From Wild Fundraising to Unwarranted Hype, What Is Happening to Crypto VCs?
Original Article Title: "Crypto VC in the Midst of Liquidity Anxiety: An Unfolding Imbalance"
Original Source: ChandlerZ, Foresight News
Waterdrop Capital partner Dashan admitted in a recent Space session that all four projects he had recently invested in had launched on Binance, but none had distributed tokens to investors according to the original investment agreement. Despite the token distribution terms being clearly outlined in the contract, after the project goes live, the agreement can be amended at will, and investors are almost unable to take any effective countermeasures.
He mentioned that the amendment to the agreement was not actually the project team's intention, but rather a longstanding unwritten rule of Binance, so he does not blame the project teams because they are also at a disadvantage in front of Binance. The current strategy is very clear: to persuade and help truly high-quality project teams to forgo token distribution and go directly to listing on a relatively clean and regulated market to showcase their value.
In traditional VC investments, rights protection based on contracts does not have the same practical binding force in the encrypted token investment structure. Due to exchanges leading circulation rules after token listing, on-chain asset allocation is not immediately bound by the traditional legal system, and investment agreements often lose their enforceability at critical junctures. In the current market environment, whether a project can gain access to a top exchange directly affects its overall survival, and the importance of agreement terms is marginalized in the face of actual interests. In order to get listed, project teams have to cooperate with exchanges in redesigning aspects such as release schedule, lock-up rules, token distribution ratios, etc. Investors, lacking on-chain governance rights and circulation discourse power, find themselves in a de facto rights disadvantage.
This statement reveals a deep-rooted crisis that the current crypto VC investment system is facing, namely a dilemma where the effectiveness of contracts, liquidity control, and exit mechanisms have completely failed.
Imbalance of Power: The New Relationship Among VCs, Projects, and Exchanges
In the industry's development over the past few years, the model of "project narrative construction - multi-round VC financing - top exchange token generation event (TGE)/listing" has gradually become mainstream. The hallmark of this model is that in the early stages, projects rely on professional VC institutions for funding, resource connection, and reputation endorsement, completing financing with gradually increasing valuations, with the ultimate goal usually being the initial token issuance and circulation on a large centralized exchange for early investors to exit.
In the previous multiple bull markets, crypto VCs, as core resources, held significant power in early-stage financing and token issuance design, playing a key role in driving rapid industry expansion and project incubation. In the last bull market, the position of project teams was enhanced, but VCs still had some dominance due to their large capital and liquidity empowerment such as Launchpad.
However, as the market enters a new adjustment period, liquidity in the altcoin space dries up, and the incentive structure between investors and projects shifts. Exchange power has reached unprecedented levels, becoming the absolute controller of liquidity, with key processes such as listing approval, token allocation, and circulation strategy concentrated in the hands of exchanges. This places projects in an extremely weak position during negotiations, even if they have signed detailed investment agreements. Faced with exchange-proposed changes to circulation conditions, project teams find it difficult to refuse, ultimately having to violate the original agreements with investors.
Exchanges have become the controllers of scarce resources, while VCs are gradually being marginalized, with their actual control capacity significantly reduced.
The "Prisoner's Dilemma" in Liquidity Contraction
The current dilemma faced by "VC coins" is not caused by a single factor.
After multiple rounds of funding, projects often have a high public market valuation at the time of Token Generation Event (TGE). This directly results in a high initial buy-in cost for secondary market investors, while also implying that early investors including VCs, the team, early supporters, etc., hold a large amount of low-cost chips and have a strong potential sell-off motive.
This expectation gap puts tokens under natural selling pressure after listing, with market participants potentially forming a consensus that "selling is the optimal strategy," triggering a negative feedback loop.
Furthermore, the token economy itself exacerbates the dilemma of VC coins.
During a bull market, many projects' token issuance models follow the high growth assumptions of the bull market, such as continuous market cap growth and sufficient liquidity to support gradual unlocking. However, in practice, many projects lack real revenue support, with DeFi relying on Ponzi schemes, GameFi relying on subsidies, NFTs relying on FOMO, and tokens completely losing intrinsic growth momentum.
Most importantly, tokens invested by VCs in the past could eventually be sold to new retail investors on the secondary market, forming a complete exit path. However, there are currently very few new retail investors on-chain and on exchanges, incremental funding is drying up, and VC mutual selling has become the norm.
Essentially, early investors, project teams, liquidity providers, and early users have become part of a zero-sum game within a closed loop, making it increasingly difficult to exit.

