Venture Capital Partner Talks Bear Market: Bullish on Axie Infinity, Which Projects Can Survive Without a Bull Market?

The partner of digital asset management firm Spartan Group, Jason Choi, shared his views on the "end of the bear market." He believes that play-to-earn (P2E) models are not sustainable, but he is optimistic about the leading project Axie Infinity. He also mentioned that DAO tools, DeFi protocols with only minor variations, and public chains without large treasuries are not sustainable. He encouraged everyone to consider which projects can survive in the future without relying on price increases.

He pointed out that the bull market was initiated by loose monetary policies in 2020, leading to the birth of many cryptocurrency projects. However, this does not guarantee the continued existence of these projects in the crypto space.

Twitter link: https://twitter.com/mrjasonchoi/status/1495844707838033920

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1. DeFi Yield

2020's "DeFi Summer" was essentially a money-printing frenzy, with most DeFi applications revolving around leverage, heightened by the bull market's increased leverage demand. Jason Choi pointed out:

Just like the end of all parties, it's almost time to foot the bill.

In fact, it doesn't require a bear market to indicate that there simply aren't enough buyers to support the high APYs offered by inflationary junk coins. He emphasized that the future of DeFi does not need high yields from Ponzi economics, but rather real-world demand:

The true yield of DeFi in the future will be far lower than what DeFi apes are chasing, but it will be more sustainable, higher than what banks can offer, around 5% - 20%.

He believes projects currently moving in this direction include Maple Finance MPL and Goldfinch GFI.

2. Unsustainable P2E

The bull market has increased demand for NFTs and game tokens, giving players profit opportunities and spawning a new economy based on guilds and scholarships. The leader in the P2E field is Axie Infinity AXS.

He pointed out that many who missed out on AXS early on often arrogantly bet against SLP, which is currently correct, and believed that the Axie game ecosystem would collapse as user numbers stagnate. However, he believes Axie Infinity will thrive.

Axie raised $150 million last year and is a P2E pioneer. He believes Axie's next iteration will be impressive. Meanwhile, he is very pessimistic about many projects copying Axie in the past year, as without a bull market, P2E profits will plummet.

Play Needs to Surpass Earn

Jason Choi believes that if the "P2E" concept starts to cool off, it must be compensated by the entertainment value of Web 2 games to achieve unicorn valuations, such as DECIMATED DIO and Illuvium ILV. He said:

Projects that prioritize game entertainment over Axie clones will better drive long-term user growth. However, this is not easy. Many underestimate the budget for AAA games like "Grand Theft Auto 5," which cost $100 million!

Other phenomena that Jason Choi believes are not sustainable:

• The current game guild scholarship model
• The enthusiasm for DAO tools
• Slightly improved DeFi protocols
• Layer 1 blockchains without massive treasuries

He emphasized at the end of the article:

For ambitious founders and investors, the most pressing question now is, what "won't" change in the cryptocurrency space in the next year or two? Which projects and revenue models do not entirely rely on a continuous upward trend?