Original title: The Cure

Author: Arthur Hayes, BitMEX CEO; Compiler: 0xjs@金财经

Grabbing and sticks can sometimes infect men and women and produce unusual Rational behavior. Unfortunately, many Maelstrom portfolio companies have contracted the CEX-borne disease. These founders believe they must listen to everything a few prominent CEXs say or their path to lofty returns will be blocked. CEX says: raise this metric, hire this person, give me this token allocation, list your token on this date… wait, it doesn’t matter… we’ll tell you when to list. These perverts, caught up in their passion, have almost forgotten their users and the reason why cryptocurrencies exist. Come to my clinic; I can cure you. The cure is ICOs. Let me explain...

I have my own three-part theory as to why cryptocurrencies are one of the fastest growing networks in human history.

Control - Big Business, Big Tech, Big Pharma, Big Military, and Big [fill in the blank] use their wealth and power to control most large and economic groups. While increases in living standards and longevity have been rapid and steady since the end of World War II, they have slowed for the 90 percent of the population who have few financial assets and ultimately little power. Decentralization is the antidote to the dystopia of centralized wealth and power.

Amazing technology - The Bitcoin blockchain and the numerous blockchains that follow are amazing new technologies. From its innocuous beginnings, Bitcoin has proven to be one of the most tried and tested monetary systems at least. Bitcoin offers nearly $2 trillion in bug bounties, which can be double-spended by anyone who can hack into the network.

Greed – The rise in the fiat and energy value of the cryptocurrencies that power blockchains or tokens created through these blockchains makes users rich. The wealth of the cryptocurrency community was on display during this November’s U.S. election. Like most other countries, the United States has a pay-to-play system. Cryptocurrency tycoons are among the largest donors to candidates across all industries, leading to wins for pro-crypto candidates. Cryptocurrency voters are able to donate generously in campaigns because Bitcoin is the fastest-growing asset in human history.

Most crypto folks understand intrinsically why the movement is successful; however, there is occasionally a bit of forgetfulness. This is reflected in the way crypto capital formation changes over time. At some point, those seeking crypto capital catered to the greed of the community and were wildly successful. Other times, cash-strapped founders forget why users are flocking to crypto. Yes, they may believe in a cryptocurrency by the people, for the people, and yes, they may have created super cool technology, but without users getting rich, the adoption of any crypto-centric product or service will fail.It would go too slowly.

Since the ICO craze came to a halt in 2017, capital formation has become less pure, straying away from the purpose of fueling community greed. Instead, there are tokens with high fully diluted value (FDV), low circulating supply, or VC backing. VC tokens have performed poorly so far in this bull market cycle (2023-present). In my article “PvP” I pointed out that legacy coins will underperform major coins (Bitcoin, Ethereum and/or Sol) by around 50% in 2024 on a median basis. Retail investors can eventually purchase these projects through listings on major centralized exchanges (CEX), but they are unwilling to pay such high prices. As a result, exchanges’ internal market-making teams, airdrop recipients, and third-party market makers dumped tokens into illiquid markets, leading to dismal performance. Why have we as an industry forgotten the third pillar of crypto’s value proposition…making retail investors rich?

The cryptocurrency new issuance market has become what it was meant to replace. The system is similar to the TradFi initial public offering (IPO) scam. Retail investors are the ultimate takers of VC tokens, but there are always alternatives in the cryptocurrency space. Meme coins are tokens that have no purpose other than the ability to spread meme content virally on the Internet. If a meme becomes popular, then you buy it and hopefully others after you will follow suit. Capital formation of Meme coins is equal. The team releases the full supply at launch with an opening FDV of millions of dollars. Starting with decentralized exchanges (DEXs), speculators are making extremely risky bets on which meme will enter the collective consciousness of the industry and thereby create buying pressure for the token.

The best part about memecoin from the average gambler’s perspective is that if you get in early, you can move up a decade or two on the wealth ladder. But everyone involved realizes that the memecoin they purchase is not productive in any way, will never generate any cash flow, and is therefore essentially worthless. Therefore, they are perfectly fine with losing all their money in order to pursue their financial dreams. Best of all, there are no gatekeepers telling them they can or cannot buy this or that memecoin, nor are their secret pools waiting to dump their recently unlocked supply if the price rises high enough.

I wanted to create a simple taxonomy to understand the different types of tokens and their values. Let’s start with memecoin.

Intrinsic value of Memecoins = Memetic content goes viral

Intuitively, this is easy to understand. You just have to be a socially active person in any community, online or offline, to understand memes.

