Debate: How to evaluate the controversy of Binance's frequent listings? Has He Yi stated that the era of "haircut" may have ended?

Author: BlockBeats

Last weekend, the conflict between VC coins, exchanges, and retail investors reached a recent peak, catalyzed by two lengthy articles from Binance co-founder He Yi. On June 20, the project token named Lista DAO was launched on the platform as the second Launchpad project of Binance Megadrop. With members of the Lista DAO team including former Binance employees and the project having previously received investment from Binance Labs, many users were optimistic about LISTA and participated in secondary trading. However, in the context of an overall weak market, LISTA did not bring any surprises to retail investors and instead fell continuously, which seemed to become the last straw that broke the camel's back. The market's anger gradually spread from dissatisfaction with VC coins to the frequent listing of coins by Binance while ignoring the interests of secondary users.

On June 21, He Yi responded, stating, "Even if Binance does not list new projects, funds will still flow due to token unlocks, meme coins, etc."; "Some VCs are indeed the core reason for inflated prices, but VCs generally have a 7-year lock-up period of 4+3 from LP fundraising, collecting management fees + dividends; the general unlocking for VCs is one year after TGE (not all), so many crypto VCs are also going bankrupt, and some VC's LP investments in the crypto space may also go to zero."

The next day, He Yi published another article reviewing the iconic developmental milestones in the crypto space from ICOs, IEOs to DeFi, and stated, "Today, the market has indeed changed again. The infighting among rug-pulling studios and L2 projects has turned into a farce, and the era of rug-pulling may be coming to an end."

The two lengthy articles pointed out the current market situation: the prosperity that retail investors expected during the ICO period (altcoin bull) has not reappeared, and the long-standing expectations for airdrops have fallen flat; under tight market liquidity, the conflict between retail investors and exchanges and VCs has intensified. Retail investors generally believe that VCs acquire tokens at low costs, and the unlock selling pressure floods the market. On the other hand, exchanges frequently list new coins, exacerbating the diversion of funds, while new coins perform poorly, leading to retail investors being "harvested" once they take over.

He Yi's lengthy article thus sparked a two-day debate, with many industry insiders sharing their views, which BlockBeats has summarized as follows:

Support for Binance

Data Organizer KOL 杀破狼 killthewolf.eth

You bought a bag of rice at the supermarket, and the next day the rice depreciated. You blame the supermarket owner for recently stocking too many new varieties of imported rice, which caused the rice in your hands to depreciate. I think this logic is a bit one-sided. The essence of determining the price of rice is still the supply and demand relationship. You can blame the producers for continuously producing new varieties of rice, or you can blame the village for not having new people move in to increase the demand for rice. However, the supermarket is just an intermediary and cannot determine the price of rice. Moreover, there are countless supermarkets in this village; Binance is just one of them. Even if Binance refuses to list new varieties of imported rice, there will be a bunch of supermarkets eager to list them. This is the law of the world.

KOL, Senior Practitioner 子敬

I've observed that the public opinion regarding the listing issues of ZKSync has been quite severe lately. But I really can't understand it; CEXs are not law enforcement agencies. Besides having some deterrent power over the project parties' rug-pulling behavior, they have no obligation to supervise whether the project parties are doing harm, and behaviors like insider trading cannot be monitored. The statement made by the sister here is quite objective: "If Binance does not list these projects, they still exist." If users really want to buy, they can also buy on-chain without CEXs. CEX listing merely provides a channel; CEX needs traffic, and wherever there is traffic, there are potential new users, so CEX should appear there. This makes sense from a business logic perspective. CEX only provides convenience for users to buy coins but does not change or should not affect users' trading decisions.

Moreover, whether it is Binance, OKX, or any major exchange, they cannot decide whether a project is doing harm. So please manage your own wallet and do not let the listing of a major exchange dictate your underlying trading principles. If your investment decision is affected by the listing on a major exchange, leading to losses, then please bear the consequences of your gambler's mindset. In other words, if retail investors can reach a consensus to resolutely resist project parties that do harm and do not provide any liquidity to such projects, without buying pressure, no matter how strong the market makers are, without market support, they will ultimately go to zero. At that time, there is no need for user advice; when the time comes, major CEXs will also abandon them. This should be their fate. However, contrary to expectations, there are too many speculators in this market, who always think they are the smartest one amid information asymmetry and market sentiment, and they must bear what they should.

