Meme 'devours” the market, VC projects fall out of favor, where will the market go next?

Author: Terry, Vernacular Blockchain

Memecoin and VC Token, which one will you choose?

Before 2022, everyone would probably not hesitate to choose star projects backed by well-known VC institutions, with high visibility and high valuations. Now in just two years, the trend has changed, especially in 2023 The small trend started by Ordinals quickly grew into a powerful anti-VC wave in the crypto world.

Even since the first half of this year, Memecoin has been leading the way in comparison with the market performance of VCToken, attracting a large amount of attention and capital inflows in a short period of time. The general public represented behind it The call for fairness has gradually become a trend. So behind this, is the capital voting with their feet, or is it a short-term illusion within the market?

VCToken’s “Fire and Ice”

The first half of 2024 is almost an intensive redemption period for a series of former “king-level” star projects, from Wormhole to Polyhedra Network, from From Starknet to LayerZero, and from Zksync to Blast, these are Airdrop projects that community users and wooly parties have been waiting for for a long time.

It’s just that the price performance after actual realization is not satisfactory, especially after the industrialization of Airdrop, A large number of community users/Lumao Studio are helping these star projects obtain extremely beautiful paper data, thereby pushing up the project valuation At the same time, coupled with the increasingly exaggerated FDV caused by its own VC financing, it also paved the way for the sell-off risk of its early liquidity.

For example, the recent issuance of new VC tokens such as W (Wormhole), ZK, ZRO, and STRK are basically nothing - FDV is extremely high and the trend has been falling. It has ended with a negative line almost every day since its listing. , all users who enter the market are deeply trapped.

Based only on data statistics in late June (not counting the recent sharp decline), PORTAL and SAGA have fallen by about 80% compared to the opening price, while W, ZKJ, STRK, OMNI, and ALT have fallen by about 80%. It also fell more than 50% from the opening price.

Source: @terryroom2014 / It's over.

At least for the recent new Tokens, buying them in the secondary market is almost more cost-effective than the later financing valuation, and there are even signs of an inversion of primary and secondary market valuations:

As of July 10 The latest data:

ZRO

has a cumulative financing of US$3 billion in history, and the current total market value is only US$3.8 billion;

• W

  has a cumulative financing of US$2.5 billion in history, and the current total market value is US$2.9 billion;

• ZK

  The cumulative financing in history is US$1.25 billion, and the current total market value is US$3.1 billion;

• ZKJ

  The cumulative financing in history is US$1 billion, and the current total market value is US$1.2 billion.

• But what is interesting is that Dune statistics show that even when the market continues to decline, the book value of major VC investments in these Tokens still has a floating profit of dozens or even nearly a hundred times. VC Overall unrealized profit remains high at 7 times.

Source: dune.com

Hitesh.eth, co-founder of DYOR, also calculated the top 10 "VC Tokens" with overall VC return rate on the market. Basically, they are the main force in the current market, which also makes the market confidence affected. A huge blow.

But at the same time, although secondary market investors such as ENA, DYM, and SAGA have suffered heavy losses, VCs are still able to lock in profits of more than 10 times - the highest ENA has a return rate of about a hundred times, and the lowest ALT It is also more than 10 times, and the experience of VC and secondary market investors can be described as "ice and fire". InMemecoin "

Devouring" market

Compared to the stars VCToken

Memecoin

and other chain asset attributes However, the price performance of the secondary market has been unparalleled, almost "swallowing" the entire market, becoming a cultural symbol of Web3 at this stage.

Whether it is emerging Memecoins such as PEPE and FLOKI, or GME and other public chain new Memecoins, wealth passwords are constantly emerging several times or even dozens of times, which once made people dream back to the 2020 DeFi Sunmmer market environment during the period.

Especially since April this year, the volatility of the new star VC Token that has been intensively launched has dropped, making it difficult for secondary market traders to profit from it. The market’s FUD sentiment towards VC Token has become more serious, and Memecoin has shown The unique charm attracts a large amount of attention and capital inflow in a short period of time with the help of community consensus.

