The ups and downs of the cryptocurrency world: From a pile of air to $3 trillion

Author: JW, Founder of Impa Ventures Source: Undercurrent Waves

The world of Web3 is reveling every day.

Late last night, people were sighing at the depression of "Double Eleven" and exclaiming at the soaring of Bitcoin. As of last night, Bitcoin rose above 89,000 USDT, a height never seen in history.

This is the seventh year that Web3 has emerged in China on a large scale.

People like to use the "seven-year itch" to describe the changes in a relationship. For the Web3 world, the past seven years have been seven years in which it has gone from being a niche to being relatively popular in China, and then widely discussed and debated.

Most people have gone from knowing nothing about Web3 to knowing a little bit about it, and even being in it. People in the industry have gradually moved from the edge to the mainstream. This once gloomy industry, like other industries, has not only the initially fascinating wealth effect, but also presented a cycle of change and a complex entanglement of human nature.

Today, there are more than 500 million crypto users in the world, and the on-chain stablecoin assets have exceeded 173 billion US dollars. But many people still don't understand what has happened and is happening in the Web3 world.

Seven years ago, 24-year-old JW joined Web3 by chance after graduating from Tsinghua University's Schwarzman College. This was her first job. At that time, most of her classmates entered investment banking consulting, government departments and academic research.

As she said, fate made her see a surreal world she had never imagined: there were idealists who were obsessed with decentralization, and there were also scammers who came here just to pan for gold; there were people who got excess returns, but there were also people who lost all their money. And she herself, from someone who knew nothing about the world of cryptocurrency, became the founder of a fund.

Where there are people, there are rivers and lakes. It's just that in Web3, which is closer to money, the rivers and lakes are more cruel.

In this article, JW will review the cryptocurrency world of the past seven years in the first person. "Reflect on where we are today and why we are still moving in this field."

0. One day in the cryptocurrency world is like one year in the real world

It is generally believed that the concept of Bitcoin was born on November 11, 2008, and the proposer was Satoshi Nakamoto, who is now missing. In China, on June 9, 2011, Yang Linke and Huang Xiaoyu founded Bitcoin China, the first Bitcoin trading platform in China; OKCoin and Huobi were established in 2013.

But this is a game played by a small number of people—so few that you can count them on your hands.

It was not until 2017 that Bitcoin became a "popular term". That year, the price of Bitcoin soared from less than $1,000 at the beginning of the year to $19,000 at the end of the year. The 20-fold increase and the myth of wealth creation by mass ICOs instantly shook the entire Internet and VC circles.

Whether you participate or not, everyone is talking about blockchain, and the air is full of white papers. Li Xiaolai, Xue Manzi, Chen Weixing and other big Vs are working hard to preach the concept of decentralization and shout to their fans about the projects they invested in. In early January 2018, the screenshot of the WeChat message from the famous investor Xu Xiaoping, which reminded people that "the blockchain revolution has arrived", is still memorable.

At 3 a.m. on February 11, 2018, Yuhong and a group of friends who didn’t sleep created a WeChat group called “3 o’clock sleepless blockchain”. In less than three days, the group “exploded”… The total value of the friends in this group is probably trillions.

There is a popular saying in the currency circle:

If you haven’t heard of the 3 o’clock blockchain group, it means you are not a blockchain person;

If you haven’t joined the 3 o’clock blockchain group, it means you are not a big boss in the blockchain circle;

If you haven’t been swiped by the 3 o’clock blockchain group, it means you haven’t experienced what “one day in the currency circle is one year in the human world” means.

But this is just a prelude to madness.

1. "This is the godfather of e-commerce in South Korea"

In the summer of 2018, I went to Seoul with my former boss (one of the founders of the top fund in Asia at that time) to attend the Korea Blockchain Week. South Korea is one of the most important markets in the crypto industry, and the Korean won is the second most traded fiat currency - second only to the US dollar. Crypto entrepreneurs and investors from all over the world want to get a piece of the pie here.

The company we are going to meet is a company called Terra, which is a top project in South Korea. The meeting was arranged in a Chinese restaurant in the Shilla Hotel, a traditional Korean hotel that can almost be said to be somewhat conservative. As the local government's guesthouse, the lobby was filled with young people from all over the world who were enthusiastic about the crypto world.

Terra was founded by two Korean founders, Dan Shin and Do Kwon. Dan's company Tmon was once one of the largest e-commerce platforms in South Korea, with a GMV of more than 3.5 billion US dollars per year; Do and I are about the same age and have tried to start a business several times after graduating from Stanford.

