Author: donn (@tzedonn)
Compiled by: Deep Tide TechFlow
Deep Tide Introduction: When only 12 projects have annual revenues exceeding $50 million, when DeFi is attacked by AI and becomes a pit of fire, when on-chain gold diggers are still trapped in a battlefield that has already ended—every crypto practitioner should ask themselves the same question: What can I still do here?
Many of my friends have left or are considering leaving the crypto industry, so I want to share some broader thoughts about the market and discuss what is left to do in cryptocurrency?
The core of the problem is that cryptocurrency is stuck in three key areas: (i) a lack of innovation, with nothing new emerging in the past 2-3 years; (ii) the advancement of quantum technology threatening Bitcoin's survival by 2029; (iii) large language models like Claude Mythos increasing the number of attacks, making the risk/reward of DeFi unattractive.
This leads to the question: What is left to do in cryptocurrency?
VCs and Liquid Token Investors
Due to this innovation drought, the VC industry has been quite quiet, especially in token trading. Every crypto VC will tell you how boring it is, unless they are doing larger Series B+ funding or backing stablecoin payment startups.
The few good VCs I interact with are investing in contrarian verticals, such as quantum startups (e.g., Project Eleven, Oratomic) or novel ideas (e.g., Shift Foundation, PostFiat, Ambient).
I think this is normal because we have basically figured out what works and what infrastructure is needed, so there are fewer and fewer exciting new things. Now we are in the adoption phase of payments and remittances. The endgame and institutions have arrived.
Similarly, for those working in crypto, it only makes sense to work at stablecoin fintech companies (e.g., Circle, OpenFX, Tempo, Arc, Plasma), trading platforms (e.g., Polymarket, Kalshi, Hyperliquid), or novel contrarian startups (as mentioned above). Working at an L1 foundation is a well-paid dead-end job that does you no good in the long run.
The lack of "cool new things" on the VC side means fewer quality tokens will come to market, and less VC capital will flow into the liquid market.
Therefore, long-term liquid token investors who evaluate tokens based on growth, fundamentals, and value accumulation probably have fewer than 10 quality targets now, and this number seems unlikely to increase in the short term.
Only 12 token projects have annual revenues exceeding $50 million. Only three of them have a value accumulation score >=7 (HYPE, PUMP, JUP). Even if you evaluate based on "growth" and teams improving token value accumulation, you might add another 5-10 tokens to the list below (e.g., MORPHO, SYRUP).
The market cap of OTHERS has also dropped from about $450 billion to about $180 billion, while the stock market is experiencing speculative frenzies in areas like high-bandwidth memory, photonics, quantum, polypeptides, etc.
Subjective and Systematic Traders
You might say cryptocurrency is mostly narrative trading and momentum trading, so it suits subjective traders who go long/short, trade narratives, or catalysts/news. This is the area I am in and know best.
In the depths of the bear market, trading catalysts has been more profitable, although many require you to stay alert and react quickly. There is a lot of edge and decent trading opportunities here.
Still, there have been quite a few event-driven trades in the past 3 months, such as...
Shorting TAO when the Templar subnet left, dropping from $330 to $260 in 5 hours (April 9)... Going long TAO on Chamath and Jason Cal's shills (with varying success)
No trade here, but interestingly, WLD didn't even rise on the Tinder and Zoom partnership announcement (down 8% in two days)
Shorting AAVE on the KelpDAO hack, which happened around 1730 UTC but was first reported on Twitter about an hour later at 1830 UTC (April 19)
Shorting AAVE on Marc Zeller's ACI departure (March 3)
Shorting the pullback in TRUMP after the Trump dinner announcement (March 12)
Shorting ACX to the "conversion price" after the spike from the token-to-equity conversion announcement (March 11)
Shorting DRIFT on the exploit, down 40% in 1 hour (April 1)
Shorting RESOLV on the exploit, down about 10% (March 22)
Going long ALGO on the Google quantum breakthrough (March 31)
Going long LDO on the buyback announcement, up about 17% in about 5 days (March 27)
Going long/short on pump-and-dump scams like RAVE, SIREN, STO, PIPPIN, POWER (things I prefer not to participate in)
Still, open interest has dropped about 60% since October 10th, and reactions to news are often small. You need to be selective about what news to trade and whether others care about it, because retail trading interest is scarce (usually the slowest to react to headlines), so you are mainly PVPing with other news traders.
I increasingly see subjective traders spending more time on prediction markets and trading stocks/commodities, and Hyperliquid makes this transition much easier.
