Author: Jademont Zheng, Co-founder and CEO of Waterdrip Capital
The current state of the entire cryptocurrency industry is something that most people would not have anticipated just a few years ago.
Web3 token projects are dying in bulk.
Almost no token project founder has gone through life without facing legal disputes, lawsuits, or community backlash. Undoubtedly, some founders began with the genuine intention of building a strong product and ecosystem, but when the avalanche strikes, very few can remain untouched.
Top CEXs are gradually losing their industry influence.
Even as trading volumes continue to hit new highs, it is increasingly becoming like a traditional brokerage—facilitating trades but no longer controlling asset issuance or pricing. The gap compared to capital market infrastructure providers like Nasdaq is growing even wider.
Institutional investors in the primary market have collectively withdrawn.
It’s not a lack of capital, but a lack of exit mechanisms. Some institutions tacitly allow project teams to manipulate token prices and jointly facilitate value transfer, while others simply exit the industry altogether. With no long-term returns and no emotional value, it’s better to invest in other sectors.
Under an avalanche, no snowflake is entirely innocent; but each snowflake bears a different degree of responsibility.
In my view, a few snowflakes are particularly heavy.
First, FTX and Luna.
They collapsed one after another during the industry's peak, shattering traditional capital's trust in the entire sector and causing many institutional funds to remain hesitant to this day.
Second, top CEXs.
At the height of the industry’s glory, it should have taken on the responsibility of a leader: establishing higher listing standards, helping the market identify high-quality projects, promoting long-term thinking, and fostering a healthy industry culture.
But the reality is exactly the opposite. Short-term gains override everything, with token projects mass-producing pump-and-dump coins and rapidly harvesting liquidity becoming the norm. Platforms earn listing fees and trading volume, but at the cost of exhausting the industry’s credibility. When the tide goes out, there are no winners—everyone is on the same boat.
Third, the Ethereum Foundation.
I have always believed that the transition from PoW to PoS is a severely overrated decision. While it does reduce energy consumption, the cost savings are negligible compared to the development opportunities lost as a result.
If Ethereum had continued evolving along the PoW path and consistently driven the development of computational infrastructure, it could have had the opportunity to become the world’s largest blockchain-based AI computing network, securing a more strategic position in the AI era. Transitioning to PoS, however, prematurely ended this possibility.
So, is there still an opportunity in this industry?
Of course.
However, compared to the factors mentioned above that determine industry direction, there are few variables left that can truly reverse the trend.
I believe that, in the future, only two things may truly reignite a new wave of prosperity:
First, the United States will include BTC in its national strategic reserves and continue making actual purchases, thereby restoring global confidence in crypto assets.
Second, a super app with hundreds of millions of users that generates real value is born on-chain, proving once again that blockchain can not only issue assets but also create demand.
In addition, other positive developments are more like cyclical rebounds rather than the dawn of a new era.