"This is the godfather of e-commerce in South Korea." The boss said to me on the way to lunch.

Similar to the investment ideas in traditional fields, the consideration of "people" is also the only way to invest in Web3. People like Dan who have succeeded in the Web2 world instantly attracted the participation of all top cryptocurrency exchanges and funds.

Later, we invested 2 million US dollars in Terra.

Perhaps Do and I are of the same age, and we have kept in touch since then. Do is similar to my other classmates in the computer science major: a boy with standard American pronunciation, wearing a T-shirt and shorts.

Do told me that they planned to make the stablecoin issued by Terra into a widely adopted digital currency, such as how they negotiated with the largest convenience store chain in South Korea, the Mongolian government, and retail groups in Southeast Asia. They also developed a payment application called Chai, "which will become the Alipay of the world."

In an office that looks like a warehouse, when Do talked to me about their grand plans while drinking coffee, I felt dreamy for a while: at that time, I actually didn't understand how they would achieve these plans. I just felt that it sounded so new and ambitious.

Cryptocurrency at this time was far from becoming a consensus (of course, it still hasn't become a consensus today). Most of my classmates, who are either in investment banks, consulting companies, or Internet giants, either know nothing about cryptocurrencies or are full of doubts, but here I am chatting with someone who plans to launch a "global payment network."

This is an era of chasing narratives, big funds, and professor coins.

"Help me track this link and tell me how much money has been deposited. The deadline is this week." My boss sent me a link to a Dutch auction project, a Layer 2 project that was running a public sale. In fact, we never actually met the team. They only provided a website and a white paper, but raised more than $26 million in 2018. Although the token has fallen to 0 since then.

People would rather trust a stranger on the Internet across continents than a person in the same room.

At this time, I was just over 24 years old, although I guess most of the investment committee, in many cases, didn't know what they were doing - just like me. But they encouraged me to invest another $500,000 in this project, "just as making friends."

They tried to replicate the madness of 2017: as long as there is support from a famous fund, any code name can soar 100 times.

But the music soon stopped.

2. "When will Bitcoin return to $10,000?"

I once thought this was the best job in the world: traveling around the world at a young age; buying expensive business class tickets and hotels; walking through magnificent venues; learning new things and making friends of all kinds.

But the bear market came unexpectedly.

In December 2018, the price of Bitcoin plummeted from more than $14,000 at its peak to $3,400. As a young person who had just started working, I didn’t have much savings, but when I saw the price of Ethereum fall from $800 to $400 and then to $200, I decided to bet with one month’s salary.

In hindsight, this was not a wise decision. Less than a month after I bought it at $200, the price of ETH fell below $100.

“What a scam.” This was the first time I had such a thought.

In the first half of 2020, the world was hit hard by the epidemic, and the cryptocurrency industry was also hit hard in the market crash on March 12. I was trapped in Singapore at the time. I still remember that afternoon, every time I opened the price query website, the price of Bitcoin fell by another $1,000. A month ago, the price of Bitcoin was still around $10,000, and in just a few hours, it plummeted from $6,000 to $3,000 - much lower than the price when I first entered the industry.

To me, it was more like a farce. I was watching everyone's reactions: some were waiting and watching; some were buying at the bottom; some were liquidated.

Even more experienced investors were pessimistic. "Bitcoin will never go back to $10,000," they said. There was even discussion about whether the cryptocurrency industry would continue to exist, and some people thought it might just be a detour in the history of technology.

But some chose to stay. My institution had no new investments at that time, but I was still accepting projects.

Soon, decentralized finance (DeFi) began to become a topic of conversation. I wasn't a trader myself, but all my fellow traders thought DeFi was a bad idea: everything was slow, order book-based exchanges were impossible, there was no liquidity, and there were fewer users.

What I didn’t fully understand at the time was that security and permissionlessness were the biggest selling points of DeFi, but can permissionlessness really impress people? After all, the KYC (know your customer) of centralized exchanges is not too bad.

Attending DevCon IV and DevCon V during the bear market was also an eye-opening experience.

Although I studied computer science in college and was no stranger to hackathons, I had never seen so many "exotic" developers anywhere else. Even with the price of ETH falling by 90%, people were still enthusiastically discussing decentralization, privacy, and on-chain governance on Ethereum. I have no belief in decentralization and no enthusiasm for anarchism - these concepts only appeared in class for me.

