The era of "picking up money" is over, and it will become increasingly difficult for retail investors to make money through cryptocurrencies like Bitcoin

Author: Terry, Plain Language Blockchain

In the past year, have you encountered any Rug Pull projects? Have you suffered from "buying at the peak" due to the hype from KOLs? Or have you faced losses from increasingly rampant phishing attacks? Or perhaps you bought newly launched Tokens on major platforms only to see them plummet?

Many users likely resonate with at least one of these scenarios, which can be said to reflect the investment experiences and true sentiments of most ordinary investors over the past period:

Whether it’s issues of on-chain security or asset depreciation, users find it hard to defend against them. Many previously common pitfalls have even begun to industrialize; to put it bluntly, they have almost uprooted the "leek roots."

This article will review the increasingly diverse pitfalls in the crypto world recently and explore whether there are still opportunities for ordinary users to profit in the crypto industry.

Ordinary Users' "Fancy Losing Money Techniques"

1) The Industrialization Trend of Rug Pulls

Firstly, the schemes for Rug Pulls are becoming increasingly sophisticated, with the most outrageous being the ZKasino incident:

On April 20, a community user discovered through the Wayback Machine that ZKasino had removed the statement "Ethereum will be returned and can be bridged back at this point." from its official Bridge interface.

At the same time, community users were unable to withdraw funds, the ZKasino official Telegram was muted by administrators, and social media updates ceased, with the total amount of funds involved exceeding $20 million.

Interestingly, just a month earlier in March, ZKasino had announced a Series A funding round at a valuation of $350 million, with the specific amount undisclosed, but several trading platforms and VCs participated…

In addition, the so-called "Rug Chain" zkSync has not only frequently experienced security incidents with ecological projects but also shows an increasingly obvious trend of industrialization in quickly capitalizing on hot topics. For instance, the recent Rug Pull of the zkSync ecological DEX Merlin, which shares the same name, affected over a million dollars in funds.

It must be emphasized again that many projects in the zkSync ecosystem are indeed of varying quality, and while participating in the zkSync ecosystem, users should remain vigilant against risks at all levels.

2) The Increasingly Rampant Hacker/Phishing Attacks

Recently, one of the most eye-catching cases in the field of on-chain security is undoubtedly the "same first and last number phishing attack," which seems to have become commonplace:

A certain whale address fell victim to a phishing attack from an address with the same first and last numbers, resulting in a loss of 1,155 WBTC, amounting to over 400 million yuan! Although the hacker later chose to return the funds due to various factors, it still exposed the extremely high risk-reward ratio of such phishing behavior, which can be described as "three years without a catch, one catch feeds a lifetime."

Moreover, similar phishing attacks have already industrialized over the past six months—hackers often generate a massive number of on-chain addresses with different first and last numbers as a seed library. Once a certain address engages in a fund transfer with the outside world, they immediately find an address with the same first and last numbers from the seed library and then call a contract for a related transfer, casting a wide net to wait for a catch.

Some users sometimes copy target addresses directly from transaction records and only check the first and last few digits, thus falling victim. According to Yu Xian, the founder of Slow Mist, phishing attacks targeting first and last numbers are "net attacks where the willing take the bait, a game of probability."

This is just a glimpse of the increasingly rampant hacker attacks. For ordinary users, the colorful on-chain world presents risks, both tangible and intangible, that are almost exponentially increasing, while individual risk awareness is hard to keep pace.

Overall, various forms of attacks on on-chain, wallets, DeFi, etc., are emerging one after another, and even social engineering attacks are rampant, making DeFi security risks resemble an asymmetric one-sided hunt: for technical geniuses, it is undoubtedly an inexhaustible free ATM, while for the vast majority of ordinary users, it feels more like a Damocles sword that could fall at any moment. Staying vigilant and not casually participating in authorizations is more about luck.

So far, phishing, social engineering attacks, and other C-end risks are the most common ways for ordinary users to lose funds in Web3, and due to the additional risk points of smart contracts, the problem is becoming increasingly severe.

