Scenes from the Crypto Craze: Altcoin Mania and the Evolution of Retail Investors
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Scenes from the Crypto Craze: Altcoin Mania and the Evolution of Retail Investors
For a time, DeFi became the hottest trend in the crypto space. Exchanges, public chains, wallets, and other related or even unrelated projects all wanted to jump on the DeFi bandwagon to rejuvenate themselves.
Navigating Web3 tides with focused insightsA massive surge has unveiled hidden corners of the crypto world.
DeFi, or decentralized finance, has remained one of the most geeky and obscure circles in crypto since its inception over two years ago. In December 2012, the first DeFi application, MakerDAO, launched globally, targeting the stablecoin market—a move lacking the speculative appeal that crypto enthusiasts typically crave.
In mid-June, Compound introduced "liquidity mining" with its "lend-to-mine" model, offering users incentives via its governance token COMP that were more than six times higher than previous rewards. The price of COMP skyrocketed, multiplying sixfold within three days.
Following Compound's lead, other DeFi tokens rolled out their own liquidity mining programs, delivering 10x or even 100x returns.
Suddenly, DeFi became the hottest trend in the crypto space. Exchanges, public chains, wallets, and various related (and unrelated) projects all scrambled to latch onto the DeFi hype for renewed vitality.
Amid the DeFi frenzy, the landscape of the crypto world quietly shifted. Investors holding the so-called "wealth password" transformed overnight into the pyramid’s new "lambs," looking down on the crypto world, while those who hadn't yet joined were dubbed old lambs, self-deprecatingly calling themselves "lazy, ignorant, and unwilling to learn."
One day in crypto equals a year in the real world. DeFi instantly ignited the second half of 2020, with people still pouring fuel into this fire. Amid the spectacle, some rode the wind to rise like chickens and dogs, while others turned to ashes after being burned.
Altcoin Carnival
By July, the crypto market heated up again.
On July 1, the total market capitalization of cryptocurrencies was $263 billion. A month later, it reached $351.1 billion—an increase of nearly one-third (33.5%).
An overall 33% rise might not seem impressive, but examining individual coin performances reveals just how wild the surge truly was.
NEST token was priced at $0.023 on July 1, but by August 10, it had surged to $0.1872—up eightfold in a month.
BAND token rose from $1.11 on July 1 to $17.22 on August 10—a 15.5x increase in one month.
JST, a new DeFi-themed token launched by Tron founder Justin Sun, also multiplied 17 times within a month.
“It feels like 2017 again,” investor Xiao Yang told TechFlow. “Someone recommended this coin to me, but I missed it—it already went up over 20x.”
Wave after wave of rallies officially sounded the bull market’s horn.
The market widely believes DeFi reignited the bull run.
Defi refers to decentralized finance, and all the aforementioned surging coins are DeFi concept tokens. DeFi also propelled ChainLink’s token LINK into the fifth-largest cryptocurrency by market cap.
This DeFi boom began in June. Mid-month, after Compound launched "liquidity mining," its governance token COMP offered users over six times the original incentive level. COMP’s price then surged, rising sixfold in just three days.
Spurred by Compound, various DeFi projects rushed to join the "liquidity mining" bandwagon.
"Liquidity mining" resembles earlier crypto trends such as "trade-to-mine" and "staking-to-mine"—users earn tokens by providing liquidity to a project. However, unlike those models, this operates on a decentralized exchange platform.
These eye-catching metrics translated directly into market sentiment. Soaring prices revived the dream of instant wealth, making the crypto market red-hot once again.
Like any investment market, behind every rally, there are winners celebrating sudden riches—and losers lamenting missed opportunities.
“If you open your trading app now and none of your watchlist coins have gained over 20%, and you haven’t seen a single coin double in the past week, then one thing is clear,”
wrote blogger "Blockchain William" on Weibo, “You’ve been left behind by the new crypto world—the wheels of time have rolled right over your face, without taking you along.”
Who profited from the surge? And who is paying the price?
Lamb Evolution
A debate has emerged in the crypto community about new versus old lambs.
Who are the new lambs? Who are the old ones? How do we tell them apart?
Some say early entrants are old lambs, while latecomers are new lambs. Others argue that those buying "new coins" (like BAND, LINK, and other DeFi concept tokens) are new lambs, while those still holding "old coins" (like Bitcoin and Ethereum) are the old lambs.
“DeFi coins are like stocks on China’s STAR Market—concept-driven, surging so fast they make you question reality. Meanwhile, previously valued coins like Bitcoin, Litecoin, and Ethereum are like blue-chip bank stocks—everyone agrees they have value, but they just don’t surge,” investor Li Feng explained.
No one can precisely define new versus old lambs, but judging by outcomes, those who made money are the new lambs, and those who didn’t are the old ones. The crypto wealth code has shifted from old to new lambs.
For example, according to data from IntoTheBlock, on August 9, all 184,330 LINK wallet addresses were in profit. By this definition, LINK buyers belong to the new lambs.
Another simple distinction: in the eyes of DeFi investors, Filecoin investors are clearly old lambs. With Filecoin’s mainnet launch repeatedly delayed, these investors see no hope of recovering their costs.
In reality, most new lambs grew out of the DeFi ecosystem. As mentioned earlier, DeFi’s explosion set the entire crypto market ablaze. Some use the DeFi-driven rally as a dividing line, splitting the crypto world into two eras: classical crypto and new crypto.
Most old lambs failed to catch the DeFi wave and now mock themselves as “lazy, ignorant, and unwilling to learn.”
DeFi escalated from a whisper to a storm in just over a month. DeFi’s total value locked (TVL) multiplied sixfold in under three months, surpassing $6 billion by August 14.