But the developers seemed to truly embrace these philosophies. "You joined at a bad time," a colleague comforted me. The year before, when we attended DevCon III in Cancun, Mexico, our fund made tens of millions of dollars just by investing in the projects presented at the conference.

During the bear market, we also missed the opportunity to invest in Solana when its valuation was less than $100 million (now its market value is over $84 billion). Although we interviewed the founder Anatoly and Kyle of Multicoin. Kyle believes in this project very much and believes it will become the "killer" of Ethereum.

Solana's TPS is 1,000 times higher than Ethereum because they use a consensus mechanism called "Proof-of-History". But after a technical due diligence call with Anatoly, my colleague thought, “Solana is too centralized. Centralized TPS doesn’t make sense, why not just use AWS?” Obviously, my colleague didn’t like it very much, “and the founder doesn’t understand the value of a truly decentralized network like Ethereum, probably because he worked at Qualcomm before.”

(DeFi TVL growth chart — a chart that every VC will go crazy for) (Source: DeFi Llama)

With the introduction of the concept of yield farming, my skepticism about decentralized finance (DeFi) was quickly shattered. By depositing tokens into DeFi smart contracts, users can become liquidity providers for the platform and can be rewarded with protocol fees and governance tokens. Whether you call it a growth flywheel or a death spiral, DeFi protocols have achieved tremendous growth in the number of users and total locked value (TVL).

Specifically, the TVL of DeFi protocols has soared from less than $100 million at the beginning of 2020 to more than $100 billion in mid-2021. Thanks to open source technology, it only takes a few hours to copy or modify a DeFi protocol. Because the process of providing liquidity is called "yield farming", DeFi protocols are often named after food.

For a while, new "food coins" were born almost every day - from Sushi to Yam. People in the cryptocurrency circle like this pun, even a protocol with millions of transactions can be named after food and use emojis as its logo.

But hacks and exploits in DeFi projects make me nervous. I'm not an adventurer. My friends were farming like crazy: they would set alarms at 3 a.m. just to be among the first to enter the new liquidity pool.

In the summer of 2020, annualized yield (APY) was the hottest topic - people were chasing the pools with the highest APY. Noticing the market's demand for allocating funds for yield farming, industry veteran Andre Cronje launched a yield aggregator product: Yearn. This product has caused a huge response.

As more and more funds poured into DeFi, we also witnessed the birth of some "great gods" on Twitter: such as SBF from FTX, Do Kwon from Terra, and Su and Kyle from 3AC.

Terra launched multiple DeFi products, including Alice, a payment application for the US market, and Anchor, a lending protocol. Anchor was probably designed for on-chain newbies like me — just deposit your stablecoins into the contract and get an annualized yield of nearly 20%, a no-brainer.

At its peak, Anchor’s total locked value (TVL) exceeded $17 billion. “Congratulations to Anchor, it’s a great product, I’ve also invested some money in it.” I sent Do on WeChat, unsure if he would reply.

But I knew that at this time he seemed to be no longer the young man I knew — he had a million followers on Twitter and announced plans to buy $10 billion worth of Bitcoin.

“Thank you — you’ve done well with your portfolio too,” he actually replied. He was referring to some gaming projects I had invested in earlier. DeFi has also changed the gaming space in crypto — now it’s all about “earning.”

As the craziness continued, I also invested in a lending project from Three Arrows Capital.

A few months later, questions about Anchor’s profitability began to emerge. It turned out that the lending products offered by Terra did not generate enough returns to cover the interest paid to liquidity providers like me; current payments were largely subsidized by the Terra Foundation. I immediately pulled my money out after seeing the news; I also redeemed my investment from Three Arrows Capital around the same time.

The atmosphere on crypto Twitter started to get weird. Especially when Do tweeted “Happy Poor” and Su went shopping in Singapore, it felt like a signal of a market top. I was lucky to escape the collapse of Terra and Three Arrows Capital; I learned a few months after the collapse that the payment app did not actually process payments on the blockchain, and the borrowed funds were used to leverage so much that they could never be repaid if the market direction changed.

But when FTX collapsed, I was not so lucky.

For weeks, there had been rumors that FTX had suffered huge losses from the collapse of Three Arrows Capital and Terra, and might be insolvent. Billions of dollars were being withdrawn from the exchange every day. Out of an abundance of caution, my company also withdrew some, but not all, of its assets from FTX.

It was a turbulent period. Almost every day there were panic rumors of stablecoins USDT and USDC depegging, and rumors that Binance might go bankrupt. But we didn’t lose hope, and I had faith in SBF—what bad could a billionaire who believed in effective altruism and slept on the trading floor do?