If meMecoin is like this, so what is VC coin?

TradFi followers have no real skills. I know this to be true when I reflect on the skills required in my previous job at an investment bank. In short, not much skill is required. The reason so many people want to work at TradFi is because you can make a lot of money without knowing anything substantive. Give me an ambitious young person who has mastered high school algebra and has a good work ethic, and I can train them to do any front-office financial services job. But this is not the case for these professions such as doctors, lawyers, plumbers, electricians, mechanical engineers, etc. It takes time and skill to enter these careers, but on average, they make less money than an associate investment banker, salesperson, or trader. The amount of brainpower wasted in financial services is depressing, but I and others are just human beings responding to social incentives.

Since TradFi is a low-skill but high-paying profession, entry into this rarefied club is limited based on other social factors. Who your parents are and where you went to college or boarding school are more important than your intelligence. Adhering to stereotypes based on race and social class is more important in TradFi than in other professions. If you are admitted into this exclusive club, you perpetuate these norms that give value to your earned and unearned characteristics. For example, if you worked your butt off and took on huge debt to get into a highly ranked college, you will hire others from your college because you believe that college is the best. If you don't, then you're admitting to yourself that all the time and effort you spent on getting the certificate wasn't worth it. In human psychology, this is called the effort rationalization bias.

Let’s apply this framework to understand how VC puppets raise and allocate capital.

In order to accumulate enough capital to invest in enough companies to find a winner (e.g. Facebook, Google, Tencent, ByteDance, etc.), top venture capital firms need large amounts of capital. This capital comes from endowments, pension funds, insurance companies, sovereign wealth funds and family offices. All of these pools are managed by the folks at TradFi. Managers must fulfill their fiduciary duties to their clients by investing only in “appropriate” venture capital funds. This means that, in general, they must invest in venture capital firms managed by “qualified” and “experienced” professionals. These subjective requirements mean that the people in charge all graduated from the same small group of global elite universities (Harvard, Oxford, Peking University, etc.), and all worked in large top investment banks (JPMorgan Chase, Goldman Sachs), asset management companies (BlackRock, Fidelity) ) or start their careers at large tech companies (Microsoft, Google, Facebook, Tencent, etc.). TradFi employment gatekeepers say that if you don’t have this background, you don’t have the necessary experience and background toInvest other people's money wisely. They are a homogeneous group of people who look alike, speak alike, dress alike, and live in the same global elite enclave.

The dilemma facing allocators of VC funds is that if they take a risk on a fund managed by someone from a non-standard background and the fund goes bankrupt, the allocator could lose their job. However, if they play it safe and invest in a fund managed by the "right" individuals, and that fund goes bust, they can blame it on bad luck and continue in the asset management business. If you fail alone, you lose your job. If you fail along with everyone else, you can keep your job. Because the main goal of TradFi fools is to keep high-paying, low-skilled jobs, they minimize career risk by playing it safe and allocating funds managed by people with the "right" background.

If venture capital funds are selected based on whether a managing partner fits a recognized stereotype, then the same manager will only invest in companies or projects whose founders fit the “founder” stereotype. Business-focused founders' resumes must include work experience at a large consulting firm or investment bank, and they are expected to attend one of select elite global universities. Technical founders must have experience working at large, highly successful technology companies and hold advanced degrees from universities known for producing great engineers. Finally, because we are social beings, we prefer to invest in those near us. Silicon Valley venture capital firms only invest in companies located in California's Bay Area. Venture capital firms want their portfolio companies to be headquartered in Beijing or Shenzhen.

The end result is an echo chamber of sameness. Everyone looks, talks, feels, believes and lives the same. Therefore, everyone succeeds or fails together. This is a perfect environment for a TradFi VC puppet whose goal is to minimize career risk.

When crypto project founders begged for venture capital to fund their nearly worthless projects after the ICO bubble burst, they made a deal with the devil. Crypto project founders have had to make changes in order to raise funds from venture capital firms primarily based in San Francisco, New York, London and Beijing.

Intrinsic value of VC coins = founder’s university, work experience, family, location

VC allocators believe in the team first, and then the product. If founders fit this stereotype, capital will flow freely. Because they inherently have the “right” thing, a small group of teams will find product-market fit after investing hundreds of millions of dollars, and the next Ethereum will be born. Since most teams fail, the VC allocator's decision-making matrix is ​​unquestioned in that they only back founders who are the type that everyone believes is expected to succeed.