DeFi moved so fast that most lambs didn’t even react before the train to instant wealth had already passed them by.
Meanwhile, veteran lambs who lived through the 2018 bull market remained stuck in outdated patterns—fixated on supply, circulating volume, market cap, whether a coin is vaporware, or if it has real product adoption—thus missing out entirely.
In this emerging DeFi tide, concepts like fixed supply, circulating supply, celebrity endorsements, value investing, or long-term holding no longer apply. All that matters is rapid in-and-out trading. Past judgment frameworks have become obsolete.
These liquidity-mining DeFi projects are monsters born from native crypto soil—novel in design, growing rapidly, perfectly satisfying crypto investors’ FOMO for “wealth, instant wealth, immediate windfalls.”
Cut, Then Hype, Then Repeat
One day in crypto equals a year in the real world.
This saying, popular since late 2017, remains true today.
“Everything changes too fast—I haven’t even figured out the names in DeFi, and everything’s already turned upside down,” said one DeFi participant.
In a way, the evolution of lambs mirrors the evolution of the crypto world.
From ICOs to futures contracts, to DeFi—looking back from today, this progression seems almost inevitable.
During the ICO era, token funds, exchanges, project teams, and media colluded—but all faced dumping: token funds dumped at ultra-low private sale prices, exchanges internally dumped newly listed tokens, blockchain media dumped promotional tokens, leaving retail investors to silently absorb the losses.
Thus, ICOs faded away.
Next came futures contracts. Rules appeared fair—betting on price increases or declines. Candlestick charts, group pump calls, long vs. short battles... But even without deliberate manipulation or K-line tampering by exchanges, much like Macau casinos, gamblers could never beat the “Kelly formula.” The real winners were always the futures contract exchanges.
Finally, DeFi arrived—fully transparent, fully open. No need for marketing fluff, no middlemen skimming profits. Everything started from zero, competing purely on knowledge and strategy—the very things new lambs pride themselves on.
Investors believing in free markets and decentralization staged the most primitive tales of wilderness in the utopia they built themselves.
Crypto is becoming increasingly decentralized, gameplay more complex, and project lifecycles shorter.
“What’s the difference between this DeFi hype and the old ICO days?” someone asked.
“There is a difference—back then, ICOs at least required procedures. Now, it’s just direct cash transfers,” someone replied sarcastically.
Back in the ICO era, participants had to go through team building, securing seed investors, private sales, exchange listings, etc. Two years later, DeFi players simply mint a token, create a chat group, and start shilling—all in one swift motion. Both financial and time costs have been reduced to nearly zero.
Another view holds that DeFi added financial layers to the blockchain world. Two years ago, blockchain promised to disrupt the world, and everyone wanted to become Web 3.0.
Yet, after two years, no killer blockchain application has emerged. The combined market cap of all cryptocurrencies still doesn’t match that of a single large-cap public company. “Blockchain once aimed to transform the world; now it’s沦为 just a speculation tool,” investor Niu Sheng said helplessly.
Perhaps the last remaining allure of crypto is unregulated get-rich-quick opportunities. Even though these chances grow faster, slimmer, and harder to access—with ETH transaction fees nearing 100 yuan per ERC-20 transfer.
Stories of overnight riches still circulate. Rumors spread in groups about someone achieving financial freedom through the recent "DeFi oracle" Kava.
Small wealth leveraged into massive gains—that’s the attraction of crypto, but like gambling, where does the road to financial freedom end? No one knows.
“Several people I know well have returned to regular jobs to repay loans,” said an industry insider. In his experience, there’s no freedom—only margin calls.
Yet reviewing the growth of DeFi tokens, it may not differ much from ICOs—prices surge several or even dozens of times with low trading volume. Once newcomers flood in and volume rises, further growth stalls.
“Ultimately, there are no new users or fresh money entering crypto,” Niu Sheng revealed. “It’s just existing players fighting each other, with shillers using price spikes to attract lambs.”
“All of this will be cut down. Most people still lose money,” he concluded.
Recently, Ethereum co-founder Vitalik Buterin tweeted that he hasn’t participated in liquidity mining and isn’t particularly interested. “Without understanding the real situation, there’s no need to blindly follow the so-called ‘hot DeFi projects’ on Ethereum. There are many other types of Ethereum DApps worth exploring.”
At 4 PM Beijing time on August 14, DeFi project Yam Finance (YAM) crashed 98.8% in minutes due to a code bug. YAM, which had hit $160 the previous day, plummeted to $1, dragging down the entire DeFi sector.
From birth to near-zero, YAM’s lifespan was only 36 hours. An investor in a group asked: “I deposited 100,000 yuan to buy YAM. After the crash, my assets dropped to 860 yuan.”
At 4 PM on August 15, CRV, the token of DeFi stablecoin exchange Curve, fell below $10—down 95% from its peak.
“Yesterday I mined potatoes until they vanished; today I farmed CRV until I drove straight into a ditch,” joked one investor. Meanwhile, some old lambs felt lucky—they hadn’t boarded yet when the crash hit.
After the DeFi token crash, major coins rebounded, shifting the balance once again between new and old lambs. New lambs fumed in anger; old lambs remained calm as ever.
Yet just after one weekend, new coins resumed their "breaking new highs" performance—LINK, for instance, kept climbing, reaching $19.3. The new lambs reclaimed the high ground.
DeFi’s total value locked continues to soar, rising 30% in a week—proof that capital keeps flooding in.
“Once a batch of new coins takes center stage, they inflate prices to lure new lambs, becoming the new mainstream—until the next batch arrives. It’s cyclical—cut, then hype, then repeat,” Niu Sheng mused.
Human nature is that of a repeater. It’s easy to foresee that soon, atop these new lambs, another tender crop of lambs will sprout anew.
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