However, one day on my way to the gym, my partner called me and told me that FTX had declared bankruptcy and $8 billion was missing. Because they had misused users’ assets, we might not get our money back.

But I was surprisingly calm about this outcome. Maybe this is our industry: magic Internet money. All assets are ultimately just a string of characters and numbers on a screen.

Money is a test of character, and cryptocurrencies just accelerate everything. Even fast-forwarding to today, I still have no doubt that Do and SBF's initial motives were well-intentioned. Maybe they were blinded by the inflation brought about by unrealistic growth; or they thought they could "fake it until they make it."

DeFi is like a Promethean fire in the cryptocurrency industry: it brings hope, but also comes at a heavy price.

3. The Misunderstood Crypto World

As an old Chinese saying goes: "Illness comes like a mountain falling, and illness goes away like pulling out a thread." It took the cryptocurrency industry several years to recover from the crash.

To the outside world, this seemed to be just another Ponzi scheme. People associate cryptocurrency founders with extravagant clothing, a love of memes, parties around the world, and how to get rich quickly by any means possible.

At an alumni reunion, I caught up with old classmates. When I mentioned that I invested in cryptocurrencies, they jokingly said, "So you are a crypto bro now." I didn't take this as an offense, but it was indeed a strange statement: it seemed to distinguish cryptocurrencies from technology and VC. Traditional Internet and technology investments are seen as the right way to go, and a young person with a decent education joining the crypto industry is more or less a bit misguided.

For a long time, the terms "Web 3" and "Web 2" have often been used in opposing contexts. But this division does not seem to be seen in other industries. No one is trying to deliberately distinguish founders in the field of AI from founders in other fields such as SaaS.

What is unique about Web 3 in the context of venture capital?

My personal view is that cryptocurrency has fundamentally changed the way venture capital and early-stage investing work, making the requirements for crypto startups to succeed slightly different from equity-based startups. In short, the token economic design in crypto has created unparalleled opportunities for startups and venture investors. At the end of the day, it all comes down to product market fit (PMF), user growth, and value creation - which is not fundamentally different from the Web2 world.

And, as the cryptocurrency industry matures, there is more and more convergence between Web 2 and Web 3 companies.

It's time to re-examine the industry.

In the early days of cryptocurrency (and we are, after all), what people wanted might be a grand vision (such as a digital currency independent of central banks), a new computing paradigm (a general-purpose smart contract platform), a wish story (such as a decentralized storage network that replaces AWS), or even a Ponzi scheme that everyone wants to be one step ahead of others. Today, cryptocurrency users are more clear about what they want, and they support these demands by paying for them or moving capital.

For those outside the industry, it may be difficult to intuitively understand that "magic internet money" can actually generate income; some crypto assets even offer more attractive price-to-earnings ratios than stocks. I tried to use data to illustrate - 2.216 billion US dollars - Ethereum's protocol revenue in the past year; 1.3 billion US dollars, 97.5 billion US dollars - the net operating profit of the stablecoin issuing company Tether in the second quarter of 2024, the total amount of US Treasury bonds held by Tether; 78.99 million US dollars - the revenue of the meme issuing platform Pump from March 2024 to now (August 1). Even in the crypto industry, the value of memes is controversial: some people think it is a new cultural trend and a consensus that can be traded, such as Elon Musk's use of Dogecoin on his Mars colony; others think it is a cancer in the industry, after all, memes themselves do not have products and bring value to users.

But I think that meme is already a social experiment that cannot be ignored, just from the number of participants and the scale of funds - tens of millions of users around the world and tens of billions of dollars in real money, maybe there is no tangible meaning, but under the same principle, isn't postmodern art?

Many people's first impression of the crypto market may still be: storytelling, hype and trading. In the ICO bull market in 2017, this was indeed partly true, but after several cycles, the gameplay of the crypto industry has also changed significantly.

Five years later, the revenue-generating ability of DeFi protocols has proved PM. From the perspective of trading comparables, the value of these projects is getting closer and closer to the traditional stock market.

In addition to the difference in asset liquidity, the connection with the real world is also generally considered to be the main difference between Web2 and Web3.

After all, compared with AI, social networking, SaaS and other Internet products, Web3 products still seem to be a little far away from the real world. But in some countries, such as Southeast Asia, the largest comprehensive application platform Grab (taxi, food delivery, financial products) already supports cryptocurrency payments; in Indonesia, the world's fourth most populous country, the number of users trading crypto assets has exceeded the number of users trading stocks; in Argentina and Turkey, where local currencies have depreciated severely, cryptocurrencies have become a new choice for people to reserve assets. In 2023, Argentina's cryptocurrency trading volume exceeded US$85.4 billion.

