industry. Without long-term returns or emotional value, it’s better to invest in other sectors.

In the avalanche, no single snowflake is completely innocent; however, the responsibility borne by each snowflake is not the same.

In my view, some snowflakes carry particularly heavy burdens.

First, FTX and Luna.

They collapsed consecutively at the height of the industry's prosperity, destroying the trust of traditional capital in the entire industry and causing a significant amount of institutional funds to remain hesitant even today.

Second, top CEXs.

At the industry's most glorious time, they should have taken on the responsibility of leadership: establishing higher listing standards, helping the market filter quality projects, advocating long-termism, and forming a healthy industry culture.

But reality is the opposite. Short-term interests overshadowed everything, with token issuing groups mass-producing worthless tokens and quickly harvesting liquidity becoming the mainstream approach. Platforms earned listing fees and trading volumes but also overdrew the credit of the entire industry. When the tide recedes, there are no winners; everyone is on the same boat.

Third, the Ethereum Foundation.

I have always believed that the shift from PoW to PoS is a severely overestimated decision. It does reduce energy consumption, but the cost savings are almost insignificant compared to the lost development opportunities.

If Ethereum had continued along the PoW path and continued to promote the development of computing infrastructure, it would have had the chance to grow into the world's largest blockchain-based AI computing network, occupying a more important strategic position in the AI era. The shift to PoS, however, prematurely ended that possibility.

So, does this industry still have opportunities?

Of course it does.

However, compared to the aforementioned factors that determine the direction of the industry, the variables that can truly reverse the trend are limited.

I believe that the only two things that might truly reopen a new round of prosperity in the future are:

One is that the United States incorporates BTC into its national strategic reserves and continues actual purchases to rebuild global capital’s confidence in crypto assets;

Two is that a super application genuinely emerges on-chain with hundreds of millions of users that can create real value, allowing blockchain to prove once again that it can not only issue assets but also create demand.

Aside from that, other favorable factors seem more like cyclical rebounds rather than a new era.