Original author: hitesh.eth
Original translation: Luffy, Foresight News
I have not conducted in-depth research on VC coins and Memecoin. Here I will share a neutral opinion based on my own observed data. Please put aside the misunderstandings about these two types of tokens and do not blindly believe the opinions of a few KOLs.
VC Coin: Solid foundation, promising future
Let’s start with a simple definition of VC tokens: tokens with more than 51% of the supply allocated to the team and investors. Sounds fair, right?
If you look closely at the token economics of most infrastructure projects like EIGEN, SUI, APT, AVAIL, ZK, SEI, you will find that a large portion of their token supply is allocated to community and ecosystem growth.
This is critical. For infrastructure projects, the health of the ecosystem drives everything. When the incentives are compelling, DApps will migrate to this new chain. Currently, a few DApps (Aave, Uniswap, Curve) dominate. The first challenge of a new ecosystem is to attract these important players to join, while fostering innovation and incentivizing developers. Incentives drive this process.
We see projects like Sui and Aptos using token supply wisely to incentivize ecosystem development. Their ecosystems are seeing clear growth, and this growth will inevitably drive hype, as the funds that fuel ecosystem growth are also used to incentivize marketers and creators to expand the projects visibility. Its a feedback loop, with incentives from the top driving the marketing funnel, and retail investors following the hype.
Investor unlocking will proceed as planned, but don’t misunderstand the behavior of venture capital firms. They are fighting for long-term interests, and venture capital firms aim to get huge returns, just like retail investors. When 30% of the supply is used to drive the long-term growth of the project, they will not exit easily.
They know how to shift thinking and create positive feedback loops. For example, in the case of Sui, retail investors were frustrated a few months ago, but after the treasury allocation and announcement, the token price started to rise, and the Sui community is now cheering.
Retail investors need security, safety, and lower risk. VC-backed tokens, especially those committed to ecosystem development and continuously improving on-chain metrics, can provide these.
Memecoin: Short-term mania caused by snipers and liquidity trap
Memecoin was launched fairly and was fully circulated at the Token Generation Event (TGE). But in the Memecoin hype, was everyone treated fairly?
No. The Memecoin hype was driven by snipers who grabbed cheap tokens and you became their exit liquidity.
Then, communities form and influential KOLs buy large amounts of tokens from the open market. The game is the same for everyone, but the beliefs are different. You may exit at 2x, but the KOL will still hold at 10x, and then build a story to support their position.
Their goal is to make retail investors believe the story so much that they no longer care about profits. At that time, liquidity will quietly withdraw from decentralized exchanges, big players will profit, and retail investors will not know what happened. At this point, you will realize that Memecoin is no different from VC coins.
Strategy: Play both, don’t lose one for the other
Retail investors love trends, and memes are trends. If you want to trade them, do it your way, don’t listen to the advice of KOLs. Don’t abandon VC tokens completely, either, the narrative can shift quickly. Sadly, your funds are trapped in Memecoin when VC coins rise.
The key is to stay alert. Play both sides, but don’t get emotionally attached to any coin. Most coins will eventually go to zero, so be prepared to exit when the time is right.
