Original Title: Crypto's New Realities: HODL is Dead, DAOs are LMAOs, Bye DeFi and More

Original author: Ignas, Decentralized Finance Research

Original compilation: Deep Tide TechFlow

As part of finance and trading, what fascinates me about the crypto market is that it clearly tells you what is right and what is wrong. Especially in this chaotic world, whether in politics, art, journalism, or many other industries, the line between truth and lies is blurred. However, cryptocurrency is simple and straightforward: If you are right, you make money; if you are wrong, you lose money. It's that simple.

But even so, I still fell into a very basic trap: When market conditions change, I did not reassess my portfolio. When trading altcoins, I became overly complacent with those "untouchable HODL" assets, like ETH. Of course, adapting to the new reality is easier said than done. There are too many variables to consider, so we often opt for simple narratives, like HODL (Hold On for Dear Life), because it doesn’t require us to actively monitor the market.

But what if the era of HODL has already come to an end? In this ever-changing world, what is the role of cryptocurrency? What have we missed? In this blog, I will share what I believe are the significant changes happening in the market.

The End of the HODL Era

Let's travel back to the beginning of 2022:

The price of ETH has settled at around $3,000 after a significant drop, down from a previous high of $4,800. The price of BTC is around $42,000. However, due to interest rate hikes, the collapse of centralized finance (CeFi), and the bankruptcy of FTX, both subsequently fell by 50%.

Despite this, the Ethereum community remains optimistic: ETH is about to migrate to PoS (Proof of Stake), and a few months ago the EIP proposal for ETH burning was just launched. The narrative of ETH as "Ultrasound Money" and an environmentally friendly, high-efficiency blockchain is very popular.

However, in the remaining time of 2022, ETH and BTC performed poorly, while SOL faced a brutal decline, with its price plummeting by 96% to just $8. Ethereum won the L1 (Layer 1 network) war, while other L1s either migrated to L2 (Layer 2 network) or faced extinction. I remember attending conferences during the bear market, where most people firmly believed that ETH would rebound the strongest, so they bought a lot of ETH while under-allocating BTC, completely ignoring SOL. The strategy is simple: HODL, then sell at the peak of the bull market in 2024/25. Easy peasy.

However, reality slapped us hard!

Since then, SOL has rebounded, while Ethereum is facing the strongest panic selling (FUD) in history. The narrative of 'ultrasound money' is dead (at least for now), and the narrative of environmental (ESG) concerns never really gained traction. HODLing ETH is the biggest mistake I've made in this cycle. I believe this is a common regret for many.

My bullish logic for ETH is that it will become the most productive asset in the crypto market.

Through Restaking, ETH will gain "superpowers" that not only protect Ethereum but also safeguard the entire critical DeFi and crypto infrastructure. The Restaking rewards for ETH will soar, and airdrop rewards will continue to accumulate through Restaking ETH.

As yields increase, the demand and price for ETH should rise. In summary: To the Moon! Obviously, this has not happened, as the value proposition of Restaking has never been clear, and Eigenlayer has also performed poorly in token issuance. So, what does all this have to do with the fact that the HODL metaverse has already perished?

For many people, ETH has always been an asset that you "buy and hold without caring." If BTC rises, ETH usually rises even more, so holding BTC seems meaningless. When the bullish logic for ETH based on the restaking narrative failed to materialize, I should have recognized and adjusted my strategy in a timely manner. However, I became lazy and complacent, unwilling to admit my mistakes. I told myself: One day ETH will rebound, right?

HODL is not only bad advice for ETH, but even more so for other assets, perhaps the only exception being BTC (which will be discussed in detail later). The crypto market changes too quickly; it is unrealistic to expect to hold an asset for months or even years and then retire. Looking at the charts, it can be seen that most altcoins have given back the gains made during this bull market cycle. Clearly, profits come from selling, not holding.

A successful meme coin trader stated that rather than HODLing, he usually holds a meme coin for even less than a minute. Although some people still try to sell you the dream of HODL, it is more like a "quick in and out" cycle rather than true HODL.

BTC is the only macro crypto asset

In the strategy of "quick in and out," the only exception is BTC. Some attribute the excellent performance of BTC to Michael Saylor's "infinite buy orders," as we have successfully promoted BTC as "digital gold" to institutional investors.

However, this battle is far from over. Many crypto commentators still view BTC as a highly volatile risk asset, similar to betting on the risk assets of the S&P 500.

This view contradicts the research of Blackrock. Blackrock found that the risk and return drivers of BTC are different from those of traditional risk assets, making it unsuitable for the "Risk On/Risk Off" model in traditional financial frameworks, a method used by some macroeconomic commentators for analysis. I shared some observations on the not-so-obvious truths in my article "The Crypto Truth and Lies in 2025: What Do You Believe Is the Truth?"

I believe that Bitcoin (BTC) is shifting from the hands of those who view it as a high-leverage stock bet to those who see it as a digital, safe-haven, gold-like asset. Mexican billionaire Ricardo Salinas is an example, as he continues to hold BTC. BTC is the only true macro crypto asset. The value of ETH, SOL, and other crypto assets is typically assessed based on transaction fees, trading volume, and total value locked (TVL), while BTC has transcended these frameworks to become a macro asset that even Peter Schiff can understand.

