Original Title: Crypto's New Realities: HODL is Dead, DAOs are LMAOs, Bye DeFi and More
Original author: Ignas, DeFi Research
Original translation by: Shen Chao TechFlow
The reason the crypto market fascinates me as part of finance and trading is that it clearly tells you what is right and wrong. Especially in this chaotic world, where the boundaries between truth and lies are blurred in many industries, including politics, art, journalism, and many others. However, cryptocurrency is simple and straightforward: if you are right, you make money; if you are wrong, you lose money. It's that simple.
Even so, I fell into a very basic trap: when market conditions changed, I did not reevaluate my portfolio. When trading altcoins, I became too complacent about those 'untouchable HODL' assets like ETH. Adapting to the new reality is easier said than done. There are too many variables to consider, so we often choose simple narratives like HODL (holding for the long term) because it doesn’t require us to actively monitor the market.
But what if the era of HODL is already over? In this constantly changing world, what role does cryptocurrency play? What have we missed? In this blog, I will share what I believe are significant changes happening in the market.
The end of the HODL era
Let's travel back to early 2022:
ETH's price stayed around $3,000 after a big drop, down from a previous high of $4,800. BTC's price was around $42,000. However, due to interest rate hikes, the collapse of centralized finance (CeFi), and the downfall of FTX, both subsequently dropped by 50%.
Nevertheless, the Ethereum community remains optimistic: ETH is about to migrate to PoS (Proof of Stake), and a few months ago, an EIP proposal for ETH burning was just launched. The narrative of ETH as 'ultrasound money' and an environmentally friendly, high-efficiency blockchain is very hot.
However, in the remaining time of 2022, ETH and BTC performed poorly, while SOL suffered a brutal drop, plummeting 96% to just $8. Ethereum won the L1 (layer one network) war, while other L1s either migrated to L2 (layer two network) or faced extinction. I remember attending conferences during the bear market where most people were convinced that ETH would rebound the strongest, so they bought a lot of ETH while underweighting BTC, completely ignoring SOL. The strategy was simple: HODL and then sell at the peak of the bull market in 2024/25. Easy peasy.
However, reality hit hard!
Since then, SOL has rebounded, while Ethereum faced the strongest panic sell-off (FUD) in history. The narrative of 'ultrasound money' is dead (at least for now), and the narrative of environmental sustainability (ESG) never truly gained popularity. HODLing ETH was my biggest mistake in this cycle. I believe it is a shared regret for many.
My bullish logic for ETH is: it will become the most productive asset in the crypto market.
Through restaking, ETH will gain 'superpowers', not only protecting Ethereum but also the entire critical DeFi and crypto infrastructure. The restaking rewards for ETH will soar, and airdrop rewards will continue to accumulate through restaking ETH.
With increasing yields, the demand and price for ETH should rise. In summary: to the moon! Obviously, this has not happened, as the value proposition of restaking has never been clear, and Eigenlayer has also performed poorly in token issuance. So, what does all this have to do with the fact that the HODL metaverse has already perished?
For many, ETH has always been a 'buy and forget' asset. If BTC rises, ETH usually rises even more, so holding BTC seems pointless. When my bullish logic for ETH based on restaking narratives failed to materialize, I should have recognized and adjusted my strategy in a timely manner. However, I became lazy and complacent, unwilling to admit my mistakes. I told myself: one day ETH will rebound, right?
HODL is not only bad advice for ETH but even more so for other assets, perhaps the only exception being BTC (which will be discussed in detail later). The crypto market changes too quickly, and it's unrealistic to expect to retire by holding an asset for months or even years. Looking at the charts, we find that most altcoins have retraced their gains from this bull market cycle. Clearly, profits come from selling, not holding.
A successful meme coin trader stated that rather than HODLing, he usually holds a meme coin for less than a minute. While there are still people trying to sell you the dreams of HODL, this cycle is more about 'quick in and out' rather than true HODL.
BTC is the only macro crypto asset.
In the 'quick in and out' strategy, the only exception is BTC. Some attribute BTC's outstanding performance to Michael Saylor's 'infinite buy orders' because we have successfully promoted BTC as 'digital gold' to institutional investors.
However, this battle is far from over. Many crypto commentators still view BTC as a highly volatile risk asset, similar to betting on the S&P 500.
