This topic has sparked numerous discussions recently. Let's explore the flow of market capital and the business models of exchanges and venture capital (VC) in the crypto space.
We'll break it down using simple logic and relatable examples. History shows us that current challenges are not without solutions.
Market Capital Distribution and Audience Segmentation
The capital market is broadly divided into primary and secondary tiers. Further subdivisions include various ecosystems, sectors, and asset types like NFTs, tokens, inscriptions, and runes.
From an audience perspective, the market splits into two main groups: domestic and international users.
Since regulatory policies took effect, domestic users have had limited exchange options. Consequently, exchanges don't need to court domestic users aggressively—if users don’t choose them, they have few alternatives. Moreover, wealth creation effects naturally attract users.
Of course, multiple exchanges exist, each carving out a unique competitive edge. Some prioritize security, others focus on nurturing new ecosystems, some target secondary assets overlooked by leading exchanges to survive, and a few even encroach on primary market territories.
From an exchange’s viewpoint, assets can be categorized as:
- C-Class Assets: Ordinary primary market assets (uncertain risk, require research and due diligence).
- B-Class Assets: Quality primary market assets (show potential but carry risk; decisions based on benefit analysis).
- A-Class Assets: Premium primary market assets (strong backing, low risk, guaranteed returns).
Naturally, everyone competes for A-Class assets. Leading exchanges selectively pick B-Class assets, while C-Class assets are typically ignored—left to circulate in the primary market.
Think of it like the education system: students (assets) apply to universities (exchanges). Top students bring prestige and benefits, so everyone wants them. If you’re not top-tier but have connections that add value, you’re still welcome. Average students who can pay might be accepted, as exchanges need revenue. But slots are limited. Poor performers, even if they pay, pose a risk to the institution’s reputation and are often rejected—though some lesser-known schools might take them.
Thus, a门槛 (threshold) forms. Projects must "pass exams" to be listed.
There are also under-the-table considerations. If you have an "international identity," even with average credentials, you might be welcomed if you can boost the exchange’s overseas reputation.
In summary, domestic projects must compete on merit or connections, as the domestic market is saturated. Overseas markets, however, offer growth opportunities for exchanges. High-profile international projects can attract foreign users, driving sustained revenue.
This clarifies capital and audience dynamics. When new narratives emerge, exchanges check the user base composition. If it’s overseas-dominated, they may offer privileged access or lower thresholds—even accepting lower profits to attract users. For domestic-led narratives, exchanges assess strength and novelty. If the ecosystem grows large and profitable, negotiations begin.
In this environment, exchanges prefer quality over quantity.
VC Model Coins and Exchange Operational Logic
Let’s start with typical projects, not just those born with advantages.
A new narrative needs traction to survive—i.e.,流量 (traffic). In the early stages, projects rely on data to maintain credibility. Initial progress attracts offers from influential players. Without strong fundamentals, going solo is tough; collaboration is key.
At this point, initial traffic expands through these partnerships. Once traffic reaches a desired level, the project qualifies for a "prestigious university" (exchange listing). But now,回报 (returns) must be discussed—no one works for free.
From the initial 100% ownership, the project allocates shares to partners and the exchange. Suddenly, there’s not enough left for early supporters. This is where "女巫" (Sybil) strategies come into play.
Recent Sybil-related incidents highlight tolerated malpractices in crypto—a laughable matter.
In this logic:
- Projects handle technology and implementation (some profit from ideas alone, but that’s rare now).
- VCs act as promoters, providing funds and leveraging connections to build hype.
- Exchanges serve as流量 amplifiers (liquidity providers).
Projects earn from their innovation, VCs profit from low-cost acquisitions, and exchanges gain from traffic conversion.
After allocating shares, the focus shifts to sales strategies (market makers follow similar logic).
Exchanges, being early pioneers, built user-friendly trading platforms that reduce primary market complexities and perceived risks. Once technology is set, they need users. In the survival phase, exchanges rely on projects to bring users and run subsidies to attract and retain them.
When dominance is achieved, efforts shift to attracting distant "tourists."
Ultimately, everyone is circling their pond in the market. With maturity, exchanges become protective—their cultivated crops shouldn’t be harvested by others.
Why Don’t Exchanges Like Your Coin?
The bias that "your own child is always best" often needs discarding.
