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Crypto Assets Project Paradox: Why Are Null Projects More Favored
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.
limitations of the real world
When a project has actual products, it has to face some uncomfortable realities:
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:
For project founders without products, the best strategy is:
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:
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:
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.
Case Study Analysis
The crypto assets sector has buried billions of dollars in white paper projects, which confirm the theory mentioned above:
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:
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.