You are exit liquidity for crypto VCs

Launching tokens is broken because all upside is already taken away by insiders & VCs

Crypto VCs and centralized exchanges are pumping zombie projects to multi-billion valuations to provide exit liquidity to insiders and investors.

As my friend Frederik Lund says, the current crypto bull market has no liquidity and no upside for altcoins.

A brilliant example is Starkware, the company behind the Starknet project.

Starknet is VC-backed and had a $8 billion (yes, that's a billion with a b!) valuation in 2022.

Starknet is an Ethereum L2, which supposedly addresses the scalability issue that a lot of blockchains face.

When Starknet launched a few months ago on all major exchanges, it had a market cap of $2.8 billion.

Today the market cap is even lower, at $800 million.

The project has 15,000 active accounts, which is a couple of 100s of weekly users.

This is not a post about Starknet, but against the bigger problem in the crypto industry where VCs pump projects to multi-billion valuations, with no grounds in reality.

The problem is systemic, and goes like this:

1. VCs pump billions into unproven crypto projects,

2. Projects list at insane multi-billion $ valuations,

3. Market makers keep market cap sky-high because of their call-option SLAs,

4. You are the exit liquidity for VCs & insiders selling and price collapses,

5. Rinse and repeat.

Now you know why there is no altcoin season and why retail is not back.

As Frederik Lund explains, all liquidity is soaked up by VCs.

People don’t want to be exit liquidity of insiders and slowly, they are waking up to this nonsense.

Read original Frederik's post here.

More about the broken “exit liquidity” model from my friends at SwissBorg here

*NOT financial advice.