If the user does not want VC coins or memes, then what does the user want?

1. Preceding Section

Recently, the phenomenon of VC coins and meme coins has sparked widespread reflection within the industry. Not only ordinary investors but also many well-known figures are discussing solutions. For example, during the discussion on girlfriend coins hosted by He Yi, Jason (Chen Jian) raised the issue of how to address the problem of project teams becoming complacent after launching their coins. Binance CEO Zhao Changpeng's recent article "Crazy Ideas on Token Issuance" is also seeking solutions to related issues.

Teams that are truly committed to project development hope that the market can reward genuine contributors, rather than allowing Ponzi schemes, speculators, and others to disrupt industry development and gain improper benefits.

This article will analyze VC coins and meme coins as case studies.

2. The Past and Present of VC Coin

The emergence of VC coins has its historical reasons. Although there are shortcomings now, it played an important role in the early days, and many significant projects involved VC.

2.1 The Chaos of ICOs in 2017 - A Dance of Demons

2017 was a key year for the first token issuance in the blockchain field, with the explosion of ICO (. According to statistics, the ICO financing amount that year exceeded 5 billion dollars. The situation at that time can be described as "a chaotic dance of demons." As long as a project announced an ICO, had someone endorse it, and the white paper was well-written, it would quickly sell out. The level of enthusiasm among people was astonishing.

The main reasons for the explosion of ICOs include:

1. Mature token issuance technology: The launch of Ethereum enables developers to easily create smart contracts and decentralized applications )DApp(.
2. Factors such as strong market demand, the rise of decentralized concepts, and lowered investment thresholds.

Some classic cases emerged during this period:

1. Ethereum: Although the ICO took place in 2014, its smart contract platform was widely used for new project ICOs in 2017. It has now evolved into the second largest project in the crypto world.

2. EOS: Raised nearly $4.3 billion through a year-long phased ICO, setting the record for the largest ICO of the year. However, it has now almost disappeared, due to reasons including improper technical route choices and insufficient grasp of market demand.

3. TRON: ICO in 2017, raised a large amount of funds. Despite early controversies, it developed rapidly afterwards. To some extent, compared to those projects that ran away, Sun Yuchen has done quite well. His grasp of market demand is quite precise, such as the yield of TRC stablecoins.

4. Filecoin: Successfully raised over $250 million in 2017, its distributed storage concept has received widespread attention. The founding team is strong. It is currently difficult to assess the project's success or failure, and its healthy development remains in question.

The number of non-classical cases is larger, and the impact may be greater, which is also an important historical reason for the emergence of VC coin.

Main Issues Exposed by ICOs:

1. Lack of Regulation: Leads to high risks for investors. Scams and Ponzi schemes are everywhere.

2. Market Bubble: A large number of projects raise huge amounts of funds in a short period, but many lack actual value or the described scenarios are not feasible.

3. Insufficient investor education: Ordinary investors find it difficult to assess project quality, making it easy for them to make incorrect decisions.

) 2.2 The entry of VC and credibility endorsement

In the face of the chaos surrounding ICOs, venture capital ### VC ( is the first to step up to address the issues. VC provides more reliable support for projects through its own credibility and resources, helping to reduce many of the problems brought about by early ICOs. At the same time, it also plays a role in helping users filter projects.

The main function of VC:

1. The flaws of grassroots financing as an alternative to ICOs

   • Reduce fraud risk: filter out "air projects" through strict due diligence
   • Standardization of capital management: adopting phased capital injection and token lock-up period terms
   • Long-term value binding: VC usually holds project equity or long-term locked tokens

2. Empowering Project Ecosystem

   • Resource Import: Connecting key resources such as exchanges and developer communities for the project.
   • Strategic Guidance: Assist in designing the token economic model and governance structure
   • Credibility endorsement: The brand effect of well-known VCs can enhance market trust.

3. Promote industry compliance

   • VC promotes projects to actively comply with securities laws and adopt compliant financing frameworks.

Overall, VCs play an important role in the success of Web3 projects by providing funding, resources, credibility, and strategic guidance, helping projects overcome many challenges faced during early ICOs, and indirectly assisting the public in the initial screening.

) 2.3 VC coin issue

VC coin has also begun to show a series of limitations in the later stages, mainly reflected in:

1. Conflict of Interest: VC may promote excessive tokenization of projects or prioritize servicing their own portfolio.

2. Unable to solve the subsequent project development issues.

3. Colluding with project parties to deceive retail investors ###, some projects and VCs have such operations, and major brand VCs are relatively better (.

VC institutions only complete the early investment and profit exit stages, lacking obligations and capabilities for the later development of projects. The main issue with VC coins is that after a project is listed, there is a lack of ongoing motivation for development, and both VC and the project side may cash out and run after the coin is listed. This phenomenon causes retail investors to despise VC coins, but the essence is still that the project lacks effective supervision and management, especially regarding the matching of funds and results.

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3. The Fairlaunch of Inscriptions and the Memecoin Phenomenon

The emergence of inscriptions and Fairlaunch in 2023, as well as the pumpfun model of memecoin in 2024, reveal certain phenomena and also expose some issues.

) 3.1 The Outbreak of Inscriptions and Fairlaunch

In 2023, two significant trends emerged in the blockchain field: the explosion of Inscriptions### technology and the widespread adoption of Fair Launch( models. Both phenomena stem from reflections on early financing models such as ICO and VC monopolies. In the field of Inscriptions, most VCs indicated that they had no opportunity to participate in the primary market, and even in the secondary market, they did not dare to invest on a large scale. This reflects the pursuit of decentralization and fairness by users and communities.

