Author: Matt Ye, Founder of Lorenzo
Introduction:
When the industry begins to question itself collectively, with declining asset quality, stagnant innovation, rampant scams, and mainstream institutions continuing to watch from the sidelines, are these phenomena really just cyclical issue?
The founder of Lorenzo approaches from a more fundamental perspective, pointing out that the problems of the crypto industry are essentially not issues of projects, technology, or individuals, but rather issues of civilizational form. From the anarchy of DeFi's black market, to the feudal order dominated by CEXs, to the capital colonization of Wall Street, he attempts to还原 the three evolutions of the crypto world and raises a more critical question:
What will be the next civilizational form of crypto?
The common evaluation of the crypto circle nowadays is: the assets are no good, and the people are no good either. To summarize, it basically boils down to the following questions:
- Why is the quality of native cryptocurrency assets continuously deteriorating, with the entire industry rapidly rushing towards securities trading?
- Why has cryptocurrency innovation stagnated? Why is there nothing that feels truly exciting anymore?
- Why do serious participants in finance, law, and the real economy refuse to regard cryptocurrency technology as a legitimate tool?
- Why does cryptocurrency produce more scammers per capita than any other industry in history?
- At the same time, why are there also many pure idealists—those with near-religious beliefs, willing to fight for it? Such as researchers and developers pursuing pure decentralization.
I believe that any person and product are products of civilization. What kind of civilizational form produces what kind of technology, goods, systems, and people. So when we feel that these dimensions have systematic problems, the problem must lie in the civilizational form and the system itself, not in the superficial phenomena. After all, as is well known, studying medicine couldn't save the Chinese people, and importing foreign guns and cannons couldn't save the Qing Dynasty either.
Does the crypto circle have a civilizational form? Naturally, it does.
First Form: The Anarchic Black Market of DeFi
The pure on-chain environment is essentially a black market, a dark forest without rules or systems.
In the dark forest, the rational strategy is not to build, but to steal as much value as possible as quickly as possible, and then disappear. This is the optimal solution in game theory.
If we assume that everyone else is a ruleless, bottom-line hunter, the longer you stay, the greater your risk exposure. Even if you are a successful "big cutter" who has made it ashore, if you keep playing, one day someone stronger or more unscrupulous will eventually take you down. So your optimal solution is: make a fortune by any means necessary, and disappear before anyone else can move against you.
This is why Rugpull is the most native business model in cryptocurrency. Every RugPull, every anonymous team that disappears, every project handed over to the community's destined individuals—these are not accidents, but the inevitable operation of the market under its incentive structure.
The same applies when facing crime. "Not your keys, not your coins" might be a strategy against financial hegemony, but it is clearly not a good security philosophy. Once assets are stolen, it becomes a technical version of victim-blaming: "Why didn't you manage your private key properly?" It avoids the question that a civilized society should ask: who is responsible for building a system that ordinary people can use safely?
Second Form: The Feudal Empire Under CEX Rule
When the high costs caused by the chaos of the black market become unbearable even for the most radical participants, power begins to concentrate in CEXs (including centrally managed DEXs). CEXs implement their own laws and systems within their empires, greatly reducing the trust costs for participants. CEXs will do their utmost to ensure the security of custodial assets. Most CEXs will sanction clear illegal activities. The assets that can be listed, while not all perfect, have at least undergone a certain degree of screening, which is much better compared to the 99.9% of pure on-chain launchers that go to zero within three days. When an asset performs poorly, most people's first reaction is still "how did this coin get listed on xxx exchange?", which is also a manifestation of trust in the CEX brand.
But the feudal system has its own problems. It creates a new type of planned economy based on encryption technology. The direction of the entire industry's resources and capital, i.e., the "core narrative," is "planned" according to the listing preferences of exchanges. But true innovation cannot be planned, so it naturally stifles a great deal of innovation invisibly. Data fraud and node resource rent-seeking, common in planned economies, are also ubiquitous in the crypto planned economy. Each cycle sees the entire industry pushing a narrative with all its might, only to cycle back to zero. Any project that does not fit the CEX's listing preferences, or even assets/businesses that might threaten the CEX's position, will not receive any liquidity from the exchange.
Third Form: Wall Street Colonization
When institutional funds entered the market, the industry was jubilant, believing it had gained recognition from the mainstream world. But what actually happened was: the most seasoned predators in human history discovered a treasure trove without an institutional framework, where retail investors have no recourse after being exploited and only admit they didn't do their own research (DYOR).
They are not here to build; they are here to colonize and harvest. ETFs, tokenized U.S. Treasuries, securities platforms—this is not called maturity, this is called吞并 (annexation). Wall Street will certainly provide rules for the crypto circle, but they are Wall Street's rules, rules that protect Wall Street capital. And the Wall Street elites do not care about innovation in the crypto circle, nor do they care about the survival of people in the crypto circle, and they will certainly not use crypto technology to revolutionize themselves.
Crypto Technology is Revolutionary, But a Mature Crypto Civilization Has Never Arrived
So now let's answer those five questions:
- Poor quality of native assets & the rush towards securities trading: Financial products are also products of civilization. This proves that the product quality of sovereign state civilization is better than that of crypto civilization. In traditional finance, a security needs to undergo full market competition and verification, and must comply with financial regulations and laws, none of which exist in the crypto circle. Trading securities on-chain is not an evolution of the crypto industry, but an admission that the crypto-native economy has failed—good assets must be imported because they cannot be generated internally.
- Regarding innovation stagnation: The trust cost in the black market is too high to form effective large-scale cooperation, hence unable to achieve large-scale innovation. The planned economy of the feudal system, where the allocation power of大量 industry resources is in the hands of a very few committees, rather than through full market competition, this structure itself also does not support the emergence of大量 innovation. Projects made specifically for exchanges (Shandong-style projects) are a reasonable strategy born from operating within this system.
- Why serious industries keep their distance: They understand the technology, but they don't trust the environment. There is no accountability mechanism here, no consensus-formed and enforceable system. The reaction when something goes wrong is to run away rather than solve it. Staying away from crypto is not prejudice, but a correct response to an environment where "accountability structurally does not exist." As the saying goes, a wise man does not stand under a precarious wall.
- Why scammers are rampant: Because in a black market, scamming is a rational strategy. There is no lasting reputation to protect, no peer group with the authority to expel you, no law to track your on-chain behavior. The environment creates a bunch of scammers. One might as well ask: why would anyone still build honestly?
- Regarding the coexistence of idealists: Because when there is no institutional cornerstone, faith is the only substitute. In an environment where the ground is constantly shaking, belief is the only lasting asset. Scammers and idealists are not moral opposites; they are two reactions to the same missing layer—one fills the vacuum with plunder, the other with faith.
Five Questions, One Answer: Crypto's Problem Lies in a Backward Civilization and a Lack of Excellent Institutions
So this leads to the sixth question: What exactly is the next civilizational form of crypto?
I have a perfect answer in my heart, but due to length constraints, I cannot write it all here. If you are also an industry practitioner concerned about the fate of the crypto circle and agree with the views in this article, welcome to discuss.