Although we have not yet fully realized an "Internet of Ownership", we have seen the vigorous innovation that cryptocurrencies have brought to the current Internet.

For example, stablecoins represented by Tether (USDT) and Circle (UDSC) are quietly changing the landscape of the global payment network. According to a research report by Coinbase, stablecoins have become the fastest growing payment method. Stripe recently completed the acquisition of the stablecoin infrastructure project Bridge for $1.1 billion, the largest acquisition in the crypto world.

Blackbird was founded by the co-founder of Resy and is focused on changing the dining experience by allowing customers to pay for meals with cryptocurrencies, especially using its own token $FLY. The platform aims to connect restaurants and consumers through a cryptocurrency-driven application that also serves as a loyalty program.

Worldcoin, co-founded by Sam Altman, is an avant-garde movement to promote universal basic income that relies on zero-knowledge proof technology. Users scan their irises through a device called Orb, which generates a unique identifier called "IrisHash" to ensure that each participant is a unique human, thereby combating the growth of fake identities and robot accounts in the digital space. Worldcoin has more than 10 million participants worldwide.

If we go back to the summer of 2017, we probably wouldn’t have thought what the next seven years would mean for the crypto industry—that so many applications would grow on the blockchain, or that hundreds of billions of assets would be stored in smart contracts.

4. How AI uses cryptocurrencies as a mirror

Next, I want to talk about the similarities and differences between cryptocurrencies and AI. After all, too many people compare the two from time to time.

Comparing cryptocurrency to AI may be like comparing apples to oranges. But if you look at today’s AI investment from the perspective of a cryptocurrency investor, you may find some similarities: Both are full-stack technologies, each with its own infrastructure layer and application layer. But the confusion is also similar: it is not clear which layer will accumulate the most value, the infrastructure layer or the application layer?

"What if Toutiao does what you want to do?" - This may be the nightmare of all entrepreneurs. The past development of the Internet has proved that this nightmare is not groundless. From Facebook and Zynga's termination of cooperation and making mobile games on their own to Twitter live broadcast and Meerkat later, the resource advantages of large companies make it difficult for startups to compete.

In the crypto industry, because the economic models of the protocol layer and the application layer are different, the focus of each project is not to do every layer in the ecosystem. Taking the public chain (ETH, Sol etc.) as an example, the economic model determines that the more people use this network, the higher the gas income, and the higher the value of the token. Therefore, the top projects in the crypto world spend most of their energy on ecological construction and attracting developers. Only the emergence of popular applications will increase the use of the underlying public chain, and then increase the market value of the project. Early infrastructure projects will even directly provide subsidies ranging from tens of thousands to millions of US dollars to qualified application developers.

Our observation is: It is difficult to distinguish the value capture of the infrastructure and application layers, but for capital, the infrastructure and application layers will alternately be hot, but both are winners. For example, a large amount of capital has poured into the public chain, the performance of the top public chain projects has improved, giving rise to new application models and eliminating the middle and tail public chains; capital has poured into new business models, the user scale has grown, and the top applications have occupied capital and users, giving rise to higher requirements for the underlying infrastructure, forcing the infrastructure to upgrade.

So is there any reference for investment? The simple truth is that there is nothing wrong with investing in the infrastructure and application layers, and the core is to find the top player.

Let's go back to 2024 and see what kind of public chain survived in the end. Here are three superficial conclusions:

Disruptive technology accounts for a small proportion of the factors for project success. Of the "Ethereum killer" projects that were previously sought after by Chinese and American VCs and focused on professors and academic concepts (such as Thunder Core, Oasis Labs, Algorand, etc.), only Avalanche finally came out, and that was on the premise that the professor resigned and was fully compatible with the Ethereum ecosystem. On the contrary, Polygon, which was not favored by investors because of its poor technology and lack of novelty (fork ETH), has become one of the top five ecosystems in terms of on-chain assets and users.

It is a pity that Near Protocol focuses on sharding technology, and its TPS can beat Ethereum. Its founder is one of the original authors of the Transformer model paper, and it has raised nearly 400 million US dollars. Now its on-chain assets are only ~60 million US dollars. Of course, the numbers will fluctuate with the market every day, but the trend is indeed very obvious.

