Binance aggressively listing VC coins, is the market overwhelmed? He Yi: The fundamentals come from the issuer.
In recent times, the community has been complaining about high FDV (Fully Diluted Value) diluting the market value of VC coins. These coins, early-stage investments by venture capital funds, are known as VC coins. Typically, VC coins start with lower circulating supply, but as time passes, the investment positions of VCs gradually unlock, bringing significant selling pressure to the market. Consequently, people have begun discussing whether meme coins, which are fully circulated from the start, could provide a fairer market. Meme coins are expected to gradually disappear and will not change the landscape of venture capital investments.
Some commentators believe that the proliferation of VC coins is also a reason why the anticipated boom of competitive coins has not materialized. Why hasn't the season of altcoins arrived? Decentralization of altcoins: A hidden threat to the cryptocurrency market.
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Community feedback indicates: "Binance is listing coins too frequently, flooding the market with high-value VC projects in large quantities. The market liquidity simply cannot handle so many multi-billion-dollar, multi-hundred-billion-dollar VC projects. Is Binance listing coins following the spirit of prioritizing interests or following the spirit of fairness in cryptocurrencies? Bulk listing high-value VC projects sets up a trap of worthless coins, diluting the already limited liquidity. The poor activity of VC projects valued at tens of billions of dollars listed on the chain is pitiful."
Additionally, statistics show the circulating market value compared to the fully diluted market value ratio MarketCap/FDV. A ratio close to 1, like meme coins, represents completely circulating coins, shown in green; a ratio close to 0 leans towards VC coins, with hidden investors who will slowly release with the lock-up period, but will also face greater market selling pressure, shown in red.
Binance founder CZ stated: "The cryptocurrency market is a free market. The liquidity and trading volume of centralized exchanges CEX and decentralized exchanges DEX are part of a total pool. CEX is not a closed market. If Binance does not list these projects, they will still exist, and the trading volume and funds will flow to the corners of the entire industry." This indicates that the trading markets of different cryptocurrencies will flow to other places for trading even if they do not occur on Binance.
She further explained that not only will the unlocking of VC coins flow, but meme coins, on-chain dogs, "rubbing hair," and fund plates will also flow. After ETF approval, traditional financial markets will also divert funds directly to the cryptocurrency market. This shows that various types of tokens, as well as traditional financial ETFs, have caused liquidity dispersion.
She admitted that some VCs are indeed a core reason for the artificially high prices. However, VCs also bear many risks.
She explained that VCs generally have a lock-up period of 7 years, with fundraising from LP Limited Partners usually being 4+3, receiving management fees + dividends. Most VCs unlock at the TGE Token Generation Event, one year after the token issuance, so many VC projects in the cryptocurrency industry are also closing down, and some VC LP investments in the cryptocurrency industry may also go to zero.
She stated that startup teams that receive large financing have a greater possibility of surviving the bubble cycle, but the fundamentals of token prices and governance models are determined by the issuers. There is no standard answer, and everyone needs to conduct more in-depth token analysis. The rise of DeFi brings more liquidity to the industry, increases freedom, and adds complexity to CEX rule-making, which is also the charm of the free market in the cryptocurrency industry.