Speaking of which, it looks like this is the longest time TWI has been broken. There is no other reason, as a blogger who never listens to the public, every time you write something, you need to be driven by the desire to express, and in the market in recent months, it is difficult for people to give birth to this kind of feel. Although the performance of the decadence of the secondary market is not small, the feeling of the primary market may be the main reason for this lack of expression.
However, I have recently observed some phenomena and some thoughts, which may be relatively long, so I plan to split them into three or four articles, which are "the market from the first-level perspective of Eastern and Western VCs", "new signs of RWA", and "some things worth talking about on ETH and Solana".
Let's start with the first topic
In the past few weeks, I have talked to several of my peers in Asia and found that they have all entered a "pause", or "conservative", investment model.
Our most recent shot was in January, and several of our peers are similar, and there are many cases that haven't made a move for two or three months or more.
As for the feeling of the market, the word "boring" may be the most appropriate adjective, or temporary "consensus".
This sense of boredom is not entirely linked to the second level. I clearly remember that after the collapse of Luna, although the 2-pole market was sluggish, everyone was still excited about good expansion projects in the primary market, talking about ZK, or innovative Defi, Gamfi, and AI. And this excitement, after entering 2025, will slowly not be experienced. The decadence of the secondary market, which is hot for no more than a few days for any narrative, naturally has an emotional impact on the primary market, but a more worrying concern is - have we entered the stage where the "low-hanging fruit" is roughly finished, and since then has entered a window period of long-term adjustment, exploration, transformation, and corresponding severe pain? I'll expand on this topic at the end, because the current state of VC in the West is a bit different from that in the East.
The reason is that we invested in a Defi project in the Pre-seed round last year, and recently in the Seed round. Originally, I pondered that in the current primary and secondary markets, I would be very content to be able to be full. As a result, I didn't expect to overraise millions of dollars, and several European and American VCs rushed to stuff money into it. I was blown away by the results, the project itself was good, but it didn't have the texture of an S-class. Why is it that while we are "dumb fire" in Asia, Europe and the United States are still "firing", what is the reason why they dare to pull the trigger at this valuation?
We discussed it internally and made some irresponsible conjectures, such as:
The timing of the establishment of VC in Europe and the United States is not the same as that in Asia, so the exit cycle is different, resulting in different investment decisions;
Asian VCs have the temperament of "small-town problem-solvers", and in terms of yield, they either want to win their peers, or they want to at least outperform BTC (but I believe that few companies can do it in the current market situation - - ), European and American counterparts are more idealistic and long-term, or in other words, as long as they can logically explain to LPs why I invested in this project at this valuation, the obsession with yield is secondary;
Pure Deploy Fund needs, after investing in this phase, it is better to raise funds for the next phase as soon as possible, and collect management fees;
The specific reason is unknown, so I can only guess at present, so in the next few weeks, I will make an appointment with a group of partners and researchers from European and American VCs to chat, in addition to exchanging views on the market, I also want to ask for direct face-to-face advice on the above question, and then come to Twi to update after collecting information.
Then I would like to take this opportunity to discuss with you where the future of Crypto lies.
First of all, whether it is me personally, or ABCDE, I have never wavered in my belief in Crypto's long-term bullishness, which can even be regarded as a "faith", otherwise I would not be engaged in this profession full-time. But in the short to medium term, we're at a crossroads, one that I'm not sure is similar to what it was before the 2019 Defi Summer, so I'm going to share it with you.
The reason is that I have been listening to AlliaceDAO's podcast recently, and the three points mentioned in it have resonated with me a lot.
1 is that Qiao said that his current feeling is similar to that of 19 years, and he doesn't know what will happen to Crypto next, until the appearance of Defi Summer in 2020 made his eyes light up and found his direction;
2 is that they think that Crypto has only found one PMF for so many years, and that is finance, and more specifically, trading (Dex, Cex, Perp), lending, stablecoins, Mint (asset issuance, e.g Pumpfun);
3 is that they gave a lot of their AI x Crypto Start Up suggestions, if the Crypto elements in the project are too far-fetched, then it is better to directly remove Crypto and directly do pure AI, as a result, 30% of the projects really remove Crypto and become pure Web2 projects;
About 1 - Although I have entered the circle in 2019, I am just speculating in coins, to be honest, I am not sure if the VC at that time had this "boring" feeling now, but I have the impression that at least there are IEOs that are popular, EOS is exploring the direction, Starkware put forward the concept of ZK, many projects of Defi Summer in 20 years should also be established in 18-19 years + voted out, so theoretically the experience of the primary market should be better than now, in other words, at that time, everyone was interested in " The level of belief in this matter should be higher than it is now?
