Participate in both, but don’t get emotionally attached to any coin.

Author: hitesh.eth

Compiled by: TechFlow

I haven’t done any particularly in-depth research on either, so I’m going to offer a neutral take based on my observations and the data I’ve seen.

There are many misconceptions about these two categories of tokens that need to be cleared up. Don’t buy into the narratives pushed by a handful of influencers.

Here are some of my insights.

VC Tokens: Long-term Investments with Solid Fundamentals

The definition of a VC token is simple: more than 51% of its supply is allocated to the team and investors. Sounds fair, right?

If you look closely at the token economics of most infrastructure projects like $EIGEN, $SUI, $APT, $AVAIL, $ZK, $SEI, etc., you will find that a lot of the supply is used for community and ecosystem growth.

This is critical. For infrastructure projects, the health of the ecosystem is the driving force behind all development. dApps will migrate to new chains when the incentives are attractive enough. Currently, dApps like Aave, Uniswap, Curve dominate the market. The first challenge for new ecosystems is to attract these big players while fostering new innovations and incentivizing developers. Incentives are key to driving this process.

We see projects like#SUIand#APTOSmaking smart use of their ecosystem’s resources. Their fundamentals are gradually showing growth momentum. This growth is bound to spark enthusiasm in the market, as funds used for ecosystem development are also used to incentivize marketers and content creators, thereby increasing the popularity of the project.

This forms a feedback loop. Incentives from the top drive the entire marketing channel, and retail investors follow the trend from the bottom.

Investor unlocking will proceed as planned, but don’t misunderstand VCs’ strategy. They are in it for the long term. VCs, like retail investors, seek high returns. When 30% of the supply is focused on long-term growth, they won’t exit when their gains reach 10x.

They know how to divert market attention and create positive feedback loops. Take $SUI for example. A few months ago, retail investors were disappointed, but as the price started to rise after the grant and announcement, $SUI is now popular again.

Retail investors want security, safety, and lower risk. Tokens backed by venture capital, especially those with a strong commitment to ecosystem growth and improving on-chain metrics, can meet these needs.

Memecoins: Snipers and liquidity traps in short-term mania

Memecoins are usually released to the public in bulk at a Token Generation Event (TGE). However, is it fair for everyone to get these popular meme tokens?

No. The issuance of meme tokens is often dominated by snipers. They quickly snap up cheap tokens, and you become their "buyer".

Then, communities start to form, the price chart goes up, and influencers buy tokens from the market. The rules of the game are the same for everyone, but the beliefs are different. You may exit when the price doubles, but influencers hold on to 10x and build a rational narrative for their holdings. They often work with VCs who operate in secret.

Their goal is to convince retail investors that they no longer think about taking profits. When liquidity is quietly drained from decentralized exchanges and big players take profits and leave, retail investors will realize what is happening. At this point you will realize that Memecoins and VC tokens are not that different.

Strategy: Play both, but don’t get too hung up on either one

Retail investors love to follow trends, and meme tokens are trends. If you want to trade these tokens, do it at your own pace, not because of the advice of some influencer. At the same time, don’t give up on VC tokens completely. Market narratives can change rapidly, and your funds may be trapped in meme tokens while VC-backed tokens rise.

The key is to stay alert. Participate in both, but don’t get emotionally attached to any coin. Most coins will eventually go to zero. Be ready to exit when the time is right so you don’t regret not taking profits in time.