Crypto Tier Pyramid: The higher you climb, the greater the returns
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Crypto Tier Pyramid: The higher you climb, the greater the returns
Who's buying and being hyped? You are.
Navigating Web3 tides with focused insightsAuthor: Duo Nine⚡YCC
Translation: TechFlow
I accidentally became a KOL—a lucky coincidence that gave me deeper insight into how this space really works. A lot happens behind the scenes, and this is your window into it.
Crypto operates in layers, much like a classic pyramid. The higher up you are, the greater the rewards. You—the retail investor—are at the bottom of this pyramid. Here’s how it works.
Around 2020, I began posting my technical analysis on Twitter, never expecting it to go viral. Four years later, I’ve built a community I now call home.
I first encountered Bitcoin in 2014 and felt lost for a long time. Most places I went were terrible—ripe for scams, manipulation, and worse.
With that context, let me introduce you to the other side of crypto—one most retail investors never see.
Overview of the crypto pyramid and its layers
Layer One: You, the Retail Investor
Naive and trusting, retail investors are frequently exploited. They’re drawn in by promises of 100x returns. Few ever achieve this, and those who do often lose everything quickly due to newfound greed in the crypto casino.
This is the foundation of crypto. It feeds and sustains everyone above. When VCs make 1000x on an investment, that money comes from retail. Every time a token is launched via TGE (Token Generation Event), IDO (Initial Dex Offering), or other methods, it's time for profit for all layers above you—KOLs, media partners, dev teams, exchanges, and VCs.
Who buys and gets hyped? You.
That’s the entire purpose of the upper layers—to make you believe the narrative. If a big KOL says it’s a great investment, it must be true, right?
Wrong.
They just want your money. That’s all.
Those above buy tokens at deep discounts before TGE/IDO, or dev teams simply generate them out of thin air with a few lines of code.
Your buying action is what assigns value to that token—or rather, transfers value upward. This is your key function in the pyramid: being used to provide value to something created from nothing.
Layer Two: KOLs and Media
KOLs and media companies in crypto serve the upper layers. They say and do whatever they're told because they're paid to. They receive their nourishment from above and pass down to retail exactly what retail wants to hear—like a new token that will 100x.
Most KOLs cannot be trusted by retail because their incentives are misaligned—the bigger the influencer, the more skeptical you should be.
Why?
They may be sponsored by anyone above in the pyramid, promoting narratives that don’t align with your interests. That new token might just be a rebranded copy of last cycle’s project. Don’t fall for it. Always do your own research. Most memes are exactly this.
Media companies may also collude with one or multiple KOLs as a group to create "organic" engagement around a token or topic—nothing new here. Crypto protocols and VCs have marketing budgets, and they use them.
You are their target. This layer’s role is to sell it to retail.
Whenever you see a KOL listing a series of new crypto projects in a post, these are mostly promotional pieces mixed with real tokens, making uninformed readers think it’s a legitimate research article. In reality, they didn’t discover anything—they’re just getting paid.
Over time, you’ll learn to tell who’s genuine and who isn’t. But if you’re new to crypto, assume everyone is eyeing your money, then work backward—only trust Bitcoin, since it’s the most decentralized and hardest to control.
Layer Three: Crypto Protocols and Development Teams
The most honest developer was Satoshi Nakamoto. Everything after him has been distorted. That’s why there are over 13,000 altcoins in 2024. 99% are shameless money grabs with no technology or innovation—most exist solely to profit from retail.
Every time a dev team launches a new crypto protocol, blockchain, and its associated token or coin, they’re essentially conducting an unregistered securities offering.
This is mostly illegal in the U.S., but unregulated across much of the world. It’s the fastest, easiest way to make money. The actual merits of the new protocol or network don’t matter. Terms like DeFi, RWA, DePIN, SocialFi, or GameFi are used to confuse you—often to mask the truth.
That’s why, when reading a new project’s whitepaper, the most prominent sections always revolve around their token or utility token mechanics. Note that some teams repeat this every cycle under a new name or brand, using funds from prior cycles to pay off lower-tier KOLs to promote their projects.
If developers can raise funds based purely on a promise, they’ve already succeeded. Fulfilling that promise isn’t the goal. Their sole purpose is to make money for themselves and those above. VCs sponsoring these teams expect profits, not innovation.
