Recently, the “KOL round” has become a hot topic. From the summary of everyone after the Hong Kong Blockchain Week to the private placement details of 1intro being exposed by ZachXBT, the market has mixed views on the KOL round.
What is KOL round
The so-called KOL round means that the project party sells a portion of tokens to KOLs, usually at a lower price and with better unlocking terms. In return, KOLs need to help the project party with market promotion.
Of course, KOLs are not simply making money by doing nothing. Some project owners have extremely strict requirements for publicity and promotion, and review them like a final exam. Some projects with poor market performance may not be able to make a profit until more than ten months of unlocking is completed, or even lose money.
Why is there a KOL round?
The current situation is that this round of KOL rounds may exist for projects as big as Binance OKX, which is listed directly at the opening, and as small as Dogecoin, which has only 1,000 Twitter followers. Since many project owners have chosen this form, it proves that it can play a positive role in promoting the project most of the time.
For serious projects with financing, institutions play a multi-faceted role, such as endorsement, guidance, and help with listing, etc. These are irreplaceable by most KOLs. At the same time, CT has an increasing influence on the market. Many top KOLs can bring an inflated amount of traffic, exposure, and real user numbers to projects.
In this context, the project side chooses to allocate a portion of the quota to KOLs with better conditions, so as to obtain better market promotion. KOLs can cooperate with the project by taking token quotas instead of directly receiving money, which can also promote KOLs to have a deeper understanding of the project, thus achieving interest bundling. Ideally, it should be a win-win situation.
Can’t participate in projects with KOL rounds
No. Objectively speaking, most current projects have KOL rounds; subjectively speaking, the main concern about KOL rounds is that the price is too low, which actually involves the issue of fairness in chip allocation. Projects without KOL rounds will still have other investment rounds. Projects without investment rounds will have whitelists, snipers, and money-grabbing parties to get chips at lower prices in various forms and means. If you think someone's cost is much lower than yours, you won't participate, and there will be too few projects to choose from in the market.
When investing in a project, a more rational approach is to make a judgment based on all aspects of the project and your own preferences for the narrative, and estimate a reasonable price range to participate. If there are too many low-priced chips, you can lower your expectations for the project, but it is inappropriate to veto it just because of the KOL round.
Why do retail investors have negative emotions towards KOLs?
The negative emotions of retail investors mainly come from two aspects: first, some KOLs use their influence to make profits, over-promote, and say one thing and do another. A typical example is that they are extremely optimistic about the rising trend and want to exaggerate it, but in fact they are losing money while exaggerating; or they build positions at the bottom and fabricate some completely non-existent narratives to deceive people into buying in.
The second is the mass-produced 400u group, which can sometimes get quotas from good projects, which can easily lead to psychological imbalance among retail investors.
The first point is actually not related to the KOL round itself, but to KOL itself. Blockchain projects need to be screened, and blockchain KOLs also need to be screened. Retail investors should be aware that anyone’s words are just a source of information, and it is you who make the final investment decision; the second point requires project parties to be more cautious when selecting partners, otherwise it may have a negative impact on the project.
How KOLs Can Be Responsible for Their Audiences
It should be made clear that it is normal to promote the projects you hold. You hold them because you are optimistic about them, and you promote them because you are optimistic about them. This is completely in line with the investment logic of the cryptocurrency circle. KOLs are nothing more than ordinary people with relatively greater influence. There is nothing wrong with shouting about your own holdings, as long as you are objective, neutral and impartial. What everyone despises is the behavior of using fans as exit liquidity, the so-called "I treat you as a brother, you treat me as exit liquidity"
For most retail investors, due to lack of time, energy or ability to research projects, Twitter KOL is actually the main channel for obtaining information. This is also an important part of the cryptocurrency ecosystem. Most KOLs are just retail investors with more fans, and retail investors can also become KOLs after accumulating some influence. There is no need to put retail investors and KOLs on opposite sides to create contradictions. Don't be a black-and-white diode.
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