This perspective contradicts Blackrock's research. Blackrock found that the risk and return drivers of BTC differ from those of traditional risk assets, making it unsuitable for the 'risk on/risk off' model used in traditional financial frameworks, which is an analytical method used by some macroeconomic commentators. I shared some observations on non-obvious truths in my article 'The Crypto Truth and Lies: What Do You Believe to Be True?' in 2025.
I believe Bitcoin (BTC) is shifting from the hands of those who view it as a leveraged stock bet to those who see it as a digital, safe-haven, gold-like asset. Mexican billionaire Ricardo Salinas is an example, as he insists on holding BTC. BTC is the only truly macro crypto asset. ETH, SOL, and other crypto assets are usually valued based on fees, trading volume, and total value locked (TVL), while BTC has surpassed these frameworks to become a macro asset that even Peter Schiff can understand.
This transition is not yet complete, but the shift from risk assets to safe-haven assets presents an opportunity. Once BTC is widely recognized as a safe-haven asset, its price will reach $1 million.
Corruption in the private equity market
When every relatively successful key opinion leader (KOL) began transforming into 'venture capitalists' (VCs), investing in projects at undervalued prices and dumping them after token generation events (TGEs), I sensed something was wrong with the market. However, nothing describes the current state of the crypto private equity market better than Noah's post.
Here are the core aspects of changes in the private equity market over the past few years:
In the early days (2015-2019), participants in the private equity market were true believers. They supported Ethereum (Ethereum), funded DeFi pioneers like MakerDAO and ETHLend (now Aave), and embraced long-term holding (HODLing).
The goal is not just to make quick profits but to create something meaningful. By the summer of DeFi in 2020-2022, everything changed. Suddenly, everyone was chasing newer and hotter tokens.
Venture capital firms (VCs) are pouring money into absurdly valued, impractical token projects. The rules are simple: participate in private rounds at low prices, hype up the projects, then dump the tokens onto retail investors. When these projects collapse, we should learn from them, but nothing has changed.
After the FTX incident (2023-2025), the private equity market became more nihilistic. VCs began funding 'soulless token machines' (those projects recycling old ideas, with dubious founder backgrounds (like Movement), and no real use cases). Private round valuations were set at 50 times revenue (if the project has revenue), ultimately leading public markets to absorb these losses. As a result, 80% of tokens fell below their private round prices within six months of listing in 2024.
This is a phase of plunder. Nowadays, retail trust has disappeared, and VCs are in disarray.
Many VC investment project transaction prices are even lower than seed round valuations, and some of my KOL friends are also deeply in losses.
However, the private equity market is showing some signs of recovery:
1. The co-founder of Movement and Gabagool (the former 'runner' of Aerodrome) faced public backlash and was expelled from the industry. We need more clean-up actions like this.
2. Valuations in private equity and public markets are declining.
3. Crypto VC funding finally rebounded: Q1 2025 funding reached $4.8 billion, the highest level since Q3 2022, with funds beginning to flow into areas with real utility.
According to CryptoRank's (Q1 2025 crypto venture capital status report):
· Q1 2025 was the strongest quarter since Q3 2022. While the $2 billion Binance trade played a core role, there were also 12 large-scale fundings exceeding $50 million, showing a return of institutional interest.
· Capital is flowing into areas with real utility and revenue potential, including centralized finance (CeFi), blockchain infrastructure, and services. Emerging focus areas such as artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), and real-world assets (RWA) are also attracting strong attention.
· DeFi leads in the number of funding rounds, but the funding scale is smaller, reflecting more conservative valuations.
We are experimenting with new token issuance models to reward early supporters rather than insiders. Echo and Legion are leading this trend, and Base has launched a group on Echo. The Kaito InfoFi metaverse also shows strong bullish trends because even those without capital can benefit as long as they have social influence.
The market seems to have learned its lessons, and the ecosystem is gradually recovering (although KOLs still occupy the best resources).
Goodbye DeFi, welcome on-chain finance.
Remember the brief narrative of yield aggregators? Yearn Finance led the trend, followed by countless fork projects. Now we have entered the era of yield aggregators 2.0, only we now call it 'vault strategies'.
As DeFi became increasingly complex, various protocols emerged, and vaults became an attractive option: deposit assets to achieve the best risk-adjusted returns. However, compared to the first phase of yield aggregators, the main difference now is that the degree of centralization in asset management is rapidly increasing.
