Author: Jademont Zheng, Co-founder and CEO of Waterdrip Capital
Very few people in the crypto industry could have predicted the current situation we face today, just a few years ago.
Web3 Token Projects Dying in Batches.
Hardly any project founder who has issued a token hasn't experienced user protests, lawsuits, or community reckoning. Undeniably, some founders genuinely started with the intention of building a great product and ecosystem, but when an avalanche hits, very few can escape unscathed.
Leading CEXs Gradually Losing Industry Influence.
Even as trading volumes repeatedly hit new highs, they are increasingly resembling traditional brokerages in essence—handling trades but no longer controlling asset issuance and pricing power. The gap compared to capital market infrastructure like Nasdaq has, in fact, widened.
Collective Retreat of Primary Market Investment Institutions.
It's not a lack of capital, but a lack of exit mechanisms. Some institutions tacitly allow project teams to manipulate token prices, collaborating with projects to complete value transfer; others simply leave the industry altogether. Without long-term returns or emotional value, investing in other sectors seems more appealing.
In an avalanche, no single snowflake is entirely innocent; yet, each snowflake does not bear equal responsibility.
In my view, a few snowflakes bear particularly heavy weight.
First, FTX and Luna.
Their successive collapses during the industry's peak prosperity shattered traditional capital's trust in the entire sector, leaving significant institutional funds hesitant to this day.
Second, Leading CEXs.
During the industry's most glorious period, they should have taken on a leadership role: establishing higher standards for token listings, helping the market filter for quality projects, promoting long-termism, and fostering a healthy industry culture.
The reality was precisely the opposite. Short-term interests overrode everything else. The mainstream approach became token issuance groups mass-producing worthless tokens and rapidly harvesting liquidity. The platforms profited from listing fees and trading volume, but in doing so, they exhausted the industry's collective credit. When the tide recedes, there are no winners; everyone is in the same boat.
Third, the Ethereum Foundation.
I firmly believe that the transition from Proof of Work (PoW) to Proof of Stake (PoS) was a severely overrated decision. While it did reduce energy consumption, the cost saved is almost negligible compared to the lost development opportunities.
Had Ethereum continued to evolve along the PoW path and persistently advanced its computing power infrastructure, it could have had the opportunity to grow into the world's largest blockchain-based AI computing power network, securing a more strategically vital position in the AI era. The shift to PoS prematurely ended that possibility.
So, is there still hope for this industry?
Certainly.
However, compared to the aforementioned factors that determine the industry's direction, there are few variables left that can truly reverse the trend.
I believe that in the future, perhaps only two developments could genuinely reignite a new wave of prosperity:
First, the United States incorporating BTC into its national strategic reserves, with sustained actual purchases, thereby rebuilding global capital's confidence in crypto assets.
Second, the on-chain emergence of a true super application with hundreds of millions of users that can create real tangible value, once again proving that blockchain can not only issue assets but also generate demand.
Beyond these, other positive developments are more akin to cyclical rebounds rather than heralding a new era.
