Interpreting the operating logic of VC coins and exchanges, where does the market funds flow?

Original author: shaqima, crypto KOL

Editor's note: Last week, Binance co-founder He Yi published two long articles in response to the previous community's controversy over Binance's frequent listing of new high FDV projects. The contradiction between VC coins, exchanges and retail investors has intensified again, and even triggered a "debate". Reference reading: "Debate丨How to comment on Binance's frequent listing controversy; He has always said that the era of rubbing hair may be over? ". Crypto KOL shaqima thought about and analyzed the current market capital distribution and the operating logic of VC model coins and exchanges. BlockBeats reprinted the full text as follows:

"Where did the funds go? Why don't exchanges like your coins? Arrogance is not unsolvable, and a way out can be found in the lessons of the past. 》

There are many different opinions on this topic recently. I have conducted a comprehensive thinking from the perspective of the flow of the entire capital market, exchanges, and VC business models.

Here I share it in a simple and easy-to-understand way with examples.

History tells us that the current situation is not unsolvable.

The content is divided into several categories:

1. The current market capital distribution and population distribution

2. VC model coins and the operating logic of exchanges

3. Why does the exchange not like your coin?

4. How to break the situation in the future? Let's look at the lessons of the past

If you want to know why the exchange does not like your coin, you must first understand the operating model of the exchange and what role it plays in the crypto ecosystem (capital market).

1. Market capital distribution and population distribution

From a large category, the capital market can be mainly divided into primary and secondary. If it is subdivided, there will be various ecosystems, sectors and different forms of capital products (NFT, Token, inscription, rune...).

From the perspective of the population, it can be divided into two categories as a whole, Chinese and overseas.

Since the policy was implemented, the options for Chinese people to choose exchanges can be said to be very few. Therefore, for Chinese people, the exchange is not begging you to come, but the attitude is that if you don’t come, you have nowhere to go. Moreover, with the emergence of the wealth-creating effect, people will come.

Of course, there is not only one exchange, but each exchange has found its own unique core competitiveness in the market.

Some choose to focus on security, some focus on the construction and promotion of a new ecosystem, some choose to survive first with some secondary assets that the top exchanges don’t like, and some even go to compete for the cake in the primary market….

Therefore, leaving aside the form of the assets, from the perspective of the exchange, B can be classified into:

C: Ordinary assets in the primary market (uncertain risks, need to be investigated, understood and then decided)

B: Good assets in the primary market (have potential, but still have risks, analyze their interests and then make a decision)

A: Excellent assets in the primary market (excellent endorsement background, low risk, and certain returns)

Therefore, Class A assets are what everyone is scrambling for, Class B assets are selected by the top exchanges, and Class C assets are not selected by the top exchanges. I basically won't look at the category, just play in the primary market by myself

Use an example to simply summarize

The ABC here is like the examinees, and the exchange is divided into top undergraduates, undergraduates, and junior colleges.

Excellent examinees can bring benefits to the school, so naturally everyone likes them.

If you are not excellent, but you have connections and can bring value to the school, it is the same.

Those with average grades can also be accepted if they can afford the money. After all, the school also needs to make money. However, the number of places is limited, but don't be discouraged, there are other schools that welcome you more than us.

For those who are poor in learning, even if you give money, there is a hidden danger of disrupting the school's atmosphere. If you discredit the school, it will not be worth the loss. You might as well fend for yourself, or go to junior college, there will always be schools that are not afraid of risks and want to make a little money from you.

The threshold is thus formed. So, the project side also needs to take the exam.

Of course, these are the obvious ones. What are the dark operations?

If you are an "overseas identity", even if your grades and abilities are average, if you come to me, you can make me famous in the overseas market. Naturally, you are welcome.

So, in the current capital market, projects dominated by Chinese people have to rely on their strength to win. If you don't want to win, it depends on your background and connections. After all, the Chinese market is saturated. I am not afraid that you will not choose me. After all, if you don't choose me, you have nowhere to go.

