KOL Round: A New Gamble in the Encryption World, VC Exits, Retail Investors Insomnia

Original Title: Unveiling KOL Cycle: A Wealth Experiment Driven by Traffic

Original author: Biteye core contributor @viee7227

Reprint: White55, Mars Finance

Once upon a time, the rules of the primary market were relatively clear: VC provides funding, KOL voices opinions, and retail investors provide liquidity.

But today, this set of gameplay seems to be breaking.

The endorsement of VC is no longer omnipotent; project parties are starting to redesign the rules of the game around “influence.” KOLs are no longer just simple traffic roles. They hold the chips, sit at the table, and can even decide the life or death of a project.

To some extent, the KOL round is a method of token distribution that was born after VCs exited and retail investors fell silent, under the narrative of “influence above all.” In the past 7 days, XHunt statistics show that there were as many as 3,860 tweets mentioning “KOL” in the crypto circle, while “VC” had 3,078. A silent battle around influence has quietly begun.

This article does not discuss grand principles, but rather tells the true story behind KOL rotation—where it comes from, who is laughing, who is crying, who is counting money behind the scenes, and who is losing sleep at night.

1. How did KOLs step by step walk into the center of the stage?

Back to the end of 2022.

The winter of crypto VC has arrived. The valuations in the primary market are inflated, exit cycles are lengthening, and the secondary market cannot absorb the transactions. Large institutions are hesitant to take action, and small projects are unable to raise funds.

On the other hand, retail investors have quietly returned. Blast, ZKsync, Friend.tech… each burst of liquidity signals the return of retail investors.

The easiest way to influence these people is not through institutional research reports, but through those KOLs who seem to “know the industry” but are actually “selling products.”

The project party also understands: VCs may not necessarily help me break out, but KOLs can. Instead of spending money on advertising, it's better to put low-priced chips in the hands of KOLs, let them tweet, and set the pace.

As a result, a new gameplay was born:

The project party gives KOL a quota, and the price is sometimes lower than that of VC;

KOL desperately promotes before the TGE, creating FOMO;

At the moment of unlocking, the traffic exploded, and the KOL cashed out and left.

The KOL round has arrived just like that. You can understand it as a “private placement with tasks.” Low price, fast unlocking, and even a “floor clause”.

The project team is very clear: give the tokens to those who have fans and influence, and after the launch, they will naturally bring people to drive up the price.

KOLs also think it's a good deal: buying coins at a low price, bringing some traffic, and being able to sell a portion once it goes live and unlocks sounds like a surefire profit.

Is it really like this in reality?

2. The truth about the KOL round: Some become rich, while others go to zero.

2.1 Earnings on both ends of the KOL round

The profit and loss performance of KOL rounds varies greatly due to differences in projects and market conditions.

In a bull market, KOL rotations are often seen as a “triple win”: projects get funding, KOLs can position themselves at a low price, and retail investors can also make some profit by following the trend. However, in a bear market, the script changes completely.

As liquidity declines, the norm becomes a drop right after the launch, and KOLs cannot sell in time due to lock-up, making them prone to heavy losses. KOL @realChainDoctor once admitted that he invested in over ten KOL rounds last year, none of which were profitable, and some didn't even release the tokens. In the view of the cult leader @kiki520_eth, there are certain systematic traps in KOL rounds, where it's possible to not receive the tokens or even face rule changes after a rise.

Top KOL @jason_chen998 stated that his most profitable investments are Aster and Mira, as he acquired them at lower valuations when the market was poor and no one was paying attention, and the project teams were reliable. Additionally, the TGE coincided with a bull market. Therefore, the key to making money in KOL rounds lies in laying low during a bear market and leveraging personal connections to acquire projects. However, he also admitted that most KOL rounds are essentially high-yield financial products, where with good luck, one might see some returns, but with bad luck, it turns into a costly endeavor, with project teams pressuring for content, withholding tokens, and not unlocking them, leading to unpleasant outcomes.

We reviewed some recent KOL round cases of projects, and some projects can indeed bring high returns, such as:

Aster: When the coin price breaks through 1.79 USD, the KOL round's maximum floating profit exceeds 70 times. If we only consider the 30% that has been unlocked at the opening, the profit is 21 times, equivalent to entering with 50,000 U and making a profit of 1,050,000 U.

Holoworld AI: Lookonchain detected that the on-chain address 0x3723 is suspected to belong to a KOL investor, who received approximately 10.24 million HOLO in September at a cost price of only $0.088. Subsequently, they gradually liquidated around the average price of $0.6, accumulating over 4.71 million U in cashing out, with a single round yield rate as high as 444%+, netting over 4 million U in profit.

