VC coins fell by 95%, and crypto capital began to embrace the secondary and AI narrative

Primary investment is difficult, and the secondary market welcomes professional players.

Written by: Wenser, Odaily Planet Daily

Last weekend, ABCDE Lianchuang Dujun officially announced that "ABCDE Capital has stopped investing in new projects and suspended the second phase of fund fundraising plan."

As soon as the news came out, the market was shocked. Some people believed that the incident marked the crypto market's first-level investment environment was too bad, so that investment institutions could not support it alone; some people believed that this move might be a necessary choice to stop losses in time; some people believed that the emergence of subsequent incubators meant that the focus of crypto capital was shifting to direct issuance of coins. Odaily Planet Daily will review the incident in this article and briefly discuss the possible direction of crypto capital.

ABCDE ends investment, Vernal incubator takes over

Under the tweet that officially announced that ABCDE Capital has stopped investing in new projects, Du Jun briefly shared his subsequent plans:

1. Launch a new incubator brand Vernal, which will announce shareholders, incubation rules and the first batch of projects in May;
2. Engage in secondary trading. Detailed purchase targets, purchase volume and purchase reasons will be announced in May;
3. A brief summary of the investment overview of ABCDE Phase I fund: an investment of nearly US$40 million, more than 30 projects supported, and more than 50% of the projects led.

In addition, Du Jun emphasized that this move is "completely because I personally want to change my position and rethink how to participate in the development of the industry. The team is great, there is no problem with fundraising, and the two cornerstone LPs are well-funded and willing to continue to support. This is not a question of funding or ability, but a choice of direction."

In other words, after experiencing first-level investments that are contrary to the market's short-term profit-seeking ecological atmosphere, Du Jun's interest turns to "actually promote industrial progress", hoping to "accompany a team with a sense of mission and incubate companies that can truly bring long-term value to the industry and society. As a member of the industry, I believe we have the responsibility to promote the ecology to return to rationality and health, rather than being entangled by short-term games."

It has to be said that judging from this remark, this can be regarded as a failure of long-term value investors with quite ideal sentiment.

At a time when the whole nation is investing in the Meme currency speculation boom, the participation of the VC currency market has been cold, and countless projects have also entered a vicious cycle of "financing-listing-smashing-disappearing" like drinking poison to quench thirst, leaving investors and retail investors in the market to be messy in the wind and pay for their losses. The market is increasingly inclined to short-term "stream" mutual harvest, rather than long-term technological path development, real user growth and slowly rising currency prices.

Of course, this is not a system mechanism that a certain institution or user can decide. Mainstream coins, including ETH, and altcoins, have all declined to varying degrees in this cycle, and there are no exceptions for projects invested by ABCDE. According to statistics from Crypto KOL @Anymose 96, among ABCDE's investment in coin issuance projects, the highest decline in the currency price was as high as 95.5%.

 The miniature of the blood flowing in the river of the village

Based on this, capital institutions in the upstream ecological niche of crypto ecosystems can no longer sit still and urgently need a version update to better survive the current market pain period.

New Choice for Crypto Capital: Take into account the first and second

levels and embrace new narratives

Looking at the current market, crypto capital has gradually diverged into two major routes:

The first category is represented by ABCDE, and chooses to transform to secondary investment and transactions while taking into account the first level, so as to seek better market performance and capital returns;

The other type chooses to bet on new narratives such as AI and MCP, and seek possible future opportunities through a larger range of attention, capital volume and application products. This is also one of the important reasons why projects that have recently received investment mainly focus on computing, data, AI and other fields.

In this regard, the main changes in the market are reflected in the effective contraction of capital power and the changes in narrative direction; what remains unchanged is the main logic of the crypto market - the constantly updated and iterative asset types and asset issuance methods.

In this regard, the summary of Encryption KOL Encryption Weituo is quite accurate:

What the market continues to reward is a team that "can continuously create assets and markets that are both high volatility and high liquidity at the lowest cost." But there is no "application" narrative that can create volatility and liquidity, it is basically a waste of itself: For example, the "Web3" logic of "reconstructing Web2" mentioned by @YeriZhang: Social, Gaming, ID, one counts one. Because these projects are essentially the product of the "platform-application" logic of traditional large companies, and finally commercialize (harvest) through application. What this logic requires is decreasing scale and marginal costs, and no liquidity is required.

But what is the currency circle? Coins can be "commercialized" from the first day, and liquidity is an innate "commercialization" indicator. Abandoning this main indicator means that you do not belong to the currency circle, and your valuation model and competitor comparison will slide to Web2, and then you cannot beat Web2 competitors - In the currency circle, liquidity is the moat and mechanism is the main asset (not "application" products).

This is the difference between us in the "Web2 VS Web3 AI project: it's all for money, why is it so big? The views mentioned in the article " 》 coincide with that. The Web3 project is to make assets, polish and craft the assets as a product, and ultimately feed back to the application or leave the application, so as to obtain liquidity concentration and attention resource allocation on a longer scale.

From this point of view, it is inevitable to some extent to crypto capital towards secondary investment - because in a capital market with increasingly concentrated liquidity, attention and fluctuations perpetuate, and gambling and probability fly together.

In addition to the RWA, PayFi and other tracks that tell stories to people outside the circle, everyone's main game will eventually return to the word "trading", and this is the main battlefield for crypto players.