In-depth dialogue: Crypto VC life and death test, get out or get out of the circle?

Bản gốc | Odaily Planet Daily ( @OdailyTrung Quốc )

Tác giả: Wenser ( @wenser 2010 )

Trong bài viết trước ABCDE stopped fundraising, crypto capital urgently needs version update , based on the fact that ABCDE stopped fundraising, we brought up a topic – mật mã VC urgently needs version update to adapt to the new cycle and new monetization path. With the recent recovery of the crypto market, many crypto investment institutions have also started their own performances. Some choose to adjust their positions, some place their hopes on new projects, and some set their sights on the on-chain market, stablecoin track and PayFi track that are more in line with the version.

Odaily Planet Daily recently had in-depth exchanges with several first-line VC institutions in the industry, hoping to explore a new way out for crypto VC in industry discussions and find a new development direction for the market for reference by industry insiders. The following content mainly comes from interviews with ArkStream Capital, YBB Capital and other institutions, and some content has been deleted or modified.

Sir, times have changed: the era of crypto chaos has begun, and liquidity is king

Talking about the current market situation, it may be most important to understand the changes and constants in the market and the times.

ArkStream founder: Cryptos main line is still Fintech 2.0

When asked about this question, ArkStream founder Ye Su ( @allen_su1024 ) believes that from a longer-term perspective, the crypto market cycle boundary is 2023. Before that, the crypto industry is in the stage of technical base development like the AI industry before, and its main goal is to build industry infrastructure. After that, with the emergence of BTC ETF and ETH ETF, the mainstreaming of cryptocurrency has accelerated, and the main market participants have further spread from Crypto Native to mainstream groups. The specific changes include the following three aspects:

Cycle logic: transition from a growth curve centered on narrative and attention to one centered on practical applications and real income. Mã thông báos with smaller declines after 2023 will need certain business support. The decline of ETH, which has always been criticized by the market, is far smaller than other altcoins that often fall by 70%-90% or even more.

Participating groups: The transition from crypto natives to traditional financial people has triggered a major shift in the valuation model of the entire market. Compared with the Web2 industry seed round valuation of RMB 20-30 million, the Web3 industry project valuation starts at 20-30 million US dollars, which undoubtedly gave rise to a certain industry bubble. The decline in market tokens entering a new cycle has played a role in squeezing the bubble to a certain extent. I personally think it will take another 2-3 years of bubble squeezing period.

Asset distribution: From the fair distribution in the past ICO period, to the high market value, low circulation stage of VC coins, to the current Meme coins and on-chain issuance model. In the early days of the industry, VCs and retail investors in the market stood on the same starting line, participated in public offerings at the same price, and did not lock positions. Now they have returned to a similar model. The main reason is that the core demand of retail investors in the market is still the wealth effect. Which model can better meet the profit needs, most people in the market will chase after it. This is also one of the reasons why the former VC coins have gradually become lonely.

What remains unchanged is that the main trend of Crypto is still Finance 2.0 (Fintech 2.0) , that is, as a global ledger that is collaboratively empowered by decentralization and smart contracts, its core goal is not to recreate a new productivity ecosystem, but to serve the improvement of market production relations – the most efficient asset circulation, distribution and decentralized operation. The focus of the game and social tracks in the past crypto industry has still been on financial attributes, which can support this view.

YBB Capital: The lowering of asset issuance thresholds leads this cycle

John ( @John_YBB ) , co-founder of YBB Capital , also expressed a similar view. He mentioned: The changes are as follows: 1. Asset issuance is still the blood-making engine of the market, but compared with the past few cycles, asset issuance has spawned a variety of narratives and repeatedly verified the maturity of the DeFi track. In addition, this cycle is more about lowering the threshold for asset issuance, and the on-chain liquidity is then piled up, which ultimately drives the development of Dex and derivatives , which does not have much driving effect on the overall development of the industry. 2. The capital structure is transforming, the management scale of Bitcoin spot ETFs has exceeded US$250 billion, sovereign funds and traditional institutions have entered the market, and the market has shifted from retail-driven to institutional-led.

