Is There a Future for the Crypto Industry as Meme Culture Becomes Stagnant and VC Models Struggle?

Author: BroLeon from Australia

Before attending TOKEN2049, I set an important goal for myself.

That is to engage in meaningful conversations with participants at different levels in the industry, especially those seasoned players who have experienced multiple cycles and have long-term insights.

I wanted to clarify several questions:

👉 What stage is the industry currently in?

👉 Can the crypto industry continue to move forward, or is it no longer a sunrise industry?

👉 Where might future opportunities lie?

👉 Is it still worth it for young people to enter the industry?

👉 Can retail investors still make money?

👉 And, for those of us who have been in the industry for many years, can we still expect to strike it rich like in the past?

This time, I had in-depth discussions with some seasoned VC friends, very successful project founders, veteran KOLs, KOL agencies, and friends from exchanges, with each conversation lasting over an hour.

Due to limited time and resources, about 70% of the people I spoke with were Chinese, and 30% were from Europe and the US (including one Japanese partner from a European and American project).

Interestingly, there were significant differences in opinions about the future. I want to present these differing viewpoints first before sharing my own feelings.

After all, rather than just seeking voices that support my judgment, it’s better to see what everyone is actually debating.

### Pessimists: The Core Judgment of This Group is:

#### The Era of Easy Profits in Crypto May Be Coming to an End

1. Compliance

No industry can remain prosperous forever; it will go through a difficult embryonic stage -> a stumbling childhood -> a vigorous and ambitious youth -> a stable but slightly dull adulthood -> and finally, a twilight phase leading to decline.

The crypto industry has long passed the early stage of chaotic growth in the dark forest, and the main theme must inevitably be compliance. The result of compliance will be the rectification of various bugs and windfalls that arose from unclear rules and lax controls, thus shrinking the window for ordinary newcomers to become wealthy.

Today’s cryptocurrency market has grown to a size that cannot be ignored by governments worldwide. Over time, regulatory, tax, and legal departments in various countries are becoming increasingly familiar with the operational methods of cryptocurrencies. The regulation of crypto taxes in Europe and the US has matured, and the management of CEX licenses is increasingly aligning with traditional finance.

This will lead to several inevitable outcomes:

1. Once, CEXs could indiscriminately attract retail investors from various countries to trade and take a cut, but now major exchanges in developed countries have begun to follow relevant regulations step by step, with Travel Rule, contract multiples, and derivatives entry thresholds cooling down the previously blindly invested funds.

2. The number of people and funds willing to pump and create markets will decrease.

When talking about sudden wealth, I can hardly forget the era of LUNA and SBF's FTX, one of which created a paper fortune of $800 million for Real Madrid only to end up in vain, while the other leveraged user funds to skyrocket the early Solana ecosystem.

Why do such cases rarely occur in the US stock market? It is precisely because of strict compliance controls.

A large amount of black and gray money entering the crypto space has, to some extent, promoted the stage of crypto prosperity, such as the funds from Wanghui and Russian casinos, and funds from sanctioned countries. These funds will find it very difficult to enter the pool again as compliance tightens, becoming the driving force behind rising coin prices.

#### 2. Traditional Funds' Channels to Enter Web3 Are Cut Off

Many people only see altcoins falling, memes becoming less fun, and retail investors no longer picking up the slack. But if we look deeper, we will find that an important funding cycle that supported the prosperity of the crypto industry over the past few years is gradually becoming ineffective.

After the last round of liquidity easing, a large amount of traditional capital, including family offices and funds, found a relatively compliant way to enter the crypto industry:

That is to invest in Crypto VCs.

These traditional funds do not need to trade memes themselves or directly participate in various on-chain speculations; they only need to allocate funds to crypto funds.

After VCs receive the money, part of it may be allocated to mainstream assets like BTC and ETH, while another part is invested in the primary market.

Project teams receive financing, recruit teams, develop products, conduct marketing, issue airdrops, and connect with exchanges, ultimately launching the project and selling tokens in the secondary market, allowing VCs to recoup their funds.

This forms a fairly complete funding cycle.

However, since last year, this model has been facing serious challenges. Traditional fund investors have gradually discovered that the experience of investing in Crypto VCs is not ideal.

First, the investment cycle is long, and fund recovery is slow. Second, it has become increasingly difficult for altcoins to achieve the kind of crazy valuations they once did after listing; even if they do, by the time they can unlock, they have already dropped significantly. More importantly, retail investors are no longer willing to pay for these overvalued projects.

When VCs cannot create ideal returns for investors, new fundraising will naturally become more difficult. And when VCs cannot raise funds, project teams will find it hard to obtain continuous financing like in the past.

This is the fundamental reason why many VCs in the crypto space have shut down or exited (especially Asian VCs) over the past year.

Additionally, with the AI wave, the volatility of tech stocks in the US is no less than that of crypto, attracting a large amount of capital and excellent entrepreneurs away from Web3 to participate. This has led our industry to gradually become a stagnant market lacking new participants and liquidity.

