If the user neither wants VC coins nor meme coins, then what does the user want?

1. Presequence

Many well-known figures in the industry are thinking about how to address the issues raised by the phenomenon of VC coins and meme coins, trying to find better solutions. For example, during discussions about the Girlfriend Coin activity, someone proposed whether Binance's listing of tokens has a mechanism to resolve the issue of project teams selling coins and then going inactive. CZ's recent article "A Crazy Idea for Token Issuance" is also exploring solutions to related issues.

Teams that truly work hard on projects hope that the market can reward genuine contributors, rather than letting Ponzi schemes, scammers, and speculators take away industry dividends and disrupt industry development.

This article will analyze from the perspective of VC coin and memes.

2. The Past and Present of VC Coin

The emergence of VC coins has its historical reasons. Although it seems imperfect now, it played an important role at the time, with significant projects in the industry involving VC participation.

2.1 The Chaos of the 2017 ICO - A Dance of Demons

2017 was a key year for the explosion of Initial Coin Offerings (ICO) in the blockchain field, with the total financing amount exceeding $5 billion according to statistics. In addition to some classic ICO projects, there were many small projects' ICOs, which fully reflected the madness of that time; it would not be an exaggeration to describe it as "chaos and frenzy." At that time, as long as a project was going to conduct an ICO, if someone stood on stage and the white paper was well written, it would be immediately snatched up. People were irrational; it is exaggerated to say that even worthless projects would be crazily sought after.

The main reasons for the explosion of ICOs include:

1. Mature token issuance technology: The launch of Ethereum has enabled developers to easily create smart contracts and decentralized applications, driving the rise of ICOs.

2. Market demand, the rise of decentralized ideas, hopes for a better future, and low-threshold investment factors.

During this period, some classic cases emerged:

1. Ethereum: ICO conducted in 2014, its smart contract platform became widely used for new project ICOs in 2017. It has now grown to become the second largest project in the crypto world.

2. EOS: In 2017, it raised nearly $4.3 billion through a year-long phased ICO, becoming one of the largest ICOs of that year. However, it has almost disappeared from the scene, mainly due to improper grasp of the technical route and market demand.

3. TRON: ICO in 2017, although controversial, has developed rapidly since then. From the perspective of stablecoin revenue and other aspects, it has a relatively accurate grasp of market demand.

4. Filecoin: Raised over $250 million in 2017, its distributed storage concept has attracted attention. There are still questions about whether the project can develop healthily.

The number of non-classic cases is larger and has a greater impact, which is also an important historical reason for the emergence of VC coin.

Main issues exposed by ICOs:

1. Lack of regulation: Rapid development has led to many projects lacking oversight, leaving investors facing high risks. Scams and Ponzi schemes are very common.

2. Market Bubble: Many projects raise huge amounts of funds in a short period, but many lack real value or feasibility, leading to project failures or runaways.

3. Insufficient investor education: Ordinary investors find it difficult to assess the quality of projects, making it easy for them to make poor investment decisions.

( 2.2 The entry of VC and credibility endorsement

After the chaos of ICOs, venture capital ) VC ### was the first to stand up and address the issues. VC provides more reliable support for projects through its own credibility and resources, helping to reduce the problems brought about by early ICOs, while also screening projects for users.

The main function of VC:

1. The flaws of grassroots financing that replaces ICOs

• Reduce fraud risk: Filter out "air projects" through due diligence.
• Standardize fund management: adopt phased capital injection and token lock-up period terms
• Long-term value binding: Holding project equity or long-term locked tokens

2. Empowering Project Ecosystem

• Resource Import: Connecting with key resources such as exchanges, developer communities, etc.
• Strategic Guidance: Assist in designing token economic models and governance structures.
• Reputation endorsement: The brand effect of well-known VCs enhances project trustworthiness.

3. Promote industry compliance

• Promote the project to comply with securities law, adopt a compliant financing framework, and reduce legal risks.

