Aleo, a project once regarded as a rising star in the blockchain privacy computing track, is experiencing a rapid decline from its peak to obscurity. Whether it is the top financing background, the star team, or the high-profile technological innovation, none of them has prevented the Aleo coin price from plummeting, which seems to be another signal that "the hottest will die."

So how did Aleo, which has many favorable factors such as solid academic foundation, strong financing background, and support from miners, "ruin" itself?

01 Over-hype: The bubble burst behind the highlight moment

The Aleo project has been highly praised since its debut. It is a future star with technologies such as zero-knowledge proof (ZKP) and privacy computing. With the halo of big-name VCs such as Andreessen Horowitz (a16z) and SoftBank Vision Fund, Aleo was once touted as the "savior" of blockchain. The overwhelming publicity in the market, the enthusiastic discussions on social media, and the background of the technical team from big companies such as Google and Amazon have all pushed Aleo to the altar.

Aleo's founding team has a strong background, and its main members include Howard Wu, Collin Chin, and Raymond Chu, who are top experts in cryptography. Howard Wu is the co-founder and CEO of Aleo. He graduated from the University of California, Berkeley, worked at Google, and has made outstanding contributions in the fields of zero-knowledge proof and elliptic curve cryptography. His academic achievements Zexe and DIZK are adopted by top projects such as Ethereum and Zcash. Collin Chin is responsible for the development of Aleo's core programming language Leo and is a young cryptography genius. Raymond Chu has made great contributions to the development of snarkVM and snarkOS.

With the above advantages, Aleo has been highly anticipated by the market since its inception, and is considered to be an important infrastructure for future privacy computing and decentralized applications. However, this strong team background has become a double-edged sword under the market's rendering. Investors from all walks of life have flocked to it, constantly pushing Aleo's valuation to new heights, but behind this high valuation is a huge bubble risk.

During the financing process, the project was valued at hundreds of millions of dollars, especially under the halo of large institutions such as a16z and SoftBank, which attracted a lot of speculative funds and investors chasing the rise, and also pushed the project too high. The frenzy of market speculation made Aleo lose itself, and all resources and background eventually became a burden under the high valuation, unable to provide long-term support for the currency price.

When the bubble burst, the market realized that these halos could not cover up the fact that the projects themselves were progressing slowly.

02 Lack of substantial progress: The technological gap that cannot be filled by financing

Aleo's financing was quite impressive.

According to rootdata, Aleo has raised a total of $298 million, with a16z leading the A round, and SoftBank and Kora leading the B and B+ rounds. With such a strong financing background and financial support, Aleo should have achieved some substantial results quickly to support its market value. However, this is not the case.

Although Aleo has launched a series of technical tools such as the Leo programming language, snarkVM, and snarkOS, the market has not seen the expected commercial applications, and the ecological construction has remained on the surface. Despite the banner of privacy protection, actual applications have been slow to take off, while Bitcoin and Ethereum have gradually optimized their privacy functions in practice.

This lack of real progress is in stark contrast to the promises made by the Aleo project, and investors are gradually losing patience while waiting. Look at the previous Bored Ape Otherside project, which was hyped up at the time, but what happened? Two years later, there was no progress, and the price of the coin fell to a point where it was unbearable to look at. Aleo is also repeating the same mistake, and the gorgeous shell cannot cover up the lack of real progress.

03 Highly speculative: manipulation risks that cannot be concealed by the star halo

The Aleo market is full of speculators who only want short-term arbitrage and don't care about the long-term development of the project. When Aleo was pushed to the altar under the halo of top VCs, these speculative funds swarmed in, pushing the price higher and higher. However, this highly speculative market environment is destined to make the price of Aleo extremely fragile.

Once the market sentiment changes, these speculators withdraw faster than anyone else, and the price of Aleo collapses instantly. Highly speculative projects cannot withstand market fluctuations at all, and the continuous decline in the price of the currency has also shattered the confidence of investors.

Especially Aleo's market depth is very poor, and any large sell order can break through the support. Under such circumstances, who would have the confidence to hold for a long time? Look at those MEME coin imitations and dog projects, how many of them did not rise and fall overnight? Aleo has no solid market foundation and user stickiness, which will only allow speculators to use it to "cut leeks".

04 High price volatility: poor liquidity allows big investors to play fast and loose

Judging from the market depth data of Aleo, the buy and sell depth of major exchanges is very weak. The +2% buy depth of Coinbase is only $5,000, and the sell depth is only $1,369. The same is true for Gate.io. The buy order cannot support the selling pressure of the sell order. With such low liquidity, the price volatility is naturally very high. Once a large buy or sell order enters the market, the price is like a roller coaster.

This kind of market with insufficient liquidity is a hotbed for manipulation by big investors. The market depth of Aleon allows big investors to "play with it at their fingertips". A slight increase or drop in the price can induce retail investors to follow suit, push up the price of the currency in the short term, and then quickly sell it, leaving a mess behind. Such volatility not only excites speculators, but also discourages users who really want to invest, and ultimately further worsens the market environment.

05 The bandwagon effect and blind investment: the nightmare of high-level buyers

Aleon attracted a large number of copycat investors during its heyday. These people only saw Aleo's popularity and top financing background, but ignored the actual implementation of the project itself.

When the price of the currency is soaring, these followers rush to buy it, fearing that they will miss the next "100-fold currency". But when the price of the currency starts to fall, they become the "leeks" to be harvested.

Investors who blindly follow the trend without doing any research can only watch the price of the currency fall all the way after being trapped at a high position, without any chance to escape. In a market with insufficient liquidity and poor market depth, investors who take over at a high position become the last "takers" in the relay game. This phenomenon of passing the parcel will eventually lead to a more serious stampede effect and a complete collapse of market confidence.

Write to the end

Aleo has gone from being a star blockchain project to its current price plummeting. The four words “hot things must die” perfectly explain its ending.

Excessive hype, lack of real progress, high speculation, poor liquidity, blind following...all these problems are dragging Aleo down.

The dark side behind the highlights must eventually face reality. The cryptocurrency world has never lacked "unicorns", but what is lacking is solid implementation and long-term accumulation. The failure of Aleo once again sounded the alarm for the market. Investors should keep their eyes open and not be blinded by the "heat".

Great popularity is often followed by death, and this is the tragedy of Aleo.