Analyzing the Inner Logic of VC Coin

Recently, the cryptocurrency market has experienced a wave of enthusiasm primarily driven by projects supported by venture capital. These so-called "VC coins" have attracted widespread attention from investors. This article will delve into the operational mechanisms behind VC coins and their market impact.

The Rise and Fall of VC Projects

A batch of projects led by large venture capital has emerged in the market, especially in the fields of Staking and CeDeFi. The development trajectory of these projects can be analyzed through several typical cases:

The Ethena project attracted a large amount of investment in the early stages through high valuations and a strictly controlled whitelist mechanism. However, over time, its token price has plummeted, leaving many investors trapped.

The IO project has attracted attention after announcing a $30 million funding round, but its immature technology and security vulnerabilities led to a hacker attack incident. Nevertheless, the project was successfully listed, but it failed to deliver the expected returns for retail investors.

The MSN project attracted investment through extensive promotion and endorsements from opinion leaders, but quickly lost momentum after its launch, with the token value nearly dropping to zero.

There are also some relatively successful VC projects, such as EtherFi, Bouncebit, and Eigenlayer, but these projects are highly homogeneous, having determined the trading platform, execution team, and exit plan from the very beginning.

Market Bubble and Chaos

The current chaos in the market can be attributed to an excess of funds in the primary market while quality projects are scarce. Many investors have flooded into the market, trying to profit through venture capital, which has further exacerbated the disorder. This phenomenon reflects typical bubble characteristics.

Project Team Type

There are various types of project teams in the market:

1. Idealists: Typically young people who are first-time entrepreneurs and hope to change the world through their efforts.

2. "Puppet" Founder: The team pushed to the forefront, the project mainly relies on carefully designed publicity and a strong support system.

3. Short-term profit-oriented teams: Plan from the very beginning how to quickly profit from the project and exit the market.

4. Top research teams: such as Zama and Fhenix, focusing on long-term technological innovation, especially in areas such as fully homomorphic encryption.

Differences in Investment Strategies

There are significant differences in investment mentality between funds in North America and Asia. North American funds are more willing to support long-term technology innovation projects, while Asian funds pay more attention to short-term market performance and liquidity.

Investor Response Strategies

1. Focus on excellent projects of products, such as those invested by Paradigm, which typically have long-term development potential.

2. Adjust investment thinking, stand from the perspective of the project party, and profit together with them from VC.

3. Identify the authenticity of projects using technical capabilities and information channels.

4. Be wary of high valuation and low circulation projects, and pay attention to inflation pressure.

5. Consider participating in the 毛撸 activities, with low costs and controllable risks, stable returns can be obtained through airdrop and staking diversification strategies.

6. Use a blockchain explorer to analyze token distribution and assess project quality.

Overall, in the current market environment, investors need to be more cautious and rational, focusing on the long-term value and technological innovation of projects, rather than just short-term market performance.