The unchanging points are: 1. Meme coin speculation and DeFi pseudo-innovation continue to cause resource mismatches. Although the underlying technology iteration is continuing, there is currently no application matching the infrastructure. 2. Bitcoins digital gold narrative has not changed, but the separation between altcoins and BTC is getting stronger.

Summary: The cycle is still there, but the profit-seeking mentality is still strong

Overall, the power of cycles is still at work, and the entire crypto industry is still innovating around asset issuance and distribution methods, but the industry narrative has gone through round after round of baptism and has fallen into a state of exhaustion. Ultimately, it can only hope for the industrys endogenous casino scale effect and the introduction of mainstream asset liquidity from outside the industry.

In other words, the entire crypto industry is now more realistic and its profit-seeking instinct is particularly strong. Based on this background, the business model of crypto VCs has also undergone new changes.

A new storm has emerged: VCs are eyeing new monetization models

Looking back, all crypto VCs who have experienced the three years from 2022 to 2024 sighed: The road ahead is long and hard, and the current market monetization model has changed significantly compared with the past.

CypherM2Phoenix Joint Creation: No destruction, no construction, waiting for the next cycle

In view of past achievements, Cypher M2 Phoenix and other institutions jointly founded Bill Qian ( @billqian_uae ) previously stated in a post : We have invested in 10+ VC funds in this cycle. The GPs are all very good and have captured top projects. However, for our investment in the entire VC fund (we are LP), we have made a 60% accounting reduction, which means that we hope to get back 40% of the principal in the end ; there is no way, we have to admit it if we catch up with the 2022/23 investment vintage.

Sometimes you are not wrong, but you are defeated by time and year. However, we are optimistic about the next cycle of Crypto VC, because: everything will turn around when it reaches its extreme. Just like the Web2 VC in 2000 was completely wiped out in Silicon Valley, but the following year became a good year for nurturing and investing in innovation.

Nhìn lại bây giờ, this speech reflects some of the pain of the times, but is also full of deep hope for the next future.

YBB Capital co-founder: From rejecting Meme to joining the craze, flexibly choosing the track

When referring to the institutions own hematopoietic model, YBB Capital co-founder John ( @John_YBB ) summarized: Previously, YBBs main investment model was to participate in the early rounds of projects, such as seed and angel rounds of financing. After participating in the investment, it established a long-term cooperative growth relationship with the project, providing market media, exchanges, communities and other resources to empower the team, with a return rate ranging from 10 times to 100 times . The track is more cyclical and more flexible-in the earliest period of 2016, it was mainly Infra, such as L1 public chain and underlying cross-chain protocol; subsequent DeFi Summer related protocols, games in the GameFi field, and NFT, Metaverse and other tracks also have in-depth participation. From 2024 to 2025, in the market cycle where Meme coins are king, since the earliest issuance of Meme coins was driven by pure hot topics, for VC There are not many opportunities for participation; after a certain stage of development, standard coin issuance teams including traffic marketing, community guidance, and team orders have emerged, and some institutions have participated in the investment, but because this model is contrary to our industry values, we did not participate. After all, the risks far outweigh the benefits, and some projects are too ugly.

It is worth mentioning that during the TG ecological outbreak last year, we helped many Web2 project parties bring a certain scale of new Web3 users through Mini App through regional resources; later, we saw the development prospects of Pump.Fun and invested in some Meme Launchpad products, and did not miss the waves of Meme coins. Personally , I think the reasonable and long-term way of monetization should be a business that rises and falls with the Meme craze, rather than a way of cutting a wave of leeks and running away. What can bring positive user growth to the project is what we have been doing, and what we think is valuable.

At present, YBB mainly focuses on the core narratives in the industry, such as Dex, chain abstraction and asset issuance platform, as well as the narratives outside the industry, such as RWA, stablecoin upstream and downstream, and AI, which are combined with Web3; in the future, we are more looking forward to the AI economy, the upstream and downstream needs of the AI industry, derivative tools of asset issuance platforms (such as token tracking and analysis platforms such as GMGN ), and some narratives that have the opportunity to revive as the technology matures (such as Metaverse).

