Author: donn (@tzedonn)

Translated by: Deep Tide TechFlow

Deep Tide Introduction: Now, only 12 projects that once generated over 50 million dollars in revenue remain; when DeFi has turned into a hellhole under AI attacks; when on-chain prospectors are still stuck on a battlefield that has ended—every cryptocurrency practitioner should ask themselves the same question: What else can I do here?

Many of my friends have already left or are considering leaving the cryptocurrency industry, so I want to share some broader thoughts about the market and talk about what remains to be done in cryptocurrency.

The core of the problem lies in the fact that cryptocurrency is in trouble in three key areas: (i) lack of innovation, with nothing new appearing in the past 2-3 years; (ii) advances in quantum technology threaten the survival of Bitcoin by 2029; (iii) large language models like Claude Mythos increase the frequency of attacks, making the risk/reward of DeFi unattractive.

This raises the question: What remains to be done in cryptocurrency?

VCs and Liquidity Token Investors

Due to this innovation stagnation, the VC industry has been quite quiet, especially regarding token trading. Every crypto VC will tell you how boring this is, unless they are working on a larger B round+ financing or funding stablecoin payment startups.

A few excellent VCs I’ve encountered are investing in reverse verticals, such as quantum startups (like Project Eleven, Oratomic) or novel ideas (like Shift Foundation, PostFiat, Ambient).

I think this is normal because we have basically figured out what works and what infrastructure is needed, so exciting new things are becoming rarer. We are now in the adoption phase for payments and remittances. The endgame and institutions have arrived.

Similarly, for those working in the cryptocurrency field, it only makes sense to work at stablecoin fintech companies (like Circle, OpenFX, Tempo, Arc, Plasma), trading platforms (like Polymarket, Kalshi, Hyperliquid), or novel reverse startups (as mentioned above). Working at an L1 foundation is a well-paying dead-end job that offers no long-term benefits for you.

The lack of "cool new things" on the VC side means fewer quality tokens will be pushed to the market, and the VC capital flowing into the liquidity market will also decrease.

Therefore, liquidity token investors who evaluate tokens based on growth, fundamentals, and value accumulation might now have fewer than 10 quality targets, and this number doesn’t seem likely to increase in the short term.

Only 12 token projects have annual revenues exceeding 50 million dollars. Among them, only three have value accumulation scores >=7 (HYPE, PUMP, JUP). Even if you evaluate based on "growth" and teams improving token value accumulation, you might add another 5-10 tokens to the list below (like MORPHO, SYRUP).

The market capitalization of OTHERS has also dropped from about 450 billion dollars to around 180 billion dollars, while the stock market is experiencing a speculative frenzy in high-bandwidth memory, photonics, quantum, peptides, and more.

Subjective and Systematic Traders

You might say that cryptocurrency is primarily narrative trading and momentum trading, so it suits subjective traders who go long and short, trading narratives or catalysts/news. This is the field I'm in, and the one I'm most familiar with.

In the depths of a bear market, trading catalysts has been significantly more profitable, although many require you to stay alert and react quickly. There are many advantages and decent trading opportunities here.

Nevertheless, there have been quite a few event-driven trades in the past three months, such as...

Shorting TAO as the Templar subnet left, dropping from 330 dollars to 260 dollars in 5 hours (April 9)... going long on TAO when Chamath and Jason Cal shouted it out (with varying degrees of success)

There was no trading here, but interestingly, WLD didn't even rise on the announcement of collaboration with Tinder and Zoom (dropping 8% in two days)

Shorting AAVE during the KelpDAO hack, which happened around 1730 UTC, but was first reported on Twitter about an hour later around 1830 UTC (April 19)

Shorting AAVE when Marc Zeller's ACI left (March 3)

Shorting TRUMP on the dip after the dinner announcement (March 12)

Shorting ACX to "conversion price" after the announcement of token to equity conversion (March 11)

Shorting DRIFT during the exploit, dropping 40% in an hour (April 1)

Shorting RESOLV during the exploit, dropping about 10% (March 22)

Going long on ALGO during Google’s quantum breakthrough (March 31)

Going long on LDO during the buyback announcement, rising about 17% in approximately 5 days (March 27)

Going long/short on pump-and-dump schemes like RAVE, SIREN, STO, PIPPIN, POWER (I prefer to avoid such things)

Nevertheless, since October 10, open interest has decreased by about 60%, and reactions to news are often minimal. You need to be selective about which news to trade and whether others care about it since retail trading interest is low (typically the ones reacting slowest to headlines), so you are mainly PVP with other news traders.

I increasingly see subjective traders spending more time predicting markets and trading stocks/commodities, with Hyperliquid making this transition much easier.

As for systematic traders and arbitrage traders, as trading volume and funding rates decline, traditional strategies have become less profitable. To keep their interest, they will engage in HIP-3 markets, arbitrage prediction markets, trade Pendle PT/Boros, or arbitrage new perpetual contract decentralized exchanges (with limited liquidity).

