Self-righteous dog traders handed over the community tokens to facilitate the team’s share to obtain better liquidity, which is digging their own grave.

The pricing power of crypto projects in the secondary market comes from

  • 1. Primary Market Institutional Valuation

This point is no different from traditional markets, but VCs are becoming increasingly greedy in this round, offering higher initial pricing, leading to shrinking space.

Cost: Users have no wealth effect, so there will be no incremental funds.

Moreover, the so-called huge investment funds are not on-chain, lacking transparency. Users don’t know if the money has been transferred, nor where it went; they only know that this money definitely cannot be used to protect the market.

The scary thing is that the predators are contemptible. Institutions themselves don’t even know where the money went and don’t care what the project parties are doing.

A typical example is that many top-tier investment institutions in FTX didn’t even send a regulatory employee over, unaware of matters like sbf misappropriating user funds and management chaos; they only know to wait for dividends.

In this state, numerous projects are selling token rights merely to exchange for the title of institutional investment, while institutions greedily trade their worthless reputation for free token rights.

  • 2. Community Valuation

Blockchain is transparent; addresses/tx/tvl are all public. The premise of community collusion is that airdrops are in place, which is actually similar to the stock options for old employees before a traditional company goes public.

The reason the crypto space is impressive is that the only advantage is that users can obtain original shares of these top projects at a very low cost if they are willing to learn. Conversely, if the original shares are not adequately allocated, the more the early community invests, the more severe the rebound.

A few days ago, an old brother included all of ena's airdrop token shares in project expenses, resulting in a huge numerical loss. This is a typical example of not understanding the source of high pricing rationality in crypto projects, directly applying traditional industry formulas.

If the project party repurchases tokens from the market to distribute to the community, this is called marketing expenditure. Simple chip distribution is originally part of the project’s chip structure; from the start, these tokens did not belong to the team but to the community. This is not a charitable act but what community users are entitled to.

Companies in traditional industries have fundamental support, and stocks correspond to assets and dividend rights, while tokens correspond only to consensus (on the project's credit). Without the airdrop part, many 'non-profit' projects wouldn't even exist.

Even if a company's chips are fully circulated at the opening, assuming that the main forces can sell without restrictions, there will still be a line of 'asset value' supporting it in the market. However, if all token shares belong to the team and they dump unilaterally, the pricing will immediately distort.

Therefore, if we want to compare market value with traditional industries, it would be reasonable to use crypto projects * team shares (= realizable shares) to compare with traditional project market values.

  • 3. Liquidity Valuation

This round has seen a good meme market, with more and more users (i.e., real buyers) coming on-chain. Is it really necessary to go to Binance to offload?

In the past few days, punt had trading volumes of 240 million, 220 million, and 120 million.

Hmstr opened only at 370 million, 160 million; cati opened at 460 million, 209 million, 110 million, and then quickly declined.

zk only maintained over a billion in trading volume for 4 days, and scr had only 2 days after the pre-market ended.

Projects like arb and op, which are excellent, achieve reasonable pricing power by buying back all airdrops at their own pricing; of course, the project parties may have insider trading, but the community definitely has a wealth effect.

The approach of scr to exploit community valuation in exchange for liquidity valuation is definitely unprofitable. Without benefiting the community, there is no pricing power, and that is how the market operates; it hasn't risen at all since officially going live half a month ago.

It's fine to deceive brothers, but don't really deceive yourself. Does anyone really believe that their project’s pricing legitimacy comes from their technical advantages?

Wake up.

Since offloading does not necessarily require going to Binance, and can be done on-chain, why do these foolish projects still do it this way? Essentially, the costs that should have been paid from the team’s share for listing fees are instead directly stolen from the unsettled community shares, which is a wrong act of using others' funds for their own benefit.

Unlike users needing to buy tokens from the market, the tokens of the project party are minted by themselves. How to turn air into money? The project party's logic is actually to use their limited token rights to exchange for higher third-party valuations, which can be understood as a form of arbitrage:

Financing, using token rights/equity to exchange for early investment, endorsements, and resources.

PUA and exploit the community by trading token rights for community data.

Finally list on CEX, trading token rights for exit liquidity.

But now dog traders have discovered that among these three valuation components, one is easily manipulated: exploiting the community, where only they pay first and gain later, while the other two don’t show results until they see rabbits.

So for disgusting projects like zk and scr, selling 5-10% of community tokens to launchpool can allow the team to directly sell 10x more tokens, who cares about the community's well-being? The data is already there.

Exploiting this portion of token rights can increase another valuation, so why not? For such projects, the community and the team are not a common interest group; the community shares should be viewed separately from the team shares as two different projects. Moreover, these projects only have a wave of selling, just in the first few days after opening, because tokens are certificates of the project’s credit.

The cost paid by the entire industry is that when foolish retail investors are deceived time and again, the originally normal arbitrage opportunities will become fewer and fewer. Future projects will find it increasingly difficult to rely on PUA to generate data.