Taking Myshell and Kaito as examples, analyze the dilemma faced by the project when it returns to long-termism

Author: @BlazingKevin_, the Researcher at BlockBooster

CEX faces a change in consensus that users lose confidence after the SCO has been launched. Although one or two projects can rise against the trend, most projects cannot escape the gravity of the unilateral downward trend. Once this consensus continues to strengthen and gradually shifts from two to three months to a collective consensus of a complete bull and bear cycle, CEX's user retention rate and user growth rate may be severely hit.

The core contradiction is the difference between users and project parties in pricing. Project parties need to recover the initial costs from retail investors. At the same time, due to a large proportion of VC locking, high FDV became a fixed series when it was launched. The addition of the two will inevitably lead to the TGE price exceeding the psychological expectations of retail investors.

A strategy of high FDV and low MC is acceptable in previous bull and bear cycles, because the consensus on "Buy and Hold" will ultimately reward diamond players. But this consensus began to weaken after BTC passed the ETF and was completely destroyed by the Memecoin frenzy over the past year. BTC is deeply bound to US stocks, becoming the reservoir of US dollar assets, and is the first to decouple from the four-year cycle; the three tricks of Zoo, Agent and Celebrity Coin have made Memecoin go to the altar and fallen at a speed of light, and retail investors can no longer adapt to the market-making cycle of VC coins. The market has obviously undergone earth-shaking changes, while VC coins are still sitting on the death train of inertia without knowing it. The death spiral is caused by the following three points:

• Due to the large lockdown of VC and team shares, only small shares could be circulated in the early stages. The excessive FDV makes retail investors who are accustomed to Memecoin's valuation method extremely uncomfortable.

• For this small share of circulation, the project party is still unwilling to let go and secretly recycle a large amount of chips in airdrops and ecological incentives. The profit-making experience of retail investors in airdrops is very bad, which makes the community atmosphere before issuing coins depressed and pessimistic.

• Since the identity is locked, early costs can only be recovered by dumping chips in small shares of circulation, so they can only ignore market sentiment and choose to open higher.

The essence of the death spiral is the lack of long-termism, and the consensus of "Buy and Hold" completely disintegrated on altcoins. Once the price falls below the key support level, it will be like mercury dropping, and the new currency will be launched without a support level. The psychological support level that exists in disguise is the valuation and pricing expectations of the project. For projects with an expected price of only 10M, the outcome of pricing after 1B is that the funding fee reaches -2% after the opening, and there will be no miracle until the expectations are met. The poor price performance will make the price fall to 10M and will not stop. Such projects continue to increase. Even if there are some exceptions due to reflexivity in the middle, the winning rate of shorting VC coins at the opening may still exceed 50%. When long-termism disappears, and the prosperity brought about by the prevalence of short-termism is also caused by the lack of supervision interest groups. When the bubble bursts, people can only leave and tea will be cold.

Compared with other industries, Crypto is still in its early stages, but the pessimism of practitioners is already like Ragnarok, because short-termism will not bring faith and value, but will accelerate the vitality of the industry. So from now on, we need to return to long-termism.

Myshell encounters resistance when returning to long-termism in pricing

strategy

Returning to the point at the beginning of the article, when VC coins are frustrated, CEX is the most hurt. Binance took the lead in saving itself and conducted some experiments on Myshell. Whether it is good or bad, this is a signal that the leading exchanges choose to change. This experiment maintained a good momentum before February 27, but it took a sharp turn after Binance listed it. The following is a review of the key time points and corresponding market sentiment from the airdrop snapshot on February 12 to the launch of Binance on February 27.

Two reversals of market sentiment

Myshell's market sentiment went through three stages before Binance Listing, namely Airdrop, IDO and Binance Listing. During these three stages, retail investors' sentiment has undergone a drastic change. First, after the airdrop snapshot is sent and released, retail investors believe that the proportion of airdrops is too low and the number of tokens dropped is too small. A huge proportion of 30% was allocated to community incentives, but it did not clearly indicate the total number of airdrop addresses and the proportion of users or ecological projects, which had a large operational space. At this time, the market is negative about Myshell.