For exchanges, the overseas market is the main goal to increase revenue.

After accepting projects with high overseas popularity, they can bring overseas users. Once they can stay, they can continue to expand their own income.

At this point, the crowd and funds are clear at a glance.

If we talk more deeply, when a new narrative appears, first look at the proportion of the crowd.

If it is mainly overseas users, the privileged channel will be given first, and the threshold can be lowered for you. It's okay not to make money, as long as you can bring people. I can make it back from them in the future.

If it is mainly for domestic users, it depends on your ability and strength.

The narrative is novel enough, and we are not old-fashioned people. We should praise it, but the conditions are still indispensable. When your ecosystem is large enough and the profit is considerable enough, let's talk about "cutting".

Therefore, under the condition of holding without fear, it is better to have nothing than to have something bad.

After talking about the external environment, let's look at the internal structure.

Second, the operating logic of VC model coins and exchanges

In order to make it easy to understand, let's not talk about those who are born with a golden key. Let's start with ordinary projects.

After a narrative is constructed, it needs to survive in the market, that is, traffic. When you are not popular at the beginning, you need data to support your "respectability", so in the latent dragon period, everyone's starting line is the same.

If you have achieved a little success, there will naturally be powerful people who will extend olive branches to you. If your own conditions are not strong enough, it will be difficult to fight alone. You need to hold together to keep warm.

At this time, your basic traffic will begin to expand through these olive branches.

When the traffic expands to an ideal stage, you will be qualified to go to a prestigious school.

Then you need to talk about returns. After all, who will talk nonsense to you if you have no money.

From the beginning, the 100% that belonged to you was divided into some olive branches and some to prestigious schools. At this time, you touched your trouser pocket and it was broken. There was not enough to share with the brothers who helped me support the scene when I was not famous before!

What to do, witch is a good thing.

"Recently, so-called witch incidents have occurred frequently. It is really a joke that these can be tolerated in the encryption track."

So, in the above logic.

The project party plays the role of technical conception and implementation. (Of course, there are also people who make money purely by conception, that was in ancient times)

VC plays the role of Wang Po. It must help you build momentum, give you money when you are short of money, and help you build volume through personal connections.

The exchange plays the role of traffic amplifier (liquidity).

The project party earns the income of its own entrepreneurship through technology and ideas. VC earns its own low-priced chips through its own personal connections and resources. The exchange uses its own traffic to exchange for low-priced chips.

After the chips are distributed, the next step is how to sell them better. (I won’t mention market makers too much here, the logic is the same.)

After talking about VC, let’s look at the exchange:

After all, the exchange is the earliest group of people to start a business. It has built a convenient trading environment through technology, without the complexity of the primary market, and at the same time, everyone feels that it reduces a certain risk.

The technology is done, then someone needs to come. In the initial survival stage, various project parties need to bring people and do subsidy activities to attract people to come and attract people to stay, so that their own venues will become popular.

One day, I found that everyone in the village played in your venue, and there were no other venues within a radius of hundreds of miles. Naturally, you will not promote it too hard.

The next thing you need to think about is how to get tourists from farther away to come and play with you.

So essentially everyone is circling their own pool based on the entire market. When they are fully grown, they will naturally cherish their feathers. In other words, how can you let others take away the vegetables you grow?

3. Why doesn’t the exchange like your coin?

Your own children are good no matter how you look at them, and this view often needs to be abandoned.

Many times, most projects have met the requirements of traffic, but have not met the requirements of revenue.

As the old saying goes, a teacher has a legitimate reason. For an exchange to accept you, you also need to have a good name.

We examine a project from the perspective of an exchange:

1. Is the traffic large enough? If your traffic is large enough, it is the kind I want. It is easy to talk to.

If it is just a small amount of traffic, then look at other options.

2. Can you bring benefits? The benefits of trading volume are the last choice for exchanges, and it is also the bottom line for projects with large traffic.

