Summary:
The emergence of giants signifies a mature business model. Although it will reduce speculative space, there is also enough room for error, allowing for the continuous emergence of new forces.
Author: Zuo Ye, Crooked Neck Mountain
K-Shaped Fundamental Base: Betting Logic in Extreme Times
History is the ruthless victory of the mindless.
I think I have found the answer, the question is: “In the current situation where the RWA increasingly embraces blockchain and stablecoins steadily move towards payments, has the crypto industry or Token market completely lost the fundamental capital valuation?”
This is actually quite strange; blockchain is indeed the future of finance, but the focus of the era has shifted to “technological competition.” Even if the AI bubble bursts, there are new frontiers like nuclear fusion, commercial space travel, and biomedicine.
Blockchain is incredibly awkward; Western counterparts have no Eastern benchmarks, which leads to a failure of the competitive mechanism, and thus the market lacks upward momentum, becoming a dumping ground for Tokens or a void of Memes.
We cannot change this; no matter how wonderful the mechanism is, it cannot support sovereign-level assets, wrapping digital RMB, tokenized national bonds, or A-shares on-chain.
After understanding this, the problem becomes simpler: how can a niche but long-term certain market return to a market-based valuation system?
The Collapse of the Middle Class
Bet on the jockey, Not the horse.
East-West confrontation, the rise of hard technology.
These are the two main themes of the current crypto industry, just as the 2008 financial crisis was the midwife of Bitcoin.
Under ideal conditions, stablecoins serve as a link between opposing worlds, similar to the role of Eurodollars during the Cold War, communicating the rigid demands between the two camps.
Currently, both sides are still determining boundaries, and the turbulence will continue for a while. It can even be said that stablecoins are ultimately a kind of meal replacement for Chinese concept stocks.
Before reaching the boundaries, we still need entrepreneurs and VCs to strive for a place to settle down, patiently waiting for the moment to turn the tables.
The rise of hard technology will not take away the liquid capital from the crypto circle; instead, it creates new speculative targets, blaming the desolation of the crypto circle on the rise of AI is a form of intellectual laziness.
- The ceiling of the crypto industry is limited; only 55 companies can reach a $1B valuation, while there are currently 1,603 unicorns globally.
- The crypto industry resembles an oversized Alt Pre-IPO system, unable to reach Nasdaq; you can first try the waters on Binance.
Do not have an industry disillusionment; human nature is constant. “Running away” Meta’s AI Dawn Song was previously the biggest draw of Oasis Labs, which raised $45 million, treating them as a mature industry benchmark.
Outside of the Token mechanism, Pre-IPO is also possible and may severely impact the pricing logic of foreign assets, while permissionless also triggers economic games again; this is not isolated but will become more routine.
The real crisis lies outside of consensus; that is, the innovative fruits of the crypto industry will quickly be monopolized, with one or two major players rapidly emerging in each track, then it ends.
Binance, as a trading bank, took 5 years (2017-2022) to become the industry leader, but I doubt whether the next generation of products will have such a long development time, or whether the competition among new giants will be extremely fierce.
Image Caption: K-shaped Differentiation Era
Image Source: @zuoyeweb3
It is not only stablecoins, exchanges, and lending that are like this; PerpDEX, HIP-3, and prediction markets are even faster. TradeXYZ has already ended the HIP-3 battle, and $USDH has only survived for about a few months.
As a virtual product industry, crypto no longer serves as an asset target; it must seek practical uses to accommodate external assets, which in turn creates greater volatility.
Volatility is not scary; the problem is that we cannot profit from it. Each track is too quickly defined, leaving less and less space for individual speculation.
Moreover, in the upcoming era of AI implementation, the process will accelerate further. Reflecting since the narrative of Vibe Coding, the most severe impact on all humanity is the “middle class”:
- Office skills of white-collar workers are gradually replaced by Agents.
- The technical abstraction layer of SaaS is being eroded by large models.
- Companies lack the patience to cultivate junior/senior talent.
The above three have benefited from the era’s black swan, but this also means that the distance between Startups and Mag7 is infinitely compressed. SpaceX, which took 24 years, is valued at $2 trillion, while Anthropic reached a trillion in just 5 years.
To refine further, the new forces in the crypto industry will have a shorter time to enter the 55 companies’ $1B club, but you must choose the right new track and ensure a quick end to the battle.
One good news is that the collapse of token economics has quickly led the crypto industry from “technological idealism” to “financial services.” Whoever can find more funds can quickly replace the old predecessors.
Image Caption: The Normal State is No Price Increase
Data Source: @CoinMarketCap
In the past year, buybacks have failed to stop the overall downward trend of the token industry. In comparison, buybacks in the US stock market have been the foundational driving force for the past thirty years.