Questioning Binance's Inaction

Individual Investor AmyWang

In the last bull market, there were still small-cap projects with market values of millions or tens of millions when they were listed. Binance's users have a wealth creation effect, and as a leading CEX, it plays a significant role in the healthy development of the industry and can form a positive cycle. This round of VC coins currently looks like a recreation of the internet bubble of the 2000s, with a large number of infrastructure projects with few actual users being listed starting at a billion dollars, ultimately leaving the exchange users to foot the bill. I sincerely hope that the various support measures for small and medium-sized innovative projects listed in the new plan can be implemented as soon as possible, activating the potential new protocol ecosystem and injecting hope and confidence for positive development into the industry and the market.

Crypto KOL bit 壹

After new project parties list on Binance, if they perform poorly, ordinary retail investors find it hard to make money. Meanwhile, Binance continues to frequently list high market cap new coins. The opportunities for ordinary retail investors to make money on Binance are decreasing. Of course, you can say that whether the coin price performs well or not is the project party's business, and Binance is just a trading venue that does not interfere with coin prices. However, it is undeniable that with Binance's influence and traffic as the number one exchange in the crypto universe, frequent listings by Binance objectively dilute a lot of attention and liquidity. Of course, you can also say that if these projects are not listed on Binance, they will also be listed elsewhere, and Binance is just a trading venue providing trading. However, given Binance's current status in the eyes of retail investors, Binance is not just an exchange.

You can say that it is responsible to control the speed of listings and take on the burden of industry leadership, and you can say this is a form of moral coercion. You are a businessman and should speak in business terms, but you should not forget that a few months ago, you wrote a letter calling on everyone to sign and support CZ's judicial case, and everyone actively co-signed letters and made videos to appeal. This is all fresh in memory. If Binance were a small, obscure exchange, I believe no one would disturb it. However, Binance holds a significant share of trading volume in the crypto space, and such influence means that every move has a substantial impact on the crypto circle. People used to support Binance, support CZ, and support the sister because Binance was a leading exchange with industry responsibility at that time.

Binance's frequency of listings is too fast now, continuously supplying the market with large-cap VC projects, and the market liquidity simply cannot support so many tens of billions or hundreds of billions of VCs. Does Binance's listing follow the principle of profit maximization or the principle of fairness in cryptocurrency? Of course, as an exchange, it is normal for a commercial company to talk about profits, but as a native leading cryptocurrency exchange, it should not only focus on profits but also correctly guide the direction of industry development and convey the original spirit of cryptocurrency. The bulk listing of large-cap VC projects with low on-chain activity dilutes the already scarce liquidity, and whether it is Binance's listing reputation system that has collapsed or Binance's values have deteriorated after CZ's departure remains to be seen.

The principle that water can carry a boat and also capsize it has been passed down through generations in China. The overall evaluation of Binance by a large number of users in this new cycle has sharply declined, which Binance should take seriously. The essence of an exchange is to serve users as a trading venue, and the closer it is to capital, the farther it is from users. Native exchanges in the crypto space should stand tall and not become the white gloves of capital in the web2 world; retail investors in crypto cannot tolerate sand. "Being true to oneself" is the bottom line that Binance should uphold.

Other Opinions and Analyses

BixinGroup Founder 星空

A bunch of retail investors question VC coins, but they actually don't understand that if there were no VCs paving the way, they would be the ones facing the cuts. I've encountered many projects that skip VCs and go directly to raise funds from KOLs because they are easier to deceive and come with their own traffic. The project parties have never encountered such good retail investors. In fact, following the trend of venture capital is also a normal strategy, but it is the VCs' LPs who suffer, as they are the ones who actually put in the money. Ordinary retail investors can still enjoy the pain of losing money, but LPs don't even know how they lost their money.

VCs are actually the weakest and most vulnerable big retail investors in this game. It's not the big retail investors who are crying out for injustice; rather, the platforms that steadily earn fees and listing fees are the ones crying out for injustice. The world is indeed a treacherous place. Think about it: if employees of a major exchange can become wealthy, where does their money come from? Isn't it all your money? The main source is still the VCs' money.