ArkStream founder: From primary investment to 1.5 level investment, the opposition VS the ruling track

Regarding the focus of its own business, ArkStream founder Ye Su ( @allen_su 1024 ) has the following main views:

First of all, from the perspective of the entire industry, in the bull market of 2020-2022, the DPI (distribution return multiple) of top funds can reach 20 times, the upper-middle level is 5-10 times, and institutions with less than 5 times perform relatively poorly; in the current cycle, the DPI of ordinary funds is about 1, and the performance of excellent funds is 1-3 times. Very few have higher returns, and the overall return rate has dropped significantly.

Secondly, taking ArkStream itself as an example, the team previously focused on primary VC investment. Due to the good liquidity performance of the crypto industry, compared with the Web2 venture capital industry with a single exit mechanism (capital profit settlement can only be completed through listing), the unlocking cycle is as short as 1-2 years, and it is relatively easy to obtain high returns from liquidity arbitrage opportunities. This is determined by the attention economy attribute of the crypto industry; after 2023, affected by regulatory forces and exchange policies, the unlocking cycle of many project tokens will be extended to 2-3 years, or even 4-6 years, the liquidity arbitrage space will become smaller, the primary market dividend will decrease, and only a few institutions can obtain high returns, so OTC investment has become a key business for some of them. The usual operation is to choose mature projects with easier risk control, more predictable liquidity and discounts, and the investment cycle is shortened to about one year, which makes it relatively easier to judge the cycle.

Finally, in terms of the focus of subsequent attention , ArkStream can be said to be an investment institution that pays close attention to Meme. Although there are not many actions at the institutional investment level, it has always paid attention to the opposition financial infrastructure and new opportunities on the chain, including the Trading Bot track and on-chain derivatives, as well as the relatively more orthodox RWA, PayFi payment and other ruling track assets. We also look forward to having in-depth links with projects in these two directions in the future, and welcome entrepreneurs to contact and cooperate with project parties.

Summary: On-chain becomes the next gold mine

In summary, the interim consensus among VC institutions is to look for innovative projects related to on-chain transactions, combined with mainstream narratives such as AI, and look forward to the emergence of endogenous innovation in the industry at a time when liquidity is scarce and concentrated. This is also affected to a certain extent by the Trump administration and the US regulatory environment.

New variables in encryption: Trumps attitude will affect the direction of the industry to a certain extent

It has to be said that Trumps election and inauguration as US President has had a lasting and far-reaching impact on the crypto industry. His coming to power not only helped push Bitcoin to a new high ahead of time, but also laid a relatively friendly policy foundation for subsequent crypto regulation. However, the tariff trade war launched by Trump once caused both the US stock market and the cryptocurrency market to plummet, and his subsequent attitude and actions will continue to affect the entire cryptocurrency market.

Waterdrip Capital founder: The era of chaos is coming, and the crypto industry is facing crises

BẰNG Dashan, founder of Waterdrip Capital, mentioned in his article “The New Logic of Web3 Entrepreneurship under the New Global Trade Order” : “Since Trump returned to the White House, a series of unexpected economic and political measures have continued to turmoil the global market. Among them, one of the measures that caused the biggest shock was the escalation of tariff policies. Investors are still full of worries about the uncertainty of the future, and the global financial system seems to have entered an ‘era of chaos’.

But on the other hand, a series of actions show that the United States intends to use Bitcoin and gold as anchor assets for the new financial system. The three of US dollar stablecoin + gold + Bitcoin may jointly outline the prototype of the new dollar order – maintaining the legal status of the dollar, while supporting it with physical and digital assets to improve risk resistance.

In the second half of the crypto market, the simple traffic strategy is no longer sustainable, and it is replaced by entrepreneurial logic centered on hard-core value. In the current market environment, new opportunities for entrepreneurs mainly include: Bitcoin ecology (including BTCFi), other public chain ecology (including DeFi), real world assets (RWA), payment finance (PayFi), crypto concept stocks, etc. ”

YBB Capital Lianchuang: Trump has become a liquidity black hole, and the USization of cryptocurrencies is a foregone conclusion

When discussing the impact of Trump, YBB Capital co-founder John ( @John_YBB ) gave a different answer.

