Viewpoint: Rationally view Memecoins and VC coins, do not favor one over the other
Retail investors like Memecoins, but don't completely abandon VC coins.Author: hitesh.eth
Compiled by: Luffy, Foresight News
I haven't conducted an in-depth study of VC coins and Memecoins, but here I will share a neutral perspective based on my observed data. Please set aside any misconceptions about these two types of tokens and do not blindly trust the statements of a few KOLs.
VC Coins: Solid Foundation, Promising Future
First, let's give a simple definition of VC tokens: tokens where more than 51% of the supply is allocated to the team and investors. Sounds fair, right?
Upon closer examination of the token economics of most infrastructure projects, such as EIGEN, SUI, APT, AVAIL, ZK, SEI, you will find that a significant portion of their token supply is allocated to community and ecosystem growth.
This is crucial. For infrastructure projects, the health of the ecosystem is the driving force behind everything. When incentives are compelling, DApps will migrate to this new chain. Currently, some DApps (Aave, Uniswap, Curve) dominate the market. The first challenge for a new ecosystem is to attract these key participants while fostering innovation and incentivizing developers. Incentives drive this process.
We see projects like Sui and Aptos wisely using token supply to incentivize ecosystem development. Their ecosystems have shown significant growth, which will inevitably drive speculation, as the funds stimulating ecosystem growth are also used to incentivize marketers and creators to increase the project's visibility. This creates a feedback loop, where incentives from above drive the marketing funnel, and retail investors follow the hype.
Investor unlocks will proceed as planned, but do not misunderstand the behavior of venture capital firms. They are fighting for long-term interests, and the goal of venture capital firms is to achieve substantial returns, just like retail investors. When 30% of the supply is used to drive long-term growth of the project, they will not exit easily.
They know how to shift their mindset and create a positive feedback loop. For example, Sui, where retail investors felt frustrated a few months ago, saw the token price start to rise after treasury grants and announcements, and the Sui community is now cheering.
Retail investors need assurance, security, and lower risk. VC-backed tokens, especially those committed to ecosystem development and continuously improving on-chain metrics, can provide these.
Memecoins: Short-Term Frenzy from Snipers and Liquidity Traps
Memecoins are fairly distributed and fully circulated at the time of the token generation event (TGE). But is everyone treated fairly in the Memecoin hype?
Not at all. The Memecoin hype is dominated by snipers who seize cheap tokens, while you become their exit liquidity.
Then, a community forms, and influential KOLs buy large amounts of tokens from the open market. The game is the same for everyone, but the beliefs differ. You might exit at double the price, but KOLs will still hold at ten times the price and then build a narrative to support their position.
Their goal is to make retail investors believe the story to the extent that they no longer consider profits. At that point, liquidity will quietly exit from decentralized exchanges, big players will profit, and retail investors will still be unaware of what has happened. At this moment, you will realize that Memecoins are not much different from VC coins.
Strategy: Participate in Both, Don't Neglect One for the Other
Retail investors love trends, and memes are trends. If you want to trade them, do it your way and do not follow KOL's advice. Also, do not completely abandon VC tokens, as narratives can shift rapidly. Unfortunately, when VC coins rise, your funds may be trapped in Memecoins.
The key is to stay vigilant. Play on both sides, but do not get emotionally attached to any token. Most tokens will eventually go to zero, so be sure to be prepared to exit at the right time.