Crypto KOL 川沐

Binance's approach is hard to break through. Binance collaborates with its affiliated institutions and project parties to create new coins and harvest profits, entering the game as an investor to acquire tokens. They then distribute a portion of the tokens to large BNB holders to form a community of interests. Before the listing, they provide free quotas to various KOLs for promotion. Once unfavorable public opinion arises against Binance, the BNB holders and KOLs who benefit from the new coins will collectively act to shift the public opinion. Unless a new, influential tech leader emerges to create a new exchange with zero fees, allowing trading and order mining to mine platform tokens for a year, it will be hard for things to change. Currently, retail investors are like piglets; who can blame them for monopolizing the most trading volume and user base, leaving them in a state of being harvested.

Crypto KOL 比特傻

Having been in the crypto market for many years, I have never taken money from Binance, so I can be objective. Binance's PR should not treat my posts as negative because I am objectively thinking long-term, for the industry and for Binance.

1. The summary of the ICO, DeFi era, and IEO era by the sister is also an era full of mixed blessings.

In fact, both ICO and DeFi have a lot of pitfalls. At that time, the dividends were indeed more pronounced. But retail investors were also extremely likely to incur losses. As for IEOs, the hit rate was quite high. Good projects also had difficulty obtaining quotas, with many studios competing for winning bids and a KYC industry chain, making it hard for honest retail investors to make money. Retail investors, in any era, are the most vulnerable group and the group that needs protection the most.

2. Today, Binance's role is a multi-headed monopoly platform that integrates various important roles such as exchange, brokerage, securities regulatory agency, clearing and settlement institution, primary market investment and mergers and acquisitions, and publicly listed company group. Everyone should read this sentence carefully. In the traditional securities market, every role of Binance must accept strict regulation. Each role, in the absence of regulation, has the ability to do harm. Such enormous power inevitably corresponds to significant industry responsibility. What are these responsibilities? This is a question Binance needs to ponder, as it concerns Binance's long-term development.

3. CZ says he is building. Binance's role is not that of a project party; it is a multi-headed monopoly platform that integrates various important roles such as exchange, brokerage, securities regulatory agency, clearing and settlement institution, primary market investment and mergers and acquisitions, and publicly listed company group. Binance is far beyond the role of a project party; its responsibility is precisely not to build. In fact, Binance has never focused its main energy on building; its main energy is still used to maintain its leading position in the exchange market. The community has never expected Binance to build anything. A good referee is precisely one who does not play on the field.

4. The discussions about VCs and rug-pulling studios are merely a small wave in the historical tide. VCs provide funding for the primary market, which is an ancient industry. Studios making money by washing trades and providing data to project parties is also an age-old practice. However, generally speaking, the securities market cracks down on sudden investments and abnormal changes in equity before a VC goes public. The securities regulatory agency will also rigorously investigate data fraud by project parties. This crackdown and regulation keep multiple roles in balance. Currently, the disdain for VC coins, the infighting among rug-pulling studios and project parties, is a process of rebalancing. I hope that this rebalancing process can involve exchanges led by Binance, sacrificing some of their short-term interests for healthier industry development.

Rational discussions can be had, but I do not hope to see KOLs who take Binance's money come to create conflicts. You neither care about retail investors nor the development of the industry; you only care about your 400U. I am braver than you. Finally, I will conclude with a line from Stephen Chow: "With great power comes great responsibility; you cannot escape it."

Web3 Entrepreneur 小人物

This industry will not change; we can only change positions. Today, He Yi mentioned that the ICOs of 2017, IEOs of 2021, and even the rug-pulling strategies of 2023 are no longer suitable for the current market. As a whistleblower, she is also reminding everyone that the past logic of making money is due for a change, indicating that the market has truly reached a turning point.

1. Rug-pulling will not disappear: The definition of rug-pulling itself is very broad. It is not just about simply listing a large number of tokens to acquire chips; it is also a mindset, a way of thinking that continuously seeks arbitrage opportunities in this market and finds opportunities for new asset issuance to scale. The methods of acquiring early chips will only change, not disappear; the era of simply and brutally acquiring chips is gone forever.

