As a former VC investor, how do you view the current discourse on "VC is dead" in the crypto space?

Regarding the payment issue, I will answer seriously. I originally had quite a few thoughts on this discourse.

Let me start with the conclusion -

1. It is an undeniable fact that some VCs are dead.

2. Overall, VCs will not die; they will continue to exist and push the industry forward.

3. VCs are actually entering a phase of "clearing out" and "survival of the fittest," similar to the internet bubble in 2000. This is the "debt" of the last bull market, and after a few years of repayment, we will enter a new phase of healthy growth, but the threshold will be much higher than before.

Next, I will elaborate on each point.

1. Some VCs are dead

Asian VCs are probably the hardest hit in this round. Starting this year, several leading firms have shut down or dissolved, and the remaining ones may not even make a move for months, focusing instead on exiting their current portfolios. Raising new funds is also quite difficult.

In Europe and the US, the situation for mid-tier and lower-tier VCs in the first half of the year was relatively okay, related to their LP structures and fund sizes. However, in the second half of the year, especially in the last month or two, there has been a noticeable decline in activity among Asian VCs, with some simply not investing anymore or transitioning to pure Liquid Funds. Some investment managers/partners have started telling me on Telegram, "It's too hard; it's difficult to exit." The impact of the 1011 disaster on liquidity is fatal, and it is now starting to affect VC confidence.

The top firms in Europe and the US seem to be less affected, at least on the surface.

In fact, this round of "bear market" for VCs is a "delayed effect" following the Luna crash in 2022. At that time, the secondary market was bearish, but the primary market, whether in terms of project valuations or the amount of funds raised by VCs, was not significantly affected. Many new VCs were established after the Luna crash (for example, ABCDE). The thinking at that time was not wrong; several star projects from DeFi Summer, like MakerDAO and Uniswap, were built during the bear market of 2018-2019. The VCs from that bear market made a fortune during the bull market of 2021. The idea was that by investing in good projects during the bear market, they would reap the rewards when the bull market returned!

But ideals are often rich, while reality is stark, for three reasons:

First, the narrative and liquidity in 2021 were too extreme. The difference between good and bad projects for VCs in 2018-2019 was not significant; everything was skyrocketing, and any project could see dozens or even hundreds of times returns. This also led to the valuations and financing amounts of new projects in the primary market remaining relatively high during the bear market of 2022-2023 due to anchoring effects, which is what I referred to as the "delayed effect" of the primary market bear market.

Second, the four-year cycle has been broken. There has been no so-called "altcoin season" in 2025. This is due to macro reasons, an excess of altcoins, insufficient liquidity, a gradual disillusionment with narratives, and a reluctance to pay for PPTs and VC endorsements. The explosion of AI and the siphoning effect of "true value investing" in the US stock market on crypto funds also play a role. Anyway, the previous patterns are no longer repeating, and it is impossible to replicate the dream of investing in good projects in 2019 and exiting with hundreds of times returns in 2021.

Third, even if the four-year cycle were to repeat, the terms for VCs this round are completely different from the last. Some of our portfolios invested in early 2023 still haven't launched tokens after two or three years. Even if there is a Token Generation Event (TGE), there will be a one-year lock-up, followed by a release over two to three years. A project invested in 2023 might not see its last batch of tokens until 2028-2029, directly crossing over a half-cycle. How many projects in the crypto space can survive such a cycle? Very few.

2. Overall, VCs will not die

There is really nothing to worry about here; as long as the industry doesn't die, VCs won't die either. Otherwise, who will provide resources to realize new ideas, new technologies, and new directions? We can't rely entirely on ICOs or KOL rounds, can we?

ICOs are more about bringing some retail investors and communities on board and creating momentum, while KOL rounds mainly handle dissemination. These are things that happen in the later stages of a project. In the very early stages, with just one or two founders and a PPT, only VCs can truly understand and provide funding. I have discussed over 1,000 projects in ABCDE over the past two years and ultimately invested in only 40. Out of these carefully selected 40, probably 20 to 30 will still fail. Many of the projects you see in the market that you consider "garbage" have already been filtered through many rounds to be relatively "premium." Otherwise, could all those 1,000 projects launch ICOs and KOL rounds, and could retail investors or even KOLs discern them?

