Venture-Backed Crypto Projects Under Fire
The launch of Berachain’s (BERA) token has reignited debates over venture capital (VC) dominance in blockchain projects. Critics argue that tokens like Aptos (APT), Sei Network (SEI), and Starknet (STRK) have low circulating supply and high fully diluted valuations (FDVs), allowing early investors to benefit at retail traders’ expense.Key Highlights:
- BERA’s launch was met with backlash, as traders questioned how much of its supply was allocated to early investors versus the broader community.
- Other venture-backed tokens have underperformed post-launch, fueling concerns about long-term sustainability.
The FDV Debate: Are High Valuations Justified?
VC-backed projects often inflate valuations due to large funding rounds, leading to low float (small circulating supply) and high FDVs. This dynamic can artificially drive up prices before early investors start selling.Key Highlights:
- Crypto hedge fund manager Zaheer Ebtikar notes that excessive venture capital funding distorts price discovery, as projects secure large capital injections before proving real adoption.
- Hyperliquid (HYPE), which launched without VC funding, has outperformed many venture-backed Layer 1 projects, gaining 140% since its November debut.
Can VC Tokens Win Long-Term?
While some VC-backed tokens struggle post-launch, others with strong developer ecosystems can succeed if they generate real-world adoption. Projects like Ethereum (ETH) initially faced similar criticisms but evolved into dominant platforms. For newer blockchains, balancing investor incentives with long-term decentralization remains a challenge. As crypto markets mature, early VC dominance could wane, shifting power toward community-driven token models.
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