Direct benefits are the most real. If you can't see the money, why should the exchange provide you with traffic in exchange for liquidity? You take the money and leave, and the exchange is in a mess.

So, the chips are given, or the money is given, this is the real thing.

"Mr. Huang, how can we suppress the bandits without money?"

So, no matter how big the project is, the exchange can obviously use free support to increase your dream. Why should you use your own real money to support your dream?

Everything, in the final analysis, is still about interests. The rules on the surface are always used to trick people, and the rules in the dark are used to get things done.

You think that the child you chose has met those so-called requirements, but in fact, it's just a dream. Moreover, more often, we should evaluate the advantages of the project from an objective perspective. It's not that you think they are all foreigners when you see a foreigner. This is self-deception.

Fourth, how to break the situation in the future? Let's look at the lessons of the past

The market is a product of buying and selling behavior. Exchanges always simplify the path of such buying and selling behavior, so as to get a share of the pie. When the crowd is large enough, you will naturally earn more.

But the market has never been an infinitely large cake, so it is impossible for exchanges to monopolize the entire market. This is the norm.

When things develop to a certain stage, they will always face challenges at the current stage.

I don't care what the current style of Binance is, but it is true that Binance has encountered a bottleneck.

Exchanges cannot have both innovation, profit and security.

At this height, under the difficult situation, even Binance cannot completely monopolize all groups in the market.

On one hand, there is risk, on the other hand, there is an upward interest game, and on the other hand, there is a downward traffic competition. There is always a trade-off.

As it stands now, compliance and security may be Binance's top priority, so it has lost its vitality and innovation.

The recent emerging MEME focuses on fairness and the selling point of being as close to decentralization as possible, but it also means one thing, kicking away many of the roles of the original ecological food chain.

This chain naturally can no longer operate under the previous model. It means innovation.

This is not the first time this has happened. As an emerging product of NFT in 2021, BYAC in the exchange plays more of a first-half hype and a second-half follow-up in this carnival.

Therefore, in this emerging market, many other trading scenarios such as Opensea have also emerged.

The law of the market cannot be completely controlled by a single individual

Therefore, at the current stage, whether it is pump or unisat, the emergence of these platforms also plays a more important role in the new link.

In the future, more emerging assets will bypass these so-called leading platforms to shine. When there is enough traffic, token assets will be derived and return to these platforms to jointly promote the entire ecological market.

The current Binance is no longer a small boat with strong maneuverability. Since the giant ship must be stable, it will not deprive the small boat of its existence value.

Therefore, at the current stage, whether it is MEME or other emerging things, they are all opportunities for more small boats.

More giant ships will appear with this opportunity. In the final analysis, even if the MEME track deprives certain roles of conventional VC model tokens in the future, it will not be the object of choice for exchanges favored by these VCs.

It does not mean that there will be no MEME-owned exchanges.

Everyone has different standards for evaluating excellence. In a market with thousands of people and thousands of faces, when the demand is huge enough, more opportunities will be derived.

NFT, Pump, Brc20, Rune, will not grow after being rejected by a Binance

Under the huge torrent of history, exchanges are just one of the passers-by. Binance has completed its current feat in a few years, which also means: there will always be successors.

The current problem is a dilemma, but it is also an opportunity for exchanges and teams with ideas.

The fall of any giant ship is a heavy blow to the industry, and everyone needs to pay for it. There is no need to destroy it. It can only be said that with the upgrade and development, many people are no longer its customers.

But it does not mean that this market does not exist.

For the withdrawal and security of large funds, Binance still has core competitiveness.

When it cannot carry everyone's expectations of "promoting the industry", other rising stars will naturally appear.

The catfish effect can sometimes stimulate the development of the industry.

From an ecological perspective, Binance cannot stop the operation of the cycle. From the perspective of individual investors, maintaining the same trading logic as the exchange can still earn ideal returns.

Look forward to the emergence of a breakthrough method.

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