The Truth Behind the Anxiety in the Crypto Industry: We Are Losing Our Innovativeness

Author: Haotian

Recently, I have noticed a pervasive sense of anxiety on Twitter, with everyone echoing the same complaints: countless altcoins are plummeting to zero, leading exchanges are doing nothing, and AI along with the U.S. stock market are siphoning off talent and capital. But what are the deeper reasons behind this? Here are three points of view:

1. The current cycle is characterized by an overwhelming number of technical concepts, with structural imbalances between infrastructure and application layers. Too many developers and projects are focused on creating new chains, developing layer 2 solutions, and building cross-chain bridges, as well as working on DA, ZK, and parallel EVMs. The technology stack is becoming increasingly convoluted, and the valuations for financing are becoming absurd. However, at the actual application level, there is almost a complete void.

Looking back at the last crypto cycle, there was a rotation of sectors such as DeFi, NFT, and GameFI across the infrastructure, community, and application layers. In contrast, this cycle is solely focused on chains, faster chains, and the communities and applications that can actually bring in new users have nearly vanished. While MEME tokens may have temporarily filled this utility gap, their inherent lack of fundamentals, speculative nature, and high harvesting attributes mean they cannot fill the void at the application layer. Instead, they create short-term emotional fluctuations and drain long-term liquidity.

2. The short-sightedness of vested interests has collapsed the internal value transmission mechanism of the industry. Rather than saying that leading exchanges lack responsibility and accountability, it is more accurate to recognize their "broker" attributes. Ideally, in the face of a lack of quality projects and the dilemma of immediate dumping upon listing, exchanges should be choosing to discover, filter, and guide truly valuable projects. Instead, they have embraced dark token issuance groups and completely opened the floodgates for MEME tokens. As a result, a large number of tokens with no fundamentals, relying purely on emotions and harvesting designs, have been indiscriminately introduced to the market, draining liquidity without any boundaries. The original filtering mechanism that transmitted value and liquidity from on-chain to small, medium, and large exchanges has completely vanished.

In the short term, exchanges have indeed gained trading volume and fees, and have received support from short-term FOMO communities. However, in the long run, this has pushed valuable projects to the margins, ultimately leading to a situation where there are no tokens to list, relying instead on the U.S. stock market for survival. This has long been said to be a concession of discourse and pricing power, which is essentially a form of self-castration for the native crypto industry.

3. The cohesion of the crypto community is diminishing, and the vitality of industry innovation is facing exhaustion. Reflecting on the last cycle, what was most captivating was the ongoing creativity and sector rotation on-chain, with funds flowing from technical infrastructure to applications, and then to community-driven games and social sectors. Engaging in yield farming, contributing to open-source projects, and exploring niche markets, DeGen trading, etc., all led to unexpected rewards in certain fields.

In contrast, this cycle has seen a high degree of homogenization and internal competition in technical narratives, with venture capital in the primary market unable to find exit paths and ceasing to invest. A large number of developers and communities are investing on-chain without receiving positive feedback. Over time, the once-proud crypto on-chain innovation experiments and vitality have found no nourishment, leading to many excellent developers being gradually siphoned off into the AI field. While many complain that AI has weakened the appeal of crypto, the real reason is the depletion of internal innovation within the crypto industry.