Arthur Hayes: Crypto market is dominated by PvP, spending a lot of money to list but the value is like shit

BitMEX founder Arthur Hayes recently stated that with the continued growth of the cryptocurrency market in 2024, the market focus is no longer just on mainstream coins like Bitcoin and Ethereum, but is shifting towards a new batch of listed tokens. Hayes mentioned that the market is filled with a Player versus Player (PvP) atmosphere, making him question whether these newly issued tokens have deviated from the original spirit of Web3 and instead turned into a plunder game. Hayes also noted that many project founders choose to list tokens on centralized exchanges (CEX), only to find that the costs exceed expectations, ultimately causing token prices to plummet like "feces" down the toilet.

PvP: A term used in gaming, Player versus player, refers to battles between players in a game; Arthur Hayes mentioned that this has become a popular term used by junk coin traders to describe the current market cycle.

Listing Strategies in the PvP Atmosphere: VC vs CEX Tug-of-War

Hayes stated that the current PvP status in the crypto market is similar to traditional finance TradFi, triggering emotions of aggression where victory comes at the expense of others. This is especially evident in shitcoins. Many projects set a very high fully diluted valuation (FDV) for their tokens upon listing, releasing only a small amount into circulation, creating the appearance of a large market cap but with limited actual supply in the market, leading to price fluctuations and misleading investors, eventually resulting in irreversible price drops.

On the other hand, venture capital firms (VCs) continue to raise the valuation of tokens through multiple rounds of fundraising to make themselves look profitable on paper. However, once the tokens are listed, the prices plummet due to being overvalued, causing retail investors to suffer.

Listing Costs on CEX: The Hidden Costs of Token Listing

Hayes mentioned that for many project founders, the reason for choosing to list tokens on centralized exchanges (CEX) is simple: "to have more liquidity and exposure!" However, the listing fees charged by CEX are surprisingly high. For example, Binance may charge up to 8% of the total token amount as a listing fee, require a deposit of up to 5 million USD in BNB as collateral, and additional marketing expenses. Such costs are a huge burden for new projects.

CEXs, on the other hand, favor tokens with high valuations but low actual supply, as they attract high volatility and many retail investors, allowing the exchanges to earn more transaction fees. However, most tokens fail to meet market expectations post-listing, resulting in price crashes, causing losses for retail investors and making it difficult for projects to maintain good performance.

DEX Becomes the Preferred Choice due to Lower Costs, Advocates Focus on Product Value

Despite the PvP atmosphere, some projects have chosen a different path. Using Auki Labs as an example, Hayes explained that Auki Labs did not opt for a CEX listing initially but instead listed on a decentralized exchange (DEX) with a lower FDV to attract early investors. So far, Auki's price has increased by 78% compared to the previous fundraising round.

Note: Auki Labs is a target investment of Arthur Hayes' venture capital firm, Maelstrom

Hayes emphasized that Auki Labs focuses on building product value. Auki Labs' token $AUKI first listed on Uniswap V3. Platforms like Uniswap allow projects to create liquidity pools directly without going through CEX approval, enabling project teams to focus on product development and user growth without investing heavily in the exchange listing process.

Subsequently, Auki Labs listed on their first centralized exchange, MEXC, on September 4th, saving $200,000 in listing fees.

Note: Auki Labs focuses on developing spatial computing technology, emphasizing augmented reality (AR) applications that allow mobile phones or AR glasses to display the same virtual objects in the same physical space.

Lower the Listing Valuation, Prioritize User Loyalty

Hayes also provided suggestions for future startups. He advised projects to consider lowering the valuation at the time of token issuance to make it easier for users to participate and to increase the potential for price appreciation. He also recommended projects to opt for small-scale fundraising and list tokens with low FDV to allow early users to grow with the project. This not only enhances user loyalty but also enables projects to have better resilience in the future.

Additionally, Hayes suggested that projects solely focused on believing that Binance or other large CEXs can bring success should reassess their listing strategies. After all, CEX listing fees are expensive and do not necessarily provide long-term price support. A more effective approach might be to increase daily active users (DAU) and enhance product-market fit, focusing on making the product meet market demands and attracting continuous user support and community backing.

This way, token prices can naturally rise with the project's actual growth, rather than relying on listing fees for short-term token price speculation, leading to more long-term price stability.

Arthur Hayes' prediction accuracy is only 25%, yet he continues to make money.