Inscriptions first exploded on the Bitcoin blockchain, represented by BRC20, generating important inscriptions such as ORDI and SATS. The reasons for the explosion of inscriptions include: the demand for innovation in the Bitcoin ecosystem, users' needs for censorship resistance and decentralization, low barriers to entry and wealth effects, resistance to VC coins, and the appeal of fair launches.

Inscriptions have also caused some issues:

1. Pseudo-fairness: Numerous participating addresses may be disguised by a few institutions or large holders.

2. Liquidity Problem: The use of inscriptions on the Bitcoin mainnet incurs significant transaction costs and time costs.

3. Value Loss: The enormous fees generated from the creation of inscriptions are taken by miners, without empowering the Token ecological closed loop.

4. Application scenario issue: The inscription has not solved the problem of the sustainable development of Token, lacking "useful" application scenarios.

) 3.2 The explosion of Pumpfun and the memecoin phenomenon

Memes originated early and are a cultural phenomenon. In 2024, the Pump.fun platform based on the Solana chain rapidly rose to prominence, becoming the core hub for memecoin issuance. The platform utilizes a simple and complete token service process (ICO+LP+DEX) and a speculative trading mechanism, leading to a significant impact of memecoins in 2024. Pump.fun's important contribution is assembling the three separate services of Token issuance, liquidity pool construction, and decentralized exchange Dex into a complete closed loop.

The early dex ratio of tokens on pumpfun ( is commonly referred to in the industry as the graduation rate ), which is quite small, only 2%-3%, indicating that the entertainment function in the early stages is higher than the trading function, in line with meme characteristics. However, during the later peak period, the token graduation rate often reached over 20%, becoming a pure speculation machine.

The main issue with memecoins:

1. Systemic fraud and trust collapse: According to Dune data, about 85% of tokens on Pump.fun are scams, with the average cash-out time for founders being only 2 hours.

2. False advertising is rampant: project parties forge KOL platforms and fabricate trading volumes.

3. Market ecology distortion: memecoins occupy a large amount of on-chain resources, squeezing the development space of normal projects.

Memecoin has evolved from its early entertainment function to mid-late stage PVP### Player versus Player(, and later developed into PVB) Player versus Bot(, becoming a tool for a few experts to harvest retail investors. The lack of effective value injection in memecoin is a serious problem; if this issue is not resolved, memecoin will ultimately decline.

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4. What kind of projects do users or the market want?

By reviewing the development history of Web3 projects, we understand the historical reasons and the advantages and disadvantages of VC coins, while also analyzing the phenomenon of memecoins driven by inscriptions and pumpfun. They are both products of industry development. Through these analyses, we see that there are still some key issues in the current development of Web3 projects.

) 4.1 Summary of Existing Issues

The main issues of current Web3 projects:

1. The project lacks sustained momentum for development, having received too much funding in its early stages, and there are insufficient ongoing rewards for token holders and subsequent development.

2. PVP issues are serious, true fair launches are more favored, but once on the dex, it's still a race of speed.

Solution:

1. Project Management: Limit the project party or VC from obtaining a large amount of funds too early, use funds under supervision, or allocate funds to contributing teams.

2. Continuous external value injection: solve the PVP problem, reward medium to long-term Token holders and builders. Support projects that genuinely aim to build, allowing Token holders to have medium to long-term growth expectations, reducing the issue of early cash-out and exit.

( Management issues of different stakeholders and different stages of the project 4.2

1. Different stakeholders

Stakeholders in Web3 projects include the project team, investors, foundations, users and communities, miners, exchanges, and market makers. It is necessary to use economic models to plan the Token allocation and contribution incentives for different stakeholders at each stage.

2. Analyze issues from multiple aspects such as issuance, circulation, and governance.

)1( Token issuance The issuance methods of digital currencies are diverse, with the main purpose of raising funds and distributing them to users.

)2### Token circulation and management The circulation of tokens is affected by insufficient demand and limited management methods. Management methods include trading functions, Staking, member thresholds, application consumption, etc.

###3( Project Governance Web3 projects are directly controlled through consensus mechanisms and economic model design. Community governance mechanisms serve as a functional supplement to areas where the economic model is less adept. Combining DAO and foundation models can better accomplish fund and ecosystem management, providing flexibility and transparency.

) 4.3 How to Build Long-term Projects ( Value Capture and Value Injection )

If there is no cooperation between technology and application innovation, current projects in the industry relying on the shouting model will find it difficult to sustain. pumpfun provides a reference framework, but lacks the Token empowerment for value capture and injection in the ( segment.

Value capture and external value injection are the two pillars of the Web3 economic model. The former focuses on retention, while the latter focuses on introduction. The core challenge lies in balancing short-term incentives with long-term value, avoiding the pitfalls of a "paper model" and Ponzi schemes.

![The user neither wants VC nor memes, so what does the user want?])https://img-cdn.gateio.im/webp-social/moments-1028336a109372a5716ce094102bdc9a.webp###

5. Analysis of the Previous Two Bull Markets in Crypto and the Likelihood of the Next Explosion

( 5.1 The ICO frenzy of 2017

The main reasons for the bull market in the blockchain sector in 2017:

1. ICO Boom: The Ethereum ERC-20 standard lowers the barrier to issuing coins, allowing numerous projects to raise funds through ICOs.

2. Bitcoin forks and scaling controversies: raising concerns about Bitcoin's scarcity and technological evolution.

3. The rise of the Ethereum smart contract ecosystem: attracting developers to flock in, and the germination of the DeFi concept.

4. Global liquidity easing and regulatory void: low interest rate policies have led to capital