WalletConnect: After unlocking the tokens, ICO and KOL round investors will only receive about 1.5 times the return.

However, there have been many KOL round projects that experienced price crashes after launch, or the project team encountered issues.

A typical case is SatoshiVM at the beginning of 2024, where the project token $SAVM was initially heated up with the help of a large number of KOLs, reaching over $11 at one point. However, soon after, news emerged that KOLs were cashing out at high positions, triggering a crisis of trust, and the project gradually cooled down. KOLs and retail investors who did not sell are estimated to find it difficult to profit, and currently, $SAVM has fallen to about $0.075.

Another example is ZKasino, where the KOL participated in financing and promotion, but after users completed their locking period, the project party unilaterally changed the rules and took away the assets. In this incident, the KOL who participated in financing and promotion was condemned by fans as an accomplice in profit, suffering not only financial losses but also immense public pressure.

A few months ago, the coin Eclipse was launched, with a KOL round valuation reaching 600 million dollars and a Series A valuation of 1 billion dollars. However, after its launch, the actual circulating market value was only about 380 million dollars, far below the rumored valuation of 600 million. Research analyst KOL @_FORAB stated that some of the KOL round quotas for Eclipse were also distributed to media and communities, and in the end, it didn't even get listed on Binance contracts.

In this regard, well-known KOL @yuyue_chris once tweeted that the real issue with KOL rounds is not losing money, but rather that project parties and intermediaries use KOL rounds under the guise of promotion to bring in people to take over, allowing KOLs to redeem their own principal with their fans. This kind of irresponsible play of taking advantage of acquaintances is the most problematic.

2.2 Behind the Earnings: The Triangle Game of Projects, KOLs, and Retail Investors

As mentioned earlier, the KOL cycle reflects the changes in the power structure of the entire primary market.

In the past, project parties relied on VC for funding, and VCs filtered projects based on their influence. Now, project parties find that KOLs are cheaper, faster, and more effective at creating momentum.

VCs are unhappy: they invested millions of dollars, but the project team allowed a group of low-priced promoters to come in, whose influence is even greater than their own… Therefore, some VCs chose to “exit.”

Retail investors are even more unhappy: what they bought in the secondary market was the tokens dumped after the KOL unlocked them, and on the day of the listing, they saw the KOL promoting the tokens, but in reality, it was a sell-off.

The project team may not be happy either: because the hype created by KOLs is often a short-term behavior, and the volume, liquidity, and high opening on the day of launch do not represent the long-term trend of the project.

Thus, a tense triangular relationship was formed on the stage of the KOL round.

KOL is calculating: With the invested money and reputation, how can they exit safely?

The project team is wondering: can the allocated quota bring the expected volume and price increase?

Retail investors are asking: Is this copy trading an opportunity or a trap?

The interests of these three parties are like forces pulling in different directions. Unless the project itself is strong enough to firmly attract these three forces like a magnet, any party exerting too much force could cause this triangle to completely collapse.

Three, the “middleman” you cannot ignore - Agency

In the KOL round, project parties often do not connect directly with KOLs, but instead distribute and manage through third-party agency institutions.

They are the “resource allocators” in this game. They help the project team design KOL round terms (price, amount, unlocking); select and invite suitable KOLs; supervise progress, and ensure content delivery. Some reliable agencies will also design mechanisms such as guaranteed returns, promotional rewards, or principal refunds to help KOLs reduce risk.

They are the “intermediaries” in the entire KOL round system, controlling both traffic and resources. So if you are a newly started KOL looking to participate in the KOL round, the first thing to do is not to find a project, but to find the right agency.

You may have heard of the following names of agencies:

LFG Labs (@dubailfg): Founded by @snow949494 (XHunt Chinese ranking 134), focusing on the China-Japan-Korea-Middle East region, mainly connecting with top projects, skilled in integrating KOL resources, content dissemination, and KOL round financing linkage.

JE Labs (@JELabs2024): Founded by @0xEvieYang (XHunt Chinese Ranking 244) in 2024, primarily builds brands and communities for early-stage high-potential projects, connects with Chinese audiences, and helps projects grow from 0 to N.

BlockFocus (@BlockFocus11): Founder “Er Gou” @CryptoErgou (XHunt Chinese Ranking 469) is one of the earliest in the Chinese community to layout the Agency business. Blockfocus emphasizes the accumulation of project value and medium to long-term operations.

