I haven't paid much attention to LuMao recently, and I feel a lot more relaxed. In fact, since the beginning of this year, I have basically stopped paying attention to LuMao activities. It's not because there are no projects, but because I have seen through the routines of many projects.

After the two "king-level" projects zksync and Layerzero issued airdrops, TVL has dropped significantly. This also indirectly confirms that the money-losing market has entered the red ocean market and there is no profit to speak of. You are eyeing the project's airdrop tokens, but the project is eyeing your wallet.

For investors, it is time to give up on profiteering, after all, there is poetry and distance in life.

Is high financing necessarily trustworthy?

What is a good project? For those who are good at catching hot spots, new technologies and new models often mean that they may catch crabs, but for most people, they may not have the strength and ability to research projects, and they may not even bother to read some project research reports. So what do they look at?

That's financing.

It is true that financing is an important reference indicator of the project's strength, but high financing is often not as simple as everyone imagines. For example, zksync and Layerzero, here we must first look at what high financing represents and why investment institutions invest so much money in projects, so that we can have a specific understanding of high financing.

First of all, for the project team, some projects do not actually need financing, because their market model and technical selling points are not that advanced. For example, if you make a Web3 version of a small game, the development cost may only be tens of thousands or hundreds of thousands. In this case, project financing is not a must. But this does not mean that the project has no future, because whether the project has a future needs to be tested by the market.

Although there are good and bad small projects like this, there are also some excellent projects. The fundamental reason for the lack of financing may be that the team itself has no shortage of money or the cost is very low, etc.

By the same token, there are also hit products in low-financing projects. On the contrary, I am starting to disagree with high-financing projects. Simply put, good financing is the financing that suits you.

First of all, high-financing projects generally need to meet the characteristic of high technical difficulty. High-financing projects with low technical difficulty often have traps. For example, a blockchain game with a very ordinary experience. Unless you can make a chain in the end like Axie, for the project party, high financing will instead be a shackle that restricts the development of the project, and it can also easily become a tool for financing institutions to make money.

For large projects, high financing is an important tool to harvest retail investors. For example, let’s take the popular Layer2 and cross-chain as an example. On the one hand, the high financing of the project team is mainly obtained by selling a higher token share, which does not mean that the project has a good prospect, because the current Layer2 threshold is not in the development of technology, but in the development of operations and ecology. For institutions, their way of making money is not only the huge profits from token investment, but also the dominance in the project ecology.

In short, it is the income brought by the operating projects. Many people may not realize this, but it is indeed an existence that cannot be ignored. For example, the on-chain gas fees earned by Layer2. Because of the airdrop expectations, many people interact with it, and a large part of this gas fee is earned by institutions, because institutions also need to participate in the profit sharing on the grounds of supporting the ecosystem.

That is to say, even if the token price is lower than the price at the time of financing, the participating institutions will still make money. Moreover, some project parties have signed a bet agreement with the financing institutions to ensure the income and profits of the lead investment institutions. In this way, even if there is a loss, someone will pay for it. For retail investors, this kind of thing will definitely not happen.

Therefore, projects with high financing are not necessarily good. The ultimate goal is for project owners and institutions to make money. As for whether retail investors can make money, it depends on luck.

Popularity of Project Factories

In short, the project factory is like the products in the factory, which may be mass-produced. With the popularity of Layer2, and the fact that many chains use EVM technology at the bottom, the writing and deployment of on-chain contracts are much more compatible, and different chains have the same demand for ecological projects, such as Swap, liquidity pledge, lending, NFT market, chain games, etc., and there will be such demand in the market, so the project factory was born.

In short, the operating model project on one chain is directly moved to another chain. This will not only increase the number of projects, but also gain support from the new chain. At the same time, this model is equivalent to two projects, and the project market value brought is much greater than one project supporting two chains at the same time. For this reason, the development of project factories will be the mainstream in the future.

Another point is that the cost of the project factory is very low. Therefore, in this case, everyone should have a low valuation of the project. However, retail investors who do not know the project think that the project party has spent a lot of effort on the project, so it must have great value, so they give it a high valuation. In the end, the tokens issued by the project were taken over by retail investors, and the profits obtained by the project actually fell into the pockets of a few people.

The fundamental reason for the emergence of project factories is the lack of innovation, which leads to an increase in imitations. Each chain has its own ecosystem, and it is impossible to unify the currency circle. This has created many small opportunities, and therefore project factories will quickly become popular.

Summarize

Overall, there may be big profits in the future, but for investors, they must pay the corresponding costs. After all, the main factor that keeps the market active is the continuous emergence of myths of getting rich quickly. This is also the main reason why big profits from short-term investments appear frequently, but you have not encountered it. Because once you encounter it, it means that most retail investors have encountered it. At this time, the project team's control over the project will be relatively weakened. Therefore, for the project party, it is better to change its face and start over instead of doing a project with less income. After all, on the Internet, no one knows what the project party has done before.

At the same time, this also explains why a large number of projects will return to zero in each round of bull and bear markets. The essence is not that the projects can no longer operate, but that they have given up on old projects and turned to new projects. After all, new projects have less burdens, and old projects will face many difficulties in rising. This is also an important reason why the market can continue to thrive.