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The hard lesson // most assets in crypto are worth zero.
When the majority of holders treat assets like hot potatoes, long-term ownership and value routes to zero. And the beatings will continue until morale improves.
People can do all the mental gymnastics they want, but the vast majority of these assets are not worth owning at any price. Truly, at any price, they are still shitty allocations of capital.
There are a few reasons for this.
Most of it comes down to path-dependency. Crypto has always been fighting a regulatory onslaught, leading to most structures and token models being horrible deformities. When survival is everything, little thought is given to the final outcome. But there lies the saviour, markets will rage on, and a new class will come to commit paricide.
‘‘Someday a real rain will come and wash all this scum off the streets.’’
The most obvious inflection point will be the Clarity Act, with the latent demand from investors for better assets propagating and hopefully torqued by a clean path built by Brian, who one could assume acquired Echo for precisely this purpose.
Current issues with market structure:
Market structure is toxic with perps dominating crypto flow. Attention and liquidations drive price more than spot demand. This has a couple of nasty outcomes. Holder quality goes to shit, and traders replace owners. Builder incentives get distorted with teams subconsciously driving towards large TAMs instead of sticky user primitives. And token design also gets fucked up with smoke, mirrors, unlocks, listings, and sleight of hand. Prices respond more to flows than fundamentals, and this again leads to narratives packaging that maximizes potential TAM, sidelining the horrible gutter work that needs to be done to build products. When the investing class is made up of traders, builders subconsciously start building for traders. This is hyper-obvious when considering the dominant token models, low float high FDV, emissions to keep pairs liquid, and unlock schedules, etc.
A lot of this is socially driven, the ladder being pulled up, social mobility evaporating yada yada yada. Structurally, central banks have pushed younger generations towards lottery ticket behaviour. But don’t let them trap you. Those who attempt to get rich quick only go broke faster. The most profitable stock trading strategy is to DCA the S&P500 and forget it about—lesson in there.
I am advocating here for the only two blades given to a retail participant: decision autonomy and time arbitrage edge. As a pleb you have no one pushing you to hit X% returns for the quarter and you can buy what you like. There is a mispricing created by perp-first markets, leaving room to accumulate very, very few assets that show a consistent approach to development.
The number one priority of the team should be making revenue, scaling that revenue, and then, when it makes sense from a numbers perspective, returning that value to token holders. Buybacks are the fucking laziest form of value return—again a path dependency of how we got here. Most teams should not be conducting buybacks. But here we are.
I am not saying perps bad spot good. Only that a perp-centric market has negative second-order effects, and we all know how fast the half-lives of narratives have decayed. Pendulums swing, and as perps rule over everything, the lacuna opens for time arbitrage. Tokens that one could buy and hold for multiple cycles (not advocating to do this, but it paints a better picture). A lot of tokens end up poorly priced because the dominant market group does not want or cannot stomach holding them.
Patience is non-ironically a winning virtue.
I find myself advocating for the great deluge, simultaneously ecstatically optimistic for what comes next.
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