Why do retail investors prefer taking high-risk PVP gambles with conspiracy coins on-chain rather than approaching new tokens endorsed by VCs with caution?
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Why do retail investors prefer taking high-risk PVP gambles with conspiracy coins on-chain rather than approaching new tokens endorsed by VCs with caution?
The current crypto market funding ecosystem still needs to be restructured, and VCs should transform from passive "arbitrage intermediaries" into active "value enablers."
Navigating Web3 tides with focused insightsBy Haotian
In recent days, a collective pullback among newly launched tokens in the secondary market seems to reflect a grassroots revolt against the current cycle’s “narrative-first, fundraising-then, followed by TGE” VC-driven industrialized token issuance model. A key question worth pondering: Why do retail investors prefer high-risk, on-chain PVP meme coin gambling over VC-endorsed new launches? Here are my thoughts:
1) First, we must acknowledge that the VC-led innovation model from the previous cycle has evolved into an industrialized assembly line of "fundraising, token launch, exit." For some time now, polished whitepaper narratives, top-tier investor lineups, seemingly impressive funding figures, and sky-high farming expectations have become liquidity extraction weapons deployed en masse—severely eroding market trust.
While it's unfair to generalize, when stacks of projects fail to deliver promises and generate no wealth effect, the market has irrationally begun labeling all VC-backed ventures as scams.
2) The core fatal flaw of VC coins lies in their pricing mechanism. After multiple funding rounds, the valuation at TGE (Token Generation Event) is often inflated layer by layer, leading to two inevitable outcomes: first, retail buyers face prohibitively high entry prices; second, early investors have strong incentives to dump. This effectively designs a “death trap” for new tokens. Logically, such projects are more likely to see downside pressure post-TGE. One-way declines then fuel bearish sentiment and shorting, creating a vicious cycle.
In contrast, despite the high uncertainty, many retail investors still favor community-driven tokens that start from zero on-chain with low market caps over VC coins whose downward trajectory feels both expected and certain.
3) In an environment of liquidity drought, VC coins suffer even more severely. Imagine when every participant knows that selling immediately after TGE is the optimal strategy, and shorting appears rational—every VC coin listing faces massive sell-side pressure. Under broader market liquidity crunches, VC tokens are likely to be the first “sacrificed.”
This resembles a “prisoner’s dilemma”: if the team airdrops generously, they face dumping pressure; if they hoard supply, they’re criticized for being greedy. Either way, the result is the same—insufficient buying support.
4) Everyone sees the problem—but how do we resolve the crisis of trust in VC coins? The crux lies in rebalancing interests among project teams, VCs, and the community. Possible solutions include:
1. Start with low valuations, leaving room for upside: Project teams and VCs should accept lower initial valuations so that TGE becomes a true starting point of value rather than a peak, offering sufficient growth expectations to the market. (The fact that many recent fundraises remain large shows the issue hasn’t yet reached a breaking point.)
2. Partially de-Venture Capitalize: Involve the community in key stages through DAO governance, IDO (Initial DEX Offering), or fair launches to reduce VC dominance in token allocation and increase community share.
3. Differentiated incentive mechanisms: Design additional rewards for long-term holders, returning value to genuine ecosystem contributors and builders—not just short-term speculators. This requires upgrading current airdrop models.
4. Transparent operations: Teams should revive the original ethos of regularly publishing development progress and fund usage reports—moving beyond one-way marketing campaigns centered solely around TGE.
That’s all.
Truth be told, VCs have played a crucial and commendable role in maturing the crypto industry. Being wary of VC coins doesn’t mean we must completely eliminate VCs. An industry without VCs risks descending into chaos ruled by shadowy interest groups—an equally devastating fate.
The current crypto fundraising ecosystem needs rebuilding. VCs must evolve from passive “arbitrage intermediaries” into active “value enablers.” Fundamentally, today’s struggles with VC coins reflect not only market saturation but also the increasing maturity of the crypto market. This places higher demands on retail investors—to better identify quality projects and invest rationally.
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Haotian | CryptoInsight
