Can DeFi experience a revival

Editor’s Note: In this article, we follow the perspective of a senior participant in the cryptocurrency market and KOL to gain a deep understanding of his analysis of current market trends, reflection on personal investment philosophy, and profound insights into the field of angel investments. Through his insights, we not only gain insight into the dynamics of the cryptocurrency market, but also appreciate how an investor continues to learn, adapt, and seize opportunities in a rapidly changing financial environment. Additionally, the article provides basic knowledge of venture capital structures, offering readers a comprehensive perspective to understand this multidimensional and dynamic industry.


Foreword
It’s been a long time since I opened a document, and facing a blank page, I don’t know where to start. However, I do miss the feeling of freely expressing my thoughts in writing. Unfortunately, such opportunities have been scarce lately. So, I set myself a limit of one hour, during which my thoughts flow, words blossom, and ultimately, my thoughts are transformed into words. No distractions from the internet, no external interference, just a blank sheet of paper and the passage of time (the title you see now was actually decided at the last moment. Initially, even I myself wasn’t sure what I would write about).
The Current Market
The recent cryptocurrency market has been quite bleak, with altcoins continuously declining over the past three months, and Bitcoin remaining stagnant. I expect this downturn to continue throughout the summer, until August, when the market might see a revival with the launch of the Ethereum ETF, preparations for the presidential election, and potential interest rate cuts. However, this is only my personal opinion and should be taken as a reference.
Lately, my activities have been relatively limited. Apart from holding ETH, participating in yield farming through Pendle and Gearbox, and signing numerous angel investment agreements, I honestly haven’t been involved in many other affairs. Trading has become exceptionally difficult, with almost all airdrop projects in the market experiencing a sell-off, except for a few exceptions, like ENA, which has risen by about 50% since its TGE. We are in an entirely new market environment. I have discussed the issues of low circulation and high FDV tokens in previous briefings.
Compared to 2021 and 2022, tokens launched in the past year have hardly experienced any price fluctuations after TGE. This phenomenon no longer exists. As Cobie described in his latest Substack article, the price fluctuations of these tokens actually occurred during the private stage. Therefore, unless you are a project founder, venture capitalist, angel investor, a trader with inside connections, or a KOL, you will find this bull market exceptionally challenging. Of course, there are exceptions, like the period from October 2023 to March 2024, which was a good time overall. If you participated early in some emerging meme coins, you could also profit. However, apart from that, most people would likely agree that this is one of the most challenging bull markets they have experienced.
Interestingly, even seasoned OGs seem to have not fully utilized their advantages. Take Hsaka, for example, despite being a key player in the market, we seem to only witness his presence when the market is easy to operate. Ansem’s situation is similar as well, looking a bit lost. However, should we really blame them? Ultimately, we are responsible for what we buy, when we sell, and what trades we make. Although KOLs may create FOMO, the person who decides how to manage the funds is still ourselves.
In 2023 and early 2024, most of my time was spent immersed in various trading interfaces, whether it was PvP terminals, Tweetdeck/X Pro, or Telegram’s alpha chat groups. However, recently, I have taken a more relaxed attitude towards the market. This is mainly because, apart from short-term trading, other trading directions seem unsustainable (the rumors about the ETH ETF a few weeks ago are an exception). This situation reminds me of the silence in the market after Terra’s crash in May 2022, where we had to return to real-life. Although I see some similarities with that time, I still believe that DeFi is undergoing a new renaissance.
As I look forward to the return of traditional DeFi, farming points and airdrop hunting seem to have evolved into a new form of DeFi. For example, the Ethena project allows you to lock USDe for three months in advance and then gain profits in subsequent airdrops. Few people foresaw that Ethena would become so popular. I wish I could have seized such opportunities better at the time. Currently, there is a new stablecoin protocol called Usual, which gives me similar expectations. They are currently operating in the private phase, also offering a high APR. The key is whether they can seize the market opportunity as accurately as Ethena (their airdrop plan is scheduled for October).
Stablecoins
I still believe this is the most crucial and practical application of cryptocurrencies. It provides a possibility to store funds in a personal wallet, unaffected by the constraints of the network, and to send funds to any corner of the world in an instant. There are already some stablecoins in the market that offer returns, such as Ethena, Open Eden, and Usual. Although the stability and reliability of these stablecoins are still questionable, we have clearly surpassed the period of Terra’s UST. Take Open Eden, for example, it is a stablecoin protocol backed by government bonds, providing approximately 5% net annual returns. At the peak of the last bull market, Terra UST’s market value reached $20 billion, while Ethena’s current market value is only $3 billion. I am very much looking forward to seeing the scale these stablecoins could develop to, or whether other protocols can challenge their position.
I have a dream, which is to have a stablecoin that is as safe as USDT/USDC and provides at least 5% sustainable returns after this bull market ends (perhaps during the trough of the next bear market). This market undoubtedly has enormous potential, just think about Wall Street and the bonds investors hold. The first step is to ensure the absolute security of this stablecoin, and I hope we can get the support of financial giants like Larry Fink and Blackrock.
In this bull market, I have high expectations for EigenLayer, Pendle, Gearbox, Hivemapper, as well as sports betting and prediction market protocols. I miss the high-yield mining projects in the last bull market, such as TOMB on the Fantom chain, which was full of speculation and high risk. Although there are still some speculative projects in the market, their TVL is not high and their popularity is limited.
Overall, I tend to support innovative products, as I am skeptical of the necessity of many fork versions of Pendle and EigenLayer. At the same time, I am seriously considering launching my own project, although this is still just a preliminary idea. If you are a developer and interested in this, please feel free to contact me.
Due to the recent market downturn, I have been able to spend more time immersed in reading. Let me share some of the books I have been reading lately.