Treasuries have 'strategist' teams - typically composed of 'institutional investors' who use your funds to chase the best investment opportunities. For them, it's a win-win: they earn returns with your capital while charging management fees. Some examples include strategy teams like MEV Capital, Seven Seas, Gauntlet, and Veda, which collaborate with protocols like Etherfi, Upshift, and Mellow Protocol. Just Veda alone has become the 17th largest 'protocol' in DeFi, even surpassing Curve, Pancakeswap, or Compound Finance.
However, the treasury is just the tip of the iceberg. The true vision of decentralization in DeFi has long since vanished; it has evolved into on-chain finance.
Think about it: the fastest-growing sectors in DeFi and crypto are real-world assets (RWA), income-generating assets, and risk-free arbitrage stablecoins like Ethena and Blackrock, which are completely diverging from the original vision of DeFi. Or projects like BTCfi (and Bitcoin L2), which rely on multi-signature wallets, where you must trust that custodians won't 'run away'.
Note: Not directed at Lombard, merely using it as an example of the convergence of treasury and BTCfi trends.
This trend has already begun since Maker transitioned from decentralized DAI to income-generating RWA protocols. Truly decentralized protocols are now rare and small in scale (Liquity is one example).
However, this may not be a bad thing: RWA and tokenization allow us to escape the era of DeFi Ponzi schemes based on cycles and leverage. But this also means that risk factors are expanding, making it more complex to truly understand where your funds are. I wouldn't be surprised by CeDeFi protocols misusing user funds.
Remember: hidden leverage will always find a way to permeate the system.
DAO - A joke?
Similarly, the illusion of decentralization in decentralized autonomous organizations (DAOs) is also being shattered. The past theories were based on the 'Progressive Decentralization' theory proposed by a16z in January 2020.
The theory suggests:
Protocols first find product-market fit (PMF) → As network effects grow, communities gain more power → Teams 'pass the baton to the community', achieving full decentralization. However, five years later, I believe we are returning to centralization. Take the Ethereum Foundation as an example; it is becoming more actively involved in expanding L1.
I have previously mentioned in my blog (Market Fear State and Future Outlook #6) that the DAO model faces numerous issues:
· Voting apathy
· Increased lobbying risks (ticket buying behavior)
· Execution paralysis
The DAOs of Arbitrum and Lido are moving towards higher centralization (through more active team involvement or BORG mechanisms), but Uniswap is undergoing significant turmoil. The Uniswap Foundation voted to allocate $165 million for liquidity mining rewards to promote the development of Uniswap v4 and Unichain. Another conspiracy theory suggests that this funding is to meet the liquidity threshold for the Optimism OP funding program.
Regardless, DAO representatives are furious. Why should the foundation pay all $UNI rewards while Uniswap Labs (the centralized entity) earns millions from Uniswap frontend fees? Recently, a top 20 representative resigned from their position as Uniswap representative.
Here are the author's core views:
· Governance Illusion: The Formal Governance of DAOs. Uniswap's DAO appears open, but in reality, it marginalizes different voices. Although proposals follow processes (discussion, voting, forum), these processes seem to have been 'pre-determined', reducing governance to a 'ritual'.
· Centralized power: The operations of the Uniswap Foundation further consolidate power by rewarding loyalty, suppressing criticism, and focusing on superficial image rather than accountability.
· The failure of decentralization If DAOs prioritize branding over actual governance, they may become irrelevant. DAOs that lack real accountability are more like 'dictatorships with a few extra steps'.
Ironically, a16z, as a major holder of Uniswap, failed to promote the progressive decentralization of Uniswap.
Perhaps it can be said that DAOs are just a 'smokescreen' to avoid regulatory scrutiny that centralized crypto companies may face. Thus, tokens that serve merely as voting tools are no longer worth investing in. Real revenue sharing and actual utility are the keys.
Goodbye DAO, welcome LMAOs - Lobbied, Mismanaged, Autocratic Oligopolies.
DEX's challenge to CEX: The rise of Hyperliquid
Here is one of my conspiracy theories:
FTX launched Sushiswap because they were concerned that Uniswap might threaten its spot market position. Even if FTX did not directly launch Sushiswap, it might have closely supported it in development and funding.
Similarly, the Binance team (or BNB ecosystem) launched PancakeSwap for the same reasons. Uniswap poses a significant threat to centralized exchanges (CEXs), but it has not challenged the more profitable perpetual contract trading business of CEXs.
