Arthur Hayes discusses the possibility of the ICO market returning. He points out that since the ICO frenzy stopped in 2017, capital formation has become less pure, deviating from the purpose of igniting community greed. Instead, we see high FDV, low circulating supply, or VC-backed tokens. So far, VC tokens have performed poorly in this bullish market cycle (2023 to present).
He previously noted that, on average, the performance of old tokens in 2024 is about 50% lower than that of major tokens (BTC, ETH, and/or SOL). Retail investors can ultimately purchase these project tokens through major CEX listings, but they are unwilling to pay such high prices. As a result, the internal market-making teams of exchanges, airdrop recipients, and third-party market makers are dumping tokens into illiquid markets, leading to poor performance. The crypto industry seems to have forgotten that the third major pillar of the crypto value proposition is to make retail investors wealthy.
Hayes believes that the ICO model has significant advantages in terms of liquidity, user experience, and blockchain speed. For project teams and investors, Hayes suggests a firm 'no' to the following three situations:
- VC-backed projects with high FDV and low circulation;
- Overvalued tokens listed on CEX;
- Those who advocate for trading behaviors they consider 'irresponsible.'
Hayes added: 'Retail investors have inadvertently realized that the risk-reward profile of VC tokens is poor, thus avoiding them and choosing meme coins instead. Let's create fervent support among users for new crypto projects again, giving them a chance to achieve substantial wealth.'