Yield Farmers

The increasing number of hacks in DeFi has also led yield farmers (or institutional TVL traders) to go dormant or exit completely this year, as the last few good trades have been Plasma and USDai. FlyingTulip could work in a bull market cycle but didn’t attract much attention upon release.

The reason why "yield trading" makes sense usually is that you can sell rewards for your governance token (as I emphasized here), but this assumes someone will buy it from you, and it’s hard to make the risk/reward worthwhile if liquidity investors/subjective traders aren't there to add fuel.

This has been the case historically (OHM), present (XPL, ENA), and likely future (the CHIP of USDai). The threshold for on-chain DeFi yields used to be 15-25% annualized returns, considering treasury rates around 0% and attack probabilities of about 10-15%.

The reason OHM was worth it then was not because of lower risk but because the returns were much higher.

Now, the threshold might be close to 50-60% annualized returns, due to the increasing number of hacks (in the first four months of 2026, DeFi was hacked for 795 million dollars) combined with Claude Mythos possibly leading to more hacking and quantum risks rising. Since no one is buying the released tokens, it's challenging to attain reasonable risk/reward.

Most rational farmers have almost completely shifted off-chain because even the 11.5% return on STRC traditional finance fixed-income securities provides better risk-adjusted returns (15-20%).

See: Rami poker, CBB, Sisyphus, delucinator, misaka

On-chain Prospectors

Last but not least... the notorious on-chain prospectors: those who buy at a market cap of 1 million dollars and sell at a market cap of 100 million dollars. I believe these people will continue to exist because trenches are still the only place to pull 100 times.

On-chain prospectors also feel like soldiers stuck in a cave, unaware that the gold rush is essentially over.

Needless to say, when our dear President and First Lady launch their coin, meme coins have peaked. We are nearing the end of the euthanasia rollercoaster, where things no longer rise as they once did, and there are too many value extractors everywhere ("FNF crew", "LA vaping crew", continuous carpet factories, and extraction trading fees).

However, I still think this niche will not completely disappear; a glimmer of hope keeps people in the trenches. Over the past few months, we’ve seen...

$GAS: GasTown jumped from a market cap of 100 thousand dollars to 60 million dollars in 3 days, then back to a million dollars in 3 days, now at a market cap of 50 thousand dollars. (January 15)

$RALPH: RalphWiggum rose from 500 thousand dollars to 55 million dollars in 2 weeks, then crashed to 3 million dollars in 12 hours when the developers gave up (-93%), now trading at a market cap of 50 thousand dollars. (January 21)

$PENGUIN: Nietzchean Penguin soared to 170 million dollars in three days (January 24), but now trading at 3 million dollars.

$MOLT reached 120 million dollars in one day (January 31), but is now trading at 1 million dollars.

$WHITEWHALE reached 200 million dollars (January 10), but is now trading at 7 million dollars.

$ASTEROID reached 200 million dollars yesterday (April 19) after Musk tweeted that it might become SpaceX's mascot. It may trend toward zero in a few days.

While these indicate that there is indeed some upward movement from time to time, your chances of hitting them might be 10%, and the absolute maximum potential may be a net 10 times (10 million dollars → 100 million dollars), because things no longer rise above 100 million dollars. Now you only have a few hours after the peak to sell it, as things will drop >90% within hours.

So... What am I doing?

I am maintaining my arbitrage strategy on Polymarket, generating about 15% annualized returns, with a maximum capacity of around 250 thousand dollars. Fully deployed, it only earns about 3500 dollars a month. Since Polymarket introduced trading fees, arbitrage opportunities have also decreased, and with the recent npm package poisoning, I increasingly feel that the risk/reward isn’t there (especially after the airdrop). The current plan is to kill it after the airdrop.

I continue to trade cryptocurrency, but not as actively as before. I have the idea of "starting an AI hedge fund," but my exploration has led me to conclude that AI is not yet creative enough for subjective trading (for example, for idea generation), but if you give it a task or methodology you used before and need a little logical reasoning, it's fantastic.

Therefore, I am spending time automating certain "hedge fund analyst" tasks, such as automating on-chain scouting for internal wallets that I have done in the past on Polymarket, which is quite process-based but requires a bit of logical thinking. This is a perfect task for Claude.

I am also increasingly researching the fine-tuning aspects of AI models, particularly from the perspective of cryptocurrency and financial data. I have been reading outside of cryptocurrency and I find topics such as the AI stack (social impact and whole stack stocks), physical AI (world action models, visual language models, and data issues), and the idea of "AI integration" (PE integration but with AI) intellectually stimulating, but haven’t found a sufficiently interesting problem to devote my life to solving.

If you have anything interesting to discuss, feel free to reach out to me!