About 2 - is an echo of 1, and my biggest concern in the short to medium term, i.e. - whether we have come to a crossroads that is more or less low-hanging fruit is picked than it was in '19.
If Crypto's biggest PMF on the utility is finance, then Defi Summer+'s continuous iteration of micro-innovation in the following years has basically reached a boundary today.
The opposite of Utility is what Crypto is good at - that is, the narrative direction, which Meme is undoubtedly the best representative, Pump.FUN will push this direction to a boundary in 2024.
And in the last few years, when Utility and Narrative weren't sure what to do, our circles were at least able to roll up Infra. From ETH to EOS to Solana and then to Aptos, Sui...... I'm wondering, Solana has Firedancer this year, Monad and MegaETH are likely to be launched on the mainnet, have we also reached the boundary in terms of blockchain Infra scaling?
Regarding 3 - a crossroads, all three roads have reached the border, so whether there is only one last way, which is "the modularity of blockchain", is related to the third point above, I also heard similar insights in the YC podcast.
The modularity mentioned here is not the modularity of Celestia, but the abstraction of blockchain technology as a whole into a module, which is inserted into a start-up as a function, similar to AI.
The vast majority of Crypto projects we see now are built entirely on Crypto, or Crypto for Crypto's sake, and are not designed to solve a real-world problem. It's called Crypto Native, but if it's not good, it's not out of the circle at all, and it's self-congratulatory in the circle.
The Web2 AI venture capital community is expected to have similar problems, and many projects seem to be "AI for AI's sake" rather than solving a specific real-world problem.
Will the primary market produce some kind of integration of Web2 and Web3 in the future, or an encounter? A project must exist to solve a problem in the real world, and in the process of solving the problem, the part that needs to use Crypto will add Crypto elements, and the parts that need to use AI will add AI elements, but the original intention and purpose are completely unrelated to Crypto and AI. Just as Meituan Takeaway uses 5G, platform software, big data, and AI task distribution...... But it's essentially a project to solve the problem of eating.
If the next big stage of Crypto is in this form, will you be bored? Can a series of current forms based on the Crypto Native industry chain, such as Crypto VC, exchanges, and studios, continue?
At present, there are more and more payment and RWA-related projects in the primary market, which is more or less in line with the idea of 3.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
The crypto market from the first-level perspective of Eastern and Western VCs: narrative for narrative's sake, boring
Written by Lao Bai, Research Partner, ABCDE
Speaking of which, it looks like this is the longest time TWI has been broken. There is no other reason, as a blogger who never listens to the public, every time you write something, you need to be driven by the desire to express, and in the market in recent months, it is difficult for people to give birth to this kind of feel. Although the performance of the decadence of the secondary market is not small, the feeling of the primary market may be the main reason for this lack of expression.
However, I have recently observed some phenomena and some thoughts, which may be relatively long, so I plan to split them into three or four articles, which are "the market from the first-level perspective of Eastern and Western VCs", "new signs of RWA", and "some things worth talking about on ETH and Solana".
Let's start with the first topic
In the past few weeks, I have talked to several of my peers in Asia and found that they have all entered a "pause", or "conservative", investment model.
Our most recent shot was in January, and several of our peers are similar, and there are many cases that haven't made a move for two or three months or more.
As for the feeling of the market, the word "boring" may be the most appropriate adjective, or temporary "consensus".
This sense of boredom is not entirely linked to the second level. I clearly remember that after the collapse of Luna, although the 2-pole market was sluggish, everyone was still excited about good expansion projects in the primary market, talking about ZK, or innovative Defi, Gamfi, and AI. And this excitement, after entering 2025, will slowly not be experienced. The decadence of the secondary market, which is hot for no more than a few days for any narrative, naturally has an emotional impact on the primary market, but a more worrying concern is - have we entered the stage where the "low-hanging fruit" is roughly finished, and since then has entered a window period of long-term adjustment, exploration, transformation, and corresponding severe pain? I'll expand on this topic at the end, because the current state of VC in the West is a bit different from that in the East.
The reason is that we invested in a Defi project in the Pre-seed round last year, and recently in the Seed round. Originally, I pondered that in the current primary and secondary markets, I would be very content to be able to be full. As a result, I didn't expect to overraise millions of dollars, and several European and American VCs rushed to stuff money into it. I was blown away by the results, the project itself was good, but it didn't have the texture of an S-class. Why is it that while we are "dumb fire" in Asia, Europe and the United States are still "firing", what is the reason why they dare to pull the trigger at this valuation?
