《Returning to Basics of Virtual》

Many friends, upon hearing that new investments on $Virtual have yielded 30 times, 50 times, and even 200 times, are drooling and eager to jump in.

Silly Brother says, hold on. This is a typical exaggerated return phenomenon in the crypto circle. The actual returns differ greatly from the reported returns, so let Silly Brother explain.

1. First of all, these crazy multiples generally refer to the peak point. For example, the 200 times of $solace means you could sell at the peak, but now it has dropped by half.

2. Secondly, they don't let you sell. It's not that they don't let you sell, but if you do, your account will be almost worthless. You can't participate in pre-sales for 10 days after selling. In the tumultuous world of splitting coins, what does stopping for 10 days mean?

3. Limits. One address can hold a maximum of 566 $Virtual. Moreover, to buy 566 $Virtual, you also need a lot of points. For example, the popular solace requires nearly 2 million points to fully participate. Ordinary retail investors without that many points can only afford a small amount.

4. Large investments. Wasn't it said that the multiples are high? So, investing $10,000 could earn you a few million? Think again. How do you accumulate points? You need to buy $Virtual, $vader, or new coins, or stake or hold coins steadily to accumulate points. And it's not just about having enough points; for slightly better projects, points will be significantly oversubscribed. For instance, the top point earner for $Solace staked over 400,000 USDT of $VADER for a year. After a year, will this small clone $vader go to zero? Even if you encounter a once-in-a-lifetime new investment opportunity after staking, you might only break even with a small percentage.

5. Point inflation: Under the rules of oversubscription, points are now experiencing severe inflation. Silly Brother remembers that in mid-April, he could earn enough points from a few thousand USDT in coins to fully participate, but now, $Solace requires 400,000 USDT to stake. This is due to the vicious inflation of points.

6. Rare exceptional new investments. If every new investment were exceptional, that would be fine. However, most new investments fail, are not fully subscribed, and result in direct refunds. Many are mediocre with average returns. The probability of exceptional new investments is low.

7. High friction costs. You should realize that these small coins like $virtual are traded on their own platform's pool. The transaction incurs a 1% tax, and the small pool has huge slippage. In the morning, there was a screenshot of selling $solace worth $100,000, with a slippage of 17%. Isn't $Solace worth 60 million? Why is the pool so pitifully small?

8. Risk of collapse. Since it's a market, there is a risk of collapse. Negative feedback spiral: $virtual drops -- cannot bring good projects to benefit users -- retail investors' staking willingness drops -- buying volume decreases -- increase the number of tokens for sub-projects -- $virtual drops further -- cannot afford to bring good projects. Once a collapse occurs, within a few days, it traps all those who staked inside, and no one can escape.

9. Difficult to hedge. Then someone might say, I will buy $aixbt to stake and then hedge on the exchange. Because $aixbt's point coefficient is low, estimations suggest a monthly yield of 50%. But you have to consider the hedging costs. With less capital for hedging, it might rise first and then fall, causing a double explosion. If you open a short position with 1x leverage, the investment will double. Considering funding rates, entry and exit friction costs, and slippage, this is a monthly yield of 20%. And this yield is static; if more people get involved, the yield can drop at any time.

10. Easy to lose. What does easy to lose mean? It means that the platform has many details that make it easy for retail investors to make mistakes and lose profits. For example, multiple accounts could be deemed as witching. For example, insufficient $virtual balance may cause you to lose earned points due to deductions. For example, if you sell an airdrop, there will be no more airdrops in the future. For example, if you sell coins that were initially good for new investments, your account may be frozen for 10 days, etc.

11. Points expiration. The points you painstakingly earned have only a 1-month validity. This forces you to continuously invest, which can easily tire retail investors. Tiring retail investors is a smart strategy.

To summarize:

1. The Virtual ecosystem is a heavily burdened historical ecosystem with insufficient innovation in new targets. While the current static returns are not bad, it excels at embellishing its reported returns, leading retail investors to misunderstand.

2. How long can this market survive? Unknown. Is it already on a downward slope from its peak? Unknown. Will it continue to rise? Unknown. For users, it is a One Way Street (dead end), and most retail investors are destined to suffocate in staking.

3. Silly Brother admires those who can design markets. The carefully designed dividends + splitting + mutual assistance scheme integrates the clever design of three markets. Virtual has propelled this heavily burdened ecosystem to this extent without any new good cards, which is impressive.

#virtual $VIRTUAL