Yi Lihua analyzes four major reasons for the winter in the crypto primary market and calls on project builders and top CEXs to act together to reverse the downturn.

October 5th, Liquid Capital founder Yi Lihua posted an article discussing the current state of the crypto primary market. He stated that the main reasons for the decline of the crypto primary market are, "First, the narrative has collapsed. From white papers to institutional endorsements to TVL wash trading, the market basically no longer buys in. Second, supply is imbalanced. There are now tens of thousands of projects, and it is extremely difficult for excellent projects to stand out. Third, the 1 plus 3 unlock mechanism basically kills VCs in a targeted way, letting projects, MMs, and exchanges run first. Fourth, the cost of listing. Why do primary market projects now need high valuations and large financing? Mainly because for listing on several leading CEXs, the average cost needs to be tens of millions of dollars."

Yi Lihua believes that industry leaders now truly need to focus on the direction of building, for example, improving Binance's listing screening method. Under the current model, even Vitalik's ETH back then would not have been able to list on Binance. Second is to completely abolish the 1 plus 3 unlock mechanism. VCs bear the greatest risk and should not carry the worst unlock terms. Whether a project succeeds or fails is not decided by VCs at all. Finally, crypto projects need to return to real revenue and buybacks. The U.S. stock market has continued to prosper for so many years, and the most important thing is performance growth and urging returns to shareholder interests. This is what industry leaders should do, so that secondary market investors can truly find high-quality projects.