Crypto Assets Project Paradox: Why Are Null Projects More Favored

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The Paradox of the Crypto Assets Field: Why Are Projects Lacking Substance More Favored?

In the world of Crypto Assets, an interesting phenomenon has caught people's attention: projects that only have flashy websites but lack substantial content often manage to raise millions of dollars in funding. This phenomenon is not accidental; rather, game theory plays a significant role in it.

Think back to a scene in the American TV series "Silicon Valley": companies without revenue are valued higher than profitable companies. Investors explain that actual revenue raises questions about the numbers, while the absence of revenue allows for infinite imagination. This logic has been taken to the extreme in the world of Crypto Assets: the more ethereal the project, the more funds it may raise. This is not a flaw in the market; rather, it has become one of the most profitable characteristics in the realm of Crypto Assets.

"Why is the valuation of the "Air" project high?

limitations of the real world

When a project has actual products, it has to face some uncomfortable realities:

  • Real user numbers (often disappointing)
  • The practical limitations of technology (often frustrating)
  • Measurable indicators that cannot be faked (with strong persuasive power)

In contrast, if a project only has a white paper, its potential value is limited to people's imagination. This leads to a paradoxical situation: projects that are genuinely committed to building may actually be punished by the market.

Information Asymmetry Game

In the process of fundraising for Crypto Assets, three parties are mainly involved:

  • Project Founder (in possession of all information)
  • Venture Capitalist (understand some situations)
  • Ordinary investors (know almost nothing)

For project founders without products, the best strategy is:

  • Keep a vague yet exciting description
  • Emphasize potential rather than reality
  • Create a strong fear of missing out

The more vague the description, the harder it is to be falsified. The fewer functions there are, the fewer defects are exposed.

Why is no one asking for better results?

The "prisoner's dilemma" in game theory reveals why people make choices that are detrimental to the collective. The same is true in Crypto Assets investment: if everyone demands to see viable products before reinvesting, the market environment would be healthier. However, anyone who waits may miss out on early high returns. The earliest investors usually profit the most, even if the project ultimately fails.

Therefore, every seemingly wise decision made by an investor (based on the commitment to enter the market early) has led to an overall unfavorable outcome (placing importance on hype while neglecting substance).

The value difference between dreams and reality

A project with only one online article can claim to completely change the industry and create trillions of dollars in value. In contrast, a project with actual code must face:

  • Actual number of users
  • The specific capabilities and limitations of technology
  • Reasons for Disadvantages in Competition

This gives rise to the so-called "null premium" - a valuation premium obtained due to complete detachment from real-world constraints.

collective hype behavior

When it is difficult to discern the quality of a project, people will look for similar signals:

  • Comments from influencers
  • Listing status of exchanges
  • Token price increase rate

Projects without products can allocate all resources to generating these signals instead of actual development. In the Crypto Assets space, marketing often outweighs development in importance.

"Why is the "Air" project highly valued?

Case Study Analysis

The crypto assets sector has buried billions of dollars in white paper projects, which confirm the theory mentioned above:

  • A certain project: It achieved a valuation of billions without launching its mainnet, creating a frenzied community atmosphere. This proves that in the field of Crypto Assets, the less real the product is, the more people can project their dreams onto it.
  • A certain blockchain project: claimed to raise $350 million for the concept of "processing 162,000 transactions per second," but at launch could only handle 4 transactions per second. The less evidence required for technical claims, the more funding is obtained.
  • A biometric identification project: proposed the concept of "providing biometric data in exchange for tokens," attracting billions of dollars in investment.

These cases all follow a pattern: the more abstract or technically complex the commitment, the more funds are raised, and ultimately the greater the risk of failure.

The reason this phenomenon is difficult to change.

Logically, investors should demand to see viable products. But game theory explains why this won't happen:

  • The fear of missing out (FOMO) does exist: early investors reap the most profits, creating pressure to invest before a project's validation.
  • Difficult to verify claimed content: Most investors lack the ability to assess the technical feasibility of projects.
  • The short-term orientation of fund managers: Their compensation often depends on short-term returns rather than long-term success.
  • Imbalance in incentive mechanisms: actions beneficial to individuals may be harmful to the entire market

This is why projects without products often raise more funds than those that are truly developing practical products.

The rules of the game itself are not the problem; it's just that some participants are too skilled at exploiting these rules.

"Why is the valuation of the "Air" project high?

FOMO-2.91%
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CommunitySlackervip
· 18h ago
Who doesn't love trading air? It's really fragrant.
View OriginalReply0
GateUser-44a00d6cvip
· 18h ago
It's a classic suckers' game.
View OriginalReply0
DaisyUnicornvip
· 19h ago
Sigh, air is the most valuable... Investing in this air flower, whoever loses knows.
View OriginalReply0
LiquidityWizardvip
· 19h ago
Entrusting fantasies is the true way of web3, haha.
View OriginalReply0
FancyResearchLabvip
· 19h ago
Void writing papers, max profit from sudden death
View OriginalReply0
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