As for systematic traders and basis traders. As trading volume and funding rates decline, traditional strategies are becoming less profitable. To keep themselves interested, they are doing HIP-3 markets, arbitraging prediction markets, trading Pendle PT/Boros, or arbitraging new perpetual DEXs (with limited liquidity).
Yield Farmers
The increasing number of hacks in DeFi has also put yield farmers (or TVL trading on the institutional side) into hibernation or completely exiting this year, as the last few good trades were Plasma and USDai. FlyingTulip might work in a bull cycle, but it didn't get much attention at launch.
Usually, "yield trading" makes sense because you can sell the governance tokens rewarded to you (as I highlighted here), but this assumes someone buys it from you. If liquid investors/subjective traders aren't there to add fuel, it's hard to make the risk/reward worthwhile.
This was true in the past (OHM), is true now (XPL, ENA), and will likely be true in the future (CHIP for USDai). The threshold for on-chain DeFi yield used to be 15-25% APY to account for treasury rates around 0% and a hack probability of about 10-15%.
The reason OHM was worth it back then wasn't because the risk was lower, but because the returns were much higher.
Now the threshold is probably closer to 50-60% APY, due to the increasing number of hacks ($795 million hacked in DeFi in the first four months of 2026) plus Claude Mythos potentially leading to more hacks and rising quantum risk. Since no one is buying the emitted tokens, it's hard to achieve a reasonable risk/reward.
Most rational farmers have almost entirely moved off-chain, because even an 11.5% STRC TradFi fixed note yield offers better risk-adjusted returns (15-20%).
See: Rami poker, CBB, Sisyphus, delucinator, misaka
On-Chain Prospectors
Last but not least... the infamous on-chain prospectors: those who buy at $1 million market cap and sell at $100 million. I think these people will still exist, because the trenches are still the only place where you can pull off 100x.
On-chain prospectors also feel like WWII soldiers trapped in a cave, unaware that the gold rush era is basically over.
Needless to say, meme coins peaked when our dear President and First Lady launched their coins. We are nearing the end of the euthanasia coaster, things don't pump like they used to, and there are too many value extractors everywhere ("FNF groups", "LA vape groups", serial rug factories, and extractive transaction fees).
Still, I don't think this segment will die completely; a glimmer of hope keeps people in the trenches. In the past few months, we've seen...
$GAS: GasTown went from $100k market cap to $60 million in 3 days, then back to $1 million in 3 days, now at $50k market cap. (Jan 15)
$RALPH: RalphWiggum went from $500k to $55 million in 2 weeks, then dropped to $3 million (-93%) in 12 hours when the dev abandoned it, now trading at $50k market cap. (Jan 21)
$PENGUIN: Nietzschean Penguin pumped to $170 million in three days (Jan 24), but now trades at $3 million.
$MOLT hit $120 million in one day (Jan 31), but now trades at $1 million
$WHITEWHALE hit $200 million (Jan 10), but now trades at $7 million
$ASTEROID hit $200 million yesterday (April 19) after Musk tweeted it could be a SpaceX mascot. It will probably trend to zero in a few days.
While these show that pumps do happen from time to time, your odds of hitting them are probably 90% in a few hours.
So... What Am I Doing?
I am maintaining my arbitrage strategies on Polymarket, generating about 15% APY, with a max capacity of about $250k. Fully deployed, it only makes about $3500 per month. Arbitrage opportunities have also decreased since Polymarket introduced trading fees, and with the recent npm package poisoning, I increasingly feel the risk/reward isn't there (especially post-airdrop). The current plan is to kill it after the airdrop.
I continue to trade crypto, but not as actively as before. I had the idea of "starting an AI hedge fund," but my exploration led me to conclude that AI isn't creative enough for subjective trading (e.g., for idea generation), but it's great if you give it a task or methodology you've used before that requires a bit of logical reasoning.
So, I am spending time automating certain "hedge fund analyst" tasks, like automating the on-chain reconnaissance I used to do for internal wallets on Polymarket, which is quite process-based but requires a bit of logical thinking. It's a perfect task for Claude.
I am also increasingly looking into the fine-tuning aspect of AI models, especially from a crypto and financial data perspective. I've been reading outside of crypto, and I find topics like the AI stack (social impact and stocks across the stack), physical AI (world action models, vision language models, and data issues), and the idea of "AI roll-ups" (PE roll-ups but with AI) intellectually very stimulating, but haven't found a problem interesting enough to dedicate my life to solving yet.
If you have anything interesting to discuss, feel free to reach out!
