TechFlow news, April 16 — Jack Yi, founder of LD CAPITAL, posted a detailed analysis today on social media about the multiple challenges currently facing Web3 investors. He pointed out that the decline of investors stems mainly from three factors:
First, unfair token unlock mechanisms have become the biggest constraint for investors. Investors generally face a strict "1+3" vesting period, while exchanges, project teams, market makers, and KOLs are not subject to such restrictions. In the crypto industry's rapidly evolving environment—where narratives may shift up to ten times within four years—this asymmetry puts investors at a clear disadvantage.
Second, investment success rates are extremely low. Although the 2021 bull market spawned numerous projects and funds, very few have delivered actual returns. He further explained that even if one out of five investments successfully lists on a major exchange, that single project would need to generate over a 10x return to cover overall investment and time costs. Given current market caps at listing, achieving this goal by unlock time is difficult.
Third, investors face the dilemma of being unable to simultaneously secure good projects, low valuations, and large allocation sizes. Most investors, constrained by valuation and allocation size, end up "only making noise." Compounding the issue, investors also bear reputational risk—given high project failure rates, once an investor's logo is attached to a project, they not only suffer financial loss but also public scrutiny, despite possibly holding only a "fraction of a percent" allocation.
He concluded: "This business model is classic—going through the stress of selling heroin, while earning cabbage money."