It’s clear that crypto acumen isn’t enough when it comes to choosing which teams to fund. This is what is provided for the projectThis is where the divide begins between the VCs of the money and ultimately the retail investors. VC fools want to keep working. Retail investors want to stop being worthless civilians by buying a token that can rise 10,000x. 10,000x returns were possible in the past. If you had purchased Ethereum during the presale at around $0.33, you would have made 9,000x your profit at current prices. However, the current process of crypto capital formation makes generating these types of returns nearly impossible.

Venture investors make money by passing the illiquid SAFT (agreement sale for future tokens) hot potato from fund to fund, raising valuations at every turn. By the time a crypto project's shit hits the CEX for its initial listing, its FDV has typically exceeded $1 billion. To generate a 10,000x return, FDV would have to grow to a very large number. That number is so large that it’s greater than the total value of all fiat assets…and we’re talking about just one project. This is why retail investors would rather risk investing in a memecoin with a market cap of $1 million than in a $1 billion FDV project backed by the most “respected” venture capital group. Retail investors behave in a manner consistent with maximizing expected returns.

If the VC token model is rejected by retail investors, then what is the essential meaning of ICO?

ICO intrinsic value = Meme content virality + potential technology

If the team’s project look, feel, and stated goals are in line with the current crypto era If the spirit matches, then the project has Meme value. If the meme catches on and spreads quickly, the project will gain traction. The goal of the project is to acquire users as cheaply as possible and then sell products or services to those users. Items that get the most attention will move users to the top of their funnel.

ICOs occur early in a project’s life cycle. Ethereum raises funds first, then builds them. There is an implicit trust that the team building the project will create something valuable as long as the community funds them. Therefore, potential technologies are evaluated in the following ways:

1. Has the team built something substantial on Web2 or Web3?

2. Is what the team proposes to build technically feasible?

3. Could this potential technology solve a problem of global significance and ultimately attract millions or even billions of users?

Technical founders who can achieve the above points are not necessarily the ones that VCs will invest in. The crypto community places less emphasis on family ties, previous jobs, or a specific educational background. These things are great, but if they didn't lead to a founding team delivering good code before, then itThey won't matter. The community will support Andre Cronje any day over some ex-Googler who graduated from Stanford and has a Battery membership.

While most ICOs (i.e. 99.99%) tend to be close to zero after one cycle, a few teams can build technology to gain value from users who join because of the meme. Early investors in these ICOs have the opportunity to earn returns of 1,000x or even 10,000x. This is the game they want to play. The speculative nature and volatility of ICOs is a feature, not a bug. If retail investors want safe, boring investments peddled by better people, they can trade on the numerous TradFi stock exchanges around the world. In most jurisdictions, an IPO requires the company to make a profit. Management must also make various representations to assure the public that they are not cooking the books. For most retail investors, the problem with IPOs is that they don't generate life-changing returns. Venture capitalists have milked them dry in the process.

If ICOs are so obviously funding projects with viral memes and technologies that could have global impact, how can we make them great again?

In its purest form, an ICO is one where any team with an internet connection can pitch to the crypto community and receive funding. The team launches a website detailing who they are, what they will develop, why they are qualified and why the market needs their product or service. Investors, well, speculators, can then send cryptocurrency to an on-chain address, and after a certain period of time, the tokens will be released to the investor. All aspects of an ICO, namely timing, amount raised, token price, type of technology to be developed, team composition and investor location, are not determined by any gatekeeper (VC fund or CEX) but by the team conducting the ICO Determined alone. This is why ICOs are hated by centralized intermediaries… they are unnecessary. However, the community loves ICOs because they offer many projects proposed by people from different backgrounds, ultimately allowing those who want to take the most risk to reap the highest rewards.

ICOs are making a comeback because the industry has come full circle. We experience freedom, but we also lose our wings. Then we felt the iron grip of VC totalitarianism and CEX control and hated the overvalued crap they foisted on us. With a burgeoning bull market behind us, fueled by money printing in the US, , Japan and the EU, a group of degenerates mesmerized by useless memecoin speculative trading, the community is once again ready to dive headfirst into high-stakes ICO trading. Now is the time for cryptocurrency speculators to throw their money in all directions in the hope that they can get their hands on the next Ethereum.

The next question is, what will be different this time?

Now, with a framework like Pump.fun, listing a token only takes minutes, and we have more liquid DEXs, teams will raise funds through ICOs and deliver within days Tokens. This differs from previous ICO cycles where months or years would pass between the subscription and delivery of tokens. Now you can instantly trade newly released tokens on platforms like Uniswap and Raydium.