Just think about the phenomenal projects from the last round to this round; aside from a few exceptional cases like Hyperliquid, which of them did not have VC backing? Whether it's Uniswap, AAVE, Solana, Opensea, or PolyMarket, no matter how anti-VC the sentiment may be, the industry still relies on the collaboration between founders and VCs to push forward.

A few days ago, I spoke with a prediction market project that is completely different from most Polymarket/Kalshi copycats, extremely differentiated. I shared it with some VCs and KOLs in the past couple of days, and the feedback has been very positive, with many wanting to discuss further. You see, good projects won't die, and good VCs won't either.

3. The thresholds for VCs, projects, and talent will increase, trending towards Web2

VCs - Reputation, funding, and professionalism are clearly entering a phase where the strong get stronger.

The reputation and brand of a VC are not primarily measured by how famous they are among retail investors, but rather by whether developers or founders are willing to take their money and why they choose to take their money over another VC's. This is the true moat for VCs. This round has clearly seen VCs become more similar to CEXs, transitioning from a pyramid structure to a more pin-like structure.

Projects - We have transitioned from evaluating narratives and white papers (or even not looking at white papers, like during 2017 when Li Xiaolai raised over a hundred million with just an idea) to looking at Total Value Locked (TVL), VC endorsements, narratives, and transactions in the last round, and now to looking at real user numbers and protocol revenues. It feels like we are finally getting closer to the direction of the US stock market.

Jeff from Hyperliquid once mentioned in an interview that the vast majority of projects in the crypto space have only one business model: selling tokens. Because during the TGE, there is nothing—just a mainnet, no ecosystem, no users, no revenue… so they can only sell tokens. Imagine a company going public in the US with only a corporate entity and a bunch of employees, maybe some factories and workshops, but no customers and no revenue. How could that possibly get you listed on Nasdaq? Why can we in Web3 go directly to TGE or listing?

This round, Polymarket and Hyperliquid have set the best examples: one spent years building a large number of real users and revenue, even supporting a new track, before considering launching tokens. One project did attract early users with the expectation of token airdrops, but their product is unbeatable, and after launching tokens, everyone continues to use it. The project itself is a cash cow, with 99% of its revenue used to buy back tokens. When a project has real users and real revenue beyond just farmers, then we can talk about TGE and listing, and our circle will have truly gotten on the right track.

Talent - One of the main reasons I have always had confidence in Web3 is that this industry attracts some of the smartest people in the world. I have previously written that among the over 1,000 projects I have discussed, nearly half of the founders and core teams are Ivy League graduates. Domestic founders are almost exclusively from Tsinghua and Peking University, with a few from Zhejiang University, Shanghai Jiao Tong University, and Xiamen University.

Of course, this is not just about academic credentials; I myself am not from a prestigious school. But it is undeniable that from a statistical perspective, having so many high-IQ talents clustered here, even if just due to the wealth effect, will definitely lead to the creation of some useful or interesting things.

So, as I mentioned earlier, although the market is bearish, the entrepreneurial directions this round are quite clear: stablecoins, perpetual contracts, everything on-chain, prediction markets, and the agent economy are all directions with confirmed product-market fit. Good founders and good VCs can definitely create truly great products. Polymarket and Hyperliquid have set the best examples, and I believe we will see more star products emerging in the next year or two.

For ordinary people, Web3 remains the most promising place for you to transform from nobody to somebody—of course, this promise is in stark contrast to the hellish difficulty of the already saturated Web2. Compared to the previous rounds or the last cycle, this difficulty has shifted from easy to hard. I remember seeing a tweet from a Web3 VC partner a few days ago, saying they received over 500 resumes for a junior intern position within a few days, many from prestigious schools, which scared them into closing the job posting.

So, in the end, it still comes down to this: pessimists are always right, while optimists always move forward.

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