The books I’ve been reading mainly cover philosophy, economics, and life skills, among other fields. Additionally, as I have gradually ventured into venture capital over the past year and a half, I also intend to read books on this subject.
Some Basic Knowledge About Venture Capital
When pitching to investors, it is crucial to understand some core terms related to venture capital structures. Please refer to the chart below, as we will discuss these terms in detail in the text.


A venture fund is a fund specifically set aside for investing in startups, commonly known as “dry powder,” and it is the main investment tool. Each fund, as a limited partnership, is managed within a period of about 7 to 10 years according to the partnership agreement.
The single goal of the fund during this period is to profit, mainly achieved through two methods:
Performance fees on the fund’s return, usually around 20%.
Management fees, typically around 2%.
This explains why you’ve heard of the 2/20 model.
The management company, also known as the venture capital firm, is responsible for the day-to-day operations of the venture fund. It is different from the venture fund itself and is a business entity established by the company’s partners.
The management company uses the received management fees to pay the company’s operating costs, including rent, employee salaries, and so on. These management fees are used to support the deployment and growth of the fund.
Venture capital managers only earn profits when the fund’s performance exceeds certain benchmarks.In order to receive performance bonuses, one must achieve results.
General Partners (GPs) are core members of management companies and are responsible for leading and overseeing the operations of venture capital funds. GPs can be senior partners in large venture capital firms or independent individual investors.
The responsibilities of GPs include raising and operating venture capital funds, making investment decisions, evaluating potential investment opportunities, recruiting teams on behalf of the fund, assisting portfolio companies in achieving exits, and determining how to effectively utilize the funds they manage. In general, the role of GPs can be summarized into two key tasks: investing in promising high-quality enterprises and raising more capital for the fund.
The compensation for GPs comes from the performance bonuses and management fees of the fund. For example, if the performance bonus is set at 20%, then 20% of the fund’s profits will serve as the GP’s compensation.
The actual funding for venture capital funds comes from Limited Partners (LPs), who are the financial backbone behind the funds. LPs typically include the following types of institutional investors:
– University endowment funds
– Pension funds
– Sovereign wealth funds
– Insurance companies
– Foundations
– Family offices
– High-net-worth individuals
The core assets of venture capital funds are their portfolio companies, which are startups that receive investments from the venture capital funds in exchange for preferred shares. While specific requirements vary from fund to fund, companies that receive venture capital investments typically need to meet the following criteria:
– They should operate in markets with broad potential.
– They should have achieved product-market fit.
– They should have excellent products that are highly favored by customers.
– They should demonstrate strong financial performance and have the potential to provide significant returns for investors.
Here is a list of some of the largest cryptocurrency venture capital firms.
Angel Investing
Angel investing typically refers to investing at an earlier stage before venture capital and angel investors often operate independently and write relatively smaller checks. This type of investment usually occurs at the “pre-seed” or “seed” rounds of a company, which are the stages when the product or service is not yet fully developed or in its early stages of development. While angel investing carries greater risks as most startups may not sustain, it also offers significant potential returns if the invested company can successfully grow.
I am passionate about angel investing because it is a field where anyone, regardless of background, can become someone who influences others within 1 to 3 years by investing time, effort, and consistent action. It is a novel and vibrant field where you can become an expert through continuous experimentation, making mistakes, and staying curious, even without the prestige of top-notch institutions.
So, how did I get started in angel investing?
To explore this question, let’s go back to the beginning of the story. Before venturing into cryptocurrencies, I was involved in the stock market, focusing on stock trading and improving quality of life. In January 2019, I created a Twitter account primarily to share these topics. Prior to Twitter, I also ran a blog discussing investment topics and wrote some news articles (which have now been deleted). In 2021, I quit my 9-to-5 job and fully immersed myself in the world of cryptocurrencies a few months later. Initially, I was randomly investing in NFTs, DeFi projects, and some niche coins on Binance. But as I continued to share my insights, I started receiving opportunities to participate in trades. At first, I turned down these opportunities due to lack of experience, but I soon realized that many people with even less experience were already involved.