🎜In contrast, although VC🎜🎜Token🎜🎜 has strong background support, its performance has not fully met investor expectations amid the rapid changes in the market. 🎜🎜🎜🎜🎜🎜🎜🎜Source: dune.com🎜🎜🎜🎜🎜What’s more interesting is that Dune statistics also show that in this Meme super cycle, the actual number of holder addresses on the chain of the top 46 Memecoins There has indeed been a significant growth trend in the past 90 days: 🎜🎜🎜🎜Among the 46 Memecoins, except for 4 that are experiencing a decline in growth (of which FLOKI has only declined slightly), the number of holders on the chain of the remaining 42 Memecoins has all achieved universal With double-digit or even over 100% growth, this data undoubtedly reflects that the market’s attention and enthusiasm for participation in these Memecoins is indeed rising sharply. 🎜🎜🎜🎜And the relative number ratio of buyers/sellers in the past 30 days is basically above 1, which also means that investors have a relatively optimistic attitude towards the future trend of Memecoin and are willing to invest more funds to obtain potential profits. 🎜🎜🎜In short, unlike many previous crypto projects with large financing and VC-led narratives, which have high thresholds and are more oriented towards crypto OGs and on-chain whales (rich elites), 🎜Meme is for OGs and whales. It provides an opportunity for the general public, especially so that the general public can participate fairly and share the dividends. 🎜🎜🎜Therefore, in comparison, discussions and doubts about Memecoin and VC will inevitably become the mainstream of the community again. 🎜Meme will at least bring continuous incremental funds and attention through user flow, and in the near future, it can easily reach billions New projects valued in US dollars are all outdated concept products that hide grand narratives or old gameplay. It is natural for them to be disliked by the community. 🎜🎜🎜🎜Community resistance behind the Meme wave🎜🎜🎜🎜In fact, if we carefully examine the current market environment, we will find that in addition to short-term speculation, the general public’s voice for fairness represented behind Meme has gradually become a trend, and funds are everywhere. Vote with your feet. 🎜🎜

To put it bluntly, The rise of the Meme wave actually represents, to a certain extent, community users and the market’s correction of the traditional “financing-cash-out” model in the past two years: The previous star projects relied on top VCs to build a game, combined with high-end The gameplay of using high-valuation and large-amount financing based on technical narrative, and finally attracting the community to pile up a series of beautiful on-chain data through the so-called "Airdrop" is basically over.

Especially since this year, long-awaited projects such as ZKsync and LayerZero have caused major Airdrop-related controversies such as "Witch Attack" and "Rat Warehouse" in the community. This basically means that the Web3 world has gradually entered the " "Post-Airdrop Era" - When star projects begin to regard Airdrop as an arrogant power for resource allocation, Airdrop is no longer a mutual complement between community users and project parties.

Because of this, the rise of Memecoin is precisely because they are often not bound by the traditional set of primary and secondary market takeover rules. Although this also means that its risks are higher and price fluctuations are more violent, it is not suitable for ordinary people. At least there is one more choice for users.

If you deeply analyze the reasons behind the ebb and flow of Memecoin and VC Token, the objective market conditions are almost clearly visible:

• First of all, it is caused by high valuation and low circulation Selling pressure, After all, today’s star projects almost all use high FDV and low actual circulation as the issuance rules, which forms a potential unstable factor. The selling cycle is extremely long, bringing huge pressure to the market;

• Secondly, users are gradually becoming immune to technical narratives, Especially from L2 to Restaking, after experiencing the rendering of technological innovation by many projects, especially celebrities, users have become more rational and prudent, no longer It is easy to be moved by technical narratives that seem to be unpredictable but actually lack substantial breakthroughs;

• In addition, the effect of high-frequency capital pumping cannot be ignored, Similar to the large-scale IPO blood pumping phenomenon in the stock market, recently The community also once disputed whether the intensive launch of star projects led to a large amount of funds being withdrawn from the market, seriously affecting the market's liquidity;

• After all, voting with real and practical funds will not deceive people.

To a certain extent, the alliances and entrenched interests between VCs in the crypto world and the Web3 industry have reached a stage where it is obvious that the situation needs to be broken, and users are spontaneously interested in real money-making effects and hot spots. There’s nothing wrong with chasing.

After all, in this market full of temptations and opportunities, Users instinctively tend to those opportunities and hot trends that can bring tangible benefits. Once existing projects cannot meet this demand, they will express it in various ways Dissatisfaction and rebellion in search of better investment returns and market conditions.

This also sounds a wake-up call for VCs and project developers who are accustomed to path dependence.

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