Crypto Markets from an East-West VC Firsthand Perspective: Storytelling for Storytelling's Sake, Utterly Boring
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Crypto Markets from an East-West VC Firsthand Perspective: Storytelling for Storytelling's Sake, Utterly Boring
When it comes to the sentiment of the market, the word "boring" might be the most fitting adjective—or perhaps the temporary "consensus."
Navigating Web3 tides with focused insightsAuthor: Lao Bai, Partner at ABCDE Research & Investment
Come to think of it, this might be the longest I’ve gone without posting on Twitter. The reason? Simple. As a blogger who never takes ads, my writing has always been driven by the need to express something—and lately, the market hasn’t exactly inspired much of that feeling. While the sluggishness in the secondary markets certainly plays a role, it’s really the sentiment in primary markets that’s primarily killing the vibe.
That said, I’ve recently noticed a few things and have some thoughts—quite a few, actually. This will likely be long, so I’m planning to split it into three or four parts, focusing on: “VC Perspectives on Primary Markets: East vs West,” “New Signs in RWA,” and “Interesting Developments on ETH and Solana.”
Let’s start with the first topic today.
Over the past few weeks, I’ve spoken with several peers in Asia and found we’ve all unconsciously entered a state of “pause” or “conservatism” in our investing.
Our last investment was back in January. Others are in similar situations—going two or three months, sometimes longer, without making a single move.
When describing the current market sentiment, the word “boring” feels like the most accurate label, perhaps even a temporary consensus.
This sense of boredom isn’t entirely tied to secondary markets. I clearly remember after Luna collapsed—while the secondary market was depressed—there was still excitement around promising Layer 2 projects, ZK narratives, innovative DeFi, GameFi, and AI. But since entering 2025, that excitement has gradually faded. The secondary market’s inability to sustain any narrative beyond a few days inevitably affects sentiment in primary markets. But a more concerning question looms: Have we simply picked most of the “low-hanging fruit,” and are now entering a prolonged transition period—a phase of adjustment, exploration, and transformation, complete with significant growing pains? I’ll return to this point later, because Western VCs currently seem to be in a different state compared to their Eastern counterparts.
The trigger for this reflection was one of our own DeFi projects, which we backed at Pre-seed last year and is now raising its Seed round. Initially, given the current state of both primary and secondary markets, I figured just closing the round would be a win. To my surprise, it ended up significantly oversubscribed—several million dollars over target—with multiple European and U.S. VCs fighting to get in. I was stunned. The project is solid, sure, but not S-tier by any means. So why are Western investors still actively deploying capital while Asian VCs appear to be sitting idle? What gives them the confidence to pull the trigger at these valuations?
We discussed internally and came up with some irresponsible guesses:
1. Western VC funds were raised at different times than Asian ones, leading to different exit cycles and thus differing investment behaviors;
2. Asian VCs often carry the mindset of “small-town exam achievers”—obsessed with outperforming peers or at least beating BTC returns (though in the current market, few can claim that - -). In contrast, Western VCs seem more idealistic and long-term oriented. As long as they can logically justify to their LPs why they invested in a project at a certain valuation, short-term ROI becomes secondary;
3. Pure fund deployment pressure—invest now to close this fund and quickly raise the next one, primarily to collect management fees;
The real reasons remain unclear. These are just hypotheses. Over the coming weeks, I’ve scheduled calls with several Western VC partners and researchers—not only to exchange views on the market but also to directly ask about this divergence. Once I gather enough input, I’ll update here on Twitter.
Now, circling back to the idea of “low-hanging fruit”—I’d like to use this moment to open a discussion: Where does crypto go from here?
First, let me be clear: both personally and at ABCDE, our long-term bullish conviction in crypto remains unshaken. You could even call it “faith.” Otherwise, we wouldn’t have dedicated our careers to this space. But in the medium to short term, we’re undoubtedly at a crossroads—one I’m not sure mirrors the pre-DeFi Summer 2019 era, but worth discussing openly.
This line of thinking was sparked by recent episodes of AllianceDAO’s podcast, where three points particularly resonated with me:
1. Qiao mentioned his current feeling is similar to 2019—he doesn’t know what’s next in crypto, until DeFi Summer 2020 suddenly revealed a new direction;
2. They argue that after all these years, crypto has only achieved one true product-market fit (PMF): finance—more specifically, trading (DEXs, CEXs, Perps), lending, stablecoins, and minting (asset issuance, e.g., Pumpfun);
3. They gave advice to many AI x Crypto startups: if the crypto component feels forced, just remove it and build a pure AI product. Surprisingly, 30% of those teams actually dropped crypto and pivoted to fully Web2 businesses;
On Point 1 – I was already in crypto in 2019, though mostly just trading coins. Honestly, I’m not sure if VCs back then felt the same “boredom” we feel now. But I do recall IEOs were still booming, EOS was exploring new directions, Starkware introduced ZK concepts, and many DeFi Summer 2020 projects were likely founded and funded between 2018–2019. So theoretically, sentiment in primary markets should’ve been better than today. In other words, back then, people probably believed more strongly that “something big was coming”?
On Point 2 – This complements the first point and reflects my biggest near-term concern: Are we at a crossroads where most low-hanging fruit have been harvested—a juncture different from 2019?
If financial utility remains crypto’s strongest PMF, then DeFi Summer and the years of incremental innovation since have essentially reached a boundary.
On the flip side—the narrative-driven side—where crypto also excels, memes stand out. Pump.FUN pushed this direction to its limit in 2024.
And when utility and narrative stall, we’ve historically doubled down on infrastructure. From ETH to EOS to Solana, then Aptos, Sui… Now, Solana is getting Firedancer, Monad and MegaETH are likely launching mainnets soon. Have we also hit a ceiling in blockchain infrastructure scaling?
On Point 3 – If all three paths—utility, narrative, infrastructure—have reached their limits, is there only one path left: “modularization of blockchain”? This connects directly to the third insight above, and I’ve heard similar thoughts on YC’s podcast.
Here, “modularization” doesn’t mean Celestia-style modularity. Instead, it means abstracting blockchain technology as a whole into a modular component—a feature that can be plugged into a startup, much like AI.
Most crypto projects today are built entirely around crypto—created for crypto’s sake. At best, we call them “crypto-native”; at worst, they’re insular, stuck in an echo chamber.
The Web2 AI startup world faces a similar issue—many projects are “AI for AI’s sake,” not solving real-world problems.
Could the future see a convergence of Web2 and Web3? A startup exists to solve a real-world problem. If part of the solution requires crypto, add crypto. If it needs AI, integrate AI. But the core mission has nothing to do with crypto or AI per se. Just like Meituan started to solve food delivery, leveraging 5G, platform software, big data, and AI dispatch systems—but at its heart, it’s about solving hunger.
If the next major phase of crypto looks like this, will people find it boring? Can the current ecosystem—crypto-native VCs, exchanges, studios—survive such a shift?
The increasing number of payment and RWA projects in primary markets aligns somewhat with this vision. I’ve recently looked into Ondo’s Global Market and chatted with several RWA teams. Next post will dive into the new frontiers of the RWA space.
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