If a market’s clear buy-in cannot persuade others to hold assets, it means that the underlying driving force has reached a point of complete renewal.
From the perspective of VC, let’s predict the source of renewal.
Riding on the Back of the Silver Dragon
Art challenges Technology, Technology inspires Art.
When light-speed venture capital introduced Claire Zau specifically for podcasts, A16Z had already transformed into a first-tier asset management company. In Q1 2026, the top 6 VCs in the US took nearly 80% of the fundraising amount, corresponding to the top 5 startups, which accounted for 0.1%, taking 73% of the funding amount, reaching $195.6 billion.
The expenditures of AI companies are largely consistent with the profit sources of the “haircut” crowd—both are VC’s money, hoping AI does not ultimately turn into a shitcoin.
At this point, it is difficult to discern whether this K-shaped differentiation is caused by AI or ultimately creates a CapEx frenzy of the AI era.
In our usual memory, venture capital is an early, small, and experimental technology bet, but under the operation of A16Z, it has turned into a gamble that cannot afford to lose.
Image Caption: New Fundraising Trends
Data Source: @PitchBook
In such extreme scenarios, VCs that successfully raise funds and invest have turned venture capital into a Ponzi-like funding game.
The glamorous return rates of VCs need to be divided into three parts: old LPs exit DPI, existing holdings IRR, and fundraising APY. DPI is the real APY, and the money from new LPs is attracted TVL.
We cannot find the next suitable project for “haircut” from RootData’s fundraising projects, and we cannot even distinguish the proportion of the financing amount received. The entire crypto industry has fallen into an era of investment without signals.
Alternatively, it may transform into a secondary US stock research institution, which is also an important driving force for Pre-IPO and US stocks on-chain.
No one can create industry-level investment entry signals. Vitalik envisions reshaping the DeFi mechanism with options; I cannot evaluate right or wrong or truth or falsehood, but the complexity of the mechanism itself is also a signal.
However, I can outline the process of signal collapse for Chinese entrepreneurs. By the end of 2024, the BTCFi wave will cause many Chinese VCs to cease operations, completely unable to exit, a despair that even garbage exchanges cannot escape.
Image Caption: BTCFi Crushes Chinese VCs
Image Source: @zuoyeweb3
Prior to this, Chinese VCs bore the dual role of project discovery and initial pricing. Once a project gains recognition from Chinese VCs, it can enter the vision of “more mainstream or more money” American VCs, obtaining a higher valuation number.
However, after American VCs faced repeated challenges from ETH L2 and BTC L2, they can still leverage their capital advantage to hold the pricing power of stablecoins and RWA.
After this, Chinese VCs are basically out of the new round of competition for Perp DEX; only Chinese exchange VCs can barely participate. However, from the overall industry landscape, Chinese players can only remain in the trading track, while broader financial services like payments (stablecoins) and RWA face dual entry restrictions from Chinese entrepreneurs and investors.
The good thing about “Water Margin” is surrender; the bad thing about the crypto circle is the cycle.
The wave of Agents has flooded over, and the lobster heat has basically receded. The heat of Coding Agents has given way to hardware chips. However, note a long-term trend: we have not yet seen the application paradigm under the new technology wave.
The K-shaped differentiation law is still in effect. The reshaping and transformation of the crypto circle by Agents can almost certainly happen rapidly in a certain hotspot, with a certain track emerging, and a decisive outcome can be completed within 2-3 months.
If this round of cycles does not give birth, then we can only continue to hibernate. Once the signal is sent out, investors and entrepreneurs can feel the super-fast pace of a $1B funding pool, which is also the eternal charm of the crypto circle.
Conclusion
Bet on the jockey, Not the horse.
This is the most difficult time for entrepreneurs; either they go solo, or giants monopolize. There is no longer a slow growth space for growth stocks; time has become a life-threatening leverage that needs to be compressed.
Giantization means maturity of the business format. Although it will reduce speculative space, there is also enough room for error, allowing new emerging forces to continuously emerge.
We compress time and space, limiting ourselves to the topic we need to discuss—macroeconomic political changes and the surging wave of AI have not caused the crypto market to disappear, but the sense of unworthiness is becoming increasingly serious.
From a personal feeling, there is a huge problem in market structure; the entire industry lacks consumption, from the introduction of stock index futures to the financial activities of exchanges. However, no one needs retail investors to hold assets long-term; instead, they constantly “urge” users to leverage.
This is actually very fragmented; the consequence of giving more choices is that users must constantly make choices and cannot pause for a moment; otherwise, the market will collapse immediately.
The market is very cold, but capitalization is accelerating, not stagnating. I wonder if crypto can create the next concentrated wave of a thousand-fold return.