2. What remains unchanged: While everyone is concerned about how things will change in the future, it is better to think more about which parameters will not change in the industry over the next five years. We just need to continuously refine these unchanging parameters so that when new opportunities arise, we can have a first-mover advantage. For example, the four essential elements of the rug-pulling track: research—capital—technology—human resources. Regardless of how this track changes, it cannot do without these four elements.

3. Increasingly effective: In addition to these four elements, there are also factors like influence, ecological niche, circles, expertise, judgment, etc. What will remain unchanged in the future is that the greater your influence, the higher your resource distribution rights, and the more scarce resources will tilt toward you. The higher your ecological niche, the closer you are to the source of information, and with the same opportunity, your winning rate will be higher than others. The higher the quality of your circle, the faster your growth and the better the resources you acquire.

4. Seeking inward: In poker, we should focus more on the quality of decision-making rather than the win or loss of a single hand. As long as we add time as a weapon and continuously optimize our decision-making quality, even if our winning rate is just a few points higher than others, the long-term results will be vastly different. The core logic is still to seek inward and not focus on parameters we cannot control.

5. The evolutionary path will not change: If we observe the history of internet development, we will find that over the past 20 years, the trend of class solidification will not change. 2% of people will own 98% of the resource distribution rights. For example, Tencent; even for the same person, joining after 2005, 2010, or 2018 will yield completely different results. This will not change based on individual will.

6. Our industry will also follow such a path, and the situation of class solidification is gradually becoming evident. What can we do as individuals? If we do not want to be exploited as the lower class in the future, we must focus on our growth rate, which must far exceed the industry average. We need to accumulate our influence, professional abilities, and ecological niche because future trends will be organizational, and the certainty of long-term profits will be consumed by professional organizations.

7. My current response strategy: Operate with light assets, aligning with the anti-fragile model. This current phase represents a turning point for the rug-pulling track and the industry. During this time window of turning points, I will adopt a relatively light approach to manage the team and reduce operational costs. When new "right-side breakout" points emerge, I will continue to scale operations. This is a particularly challenging phase in poker, where it is hard to hit your range. At this time, you need to learn to wait patiently for your range, but before that time arrives, avoid consuming more gas; the most important thing is not to leave the table.

8. The law of survival of the fittest in any industry will not change; we can only change positions. The arbitrage and rug-pulling opportunities in the crypto industry will always exist. What we need to do is to have chips to bet when opportunities arise.

Crypto KOL CryptoMaid 加密女仆

The era of rug-pulling is over, and different groups of people are not talking about the same thing.

1. Ordinary users say: Rug-pulling can no longer make money; the era is over.

2. Investors say: They are unwilling to use their own money to inflate the initial circulating supply, forcing themselves to hedge short positions to protect the project parties from cashing out.

3. Project parties say: Relying on rug-pulling users to fabricate data and deceive investors is no longer effective; the era is over. The breakdown of consensus. One issue is that the Ponzi attribute of this model is too low, ultimately turning into a PvP mutual cutting, with no one willing to take over. A Ponzi scheme can make everyone appear wealthy on paper and attract users from outside the circle. Everyone knows that Edison experimented with over a hundred materials to find tungsten filament for light bulbs. Very few know that before finding tungsten, he had already melted down several rounds. If he ultimately could not find tungsten, all those previous hundred-plus experiments would have been Ponzi schemes.

Investor Kay Capital

VC coins, high MC/FDV are superficial; at a deeper level, it is about the average cost of chips. If the average cost of a coin/stock is 1%-10% of the current price, then having a second wave of rise in the medium-short term would be a miracle. The average cost of VC coins weighted by unreleased chips is too low.

Crypto KOL Neso

After facing criticism regarding the listing of VC coins, leading exchanges like Binance and OKX may accelerate the listing of small to medium-cap meme coins to win over retail investors' goodwill and trading volume. Attention should be paid to targets with a market cap between 100 million and 500 million, with over 10,000 holders and a solid community foundation that has undergone sufficient wash trading.

Crypto KOL PumpLUO

Many people question the high valuations and unlocks of institutional VC coins, but they are actually being led into a trap. The real harm to the market and the biggest profit for exchanges comes from contract leverage! 1. Diversion of funds. 2. Separation of liquidity. 3. Naked shorting behavior, contract trading, and the issuance of derivative products that have no relation to the coins at all. 4. Rapid consumption of retail investors' funds (crazy opening of VIP policies to attract users).