He believes that “ the impact of tariffs and trade wars on the crypto industry is not significant, and the main impact of Trump’s presidency on the market is reflected in volatility and liquidity.

In terms of volatility, the uncertainty of Trumps policies has had a significant impact on the US stock market. Since China began to clear out mining machines and mainland users, the volatility of the crypto market has gradually shown a trend of US stockization. At the same time, the completion of the Bitcoin spot ETF also means that Crypto has moved towards its final form – US stockization. Spot ETFs characterize Bitcoin as a commodity, which means that it must follow commodity rules similar to stocks and bonds in terms of taxation. At the same time, ETFs also divide Bitcoin into two parts: white and black: the white part is in the market supply and demand relationship, and has lost the original demand drive such as decentralization and anonymity, and only retains financial attributes for speculation. Its value endorsement has also shifted from the decentralized chain to the centralized government; while the black part represents the orthodox Bitcoin that still retains its original attributes. However, the current market dominance is gradually tilting towards white Bitcoin, and the largest dealer has also changed from private forces to the US government and its capital forces.

Changes in liquidity are often more destructive than the policy itself. In Web3, attention = liquidity. Trump transformed political attention into assets through the meme coin TRUMP, and constructed a narrative liquidity black hole with identity narrative + asset minting + public opinion manipulation.

ArkStream founder: Bitcoins next rival is gold

Regarding the Trump effect, ArkStream founder Ye Su ( @allen_su 1024 ) believes that it is necessary to look at the impact on Bitcoin, which is an industry bellwether.

After going through the two major development stages of technical base → mainstream assets, the main impact of Trumps coming to power and his policies is whether Bitcoin can be transformed into a global safe-haven asset. In the next five to ten years, the industry should pay more attention to whether Bitcoin can achieve the same asset status as gold. In particular, it is particularly important whether the US sovereign fund can promote this process. If it can be achieved, then Bitcoins growth space is still very huge. After all, there is still 8-10 times the market value of gold; if it cannot be achieved, then Bitcoins development space is relatively limited.

Conclusion: Cryptocurrency is no longer a niche, and it is not immune to it

In any case, Trump’s dramatic and conflicting policy measures have brought a high degree of uncertainty and opportunity to the cryptocurrency industry. The former is reflected in the volatility of the market and the “price influence” that Trump himself has exerted on the market through token projects such as WLFI and TRUMP. The latter is reflected in the further enhancement of Bitcoin’s safe-haven properties, crypto concept stocks, the stablecoin industry, and the PayFi track.

Conclusion: There are no mismatched assets, only mismatched projects

Finally, we end with the question of Is there a mismatch in the crypto market? After understanding the main views of representatives of many capital institutions, the author sorted out the main points as follows:

From a micro perspective, the crypto market does have mismatches in market capitalization and project business, valuation and actual application, token airdrops and short-term speculation, exchanges and project parties, and project parties and users. The market as a whole still finds it difficult to find a balance between expectation-driven and value implementation. The healthy development of the industry cannot be separated from the value logic of how much is used, how much is worth, otherwise innovation is out of the question.

From a meso-level or even macro-level perspective, whether it is retail investors or VC capital, all liquidity will only flow to more efficient places. Where there is a wealth-creating effect, capital will move and attention will follow. Whether it is Solana, Base, BSC ecology, or Meme coins, AI Agent concept coins, airdrops, and exchanges, they cannot be separated from the user market. As ArkStream founder Ye Su ( @allen_su 1024 ) said: The core of the market is mainly determined by user demand. As the silent majority, retail investors actually play a leading role. Therefore, products and issuance models need to be adjusted in time with the market, rather than remaining unchanged. From this perspective, the crypto industry has never had a simple mismatch, but a structural adjustment caused by industry cycles and changes in user demand.

In any case, crypto never sleeps, and liquidity flows like water. What will ultimately create waves are not mismatched projects, but assets that are just right for the time being.

This article is sourced from the internet: In-depth dialogue: Crypto VC life and death test, get out or get out of the circle?

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