However, in the IDO stage, Myshell achieved a reversal of market sentiment. Pricing differences are what we believe, the core contradiction between retail investors and project parties at present. Myshell distributed 4% of the total supply to IDO to benefit Binance Wallet users. The corresponding FDV's low price of only 20 million was naturally obtained by oversubscription of more than 100 times. Retail investors Fud's sentiment is weakening, but due to the current cycle's consensus change in project airdrops - distrust, many retail investors are still bearish. Therefore, most airdrop addresses choose to sell during TGE. From the increase in the number of coin-holding addresses on the chain, it can be seen that more than 50% of airdrop addresses choose to sell at the first time.

On the same day, according to the $SHELL pool data on dexscreener BSC, the price in the first hour after TGE No. 13 reached a maximum of $1.64, with a trading volume of $3.2 million, and a circulating market value of $420 million; the highest price in the second hour fell back to $0.9, with a trading volume of $17 million, and a circulating market value of $240 million. The closing price of No. 13 is $0.37, with a circulating market value of US$100 million.

Between the 13th and 27th, the price remained between $0.36 and $0.6, corresponding to a market value of 100 million to 160 million. During this period, $SHELL was supported at the low point and showed a shrinking upward trend. The chips sold at the airdrop address were absorbed by the top position address, and the concentration of chips further increased.

Excessive expectations and concentrated attract rat warehouses

Before Myshell went to Binance, the market evaluation was good, and the market mind of the project was relatively positive. At the same time, the TGE chain opened low and Binance contracts kept up. These two chain operations must have washed away a large number of unstable profit-making orders, and market makers recovered a large number of airdrop chips. Before Binance, the price was low and the chips were not dispersed, so it had the conditions to pull up the market and surge. However, if we add the expectation of "Myshell is the new AI leader in BSC", "Binance Investment", and "secondary level" and the expected low opening on the chain will become the biggest weakness. The rat stock that flocked in after TGE became the most determined holder in front of the Shanghai Stock Exchange, which laid the groundwork for the unilateral market after the listing of coins. The joint dumping of rat warehouse and market makers completely destroyed Myshell's efforts in IDO concessions.

This is the pain that Myshell and more VC coins will face when value returns, when practicing long-termism and allowing roadmaps and products to support market value. The rat warehouse that has existed since the birth of Crypto has become unscrupulous after being nourished by short-termism. When a project has strong expectations, whether it opens low or high, it itself revolves around expected transactions, and expectations will collapse.

**Combining the roadmap to reasonably control expectations is Myshell 's

current homework**

Low openings will make concessions to users, and community launches are a reasonable direction, but it is necessary to reasonably allocate the balance between expectations and actual roadmap. Rely on expectations to attract users, and after the expected implementation, the fundamentals of the product can play a role in bottoming out. The price management range of the token should be market-making around the reasonable expected highest market value and the actual guaranteed market value of the product.

Project parties that return to long-termism cannot rely solely on IDO to benefit users to gain market trust, this is just the first step. In the future, we should also pay attention to the contradiction between the project party and VC on transparency. When the project party launches tokens through IDO, it no longer relies on the UO, which can resolve the contradiction between the two parties in terms of transparency. The token unlocking process on the chain becomes more transparent, ensuring that past conflicts of interest are effectively resolved. On the other hand, the dilemma faced by traditional CEX is that prices often plummet after tokens are issued, which causes exchange trading volume to gradually decline. Through the transparency of on-chain data, exchanges and market participants can more accurately evaluate the real situation of the project.

The low-opening project parties on the chain must be prepared to not be able to enter the company for a period of time, otherwise it is easy to encounter the dilemma of Myshell's rat trading. Only by winning the trust of users and the market on the chain is the basis for the positive spiral of the currency price.

