veDao Research Institute: What kind of projects have higher secondary return rates?

Author: veDAO

Understanding the Rankings

This ranking comes from the weekly project recommendations by the veDAO Research Institute. So far, six issues of project selections have been released, covering a period of two months (2023.06.07------2023.08.07), involving various tracks such as DeFi and Layer 2. According to statistics, among the projects recommended by veDAO, 16 projects achieved positive returns within the two-month investment period, with 8 projects having returns exceeding 50%, and the top two projects having returns over 100%.

In addition to the aforementioned 10 projects, the 16 projects with positive investment returns recorded by the veDAO Research Institute also include LootBot (30%), Maverick (26.8%), Lyra (18.6%), Lotus (16.2%), Worldcoin (14.6%), and Chainlink (8%).

According to the statistics, among the 16 projects: the ETH mainnet seems to no longer hold dominance, but EVM chains remain active; DeFi continues to be the main narrative in the current Web3; Layer 2 concepts, AI, and Bot concepts are quite popular; almost all projects have financing backgrounds. Additionally, the inclusion of Helium and Worldcoin indicates that the narrative of "connecting with the real world" is still valued in the Web3 context.

Inverted Returns in Bear Market Primary and Secondary Markets

In addition to the "veDAO Weekly Project Selection," the veDAO Research Institute also has a content section for weekly IDO project screening. Originally, the veDAO Research Institute planned to release a ranking of IDO project returns, but upon tracking their prices, it was found that since June of this year, the vast majority of IDO projects have had unsatisfactory investment returns, with many experiencing a decline after launch becoming a norm.

Aside from Arkham, which caused a significant stir in the industry, rising from an issuance price of 0.05 USDT to the current 0.43 USDT, maintaining an 8-fold increase, and Brickken, which opened at 0.11 USDT and peaked at 0.18 USDT, almost all other IDO projects have faced a decline. Therefore, the veDAO Research Institute abandoned the idea of creating a ranking for IDO returns and began to consider that perhaps the current Web3 market is experiencing an inversion of investment returns between the primary and secondary markets.

In fact, in a bear market, most projects tend to exhibit this inverted situation. That is, the price you get in the primary market is often higher than in the secondary market, which is quite awkward. In a bear market, these projects will launch and immediately decline, regardless of how popular they are or who invested in them.

There are currently two reasons for this situation: on one hand, the difficulty of obtaining Web3 venture capital has increased. Due to the prolonged market winter, many projects find it hard to gain institutional support, or institutions cannot provide the investment amounts required by the projects, leading them to seek fundraising through IDOs. In this case, the project parties that complete fundraising may not invest more assets into market value management.

On the other hand, the industry landscape is slowly differentiating, with almost every project emerging in the market backed by well-known VCs.

In the last bull market, many participants in primary project investments earned about ten times their profits, which sparked a wave of enthusiasm for primary market investments. At that time, many people invested in star projects like FIL and SOL, riding the investment wave, and the rise of DeFi concepts created one wealth myth after another, allowing early investors behind the projects to achieve excessive returns.

As time progressed into the later stages of the bull market, countless primary projects were born every day, and after filtering out low-quality projects and scams, one would find that every project on the market had major investment institutions backing it. For example, in the last bull market, any project on Conlist had early investors associated with famous investment institutions like Binance, Three Arrows, and a16z.

Ordinary investors could only compete for public offering shares on Launchpads, and the prices they obtained for these shares might have already multiplied several times or even dozens of times compared to the prices at which institutions entered.

The premise of dancing with the market makers is that retail investors and market makers have roughly the same investment conditions, but when there is a significant difference in holding prices between the two parties, dancing with the market makers poses a risk akin to seeking skin from a tiger.

Moreover, events such as the LUNA black swan and the FTX collapse have exacerbated the funding risks for institutions. Therefore, the first choice for these institutions upon obtaining chips is to sell them in the secondary market to lock in profits. As a result, early participants in public offerings unknowingly become the institutions' exit buyers.

Thus, compared to primary market players who are stuck as soon as they launch, waiting for low-priced opportunities in the secondary market may have a higher success rate.

AI + Web3 Concepts May Become the New Nobility

From the rankings above, we can see that projects with the highest increases, such as Tenet and KyberSwap, almost all incorporate AI concepts, indicating that the narrative of AI + Web3 is increasingly being valued.

Currently, the combination of AI + Web3 is still more tool-oriented, such as the BOT narrative related to AI, primarily represented by UniBOT and Telegram BOT. After users import their wallet mnemonic phrases, these bots can perform certain trading operations for users, such as token exchanges, copy trading, portfolio analysis, automated on-chain interactions, cross-chain asset transfers, and more.

The advantage of the BOT narrative is that it provides users with a more friendly and convenient entry into crypto, which is beneficial for breaking the barriers of Web3 and allowing more users who have not yet entered the crypto industry to have a better crypto experience.

Another important narrative of AI + Web3 is the information aggregation platform that replaces commands with intent, such as veDAO, ChainGPT, and the recent 3GPT, which specialize in training Web3 content by integrating AI technology into the ecosystem. Users no longer need to search for information on a website or input keywords to get feedback; instead, they can communicate with AI to express their intent, allowing AI to provide the most accurate content and information to users.

Just like what veDAO is currently doing, as a compass for Web3 investments, veDAO is committed to accurately capturing project development dynamics and market performance for users, driven by AI, truly becoming a smart investment advisor for users. In the current state of a sluggish primary market, if you want to find the most suitable investment targets in the secondary market, veDAO is undoubtedly one of the best choices. On the veDAO platform, various project data in the industry, such as Twitter popularity, Twitter sentiment, whale activity, IDO information, etc., are aggregated, along with expert reviews and KOL opinions to guide investments. Users can view projects from different dimensions to obtain a more comprehensive conclusion.

Recently, veDAO will also launch AI investment advisory planning, which will conduct more granular analysis of smart wallet addresses and on-chain and off-chain data, allowing users to complete Alpha project screening and tracking in one stop.

Conclusion

Based on the above, we conclude that in the current market conditions, the investment return rate in the secondary market is superior to that in the primary market. Moreover, projects with AI concepts also perform well in the secondary market. It is undeniable that for some time to come, the overall situation in the primary market is still unlikely to improve, while structural opportunities still exist, such as the concept of AI + Web3 will gradually flourish. Under this logic, choosing a tool-like platform like veDAO, which can help find quality targets in the secondary market while aligning with the AI concept, seems to be a very worthwhile decision.