Behind every successful scam, there is a user who stops using Web3, and without any new users, the Web3 ecosystem will have nowhere to go. This is also one of the most damaging points to the crypto industry.

3) KOL's Fancy Promotions

For the vast majority of ordinary users, following various crypto KOLs' social media promotions is an important source of obtaining Alpha codes.

This has also given rise to the so-called "KOL Round"—as roles with greater influence over secondary market investors, KOLs can even obtain shorter unlock periods and lower valuation discounts than institutional VCs:

For example, recently Monad Labs completed a new round of financing at a large valuation of $3 billion, and insiders revealed that some industry KOLs were allowed to invest at a maximum valuation of one-fifth of Paradigm.

So, does following KOL promotions really guarantee profits? According to a study by researchers from Harvard University and others on approximately 36,000 tweets related to crypto asset performance published by 180 of the most famous crypto social media influencers (KOLs), covering over 1,600 Tokens, the conclusions were not very satisfactory:

When KOL tweets about a certain Token, the average return rate is 1.83% (1.57%) after one day (two days), while for crypto projects outside the top 100 by market cap, the return rate one day after the promotion is 3.86%. The earliest significant decline in returns starts five days after the tweet, with the average return rate from the second to the fifth day being -1.02%, indicating that over half of the initial gains are wiped out within five trading days.

4) VC Tokens Plummeting After Launch

Which would you choose: a VC Token with a high FDV (fully diluted valuation) and low circulation, or a completely "meme" token where profits and losses are self-responsible?

Recently, market trends have begun to shift, with the meme craze emerging strongly, driving extreme prosperity in trading on Solana and Base chains. For instance, PEPE, which has firmly established itself as the new leader of Memecoins, has even set a historical high. In the current market environment, beyond short-term speculation, the meme represents the growing call for fairness from the general public, with funds voting with their feet.

In contrast, there has been a series of VC tokens that launched on major platforms with extremely high FDVs and have been on a continuous downward trend, such as AEVO, REZ, and even the first project of BN Megadrop, BounceBit, which has almost closed daily with bearish candles since its listing, leaving all entering users deeply trapped.

In comparison, discussions and doubts about Memecoins and VCs have inevitably become mainstream in the community. Memecoins at least have user flow bringing continuous incremental funds and attention, while the new projects with valuations in the tens of billions are often just grand narratives or outdated concept products, which will inevitably be rejected by the community. This serves as a wake-up call for VCs and project parties accustomed to path dependence.

Where Do Ordinary Players Go from Here?

In a previous article titled "Sleepless in Web3, Will the 'Flourishing Era' of the Crypto World Ever End?" it was mentioned, "What we love is not 'Flourishing,' but the era of opportunities everywhere."

I believe many friends in the crypto industry have imagined how they would participate in this wave of the era if we had the chance to go back ten years.

Hoarding BTC? Becoming a miner? Establishing another Bitmain? Or becoming an early employee of BN? The best choices seem endless. After all, the past decade in the crypto world has truly been a golden age that broke the limits of imagination, giving birth to wave after wave of industry legends and big shots.

Regardless, the question of making money or not is an eternal topic in the Web3 world and the lifeline of Web3 development.

When trading platforms, market makers, VCs, project parties, and KOLs all start making money, while the vast majority of ordinary users continue to lose money, it indicates that the deep structural problems of the entire market have become distorted to a certain extent, which is destined not to last.

As the saying goes, behind every "fancy losing money technique," there may be a group of users who stop using Web3 products, distance themselves from VC Tokens, and choose to embrace more equitable and grassroots Memecoins. This itself is a form of resistance where funds vote with their feet.

And until some Web3 ecological applications truly run through the value closed loop, ordinary users will have "nowhere to go." Of course, this may be the "twists and turns" that Web3 development must go through, as the crypto industry continues to explore its way forward.