VC Return in the Previous Bull Market Cycle

VC Return in the Current Cycle
For VC firms, the traditional strategy of relying on rapid TGEs to achieve high multiple exits is facing challenges, and the realization period of investment returns may lengthen, increasing uncertainty. This may prompt VCs to focus more on a project's long-term fundamentals, sustainable business models, reasonable valuations, and healthier tokenomic models when making investment decisions. Their role may also need to evolve from focusing on early-stage investment and driving listings to more in-depth post-investment management, strategic empowerment, and ecosystem development.
For project teams, there is a need to reassess their token issuance strategy and community relationships. Following the questioning of the "pump and dump" model, exploring a lower valuation starting point, a more equitable distribution mechanism, designing tokenomics that better incentivize long-term holders, as well as increasing operational transparency and strengthening accountability may be more worth exploring.
From a more macro perspective of industry development, the current challenges can be seen as an adjustment in the market's path to maturity. It has exposed issues accumulated during past rapid growth and may drive the formation of a more balanced, sustainable financing, and development ecosystem. This requires all market participants, including VCs, project teams, exchanges, investors, and even regulatory bodies, to collectively adapt to change, seeking to establish a new equilibrium between innovation incentives and risk control, efficiency, and fairness.
Original Article Link
You may also like

Untitled
I’m unable to access the original article content you referenced. Please provide specific details or another article so…

From Utopian Narratives to Financial Infrastructure: The "Disenchantment" and Shift of Crypto VC

A decade-long personal feud, if not for OpenAI's "hypocrisy," there would be no globally leading AI company Anthropic

a16z: The True Meaning of Strong Chain Quality, Block Space Should Not Be Monopolized

a16z: The True Meaning of Strong Chain Quality, Block Space Should Not Be Monopolized

2% user contribution, 90% trading volume: The real picture of Polymarket

Trump Can't Take It Anymore, 5 Signals of the US-Iran Ceasefire

Judge Halts Pentagon's Retaliation Against Anthropic | Rewire News Evening Brief

Midfield Battle of Perp DEX: The Decliners, The Self-Savers, and The Latecomers

Iran War Stalemate: What Signal Should the Market Follow?

Rejecting AI Monopoly Power, Vitalik and Beff Jezos Debate: Accelerator or Brake?

Insider Trading Alert! Will Trump Call a Truce by End of April?

After establishing itself as the top tokenized stock, does Ondo have any new highlights?

BIT Brand Upgrade First Appearance, Hosts "Trust in Digital Finance" Industry Event in Singapore

