Reflections and New Opportunities in the Crypto World Winter

This year, I mainly participated in private gatherings, apart from the Breakpoint conference. Below are some of my observations and thoughts on the current state of the industry:

First-level investment institutions are facing severe challenges.

Many first-tier investment institutions have generally reported that the situation is severe, with some even asserting that "the primary market is dead." Most institutions hold a large number of unlisted or listed but unlocked project tokens, which are currently performing poorly in terms of price. Several over-the-counter trading institutions have also mentioned that it is difficult to find buyers for many trades.

The scale of fundraising for the new round has drastically shrunk, and the actual funds received may be only one-tenth of what was publicly claimed. Compared to the previous round where financing often reached hundreds of millions of dollars, the current situation can only increase the investment amount for individual projects, forcing valuations to rise, resulting in a number of projects that are difficult to sustain. However, in this round, there are no "saviors" like SBF.

In addition, almost all first-tier institutions have expressed their intention to enter the project incubation field. However, in reality, the personnel configuration of these institutions and the capabilities of their general partners do not match the requirements of incubation, and they even lack the experience to take a project from zero to success. In such a situation, how should incubation be carried out?

"Real Application Scenarios" have become the new focus.

In conversations, many institutions ask me about the sectors I have been focusing on lately. When I counter-question them, many mention projects with real revenue, users, and application scenarios, followed by a series of buzzwords like RWA, AI, Depin, etc. However, these terms seem to lack a clear reference and appear more like jargon used to prove that they are "researching."

In fact, the idea of filling the narrative gaps of Web3 with Web2 scenarios was debunked in 2022. Looking at the performance of a round of token listings on a certain trading platform to date, those application projects with "scenarios" have performed the worst. This does not mean that cryptocurrency does not need innovation, but rather that these projects are not related to the true positive externality of cryptocurrency - asset liquidity.

New users are entering the market in large numbers in new ways.

Many institutions and project parties believe that, "In this round, without new users and funds entering the market, how should we attract them?" However, in reality, new users are flooding in in ways that practitioners find difficult to understand.

For example, a well-known artist launched the most outrageous yet creative activity in the history of cryptocurrency, truly attracting attention from outside the crypto world. This year's Breakpoint conference has been hailed as the most successful public blockchain ecosystem conference in recent years, known as the "crypto world Burning Man."

It is worth noting that a group of emerging content creators is reporting on the dynamics of the crypto world in unprecedented ways. These young creators, some of whom are even under 20 years old, are adopting innovative methods that belong to the new generation. This change may be overlooked by many established practitioners.

New users are entering the market at an unprecedented pace and in ways that many are oblivious to. Soon, the entire crypto world will undergo a fundamental transformation in project narrative logic, operational methods, and communication logic.

Conclusion

History tells us that people often find it difficult to learn from it. This seems to still apply in the crypto world. Whenever the industry encounters difficulties, we instinctively resort to empty concepts like "real returns, real users, real scenarios," or hope for traditional funds to enter the market. However, historical experience shows that these traditional thoughts are merely passersby in the crypto world; at most, they engage in some arbitrage trading, and do not bring about substantial change.

The biggest challenge in the crypto world is not the products, but the people. People's ways of thinking and learning abilities are limited. Therefore, the way the audience understands and accepts cryptocurrencies at a specific time determines their participation in the market and also determines the future direction of the crypto world.

In short, the old mindset is difficult to adapt to new technologies, and only when the new generation grows up can it truly drive the development of the industry.

We need to reflect on why the best talents in the industry still cannot learn from history and realize that the future has arrived. Only by breaking through conventional thinking can we seize new opportunities in this rapidly changing industry.