Compared to previous bull markets, this current cycle exhibits significant differences. These variances manifest across several dimensions: institutional involvement, whales in crypto, exchanges, retail traders, and project teams engaging in a thrilling game of strategy.
Regarding the recent meme trend, the market shows evident divergence. How should we perceive its development? Looking ahead, how will the next phase of the crypto market evolve?
Airdrops have become more specialized since the last bull run, evolving into a battleground between project teams and large token holders (“whales”).
Recently, numerous prominent projects have initiated large-scale airdrops, sparking ongoing controversy rather than universal acclaim. Notably, ZKsync, Layerzero, and Taiko stand out in this regard.
Taiko’s decision not to disclose airdrop rules triggered widespread criticism, prompting the project team to explain. Taiko’s co-founder and CEO, Daniel Wang, responded on Discord, stating that transparency alone cannot resolve disagreements over what constitutes “fairness.”
ZKsync, as a leading player among Layer 2 solutions, faced substantial controversy despite high expectations. Participants noted a significant number of untargeted addresses, raising concerns about fairness. Furthermore, although ZKsync bridges numerous assets, its Total Value Locked (TVL) remains relatively modest.
Layerzero’s “rumor mill” has also drawn market scrutiny, exposing issues within their airdrop process. According to CEO Bryan Pellegrino, the platform received over 30,000 appeals and 3,000 reports within hours of launching their reward campaign, revealing systemic chaos.
In addition to project teams and whale token holders, institutions, retail traders, and crypto exchanges find themselves deeply embroiled in this unusual contest.
Typically, renowned projects attract early institutional investments, as seen with ZKsync, Layerzero, and Taiko. For instance, Layerzero boasts investments from notable entities like Animoca Brands and SoftBank CEO Rene Marcelo Claure, among others.
Early institutional investors traditionally benefited from guaranteed profits, but current dynamics differ significantly. The influx of tokens to whale token holders prior to airdrops creates substantial selling pressure, potentially misleading institutional investors on project valuations.
Exchanges listing these high-valuation projects face challenges due to limited initial circulating supplies, complicating profitability for retail traders.
This scenario has led to high valuations upon listing but minimal retail investor uptake, contributing to a lack of demand from this segment.
Consequently, retail investors are increasingly turning to the meme market, attracted by its perceived fairness and wealth creation potential, contrasting sharply with institutional investors’ reluctance.
Beginning in 2023, Bitcoin initiated the meme trend, particularly notable with the ORDI based on the BRC20 protocol, followed by subsequent derivatives like ARC20 and SRC20, garnering substantial market attention.
The underlying reason for the flourishing meme economy lies in technological advancements driving financial prosperity. Bitcoin and Solana have revitalized blockchain development amid stagnation elsewhere in the industry.
Bitcoin’s robust security consensus and recent upgrades like Taproot have facilitated innovations such as the Ordinals protocol, igniting a frenzy. Meanwhile, Solana’s performance capabilities have propelled Web3 applications, fostering meme token growth like WIF, BONK, and others.
Ultimately, the emergence of meme tokens on these platforms underscores a fundamental shift towards value creation, challenging the prevailing trend of non-interaction between market segments.
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Author: Asher Zhang