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Author: Jocy Lin, Founder of IOSG Ventures Source: X, @JinzhouLin
The Token2049 exhibition has begun to take a huge scale, with the number of people twice that of last year, exceeding 20,000.Even Grab’s drivers lamented that the number of people attending crypto events this week seemed to have exceeded the number of visitors coming to F1 to watch.Overseas audiences and speakers account for more than half of the events, and there is no doubt that this exhibition may become the most successful and profitable session in Token2049’s history.
Why are the US GP and “Heroes” projects flocking to the top
Why do so many American GPs come to Asia?Why do many “Heavenly” projects come remotely?For the source of fresh water.Faced with the tight market environment, many top GPs and projects have also made special trips to Asia, hoping to achieve financing goals with the help of Asian communities.
During this week, many LPs were able to meet with three U.S. GPs on average every day.At present, we have also seen that the new phase of the PM fund has been reduced to US$800 million, and the fundraising target of another P fund has dropped from US$800 million to US$200 million. The initial fundraising of the D fund is expected to be set at$250 million.This is enough to show that global crypto funds are facing a new round of financing difficulties: due to poor performance of DPI in the previous cycle, the fund size has generally shrunk, and LP has become increasingly cautious.LP is affecting the VC GP market, and the VC market is more stringent in demanding and selecting early entrepreneurs. The problem of entrepreneurs’ financing difficulties is more prominent. At the same time, the requirements for listings such as Binance will be further increased.
Funds that have made rapid progress in the first half of this year (some have produced three valuations in the same financing round) have basically been reflected by LPs as required by heads in the recent cycle.At the beginning of the year, funds and big players who bought OTC in secondary trading began to doubt this industry.The volatility and reflexivity of the crypto industry are awesome.The financing market is getting worse, even very poor, and most of the active investment deals only occur in low valuations and new directions.
Projects with a valuation of around 100m and have not yet completed TGE, but have given up their plans to go to Binance due to the difficulty.Infra, which has a valuation of 300m to 500m, is still undergoing difficult financing (it can basically be said that investors will not refuse).For those projects that have completed TGE, if the starting strategy is poor, FDV will drop an average of 80% compared to the last round of VC valuation.Projects with liquidity at Binance are still looking forward to a bull market turnaround, while projects that have not been listed on Binance have begun planning new projects or next stage of work.
Industry confidence is severely damaged, innovation support is at risk
Everyone is busy in this industry. Some do fake data and income to deceive exchanges and investors. Some continue to discuss academically in the technology community but forget that good infrastructure is for the purpose of obtaining applications and users.Because of its good income model, it has become the biggest winner, providing the best working environment and income level in the short term, but it makes it more difficult for startups to acquire outstanding talents.This is a bit like the prosperity of the 2049 Conference, but few people are discussing how to obtain real users and revenue, as well as a stable and sustainable business model.
The performance of altcoins may be worse than expected, forcing industry participants to revisit innovative and real-world application cases.The interests of VCs, exchanges, project parties and retail investors are inconsistent, and all participants have become the parties hurt by the market. The four parties have no trust and cooperation at all. Without reform, they can only go to a dead end and cannot make new ones.Money and talent/users come in, even if Bitcoin succeeds, the entire Web3 industry will still fail.
Here I advocate the adjustment of token practicality and unlocking terms. The investment lock-in period of traditional IPOs is only 6 months to one year. For investment in crypto super early seed round companies, the overall liquidity lockdown has reached 3 to 4 years..
Most project tokens do not have any utility. In the first half of the year after the exchange went online, there was a market maker willing to make markets and adjust prices, but after that, no one cared for the project/exchange, nor did anyone buy it for VCs and secondary markets.Retail investors are responsible. After countless injuries and losses, more people’s support and confidence in innovation will be greatly damaged.
If everyone is looking forward to a big rebound in a bull market while deceiving themselves, but does not think about what kind of application scenarios will allow real users to enter, then they will fall into a state of losing money.Those who enjoy early dividends in the industry do not understand the sufferings of the world. The largest 16-letter fund in the United States is a group of its own. The ten-year-long 10 billion dollar fund allows them to live well without cooperating with any institutions/market forces.Most successful founders don’t care about young entrepreneurs like they were 5/10 years ago.But the industry is in a difficult stage, and we need these successful forces to point out the direction and bring faith to everyone, so that more people can persevere and see the dawn of the next bull market.
Where should Ethereum go?
Ethereum is experiencing an unprecedented challenge.Since the ETF was launched, it has been selling net/outflow of more than US$1.2 billion. From Ethereum core researchers/EFs to developer community organizations, to Consensys-related commercial companies and external investors, a huge event is happening.The crisis of trust, V God needs to better point out the direction and goals for different participants, because Ethereum has become a very large decentralized business entity in the entire crypto market and even traditional markets. There has never been such a business entity in history.The test for the entire Ethereum community and V God will still become increasingly severe, even to a level that is neither broken nor established.After “The Merge” turned to PoS, Ethereum actually entered a 20-month deflation cycle due to the significant reduction in ETH issuance and the existence of combustion mechanisms.Due to the sluggish L1 trading in the past few months, the gas price of L1 has been in single digits for a long time, causing ETH to return to inflation trends, and the total supply may return to the level at “The Merge” in the near future.