This experience made me realize that although I initially knew very little about cryptocurrencies, I was able to gradually accumulate experience and find my place in this field through learning and practice.
As you may know, I am a KOL, although I am not particularly fond of that term. With 300,000 followers on Twitter and 30,000 subscribers on Substack, many project founders reach out to me asking if I would be interested in investing in their projects, usually with no strings attached. However, there is an unwritten rule that you should create content for the project, which makes sense. Exposure to the project → People start paying attention → More people buy → Price goes up.
Therefore, I believe this round is more about KOLs, as many founders feel that VCs do not contribute much. Yes, they do have network resources, but they usually don’t have a large audience. On the other hand, KOLs have a large audience and usually have solid network resources. Hence, many VCs have also transitioned into being semi-KOLs to share more benefits. Honestly, I don’t blame them.
Basically, I ventured into multiple areas of the Crypto and Web3 space out of curiosity. I don’t call myself an expert in any specific field, but rather, a well-rounded individual with knowledge in many topics. If I don’t have the answers myself, I use my network resources in that field to find them. Many opportunities have come from people seeing what I write or post and reaching out to me. However, I do believe I have certain advantages in certain aspects. In the DeFi space, I am personally most interested in trading DEXs, stablecoin protocols, and yield narratives, such as projects like EigenLayer, Pendle, Gearbox, Mellow, and Symbiotic. I am also fascinated by trading, whether it is on CEX or DEX. My dream is to one day have a competitor that can compete with Binance/Bybit, so I also enjoy working with teams that have such goals. I have an advantage in marketing as well, knowing which methods work and which don’t as a KOL.
How to get deal flow?
In the Crypto space, having specialized market knowledge or building a strong personal brand is crucial. Ideally, having both brings the best results.
Angel investors with significant personal brands or large audiences are able to perform well because companies value their support, which not only enhances their reputation but also helps with the promotion and distribution of their products. When reputable individuals stand together with companies, the alliance itself sends a positive signal that aids in spreading awareness of the company’s products or services.
Furthermore, when founders mention their investor lists in their pitch decks and your name is seen, it becomes a strong indicator of trust. For example, if you see that Cobie is also endorsing this project, many people might invest without conducting further due diligence. After all, if a project can attract well-known figures like Cobie, it should be a good choice for you too.
When considering whether to enter into a deal, the timing is undoubtedly a crucial factor. I need to carefully assess the trading conditions, including our current market situation and the market expectations for the next 3 months, 6 months, 12 months, and even 2-3 years. This is especially important considering the longer timeline that may be involved.
I also deeply consider whether the team is developing innovative and market-fit products and whether these products are sustainable. I explore how they will align with market narratives and which venture capital firms may be involved. Next, I engage in conversations with people in my trusted network to understand their perspectives, including why certain venture capital friends did not participate or why they did not invest on a larger scale.
I also consider the competition and evaluate the current Total Value Locked (TVL) and future potential. Additionally, I need to ask myself whether the protocol will be able to sustain independently after the incentive programs end or if it will be abandoned by the market. These questions are essential parts of the decision-making process.
I have outlined the functions of venture capital firms and provided a basic understanding of angel investing. Here are Ben Roy’s deeper insights on angel investing:


As a summary of this topic, I would like to share a quote that I particularly like from @DCbuild3r’s recent article on angel investing:
“The accumulation effect of social capital is equally powerful as the growth of your financial capital, if not more influential. I believe that in any professional pursuit, whether it’s sales, tech development, academic research, or philanthropy, social capital is the key driver of professional success. Having a network of talented friends who not only possess extensive connections, capital, and fresh insights but also have the wisdom and ability to spark change is crucial. If you become friends with such a group of people, you can truly make a difference in this world together.”
That’s all for today.