Overall, VC plays an important role in the success of Web3 projects, helping projects overcome many challenges faced during the early ICO phase through funding, resources, credibility, and strategic guidance, while also indirectly assisting the public in completing initial screenings.

( The issue of 2.3 VC coin

VC coins also show some limitations in the later stages, mainly reflected in:

1. Conflict of Interest: VC may push projects to over-tokenize or prioritize their own portfolio.

2. Unable to solve subsequent project development issues.

3. Some VCs collude with project parties to deceive retail investors.

VC institutions only complete the early stages of investment and exit, lacking obligations and capabilities for the later development of the project. The main issue is that after the project goes public, there is a lack of continuous motivation for development, and VC and the project side may cash out and run away. Essentially, the project lacks effective supervision and management, especially regarding the matching of funds and results.

![The user neither wants VC nor meme coin, so what does the user want?])https://img-cdn.gateio.im/webp-social/moments-b9e7b6b76f90bfc57347f1e04204ce3b.webp###

3. The Fairlaunch of Inscriptions and the Memecoin Phenomenon

The explosion of inscription technology and the popularity of the Fair Launch model in 2023, along with the rise of the pumpfun model for memecoins in 2024, reveal certain phenomena and issues.

( 3.1 The Outbreak of Inscription and Fairlaunch

In 2023, two significant trends have emerged in the blockchain field: the explosion of inscription technology and the popularization of the Fair Launch model. This reflects the pursuit of decentralization and fairness by users and the community.

Reasons for the explosion of inscriptions: the need for innovation in the Bitcoin ecosystem; user demand for resistance against censorship and decentralization; low barriers to entry and wealth effect; resistance against VC coins; the appeal of fair launches.

Inscriptions have also caused some problems:

• Pseudo-fairness: Participating addresses may be disguised by a few institutions or large holders.
• Liquidity issues: There are significant costs associated with using the Bitcoin mainnet.
• Value loss: a large amount of transaction fees is taken by miners, failing to empower the Token ecosystem.
• Application scenario missing: unresolved Token sustainability issue

) 3.2 The explosion of Pumpfun and the memecoin phenomenon

In 2024, the Pump.fun platform based on the Solana chain rapidly emerged as the core of memecoin issuance. The platform has a complete token service process ###ICO+LP+DEX### and a speculation mechanism, which allows memecoins to have a significant impact. Pump.fun's important contribution is to form a complete closed loop consisting of three services: token issuance, liquidity pool construction, and launching on DEX.

In the early days, the DEX ratio for tokens on pumpfun was ( with a graduation rate of ) being very low, only 2%-3%, indicating that the entertainment function was higher than the trading function. Later, during peak periods, the graduation rate often exceeded 20%, turning into a pure speculation machine.

Pumpfun's total revenue is approaching 600 million USD, and even former US President Trump has issued tokens, indicating the explosion of memecoins. However, from the data, it can be seen that memecoins are undergoing a cycle from emergence to growth and then to explosion.

The main issues of memecoin:

1. Systemic fraud and trust collapse: According to data, approximately 85% of tokens are scams, with the average cash-out time for founders being only 2 hours.

2. False advertising is rampant: project parties fabricate KOL platforms, trading volumes, etc.

3. Market ecosystem distortion: memecoins occupy a large amount of on-chain resources, squeezing the development space for normal projects.

Memecoins have evolved from early entertainment functions to PVP( player versus player), and then to PVB( player versus bots), becoming a tool for a few experts to reap profits from retail investors. The lack of effective value injection in memecoins is a serious issue, and if not addressed, they will decline.

4. What kind of projects do users or the market want?

By reviewing the history of Web3 project development, we understand the reasons for the emergence of VC coins and their advantages and disadvantages, as well as analyzing the inscription and memecoin phenomena. They are both products of industry development, and these analyses reveal some key issues that exist in the development of Web3 projects.

( Summary of Existing Issues 4.1

Current main issues of Web3 projects:

1. The project lacks sustained construction motivation, having received too much funding in the early stages, with token holders and subsequent development not receiving continuous rewards.