The stickiness between developers and users comes from the ecosystem.For public chains, in fact, users include developers in addition to end users (miners are ignored here, a completely different model). For end users, the ecosystem with rich applications and more trading opportunities will be more sticky. For developers, the ecosystem with more users and better infrastructure, such as wallets, block browsers, and decentralized exchanges, will be given priority for development. The overall presentation is a flywheel driven by developers and users.

The head effect is greater than expected.The number of Ethereum users and the amount of funds for on-chain applications are more than all the "Ethereum killers" combined. Everyone (especially those outside the industry) thinks of smart contract chains and thinks of Ethereum first (just like today when people think of AGI, they think of Open AI) - it has almost become the industry standard for everyone who wants to develop blockchain applications.

In addition, the existing head public chains already have a lot of cash in hand, and the investment or donations they can give to developers are beyond the reach of new startups. Finally, because most blockchain projects are open source projects, mature head ecosystems allow more possibilities for the building blocks of decentralized applications.

So, what are the significant differences between public chain and large model development?

Requirements for infrastructure. According to a16z, 80-90% of the early rounds of financing for most AI startups are spent on cloud services. The average fine-tuning cost for AI application companies for each customer accounts for 20-40% of revenue.

Simply put, the money has been earned by Nvidia and AWS/Azure/Google Cloud. Although public chains also have mining rewards, because the cost of hardware/cloud is borne by decentralized miners, and the current data scale processed by blockchain is still insignificant compared to the billions of data labels that AI requires, the cost of infrastructure is still much smaller than that of large models.

Liquidity, liquidity, liquidity. Public chains without a mainnet can issue tokens, but AI large model companies without users and revenue will find it difficult to go public. So although the final performance of various "professor chains" may not be as successful as expected (after all, Ethereum is still the well-deserved No. 1), from the perspective of investors, they will not lose money, and it is even less likely to return to zero. Large model companies are different. If they cannot raise the next round of financing and have no takers, they are likely to go bankrupt. From this perspective, venture capital should be more cautious.

Actual improvement in productivity. Through ChatGPT, LLM found its own PMF and began to be used on a large scale by B-end and C-end, improving production efficiency. Although the public chain has experienced two rounds of bull and bear markets, it still lacks killer apps, and the application scenarios are still in the exploration stage.

Perception of end users. Public chains and end users are strongly related. If you want to use some decentralized applications, you must know which public chain it is on, and then work hard to move your assets to this public chain, thereby forming a certain stickiness. AI is even more silent, just like cloud services and processors in computers. No one cares whether the taxi app is backed by AWS or Alibaba Cloud. Because ChatGPT's memory is very short, no one cares whether you are chatting with it on ChatGPT's homepage or on an aggregator today. Therefore, it is more difficult to stick to C-end users.

As for the application scenarios of encryption in AI, many teams have given their own insights. It is generally believed that decentralized financial networks will become the default financial transaction network for AI Agents. I think the following figure accurately summarizes the current stage.

5. Find the needle in the haystack more agilely

When I joined the cryptocurrency industry, I had little confidence in the idea of ​​decentralization. I think most industry participants were the same in the early stages. People joined the industry for a variety of reasons - for money, technology, curiosity, or just chance.

But if you ask me if I have confidence in cryptocurrency today, I would give a positive answer. You can’t deny the entire industry because of the scams in the cryptocurrency industry, just like you can’t deny the entire financial industry because of the Madoff scandal.

A recent example from my own life is: my friend R (pseudonym). He successfully turned an idea into a company with 200 employees, positive cash flow, and a market value of more than $200 million.

R’s entrepreneurship is based on his understanding of the value of decentralization. "My girlfriend is a small influencer on TikTok, but influencers can only get a small part of the audience’s tips," he once told me that the world’s largest creator network is not fair, "I want to build a decentralized version." I thought he was joking at the time, but almost three years later, he really launched the project. The platform now has hundreds of thousands of users.

For someone who joined this industry right after graduation at the age of 24, the past 7 years have allowed me to see enough aspects of the world: there are idealists, there are gold-digging scammers; there are people who get excess returns, and there are those who lose all their money.

Remember my former boss mentioned at the beginning of the article - an OG who made a lot of money in the crypto industry once said: "You still have to work hard, otherwise you will become an ordinary person with money."

I think a respectable investor once described the work of VCs as "looking for needles in a haystack." For me, VC investment in the crypto world is also such a process.

Perhaps the only difference is that the haystack of cryptocurrency may move faster. So we must always be agile.