About 5 years ago, when we visited the official website of Ethereum, we finally saw several other L1 competitors listed, which allows everyone to understand the shortcomings of Ethereum or what they encountered in a completely open, transparent and comparative way.Problem: Ethereum is now more powerful than ever before, but how to make this network more open and diversified is a problem we urgently need to solve.
Emphasizing its position, IOSG continues to be optimistic about Ethereum in its investment strategy, and we have not found a more successful technology ecosystem than Ethereum.The overall Ethereum ecosystem TVL has grown from about $34b a year ago to $88b, with a growth rate of 159.5%; this significant increase further shows the possibility of Ethereum promoting new innovative projects in the future.
The crypto industry needs to return to practical application scenarios and avoid false prosperity
The latest metamask monthly active user data shows that the decline from 30 million at the peak of the bull market to 1 million marks a significant decline.User activity of EVM-compatible L1/L2 chains has also dropped by more than 50%.This dispersion of liquidity has led to wide dispersion of applications, developers (asset issuers), and users.Developers and users are rapidly flowing to those chains with subsidies and memes. The liquidity between different chains and L2 is too fragmented, and high-performance chains do not bring high-performance applications.
The real user scale brought by airdrops and incentives is relatively limited, and people have begun to feel disgusted with the airdrop customer acquisition strategy.A third-party research shows that the user churn rate is as high as 80% after the airdrop is over, which is not good for both the founders and the project.Take Friendtech as an example. This was a relatively influential and eye-catching project in the market before, but with subsequent token launches and no price for maintenance, all users are abandoning this application.The Restaking track also encountered a relatively similar bottleneck, and TVL evacuated or moved to a new agreement after the airdrop was over.
Western funds are not optimistic and optimistic about Ton and Web2 platforms. Everyone believes that Russia and Ton chain still have some underlying problems, but they are not optimistic about it, but they have not answered the investment/not investing question.But it is obvious that in this difficult cycle, Ton has brought new vitality to the crypto market. Among the 900 million monthly active telegram users, there are about 3 million real gamers, and the customer acquisition cost of each Ton user is US$0.7.There is a high probability that Ton will bring new users to Web3 from Web2, and will also be used to the growth of new L1/L2. It can be expected that these platforms will specifically provide a budget to subsidize this part of user growth.At the same time, we can also see an opportunity. After the strategic deployment of crypto financial ETFs is completed, the United States will begin to consider allowing technology companies to access and penetrate web3. A one-stop experience with users’ unconsciousness of the chain will become a new standard.
We talked to several game funds in the game sector, including Bitkraft and Makers fund who have moved from Web2 to Web3. Their positions and performance in Web3 were not as good as expected. Compared with the more mature Web2 gaming industry, they are still more willing to go toLP raises a new issue of Web3 funds, and still looks at the emerging game paradigm of web3.The game track is extremely difficult, and participants with long-term vision are thinking about what’s next after listing?Most funds that invest in crypto games have had even more hard time. In the past two years, 90% of gamefi projects broke the issue price after listing (compared with the valuation of the last round of VC investment round), and it seems to be from 3A games/full-chain games/Degen game community platformThey are all abandoned by retail investors. Of course, Pirate nation invested in at the beginning of the year and Small Brain, which recently completed financing, still have a good community foundation.The game track has become extremely difficult, and all participants are losing confidence. Encrypted games force participants to leave or make more innovative products and fun games in a more difficult mode. Of course, we are still continuing to find the right game.Faith, a team that has a consensus on the crypto market.
This time, people in charge of listing on a leading exchange learned that their biggest internal principle and consensus are to find long-term entrepreneurs. In the past, some founders of fake data chose to cash out after they successfully went online, and gave them aThe community leaves a bunch of debt claims, and long-term entrepreneurs are committed to growing and finding more reliable and sustainable business scenarios at any stage.
At the same time, in this 2049, I also saw more founders who devoted themselves to Web3 entrepreneurship from traditional AI.
Computing represented by @gensynai and @hyperbolic_labs, and Web2 type All in players represented by @SchellingAI, and http://Title.xyz, a picture/video generation model dedicated to Midjourney art style, AI+Consumer+DePin is currentlyBecome a new track for industry funds to actively bet.More talents will definitely bring better efforts and growth to the industry. Stay optimistic and Move Forward positively!
I hereby call on more successful people who have received industry dividends to pay more attention to the root problems currently encountered in this industry, support the construction of public goods, and create a better business innovation environment for these long-term entrepreneurs.IOSG will take the lead in setting an example to provide support from 0 to 1 for early entrepreneurs in the industry, and will continue to reflect and iterate their own investment thesis to guide entrepreneurs to think about new business models and customer acquisition methods.