Shard (@ShardDXB): Founded by @ciaobelindazhou (XHunt Chinese Ranking 784), a marketing agency incubated by a crypto investment fund, focusing on providing strategic narratives and global growth services for Web3 infrastructure projects, covering key multilingual markets such as Chinese, English, Korean, Japanese, and Russian.

XDO: Led by a first-level investor @mscryptojiayi (XHunt Chinese ranking 213) with many years of market experience, who prefers to focus on “few but refined” projects, handling everything from mechanism design, strategic consulting, to market narrative shaping and execution.

Mango Labs (@MangoLabs_): Founded by @dov_wo (XHunt Chinese Ranking 112), focusing on marketing in Chinese-speaking regions and KOL investment, providing a complete set of services from narrative creation to community operations for projects.

Cipher Dance (@Cipher_Dance): Founder @Jeffmindfulness (XHunt Chinese ranking 2178) focuses on content marketing during the Pre-TGE phase, skilled at amplifying project narratives in creative forms, and deploying multilingual KOLs.

4XLabs: “Strategic Advisor + KOL Matrix,” helps global projects achieve growth from 0 to 1 in the Chinese market. Team members include @jason_chen998 (XHunt Chinese Ranking 34); @Bitwux (XHunt Chinese Ranking 24); @Phyrex_Ni (XHunt Chinese Ranking 8); @KuiGas (XHunt Chinese Ranking 31).

4. How to get the attention of project parties / agencies?

Typically, the project party or agency will allocate quotas based on the KOL's influence metrics (such as the number of followers, past tweet engagement, etc.) and specify the content production and unlocking requirements.

To gain KOL round opportunities, the key is to enhance “content + data” and build a trustworthy personal brand:

Continuously output professional content: persist in releasing market analysis, on-chain data insights, or project evaluations and other valuable content.

Actively interact on Twitter: Engage with project parties and other KOLs, participate in AMAs, live streams, and tweet discussions to enhance activity within the industry.

Optimize data with tools: Use analytical tools to enhance account visibility, such as using @xhunt_ai to check your account's influence ranking, capability model, attention level, etc., for precise content production adjustments. XHunt has also launched scoring systems like the “Soul Index,” which has become an important reference for many project parties and agencies when evaluating KOLs.

Establish connections through multiple channels: In addition to online promotion, you can also participate in offline industry events or hackathons to meet project teams.

5. How to select projects as a KOL?

The KOL round is not charity; every participant has the pressure to recoup their investment. Picking the wrong project not only leads to losses but also damages reputation, which can affect the interests of ordinary users. Therefore, it is best to conduct a systematic screening before collaborating, similar to investing in private equity, focusing on the following key dimensions:

Valuation and FDV: Is the overall valuation of the project reasonable, and is the KOL round price relatively discounted?

Unlock Design: Is the TGE unlocking ratio and linear period healthy, and is there a risk of centralized selling pressure?

Capital background: Check if there are leading VC investments and whether the institutional lineup has endorsement effects.

Participation lineup: Which leading KOLs have participated, and whether there are signals of both institutions and individuals participating together.

Agency source: Understand whether the agency responsible for matchmaking is professional, what their past performance is like, and whether they have participated in quality projects.

Team Reputation: Whether the founding team has past project experience or industry reputation, and whether there is a history of controversy.

Terms Requirements: Whether the promotional content needs to be reviewed in advance, whether there are any special arrangements such as minimum guarantees or refund clauses.

In addition, tools such as XHunt can be used to analyze the reliability of projects, check financing information, team information, the number of followers of Chinese and English KOLs, community sentiment, and project influence rankings.

6. Conclusion: The KOL round is a narrow door left for ordinary people in the primary market.

From a higher dimensional perspective, the KOL round is a financing tool that has naturally evolved in the context of the crypto industry, characterized by traffic priority, narrative leadership, and community-driven initiatives.

It lowers the financial threshold, spreads faster, and indeed helps some small projects stand out without VC support.

Of course, the KOL round sometimes also has issues such as a lack of standards and unclear responsibilities. But from another perspective, this may be one of the few opportunities for retail investors to “squeeze into the primary market.” Compared to traditional private placements dominated by elite VCs and characterized by high information barriers, the KOL round at least has a certain level of liquidity and openness. Anyone, as long as they can continuously create content and have influence, may be able to secure a quota and truly participate in the primary pricing game.

This is not a perfect mechanism, but it is a “makeshift solution” in the current crypto-native capital market. In the stage where the rules are not yet formed and the trust mechanism is still being built, the KOL round, as a new market solution, still holds significance.

Because in this era, influence itself is a new form of capital.