Topic: Centralized altcoins could be doomed: VC funding is drying up (Read 170 times)

The problem is most developers aren't building quality projects anymore. At least, not like the early days. Nowadays, it's all about NFTs and worthless "meme" coins that are speculative by design. Around 99% of "meme" coins are simply copies/clones from one another. There's no innovation. Because of this, money from VCs is moving away from the market. The only serious projects I can think about are Bitcoin, Ethereum, Cardano, Polkadot, Polygon, and Solana. The rest are simply pure junk. Even privacy coins are seeing a decline both in terms of development and innovation. The only privacy coin that's still "kicking" is Monero. Coins like Zcash, Dash, and Grin have lost their luster.

I sometimes wish I could go back in time where crypto actually focused on utility rather than speculation. New and exciting projects came up with fresh ideas for the industry. Now with most people joining crypto to turn a profit, don't expect things to improve anytime soon. It's only been 15 years since the crypto industry's inception. I wonder what will happen in the future?

I would call it the survival of the fittest, and market is the nature itself.
What you described is nature getting a hold of itself
And they (the projects you described further) will pop out eventually.

the people don't want to buy when VC unlock is happening, so the demand tanked and it's to be expected.

but maybe it's also because there are too many altcoin already in the space and nowadays majority of them are funded by these VC might means altcoins' valuation is just a huge bubble that ready to pop.
some of the most random altcoin with low utilization getting valued so much just doesn't feel right, eventually market will think that it's not be able to sustain and these altcoins gonna pop.

can you imagine some L2 tokens getting funding from VC that amounts to $300 million for a TVL less than $80m on chain when the mainnet went live? I've seen many of them, these altcoins are overvalued .
they didn't get their deserved valuation because thier project truly have utility, their entire market cap is that high because they're backed by the investors and people overhype it.

Ironically, I think what attracts investors to centralized projects is the funding it has. Centralized projects usually have more dedicated teams that focus on different aspects of the project that may help them develop better.

I said ironic because this is also what makes these start ups risky. They need to gain profit quickly and if not there will be consequences that will affect the investors.

There are multiple benefits of decentralized projects. One being that it is less susceptible to attacks since there’s not just one point of vulnerability. It is distributed among networks.

Decentralized project rock and centralized project suck. I don't like centralized project because before we get to know about them, they have already sold their tokens to VC and we get left to buy the leftovers that are always costly and we can't buy many quantities as the VC bought. They also bought cheap hence they're in profit always. Centralized project are cheating is of profits but the decentralized projects that is launched and opened to everyone to invest can give you big profits. What I think is happening is that there we now too many centralized projects and the VC aren't making money anymore because of this.

The attention has been divided between all the projects and there's less publicity for them to receive investments. The market that isn't bullish is also one for the reason many investors are not buying the centralized projects. They also get launched too high that they become unattractive for investors looking to make profits to invest into the project.

Looking at your title if it is true that centralized altcoins will experience collapse, maybe Solana is also included because Solana is one of the altcoins that is still centralized and also the ecosystem in the solana network has a lot of VCs entering there, in a straight view maybe Solana if it continues to maintain its excessive centralization may experience collapse. IMO

Regarding VC, it is not always possible to get for, seeing the development of altcoins invested by VCs, the VCs do not always get profits, such as the big example of 3Arrow Capital which was once one of the largest VCs experiencing bankruptcy because its investment failed, its finances were not good until it was destroyed.

You may be correct. In theory the VCs' interests should be aligned with the retail investors' interests, as both should profit from the growth of a token.

But if VCs get too much importance then the coin's funds (Treasury, Foundation etc.) probably will be used at least partially to compensate VCs, not for the purposes (development, emergencies) these funds were marketed as in the coin's whitepaper, website etc.

In other words: With your investment in this kind of coins you may be, at least partially, paying VCs. If it's not an excellent project (with some real USPs) then of course its attractivity is limited. And USP opportunities in the crypto sector are probably limited.

It's true, many altcoin projects supported by venture capital often do not perform as expected, especially in a sluggish market, the presence of venture capital in the crypto sector is greatly influenced by hopes for the potential for large profits in a bull market. If market conditions remain stagnant or bearish, there is a possibility that these investors will withdraw or shift their investments to other sectors.