Kaito's doctrine of the mean fits the connection period of industry

change

Kaito's airdrop distribution continues the "unspoken rule" of VC coins: reduce the quota of top users and increase the number of users that can be applied for, that is, long-tail distribution. According to the personal weight algorithm 1 Yap can be exchanged for $5-20. Ecosystem yappers, Partners and Yappers received $96 million in KAITO, but the detailed ratio has not been announced. This strategy allows the project party to hide and recover chips to the greatest extent in the airdrop, and due to the large number of airdrop addresses, the opening selling pressure has been slowed down a lot - compared with centralized airdrops to the head KOLs. Pricing at the 1B price point where both bulls and bears are hesitant has led to a stable turnover of floating stocks.

Split discs become the cornerstone of the flywheel

Secondly, Kaito designed a forward spiral around NFT, Yaps and skaito in the early stages, and used the characteristics of splitting the disk to restrict the token price when necessary. Kaito NFT's price continued to rise before the airdrop snapshot, with the highest floor price of 11ETH, about $30,000. After the snapshot, the price fell, and the TGE was worth $5,800. The current floor price gradually rebounded to 2.5ETH. A single NFT received 2620 $KAITO, about $4700 (average price of $1.8 on February 21), and a total of 1500 Kaito NFTs received nearly $KAITO.

The weight of sKAITO is positively correlated with the number of pledges, duration of pledges, and 7-day voting enthusiasm, and is negatively correlated with the Yappers voting pool and NFT holder voting weight.

 Souce: Kaito

Voting weight consists of Yappers (50%) + Holder[sKaito, NFT] (50%).

• 1 Genesis NFT ≈45,980

• 1 sKAITO ≈11.79

• Voting rights for each NFT = 3900 $KAITO

• The dynamic changes in voting rights of NFT and sKAITO depend on the relationship between the total market value of NFT and the total market value of sKAITO. The voting rights gradually tend toward the party with higher market value.

After a simple calculation, we can see that holding NFTs is cheaper than using sKAITO.

By pledging Kaito tokens, users can gain voting rights for governance and project decisions. Currently, each Kaito NFT provides 45,980 voting rights, and each NFT's voting rights are equivalent to 3,935 $KAITO.

The arbitrage space between NFT, Yaps and skaito allows Kaito's price performance to a certain extent through NFT market value.

Choosing a growth method that suits your own track is more critical

In terms of pricing strategy, Kaito's choice is understandable. Because returning to long-termism, allowing products to support market value is a difficult journey than ever before. Kaito chooses the method to return the current market value to product strength through continuous long-term value output.

After Memecoin fell in a phased manner, Kaito tended to take over the market's attention distribution leader and competed for Mindshare in a single time. Mindshare was actually the KOL responsible for the communication. KOL worked for Kaito and Kaito paid yaps. As Mindshare's importance increases, more and more projects will join Kaito to pay for it. The increasing number of KOLs, users and project parties is the basis of Kaito's positive spiral. The determination of whether the spiral is successful depends on the degree of market intrusion of Mindshare.

It is relatively difficult to observe Mindshare's market acceptance. Therefore, Kaito gave a tool like Yapper Launchpad, which is a product of toc and an evaluation indicator for tob. In general, the higher the NFT market value, the higher the sKAITO pledge rate, and Kaito's market share is increasing. The corresponding yaps will also rise and attract more KOLs to join.

Summarize

Whether the project party chooses Myshell to be the first to change, or chooses a token issuance model with community + VC dual-driven, or like Kaito, recognizes its own track positioning and achieves value return through continuous long-term value output. Both are signs of the long-term innovation in the industry.

Returning to long-termism is like going from extravagant to frugality. This is difficult for an industry without supervision. What is even more difficult is that Crypto's valuable innovation seems to be only DeFi. Long-termism in tracks such as NFT, Gamfi, Metaverse, etc. brings users a very bad experience. Therefore, in the past, there was the "wolf" that completely failed in long-termism, and in the later, there was the "tiger" that quickly passed through the short-termism. Returning to long-termism is an anti-human way at the moment, but it may be the only way to live. If you don’t trust all narratives and are hostile to any technology, then this industry may not allow you to continue growing.

We need to wait patiently, wait for the qualitative change moment of Crypto. This moment may be opened by the AI ​​Agent, or it may be other tracks. However, before this, we need to adhere to long-termism, squeeze through the long-standing abscesses in the process, adapt to and face the pain caused when returning to long-termism.