- While Web 3.0 is becoming more and more popular, VentureCapital's business model remains the same. On the contrary, it is a business model where they buy tokens at a low price and sell them to market participants at a high price. This is a far cry from the development of a healthy ecosystem.
- Projects give their tokens to VCs at low prices because they want to raise money and they want to be backed by well-known venture capitals. Projects that give away their tokens at a low price tend to see the price drop significantly in the short term as VCs sell the tokens on the secondary market, and community members tend to leave when the price keeps dropping.
- Currently, there are many Launchpad platforms in the market that are provided by incubators and VCs. The projects that offer these Launchpads require a token from the project itself in order to access it, but this token has very little utility. Basically, the token only serves as a ticket to participate in the IDO, so when the market changes from a Bull market to a Bear market, the ROI for participants in the IDO will not be high. As a result, the value of the token itself tends to drop quickly.
- Users hold tokens to participate in IDO and participate in IDO. When the market is a Bull market, the ROI is high, but when the market is a Bear market, the return on participation in IDO is not expected. This is because the literacy level of the participants is not that high and the due diligence of the investment is lax, so they often invest in the projects brought by the platform without understanding the reason and incur losses. As mentioned above, the lack of token utility also causes the IDO token to fall, which increases the possibility of double losses.