The Evolution and Future Outlook of the Internet Capital Market

The concept of "Internet Capital Market" encompasses a wide range of content. In the current context, it mainly refers to financial innovations arising from the advantages of blockchain technology: financial technology that transcends geographical boundaries. People can use digital currencies for lending, tokenize government bonds and private credits, issue stablecoins, among other activities. Today, at the intersection of traditional finance and digital assets, these activities are collectively referred to as the "Internet Capital Market."

For long-term active practitioners in the on-chain trading field, the meaning of the internet capital market is richer. It not only includes "on-chain government bonds," but also involves NFTs, DeFi, ICOs, and various investment tools invented over the past decade, as well as various tokens that have been tradable since the deployment of Ethereum's first smart contract in 2015.

This article will focus on the basic logic behind tokens, narratives, high returns, and airdrops, delving into this aspect of the internet Capital Market. We are about to welcome what seasoned crypto participants refer to as the "new metaverse." To understand this, one must first observe these capital formation mechanisms and their impacts.

Evolution of Market Financing Mechanisms

Looking back at past cycles, we can see the continuous changes in the market financing mechanisms. From ICOs to small-cap coins on centralized exchanges, and then to meme coins, it can be briefly summarized as follows:

Early ICO (around 2017)

The financing mechanism at this stage is mainly based on the project party's "commitment"; the investors' goal is to resell to buyers at a higher price. The technical practicality of the project is often very low or completely worthless. In most cases, this is more like a "hot potato" game. Typical cases include projects like Bitconnect and Dentacoin.

Venture Capital-Led Era (2021 Bubble Period)

This wave of enthusiasm attracted a large amount of institutional capital, but in hindsight, it had certain negative impacts on the industry: overvaluation and unreasonable incentive designs. However, this period also gave rise to more reliable products. Despite the inflation valuation issues, many protocols that are still popular today were born. For example, Ethena, although its early token performance was affected by the "too much too early" mechanism, is undoubtedly one of the most outstanding crypto products currently. This was also the era of the rise of projects like Solana and Uniswap. Even though there are controversies regarding their governance or operations, it is undeniable that this phase was not entirely negative.

polarization

After the collapse of a trading platform, the crypto space fell into a trust crisis, and many began to think that "everything is a scam." While this viewpoint has some merit, it needs to be viewed dialectically. Although there are gambling attributes, not all projects are purely speculative products. Stablecoins and tokenization are demonstrating immense value in practical applications, and not just as trading objects of niche assets.

At this stage, there are both purely meme coin projects and more "serious" narratives, such as AI agents. Although valuations have generally declined, some projects have evolved from mere "labels" into truly valuable projects, such as REI.

Compliance and the Integration of Digital Markets

We are entering a more mature stage: institutional investors are starting to truly participate and remain enthusiastic. However, long-term industry practitioners may have a cautious attitude towards certain projects.

Excessive knowledge may instead become an obstacle, leading one to be skeptical about everything. Taking Ethereum as an example: over the past two years, its performance has been unsatisfactory, many investors have exited, and the media has also been critical.

But what is the current situation? Large institutional investors may not care about certain statements and actions of the leadership of the Ethereum Foundation. Institutions launching tokenized funds on Ethereum may also not pay much attention to the internal culture of the Ethereum Foundation.

This is the key point that needs to be understood: most cryptocurrency projects may have forgotten how to "pursue dreams", while traditional finance is relearning this. This will bring more opportunities: with the advancement of digitization and mainstream adoption, more high-quality builders will join this field.

The Future Landscape of the Internet Capital Market

This is the future of the Internet Capital Market. We are entering an unprecedented period of prosperity in the past five years: a perfect combination of regulation, technological strength, and capital, a significant portion of which will occur on-chain. It is no exaggeration to say that some of the most valuable companies are likely to issue tokens on-chain in the coming years.

In fact, this has already begun to happen. A certain derivatives trading platform is a typical representative of the internet Capital Market. It has not accepted venture capital funding, nor does it have the burden of an equity structure, but is purely a chain-based token project that was initially not listed on any exchange.

It is worth emphasizing again: this platform was once a company with a market value of $40 billion, without roadshow materials and without the burden of an equity structure. This pure blockchain giant took a dominant position in the market as soon as it appeared, and is currently moving towards an annual revenue of $1 billion. It is the purest embodiment of the operation of the Internet Capital Market.

This is not an endorsement of a specific project, but rather a suggestion that more similar cases may emerge in the coming years. It is an exciting trend: we are moving towards an era full of opportunities. It is important not to let excessive skepticism stifle past dreams.

Today, many restrictions no longer exist. People have long been constrained by traditional structures, but in the era of the internet Capital Market, having 5-10% of one's own currency and turning it into a product valued at 100 million to 1 billion dollars can yield returns that far exceed expectations.

Financing is still necessary, and ICOs have their rationality. However, the successful paths of certain projects are worth paying attention to: if there is confidence in the product, one can choose to issue on-chain tokens, retain a sufficient share, and then let the market determine the value. The problem with traditional capitalism is that it easily leads participants to have a short-term outlook. It drives innovation but fails to realize the full potential of that innovation. Too many people are satisfied with quick profits and miss out on the greater benefits brought by long-term compound interest.

Long-term thinking often leads to exponential rather than arithmetic growth. For example, doubling in 2 years, growing 5 times in 4 years, and growing 10 times in 5 years.

Conclusion: From Speculation to Substantive Ownership

In the short term, the market undoubtedly still has speculative attributes. The prices of "worthless" assets may rise, and the prices of "quality assets" may exceed their intrinsic value, while team sell-offs may happen again.

But the key is that this wave of digitalization will attract more excellent founders who truly have the ability to build. This could be a turning point in the trend, leading to the emergence of more outstanding on-chain products.

We should focus on projects that can truly achieve compound growth, rather than speculative projects like air coins. Some projects have already demonstrated substantial results: annual income reaching 1 billion, stablecoin locked-up amount reaching 10 billion, and net deposits of 60 billion. There are even projects that have sold a large number of peripheral products globally and have launched beverages on mainstream retail channels. All these projects are supported by on-chain tokens.

While we can discuss whether these projects are overvalued or undervalued, such discussions are much more meaningful than pure speculation. We should not return to an era where we could only purchase hollow promises. Owning substantial assets is far more valuable than participating in a "musical chairs" game.

If we always view every token as a "meme coin", we might miss important opportunities. Tokens issued by certain successful projects are no longer an unattainable dream. The next world-changing innovator is likely to choose to issue tokens on-chain. Some of these assets may ultimately become significant forces in controlling the future of finance. We all have the opportunity to participate. Simplifying it to "just a meme" may overlook potential high-return opportunities.

This is the evolution of speculative methods: we have developed from trading worthless air coins to today, where we can finally truly possess substantial, lasting, and most importantly, on-chain assets, which may shape the future world.

It is now time to regain confidence, break free from the shackles of the past, and reshape dreams. The future is full of hope; do not let the shadows of the past obscure your optimism for the future.

This is the future as I see it: the perfect integration of the internet, capital, and the market.