How to bring these traditional funds back legally and compliantly to reinvigorate the industry may be one of the most challenging issues in the current market.

#### 3. Lack of Innovation in Narratives

In the short term, a bigger problem in the crypto space is that one of the most important wealth creation mechanisms in the past—the consensus around altcoin narratives—has collapsed, and the successor, memes, are not much better.

With liquidity dwindling, DePIN, GameFi, and many previously highly anticipated sectors are gradually exposing issues in their business models and real revenues.

Ultimately, this has led retail investors to no longer believe in altcoins or those grand-sounding narratives, turning instead to support "anti-Wall Street" memes.

However, memes were once a weapon against VCs, and now they are also beginning to stagnate. Today’s memes, although they have escaped the traditional VC model of issuing tokens and dumping them on exchanges, are gradually forming another set of interest groups.

Token issuance groups, hype groups, and various mutually binding small groups are beginning to dominate more and more opportunities. It has become increasingly difficult for ordinary retail investors to achieve several times or even dozens of times returns through early participation or personal insights.

Recently, Vtalik also mentioned that small groups on Pump.fun have accumulated over $100 million by continuously issuing memes, with over 90% of retail investors who played FOMO losing money.

Regardless of the specific cases, the underlying issues reflected are worth noting:

The meme game, once marketed as fair and open, is gradually being occupied by new interest structures.

Old games are being broken, new games are beginning to stagnate, and we have yet to find the next exciting game model that allows relatively more retail investors to reap benefits without such intense competition.

Optimists: The Core Judgment of This Group is:

The fundamentals of the industry are visibly improving; we have already emerged from the trough.

Although the expressions vary, many friends agree that today’s crypto space may resemble the state after the ICO bubble burst in 2019.

At that time, trust in the previous mainstream narrative (everything could be ICO) completely collapsed. There were no new projects on the market, and many old projects died en masse. Practitioners were unsure of the future direction and jumped back to the finance and internet industries.

The entire industry seemed to lack any projects that could land and continuously generate revenue, and there was nothing worth looking forward to. But the result was that in nearly a year of bear market, Defi bloomed brilliantly.

Now, a similar situation is happening again.

In fact, I felt this way since last year. At that time, the market began to decline, and retail investors were no longer willing to buy altcoins, while memes still enjoyed a brief resurgence.

I felt that the industry might need to undergo a thorough cleansing. I even wrote a long tweet discussing how the VC collusion and project dumping had led the industry into a complete deadlock, unsure of who could untie this knot; otherwise, the bear market could come quickly.

Later, the rise of memes and the innovative gameplay of Binance's Alpha extended the market's life for half a year, until after October 11, when market liquidity significantly shrank, and the market experienced a long, gradual process of decline.

It wasn’t until nearly a year later at this TOKEN2049 that I clearly felt that many of those old projects had been cleaned up.

Those that could go public have already done so, and many that couldn’t have already died.

From this perspective, the current industry slump may not be a bad thing.

It resembles a long detoxification process, and detoxification takes time. Only when old things gradually exit the market can new narratives and new gameplay have the opportunity to truly grow.

As the saying goes, nothing can be established without breaking down the old.

When winter comes, only the truly vital things have the chance to sprout again in the next spring. If we extend the time dimension, we may be able to view the current market environment more rationally and wait patiently for the next innovation.

Moreover, we can now see some projects that can continuously generate revenue and have stable user bases, making it hard for others to dismiss cryptocurrency as a Ponzi scheme.

Regarding the compliance process issue mentioned by pessimists, the optimists' view is to look at it from another angle --

"The fact that cryptocurrencies are being accepted by more and more countries and gradually entering the mainstream financial system is precisely what we early participants once dreamed of, isn’t it?"

Looking back many years ago, what did we early crypto believers hope for?

We hoped that cryptocurrencies could be widely used. We wanted more people to understand blockchain and digital assets. We wanted cryptocurrencies to no longer be just a game for a small circle but to enter the real-world financial and business systems.

Now, these things are actually gradually happening, such as @circle and cryptocurrency companies going public, many exchanges being invested in by mainstream financial institutions, Hyperliquid being mentioned by Trump, and 82 million Samsung phones in the US starting to embed stablecoin wallets, with Robinhood and Futu providing users with access to cryptocurrency trading.

These seemingly distant benefits, which may not directly relate to our daily profit-making, could become the cornerstone for a larger influx of users into crypto when the external environment changes, such as liquidity easing again.

Just as we cannot simply declare the industry dead because the once-popular ICOs no longer work, we also cannot conclude that the entire industry is failing just because the VC token issuance model is no longer effective and retail investors are struggling to profit from memes.

In fact, there is still a lot more content, but I don’t want to make this too lengthy. I will separately provide my thoughts on the questions raised earlier.

I just want to say that we should extend the time dimension and adopt a more open mindset to view the development of the industry, rather than using the old rules of the game to judge whether a new era still has a future.

This may be the most thought-provoking takeaway from my discussions with different friends at TOKEN2049.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.