How profitable are perpetual contracts? It's difficult to know for sure, but we can glean some insights from the comments.
Hyperliquid brings a different threat. It not only targets the perpetual contract market but also attempts to enter the spot market while building its own smart contract platform. Currently, Hyperliquid's market share in perpetual contracts has grown to 12.5%.
Shockingly, Binance and OKX openly attacked Hyperliquid with JELLYJELLY. Though Hyperliquid survived, HYPE investors must now take future attack risks more seriously.
This attack may no longer come from similar means but from regulatory pressure. Especially as CZ (Zhao Changpeng) gradually becomes the 'national strategic crypto advisor', who knows what he will tell politicians? Perhaps: 'Oh, these perpetual trading platforms without KYC are just terrible.'
In any case, I hope Hyperliquid can challenge the spot market business of CEXs, provide a more transparent asset listing process, and avoid high costs that could drag down protocol finances. I have a lot to say about HYPE, as it is one of the altcoins I hold the most. But it is certain that Hyperliquid has become a movement to challenge CEXs, especially after the attacks from Binance/OKX.
Protocols evolve into platforms.
If you follow my X (Twitter), you may have seen my posts recommending Fluid against the backdrop of protocols evolving into platforms.
The core point is that protocols are at risk of being commoditized, while user-facing applications can capture most of the profits.
Has Ethereum already fallen into the trap of commoditization? To avoid this trap, protocols need to become like the Apple Store, allowing third-party developers to build on top of them, thus retaining value within the ecosystem. Uniswap v4 and Fluid attempt to achieve this through Hooks, while teams like 1inch and Jupiter develop their own mobile wallets. LayerZero has also just announced vApps.
I believe this trend will accelerate. Projects that can capture liquidity, attract users, and monetize through traffic while rewarding token holders will emerge as big winners.
The transition of the crypto industry and the new world order
I wanted to discuss more areas of significant changes in the crypto industry, from stablecoins to the disorientation of Crypto Twitter (CT), as the crypto industry is becoming more complex. The 'Alpha' (exclusive information) provided by Crypto Twitter is increasingly scarce as this industry is no longer a closed circle.
In the past, we could launch a 'Ponzi scheme' with simple rules, while regulators either misunderstood crypto or ignored it, thinking it would disappear on its own. But over time, regulatory discussions have become increasingly prevalent in CT. Fortunately, the U.S. is becoming more supportive of the crypto industry, with the rise of stablecoins, tokenization, and Bitcoin as a means of value storage making us feel we are on the brink of mass adoption.
But this situation could change rapidly: the U.S. government may eventually realize that Bitcoin is indeed undermining the dollar's position. The regulatory and cultural environment outside the U.S. is quite different. The EU is increasingly focused on control, especially during the transition from a welfare state to a war state, where many controversial decisions are pushed under the banner of 'security'.
The EU has not prioritized the crypto industry but rather views it as a threat:
· 'European Central Bank warns that U.S. crypto promotion may pose financial contagion risks'
· 'The EU plans to ban anonymous crypto accounts and privacy coins by 2027'
· 'If blockchain data cannot be deleted individually, the entire blockchain may need to be deleted.'
· 'EU regulators will establish punitive capital rules for insurance companies holding crypto.'
We need to assess attitudes towards crypto in conjunction with the overall political situation. The overall trend is de-globalization, with countries gradually closing the doors to entry and exit.
· The EU is close to implementing a visa waiver ban on countries that offer 'invest in citizenship'
· European Court cracks down on golden visa schemes
· In China, as political control strengthens, outbound bans are becoming more frequent.
The role of crypto in the new world order and its transitional period remains a significant unknown. When capital controls begin, will crypto become a tool for capital freedom? Or will countries try to suppress crypto through stricter regulations? Vitalik explained in his model of 'cultural and political cycles' that the crypto industry is still forming its norms and has not yet solidified like banking or intellectual property laws.
The internet of the 1990s took a 'let it grow freely' attitude with almost no rules or restrictions. By the 2000s and 2010s, social media's attitude turned into 'this is dangerous and must be controlled!' And in the 2020s, crypto and AI are still fiercely battling between openness and regulation.
Governments once lagged behind the times, but now they are catching up. I hope they choose to embrace openness, but the trend of closed global borders deeply concerns me.
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