That’s the primary purpose of most altcoins. They’re not here to help you or solve problems. They exist to make quick money—because bull markets are short-lived, like mushrooms sprouting after rain. But beware—some are poisonous!
Very few protocols aim to build something lasting. That’s why I recommend focusing on tokens that have existed for a while and actually have real utility—ideally ones that have survived at least two crypto cycles.
Only consider truly innovative new projects—the rest are hype pushed by KOLs. The AI narrative in crypto is the latest example: 99% hype, 1% real use cases.
Crypto is driven by greed, and part of the blame lies with retail, who keeps dreaming of 100x returns—while those above happily feed that dream with new projects designed to burst it.
Layer Four: Venture Capitalists (VCs)
These are the moguls of crypto—wealthy, powerful, and in control. They can pump or dump markets, exchanges, or even kill tokens. They drive the growth of the crypto casino by funding new projects proposed by developers.
There’s no doubt VCs are here to profit. While retail dreams of 100x, VCs routinely make 1000x during bull runs. They buy in at pennies and sell to retail at hundreds of dollars.
They’re the ones who kickstart bull markets and exit when prices peak, cashing out on their 1000x gains (aka smart money). Once the hype fades, they stop playing—ushering in what we call a bear market.
In this game, VCs can get crushed if they back the wrong horse—it’s free-market competition. In the last cycle, Terra Luna and FTX collapses provided many such examples.
VCs receive capital from above, but when their investments succeed, they keep massive profits. Just look at Solana’s price to see how much certain VCs made. Vitalik Buterin was surrounded by VCs early in Ethereum’s development. They’re all rich now.
VCs use this money to fund new crypto projects. They fuel progress in the space—which is good—but they can also cause massive damage. VCs are as greedy as retail, only with a few extra zeros. Still, they play a crucial role in crypto cycles because they’re deeply embedded in the system.
Sometimes dev teams resent VCs, refusing to collaborate or accept their bribes, as it compromises their freedom. In such cases, VCs hold the power—and sometimes retail gets hurt. Some dev teams care; others don’t.
This is also why many talented dev teams with excellent projects never succeed—they’re outside the VC club. If you run with members of the VC inner circle, every layer below will support your project, including retail, ready to swallow whatever the top feeds them (i.e., dumb money).
Layer Five: BlackRock and the Federal Reserve
BlackRock recently entered crypto publicly through their Bitcoin ETF. Privately, they’ve been active in the space for years via VCs. They dominate traditional finance, and crypto is their newest frontier. The Fed’s role is simple: they print dollars whenever and wherever needed, deciding when markets boom or crash.
BlackRock, the world’s largest asset manager, wouldn’t ignore the latest asset making waves—Bitcoin. This year, they officially joined the Bitcoin train with ETF approval. For over a decade, those at the bottom of the pyramid fought for a spot Bitcoin ETF—yet it only happened when BlackRock decided to step in. That’s power.
For years, BlackRock has quietly accumulated Bitcoin through private trusts—mostly behind closed doors. Their public entry was inevitable. They know where Bitcoin is headed, and they’re already part of it.
The Fed’s role in crypto is straightforward: they decide when liquidity floods the market, just like in traditional finance. Crypto is not immune. When the Fed prints dollars out of thin air, crypto thrives. When they stop, the market crashes.
They effectively control the lives of everyone across all layers, with the rest handled by BlackRock. Neither BlackRock nor the Fed cares about 1000x returns—they can print as much money as they need, whenever they want. Money is not their constraint.
Their main objective is control and dominance over the lower tiers. They maintain this through monetary policy and other tools. We are victims of their decisions, powerless to influence or stop them. As kings of the pyramid, they act as they please.
*Disclaimer
The above is merely an illustrative explanation of how the crypto pyramid functions and the relationships between layers. The entities mentioned are neither exclusive nor exhaustive—much remains unsaid.
There are legitimate participants striving to advance Satoshi’s original vision, but they are few. Most actors in this space are players within the crypto pyramid.
Finally, anyone who threatens the upper layers is swiftly punished—like Binance’s CZ, who ended up in prison. That’s why Satoshi’s true identity remains unknown. He understood better and accurately assessed the impact his creation would have on those at the top.
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