2. PVP) Player vs Player ### issues are prominent, fairness is insufficient, and early participants profit excessively.

How to solve:

1. Project Management: Restrict project parties or VCs from obtaining large amounts of funds too early, utilizing funds under regulatory conditions, or allocating funds to teams that contribute.

2. Sustainable External Value Injection: Addressing the PVP issue, rewarding medium to long-term Token holders and builders. It can provide financial support to project parties, allowing Token holders to have long-term growth expectations and reducing the problem of cashing out and running away.

( Management issues of different stakeholders and different stages of the project 4.2

1. Different stakeholders

The most relevant aspect related to interests in Web3 projects is the design of the economic model. Stakeholders generally include the project team, investors, foundations, users and communities, miners, exchanges, market makers, etc. It is necessary to use an economic model to plan the Token allocation and incentives for different parties at various stages. The economic model includes distribution ratios, release rules, incentive methods, etc.

We must prevent any party within the ecosystem from taking too much benefit, such as the team and investors taking most of the Token value in the VC coin project, and also prevent external groups like speculators from taking undue benefits.

2. Analyze the issues from the aspects of issuance, circulation, governance, etc.

) Token issuance

Main purpose: to raise funds; to send tokens to users.

Token circulation and management

Mainly manage Tokens by providing various applications, such as trading, Staking, consumption, etc.

(3) Project Governance

Direct control relies on consensus mechanisms and economic model design. The community governance mechanism is a complement to the economic model.

The DAO and foundation model can better achieve fund and ecosystem management, providing flexibility and transparency. DAO management members must meet certain conditions, aiming to include key stakeholders and third-party institutions as much as possible.

( 4.3 How to build long-term projects ) value capture and value injection (

If there is no cooperation between technology and application innovation, it is difficult to sustain relying solely on the shouting order model. pumpfun provides a reference framework, but lacks the Token empowerment for value capture and injection in the ) process.

Value capture and external value injection are the two main pillars of the Web3 economic model. The former focuses on retention, while the latter focuses on attraction. The core challenge lies in balancing short-term incentives with long-term value, avoiding falling into "paper models" and Ponzi cycles.

![The user neither wants VC coin nor meme coin, so what does the user want?]###https://img-cdn.gateio.im/webp-social/moments-09bf8e9f7e924d239bdd3d8cf391e233.webp(

5. Analysis of the Previous Two Crypto Bull Markets and the Possibility of the Next Outbreak

) 5.1 2017 ICO frenzy

Main reason:

1. ICO Craze: The Ethereum ERC-20 standard lowers the barriers to issuing coins, allowing many projects to finance through ICOs.

2. Bitcoin Forks and Scalability Controversies: Raising Concerns about Bitcoin's Scarcity and Technological Evolution.

3. The rise of the Ethereum smart contract ecosystem: Mature DApp development tools attract developers.

4. Global liquidity easing and regulatory gaps: Low interest rate policies have led to funds seeking high-risk assets.

The bull market in 2017 laid the infrastructure for the industry, attracting talent and users, but also exposed issues such as ICO fraud and regulatory gaps.

( 5.2 2021 DeFi Summer

Main reason:

1. The explosion and maturation of DeFi: Ethereum Layer 2 scaling leads to a significant increase in the total value locked in DeFi protocols.

2. NFT breaking the circle and mainstreaming: high-price auctions and well-known projects' market value breakthroughs.

3. Institutional capital enters on a large scale: Tesla purchases Bitcoin, ETF approved.

4. Global macroeconomic and monetary policy: liquidity flooding, inflation expectations.

5. Increased acceptance in mainstream society: expansion of payment scenarios, national adoption.

6. Multi-chain ecosystem competition and innovation: The rise of new public chains and breakthroughs in cross-chain technology.

7. Memes and Community Culture: Phenomenal projects like Dogecoin.

The bull market in 2021 drove the institutionalization, compliance, and technological diversification of cryptocurrencies, but it also exposed issues such as DeFi security and the NFT bubble.

) 5.3