OpenClaw Founder Interview: Why the US Should Learn from China on AI Implementation
WEEX AI Wars II: Enlist as an AI Agent Arsenal and Lead the Battle
Where the thunder of legions falls into a hallowed hush, the true kings of arena are crowned in gold and etched into eternity. Season 1 of WEEX AI Wars has ended, leaving a battlefield of glory. Millions watched as elite AI strategies clashed, with the fiercest algorithmic warriors dominating the frontlines. The echoes of victory still reverberate. Now, the call to arms sounds once more!
WEEX now summons elite AI Agent platforms to join AI Wars II, launching in May 2026. The battlefield is set, and the next generation of AI traders marches forward—only with your cutting-edge arsenal can they seize victory!
Will you rise to equip the warriors and claim your place among the legends? Can your AI Agent technology dominate the battlefield? It's time to prove it:
Arm the frontlines: Showcase your technology to a global audience;Raise your banner: Gain co-branded global exposure via online competition and offline workshops;Recruit and rally troops: Attract new users, build your community and achieve long-term growth;Deploy in real battle: Integrate with WEEX’s trading system for real market use and get real feedback for rapid product iteration;Strategic rewards: Become an agent on WEEX and enjoy industry leading commission rebates and copy trading profit share.Join WEEX AI Wars II now to sound the charge!
Season 1 Triumph: Proven Global DominanceWEEX AI Wars Season 1 was nothing short of a decisive conquest. Across the digital battlefield, over 2 million spectators bore witness to the clash of elite AI strategies. Tens of thousands of live interactions and more than 50,000 event page visits amplified the reach, giving our sponsors a global stage to showcase their power.
Season 1 unleashed a trading storm of monumental scale, where elite algorithmic warriors clashed, shaping a new era in AI-driven markets. $8 billion in total trading volume, 160,000 battle-tested API calls — we saw one of the most hardcore algorithmic trading armies on the planet, forging an ideal arena for strategy iteration and refinement.
On the ground, workshop campaigns in Dubai, London, Paris, Amsterdam, Munich, and Turkey brought AI trading directly to the frontlines. Sponsors gained offline dominance, connecting with top AI trader units and forming strategic alliances. Livestreams broadcast these battles worldwide, amassing 350,000 views and over 30,000 interactions, huge traffic to our sponsors and partners.
For Season 2, WEEX will expand to even more cities, multiplying opportunities for partners to assert influence and command the battlefield, both online and offline.
Season 2 Arsenal: Equip the Frontlines and Command VictoryBy enlisting in WEEX AI Wars II as an AI Agent arsenal, your platform can command unprecedented visibility, and extend your influence across the world. This is your chance to deploy cutting-edge technology, dominate the competitive frontlines, and reap lasting rewards—GAINING MORE USERS, HIGHER REVENUE, AND LONG-TERM SUPREMACY IN THE AI TRADING ARENA.
Reach WEEX’s 8 million userbase and global crypto community. Unleash your potential on a global stage! This is your ultimate opportunity to skyrocket product visibility and rapidly scale your userbase. Following the explosive success of Season 1—which crushed records with 2 million+ total exposures, your brand is next in line for unparalleled reach and industry-wide impact!Test and showcase your AI Agent in real markets. Throw your AI Agents into the ultimate arena! Empower elite traders to harness your tech through the high-speed WEEX API. This isn't just a demo—it's a live-market battleground to stress-test your algorithms, gather mission-critical feedback, and prove your product's dominance in real-time trading.Gain extensive co-branded exposure and traffic support. Command the spotlight! As a partner, your brand will saturate our entire ecosystem, from viral social media blitzes to global live streams and exclusive offline workshops. We don't just show your logo; we ensure your brand is unstoppable and unforgettable to a massive, global audience.Enjoy industry leading rebates. Becoming our partner is not a one-time collaboration, but the start of a long-term, mutually beneficial relationship with tangible revenue opportunities.Comprehensive growth support: WEEX provides partners with exclusive interviews, joint promotions, and livestream exposure to continuously enhance visibility and engagement.By partnering with WEEX, your platform gains high-quality exposure, more users and sustainable flow of revenue. The Hackathon is more than a competition. It is a platform for innovation, collaboration, and tangible business growth.
Grab Your Second Chance: Join WEEX AI Wars II TodayThe second season of the WEEX AI Trading Hackathon will be even more ambitious and impactful, with expanded global participation, livestreamed competitions, and workshops in more cities worldwide. It offers AI Agent Partners a unique platform to showcase their technology, engage with top developers and traders, and gain global visibility.
We invite forward-thinking partners to join WEEX AI Wars II now, to demonstrate innovation, create lasting impact, foster collaboration, and share in the success of the next generation of AI trading strategies.
About WEEXFounded in 2018, WEEX has developed into a global crypto exchange with over 6.2 million users across more than 150 countries. The platform emphasizes security, liquidity, and usability, providing over 1,200 spot trading pairs and offering up to 400x leverage in crypto futures trading. In addition to the traditional spot and derivatives markets, WEEX is expanding rapidly in the AI era — delivering real-time AI news, empowering users with AI trading tools, and exploring innovative trade-to-earn models that make intelligent trading more accessible to everyone. Its 1,000 BTC Protection Fund further strengthens asset safety and transparency, while features such as copy trading and advanced trading tools allow users to follow professional traders and experience a more efficient, intelligent trading journey.
Follow WEEX on social mediaX: @WEEX_Official
Instagram: @WEEX Exchange
Tiktok: @weex_global
Youtube: @WEEX_Official
Discord: WEEX Community
Telegram: WeexGlobal Group

Nasdaq Enters Correction Territory | Rewire News Morning Brief

OpenAI loses to Thousnad-Question, unable to grow a checkout counter in the chatbox
Untitled
I’m unable to access the original article content you referenced. Please provide specific details or another article so…