VCs are often attracted to fast-growing sectors, but if an altcoin project doesn't show promising performance, new capital can be hard to come by. As a result, without a significant bull market to attract greater interest and support, funding for these projects could decrease drastically. This phenomenon also reflects the high risks in the crypto market, where volatility and speculation play a big role.

I do agree, only the reputable and big alts are worthy of going for a long-run investment, in my opinion.
Others are really risks, though some may hold some potential.
Volatility and bad news around them that may arise may kill them, ensuring bad market trends which would be really hard to break.

This is one thing that makes me don't give much priority to altcoin because of some personal reasons and couple with the fact that they are too volatile to hold, and as you made mention. It's so pitied that lot of people often give their highest capital to altcoin investment without having a rethink that such thing would likely happens at the later ends. And of course big projects or already established projects may not face this as they stand already with huge capital (higher liquidity) so there isn't any moment they would face that.

I would argue that this all stems from the fact that so many of project backed by VC are sidelining the community and putting the interest of the VC as their first purpose, so retailer just doesn't give a damn anymore to these VC funded project as a result, no flow of capital, and the metrics of these projects are often times artificially made. just few months ago when there are frequent TGE from these VC backed project, the founder played the community like a fiddle resulting in people gotten enough being shit on and abandon the project once and for all.

I also don't want to invest into a project that's heavily funded by VC no more just settle with the good L1 coin that have minimal funding and people in general also seem to have the same idea as reflected by the recent TIA dumping upon unlock.

I think it's not unlikely that we will see growing altcoin prices soon. They have stabilized a bit in the last weeks. So "this round" could still work for most projects.

However, I think the long term looks bleak for many altcoin projects. Perhaps this bull run the altseason will stay weak.

For me there are many reasons. First, several years have passed since the last really substantial L1 innovation happened, and the biggest one was probably Bitcoin's Taproot. Second, there's also a lack of real new Ethereum-style DeFi use cases as most speculation use cases have already been covered. But average Joes still can't get funding for their house via crypto for example - and that will probably not change as there are fundamental challenges.


For me, L2s are an interesting technology. But the question is: are they also a business?

As of now, the market is still immature and even Vitalik Buterin himself has admitted that most of the current L2s are completely centralized (see his post about L2 milestones). If they decentralize, it will be an opportunity for crypto to scale better - but it will be more difficult to squeeze out profits of such schemes.

The problem you mentioned, that there are too many L2s for the demand, and they're "eating" each others possible earnings (e.g. by onchain fees) can of course cause the collapse of some of these L2s. I think however that L2s are here to stay, but they'll look drastically different in 5 years: less projects, more decentralization, but almost zero VC involvement.

And that will definitely happen, some projects will definitely die because their networks are quiet and no longer attractive due to macroeconomic sentiment that makes the market situation tend to continue to decline, with many projects launching in this cycle and no Altseason making projects dry for sure, many VCs are helpless today even project developers are the same, market conditions like this are indeed strangling fund owners and developers.

ETH and SOL perform very well even when there is no certainty about the state of the crypto market, the problem is not in L1 but the projects above it such as L2 on Ethereum, they are the ones who are affected by the quiet activity of their network which makes them have no income therefore VCs who invest in quiet projects will have a very hard time getting profit, If this situation continues then natural selection will occur, those who are not strong will definitely die.

That's why most of the people who have been investors in crypto for a long time make Bitcoin their main asset and many in their portfolio, because it has a lower risk than altcoins.

Just read this in Cointelegraph: Apparently many centralized altcoin projects, backed by venture capitalists, aren't performing as expected. According to analyst Will Clemente, a substantial bull market would be needed to preserve the current VC involvement in the sector. Otherwise, this source of funds for the sector could be drying up. Clemente's original post is here on X.

One of the reasons the article cites could also be that the sector has become too speculative. Investors are rushing too fast in and out of tokens, while longer-term investments are lacking. I think platforms like pump.fun could also be related to that problem. The consequence is that some very small tokens get pumped (and dumped after a while) while most others tend to slide lower and lower.

This is another reason why I personally would be very careful with any investment into centralized altcoin projects. Their dependency on fresh capital can mean that they may quit the market at any time or lower the development pace. Of course big projects like ETH and SOL are still well funded, but anything outside the top 20/30 may be dangerous already.

Decentralized open source projects which don't depend on VC funding, like Bitcoin or Monero, aren't affected by this problem. This does not mean they're automatically good investments, but at least there is one substantial risk less.