When the tide goes out: who is "naked swimming"?

Written by: mary in sf

Compiled by: AididiaoJP, Foresight News

In the short term, the market is a voting machine, but in the long term, it is a weighing machine.—Benjamin Graham.

We are currently in the phase of industry consolidation, and everyone can see who is swimming naked.

Although liquidity has been declining for some time, on October 10th, liquidity dramatically and completely vanished. “Death of a Salesman” is an extremely fitting metaphor for this moment in crypto history. The play focuses on the corrosive illusion of the American Dream, the fragility of family bonds, and the psychological costs imposed by social expectations; all of these reflect the illusions of the superstructure, the vulnerabilities of crypto companies in reality, and the psychological toll borne by market participants who have been burned by one token after another.

Now that we have awakened from the fantasy of “what crypto could be” that we told ourselves back in 2021, we speculators are cleaning up the mess instead of facing the reality of what crypto looks like.

Last year, I read “Built to Last,” which discusses what distinguishes companies that are passed down through generations from ordinary companies. The author elaborates on the internet bubble, where one key point is that during each innovation cycle, the public speculates on [new mysterious technologies], but what truly distinguishes the good from the great is the people behind each company. Tokens that do not clearly codify the rights of actual token holders within the legal framework are somewhat worthless, but the past few weeks have shown which tokens have teams that care about the long-term viability of the tokens and which are short-term, having never really had relevant plans.

For all these rhetorical questions that have long been treated more as memes, now is a moment of reckoning:

Where does value accumulate from?

If value accumulates to equity entities, why buy tokens?

So are all tokens just meme coins?

The following is the mental framework of tokens that I believe will continue to exist in the future:

Bitcoin

Supported by income: such as Hyperliquid, etc.

Social capital, attention token

This article will be more observational rather than analytical like my previous ones, because I find it interesting but do not have the time to delve deeper like zachxbt.

acquisition

This week gave us two examples of token acquisitions: one token rose (Clanker), while the other token fell (Padre).

Clanker

Yesterday, @farcaster_xyz announced the acquisition of Clanker. Clanker is a token launch platform on Base, built by an excellent team, and its corresponding token was launched about a year ago:

The agreement fee will be used to purchase and hold $CLANKER

The Clanker team burned the tokens collected as protocol fees in products v0 - v3.1.

The team will permanently lock approximately 7% of the total supply $CLANKER in a unilateral liquidity pool to provide additional liquidity (which reduces the circulating supply).

The token subsequently rose because it was clear that the Clanker team viewed their token as equity in their transaction with Farcaster.

Father

The market rarely gives you the opportunity to experiment without confounding variables. Clanker and Padre are both products that seemingly generate income. Observe what happens to the tokens when a team does not take action.

The team raised funds on a platform similar to an ICO, promising buybacks and revenue sharing, but did not do so? Instead, the team kept all the profits, occasionally promising to restore revenue sharing and buybacks, while their tokens were still being traded. Now that Padre has been acquired, token holders have gained nothing, and the tokens have been revealed to be worthless.

Ironfish

If someone has time to explain the details of this acquisition to me, I would really like to know. As I understand it, the token is still trading because the network is still maintained by the Iron Fish Foundation, and the core team has been employed through the acquisition by Base. It feels a bit strange to see the former founder tweeting about price trends. Does this mean Base has acquired the Labs entity? Did they purchase any amount of tokens?

Collapse

Eclipse and Kadena

These companies have been exposed for scandals around the time of their TGE and mainnet launch on other blockchains, which serves as a very stark reminder: not all blockchains are securely structured. In fact, they remind us that blockchain transactions are about the trust in their potential, and the strength and belief of the team are important indicators of that.

I won't emphasize the token price of Eclipse or any further tweets, but I do find it a bit ridiculous. Eclipse was doomed to fail from the start because its intention was never to operate a blockchain with a long-term vision; it has always been about extracting liquidity.

There are many different circles in the crypto world. Our small circle on crypto Twitter knows that Kadena has never been a normally functioning blockchain. Many employees from different companies have told me that their companies lack viable products; they are just in a state of suspension until the music stops.

This is a rather bad and frustrating time for the cryptocurrency space. We need to provide rights protection for token holders and more productive assets with smaller market capitalizations.

I found that if you see cryptocurrency merely as an accelerated economic experiment, it becomes slightly less frustrating, but the byproduct of this experiment is that those believers who trusted the wrong teams lost a lot of money.

What does it mean when decentralized technology is so reliant on trustworthy teams? Only going up, not down.