Many projects meet traffic requirements but fail on profitability. Exchanges need a compelling reason to accept you.
From an exchange’s perspective, they evaluate:
- Traffic Volume: If your traffic is substantial and aligns with their goals, terms may be flexible. If traffic is modest, other factors are considered.
- Profit Potential: Trading fees are a last resort, reserved for high-traffic projects. Direct收益 (revenue) is king. Why should exchanges provide liquidity for uncertain gains? You profit, they’re left with chaos.
Thus, offering shares or money is essential. As the saying goes, "Without money, how can we suppress bandits?"
Even for booming projects, exchanges might support dreams for free but won’t invest real resources. Everything boils down to利益 (interest). Surface rules are for control; underlying rules get things done.
You might think your project meets requirements, but it’s often a pipe dream. Objective assessment of project strengths is crucial. Assuming all foreigners are valuable is self-deception.
How to Break Through? Lessons from History
Markets are products of买卖 (transactions). Exchanges simplify this process to take a cut. Larger user bases mean higher profits.
But markets aren’t infinite, so exchanges can’t monopolize entirely—this is normal.
At certain stages, challenges arise. Binance’s current approach, whatever the reasons, reflects its瓶颈 (bottleneck).
Exchanges can’t simultaneously excel in innovation, profit, and security. At their height, they face dilemmas: risk management, profit pursuit, and流量 competition require trade-offs.
Currently, Binance prioritizes compliance and security, sacrificing vitality and innovation.
Newer MEMEs emphasize fairness and decentralization, disrupting traditional ecological roles. This necessitates innovation—not a first-time occurrence. In 2021, BYAC NFTs saw exchanges promoting early stages and following later.
In emerging markets, platforms like Opensea gained traction. Market laws aren’t controlled by single entities.
Current platforms like Pump or Unisat play significant roles in new cycles. Future assets may bypass leading platforms, gaining traction independently. With sufficient traffic, token assets could return to these platforms, boosting the ecosystem.
Binance, now a giant ship, prioritizes stability but doesn’t eliminate smaller boats. MEMEs and innovations create opportunities for newcomers.
More giants may emerge. Even if MEMEs disrupt traditional VC-model coins and aren’t favored by exchanges, dedicated MEME exchanges could appear.
Evaluation standards vary. In diverse markets, significant demand breeds opportunities.
NFTs, Pump, BRC-20, and Runes won’t stop growing due to Binance’s rejection. In history’s flow, exchanges are mere passersby. Binance achieved feats in years, implying successors will come.
Current challenges are obstacles but also opportunities for innovative exchanges and teams.
Any giant’s fall harms the industry, costing everyone. Destruction isn’t necessary; evolution simply means some users are no longer their audience. But the market persists.
For large capital withdrawals and security, Binance remains competitive. When it can’t meet "industry promotion" expectations, newcomers will rise.
The catfish effect can stimulate industry growth. Ecologically, Binance can’t halt cycles. For individual investors, aligning with exchange交易逻辑 (trading logic) can still yield profits.
We look forward to groundbreaking solutions.
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Frequently Asked Questions
What are VC coins?
VC coins are cryptocurrencies backed by venture capital firms. These investors provide funding and support in exchange for early access to tokens at lower prices, aiming for high returns upon exchange listing.
How do exchanges select which coins to list?
Exchanges prioritize coins with strong traffic potential, profitability, and low risk. They prefer assets with solid backing, proven demand, and revenue-sharing opportunities. International appeal often gets preferential treatment.
Why do some projects fail to get listed on major exchanges?
Projects may lack sufficient user base, offer unclear profit models, or fail to meet compliance standards. Exchanges avoid assets that could harm their reputation or revenue, focusing instead on safer, high-yield options.
What role do market makers play in crypto?
Market makers provide liquidity by continuously buying and selling assets. They help stabilize prices and ensure smooth trading, often working with projects and exchanges to optimize token performance.
Can new assets like MEMEs disrupt traditional VC models?
Yes, MEMEs and decentralized assets challenge traditional models by promoting fairness and reducing intermediary roles. However, they may still engage with exchanges if they achieve significant scale and liquidity.
How can investors navigate exchange preferences?
Investors should research projects' fundamentals, traffic metrics, and exchange requirements. Diversifying across platforms and staying informed about market trends can mitigate risks associated with exchange biases.