Thanks to Maelstrom’s investment in Oyl Wallet, we’re getting an early preview of some of the potentially game-changing smart contract technology being built using the Bitcoin blockchain. Alkanes is a new meta-protocol designed to bring smart contracts to Bitcoin using the UTXO model. I can't claim to understand how it works. But I want people smarter and more skilled than me to take a look at their GitHub repositories and decide for themselves whether they want to build on top of it. I hope Alkanes will fuel a surge in Bitcoin ICO issuances.

Alkanes wiki, repo and specifications.

Since retail cryptocurrency enthusiasts have fallen in love with memecoin, there is a strong desire to trade the super-speculative asset on DEXs. This means there is enough liquidity to trade ICOs of unproven projects immediately after the tokens are delivered to investors, allowing for true price discovery.

As much as I hate Solana, I have to admit that pump.fun has been a net benefit to the industry because the protocol enables non-technical non-normals to issue their own memecoin and start trading within minutes. Following this theme of democratizing finance and cryptocurrency trading, Maelstrom has invested in what it believes will be the go-to place for spot trading of memecoins, all cryptocurrencies, and eventually new issuances of ICOs.

Spot.dog is building a memecoin trading platform to incorporate the web2 norm. Their secret lies not in technology but in distribution. Currently, the memecoin trading platform is designed for cryptocurrency traders. For example, Pump.fun requires considerable knowledge of the Solana wallet, exchanges, slippage, etc. Bettors who follow Barstool Sports, follow r/wsb, trade stocks on Robinhood, and use DraftKings to place bets on their favorite teams will trade on Spot.dog instead. Spot.dog has signed some great partnerships right from the start. “Crypto” on social trading platform Stocktwits with 1.2 million unique visitors per monthCurrency Buy Button” is powered by Spot.dog. The only partner for Iggy Azalea’s $MOTHER Telegram trading bot is… you guessed it, Spot.dog. I bet you perverts are wondering about the coins What is it? Don't worry, I'll tell you when YOLO will be included as Spot.dog's governance token

The crypto community is excited about using Metamask and Phantom. Non-custodial browser wallets are very familiar. Crypto investors can easily load their crypto browser wallet, connect it to the dApp and purchase assets. This will make it easier to get funds at blockchain speed. :

In 2017, it was not uncommon for hot ICOs to render the Ethereum network inoperable. Gas fees would skyrocket and no one would be able to afford the network in 2025. Ethereum, Solana, Aptos, and others. The cost of block space on the tier will be extremely cheap and current order throughput will be orders of magnitude higher than in 2017. If a team can gain widespread support from enthusiastic speculators, their ability to raise funds will not be slowed down. Obstacles of expensive blockchains.

Given the extremely low cost per transaction using Aptos, they have the opportunity to become the chain of choice for ICO launches

● Aptos: 0.0016 USD

● Solana: $0.05

● Ethereum: $5.22

I Introduced a Cure for the CEXually Spreading Disease in the Form of an ICO . Now, project founders must do the right thing, but in case they don't get the message, retail cryptocurrency investors need to say "no" to the following:

- venture capital backed high FDV, low liquidity projects

- Listing of overvalued tokens on centralized exchanges

- People promoting what they consider “irresponsible” trading practices

The ICOs of 2017 were clearly bullshit. The most value disruptive ICO in my opinion was EOS, which raised $4.1 billion in cryptocurrency to build EOS. Nothing was heard about it after launch. Actually, that's not true; it's amazing that EOS still maintains a market cap of $1.2 billion, which goes to show that even for something as complete a piece of shit as EOS, that's not true. At the peak of the bubble, its value was well above zero. By the way, as someone who loves financial markets, I think the structure and execution of the EOS ICO is a wonderful thing.Take note and examine how Block.one raised the most money through an ICO or token sale.

I say this to point out that on a risk-adjusted basis, even something that should go to zero will still retain some value after an ICO if you scale your bets correctly. Investing in ICOs early is the only way you can get 10,000x returns, but there is no heaven without hell. To achieve 10,000x, you have to accept that most of your investment will be close to zero post-ICO. But this is better than the current VC coin setup, where 10,000x is not only mathematically impossible, but you can still lose 75% a month after CEX launches.

Retail speculators are unconsciously aware of the poor risk-reward profile of VC coins and avoid them in favor of memecoins.

Let’s once again create fanatical support among users for new crypto projects, give them the chance to earn huge fortunes, and make ICOs great again!