We discussed it internally and made some irresponsible conjectures, such as:
The timing of the establishment of VC in Europe and the United States is not the same as that in Asia, so the exit cycle is different, resulting in different investment decisions;
Asian VCs have the temperament of "small-town problem-solvers", and in terms of yield, they either want to win their peers, or they want to at least outperform BTC (but I believe that few companies can do it in the current market situation - - ), European and American counterparts are more idealistic and long-term, or in other words, as long as they can logically explain to LPs why I invested in this project at this valuation, the obsession with yield is secondary;
Pure Deploy Fund needs, after investing in this phase, it is better to raise funds for the next phase as soon as possible, and collect management fees;
The specific reason is unknown, so I can only guess at present, so in the next few weeks, I will make an appointment with a group of partners and researchers from European and American VCs to chat, in addition to exchanging views on the market, I also want to ask for direct face-to-face advice on the above question, and then come to Twi to update after collecting information.
Then I would like to take this opportunity to discuss with you where the future of Crypto lies.
First of all, whether it is me personally, or ABCDE, I have never wavered in my belief in Crypto's long-term bullishness, which can even be regarded as a "faith", otherwise I would not be engaged in this profession full-time. But in the short to medium term, we're at a crossroads, one that I'm not sure is similar to what it was before the 2019 Defi Summer, so I'm going to share it with you.
The reason is that I have been listening to AlliaceDAO's podcast recently, and the three points mentioned in it have resonated with me a lot.
1 is that Qiao said that his current feeling is similar to that of 19 years, and he doesn't know what will happen to Crypto next, until the appearance of Defi Summer in 2020 made his eyes light up and found his direction;
2 is that they think that Crypto has only found one PMF for so many years, and that is finance, and more specifically, trading (Dex, Cex, Perp), lending, stablecoins, Mint (asset issuance, e.g Pumpfun);
3 is that they gave a lot of their AI x Crypto Start Up suggestions, if the Crypto elements in the project are too far-fetched, then it is better to directly remove Crypto and directly do pure AI, as a result, 30% of the projects really remove Crypto and become pure Web2 projects;
About 1 - Although I have entered the circle in 2019, I am just speculating in coins, to be honest, I am not sure if the VC at that time had this "boring" feeling now, but I have the impression that at least there are IEOs that are popular, EOS is exploring the direction, Starkware put forward the concept of ZK, many projects of Defi Summer in 20 years should also be established in 18-19 years + voted out, so theoretically the experience of the primary market should be better than now, in other words, at that time, everyone was interested in " The level of belief in this matter should be higher than it is now?
About 2 - is an echo of 1, and my biggest concern in the short to medium term, i.e. - whether we have come to a crossroads that is more or less low-hanging fruit is picked than it was in '19.
If Crypto's biggest PMF on the utility is finance, then Defi Summer+'s continuous iteration of micro-innovation in the following years has basically reached a boundary today.
The opposite of Utility is what Crypto is good at - that is, the narrative direction, which Meme is undoubtedly the best representative, Pump.FUN will push this direction to a boundary in 2024.
And in the last few years, when Utility and Narrative weren't sure what to do, our circles were at least able to roll up Infra. From ETH to EOS to Solana and then to Aptos, Sui...... I'm wondering, Solana has Firedancer this year, Monad and MegaETH are likely to be launched on the mainnet, have we also reached the boundary in terms of blockchain Infra scaling?
Regarding 3 - a crossroads, all three roads have reached the border, so whether there is only one last way, which is "the modularity of blockchain", is related to the third point above, I also heard similar insights in the YC podcast.
The modularity mentioned here is not the modularity of Celestia, but the abstraction of blockchain technology as a whole into a module, which is inserted into a start-up as a function, similar to AI.
The vast majority of Crypto projects we see now are built entirely on Crypto, or Crypto for Crypto's sake, and are not designed to solve a real-world problem. It's called Crypto Native, but if it's not good, it's not out of the circle at all, and it's self-congratulatory in the circle.
The Web2 AI venture capital community is expected to have similar problems, and many projects seem to be "AI for AI's sake" rather than solving a specific real-world problem.
Will the primary market produce some kind of integration of Web2 and Web3 in the future, or an encounter? A project must exist to solve a problem in the real world, and in the process of solving the problem, the part that needs to use Crypto will add Crypto elements, and the parts that need to use AI will add AI elements, but the original intention and purpose are completely unrelated to Crypto and AI. Just as Meituan Takeaway uses 5G, platform software, big data, and AI task distribution...... But it's essentially a project to solve the problem of eating.
If the next big stage of Crypto is in this form, will you be bored? Can a series of current forms based on the Crypto Native industry chain, such as Crypto VC, exchanges, and studios, continue?
At present, there are more and more payment and RWA-related projects in the primary market, which is more or less in line with the idea of 3.