This transition is not yet complete, but the shift from risk assets to safe-haven assets presents an opportunity. Once BTC is widely recognized as a safe-haven asset, its price will reach 1 million dollars.

The Corruption Phenomenon in the Private Placement Market

When every relatively successful key opinion leader (KOL) starts transforming into a "venture capitalist" (VC), investing in projects at low valuations and dumping them after the token generation event (TGE), I feel like there's a problem in the market. However, nothing describes the current state of the crypto private placement market better than Noah's post.

The following are the key changes in the private placement market over the past few years:

In the early days (2015-2019), private market participants were true believers. They support Ethereum, fund DeFi pioneers like MakerDAO and ETHLend (now Aave), and promote HODLing.

The goal is not just to make quick profits, but to create something meaningful. Everything changed during the DeFi summer of 2020-2022. Suddenly, everyone was chasing newer, hotter tokens.

Venture capital firms (VC) are pouring money into absurdly valued and utterly impractical token projects. The rules are simple: participate in private rounds at low prices, hype the project, and then sell the tokens to retail investors. When these projects crash, we should learn from it, but nothing has changed.

After the FTX incident (2023-2025), the private placement market became more nihilistic. VCs began funding "soulless token machines" (i.e., projects that recycle old ideas, with questionable founder backgrounds, such as Movement, and no real use cases). The private round valuation was set at 50 times revenue (if the project had revenue), ultimately leading the public market to absorb these losses. As a result, 80% of tokens fell below their private round price within six months of listing in 2024.

This is a plunder phase. Nowadays, retail investors' trust has disappeared, and VCs are in disarray.

Many VC investment projects are trading at prices even lower than their seed round valuations, and some of my KOL friends are also deeply in the red.

However, there are signs of recovery in the private equity market:

1. Movement co-founder and Gabagool (former "runner" of Aerodrome) faced public backlash and were expelled from the industry. We need more clean-up actions like this.

2. The valuations in the private and public markets are declining.

3. Crypto VC funding has finally rebounded: In the first quarter of 2025, the financing amount reached $4.8 billion, the highest level since the third quarter of 2022, with funds starting to flow into areas with actual utility.

According to CryptoRank's "2025 Q1 Crypto Venture Capital Status Report":

· The first quarter of 2025 was the strongest quarter since the third quarter of 2022. While the $2 billion Binance transaction played a central role, there were also 12 large-scale financings exceeding $50 million, indicating a return of institutional interest.

· Capital has flowed into areas with practical utility and income potential, including centralized finance (CeFi), blockchain infrastructure and services. Emerging key areas such as artificial intelligence (AI), decentralized physical infrastructure networks (DePIN), and real-world assets (RWA) have also attracted significant attention.

· DeFi leads in the number of funding rounds, but the scale of financing is smaller, reflecting more conservative valuations.

We are experimenting with a new token issuance model to reward early supporters instead of insiders. Echo and Legion are leading this trend, and Base has already launched a group on Echo. Meanwhile, Kaito InfoFi's metaverse is also showing a strong bullish trend, as even those without financial capital can benefit from it as long as they have social influence.

The market seems to have learned its lesson, and the ecosystem is gradually recovering (although KOLs still occupy the best resources).

Goodbye DeFi, welcome Onchain Finance

Do you remember the brief narrative of Yield Aggregators? Yearn Finance once led the trend, and countless fork projects followed. Now, we have entered the era of Yield Aggregators 2.0, only now we call it "Vault Strategies."

As DeFi becomes increasingly complex, various protocols are emerging one after another, and Vaults have become an attractive option: deposit assets to obtain the best risk-adjusted returns. However, compared to the first phase of yield aggregators, the main difference now is that the degree of centralization in asset management is rapidly increasing.

The vault has a team of "strategists" – usually a team of "institutional investors" – who use your money to chase the best investment opportunities. For them, it's a win-win: they earn yield with your capital while charging a management fee. Some examples include strategy teams such as MEV Capital, Seven Seas, Gauntlet, and Veda, which work with protocols such as Etherfi, Upshift, and Mellow Protocol. Veda alone has become the 17th largest "protocol" in DeFi, surpassing even Curve, Pancakeswap, or Compound Finance.

However, the vault is just the tip of the iceberg. The true vision of decentralization in DeFi has long since vanished; it has evolved into Onchain Finance.

Think about it: the fastest-growing segments in the DeFi and cryptocurrency space are real-world assets (RWA), interest-bearing assets, and risk-free arbitrage stablecoins like Ethena and Blackrock's BUIDL, which completely deviate from the original vision of DeFi. Or projects like BTCfi (and Bitcoin L2), which rely on multi-signature wallets, where you have to trust that the custodian won't "run away."

Note: This is not aimed at Lombard, but simply serves as an example of the integration of the treasury and BTCfi trends.

Since Maker transitioned from the decentralized DAI to an interest-bearing RWA protocol, this trend has already begun. Truly decentralized protocols are now scarce and small in scale (Liquity is one example).

However, this may not be a bad thing: RWA and tokenization allow us to break free from the era of Ponzi schemes based on cycles and leverage in DeFi. But this also means that the risk factors are constantly expanding, making it more complex to truly understand where your funds are. I wouldn't be surprised by the abuse of user funds by CeDeFi protocols.

Please remember: hidden leverage will always find a way to infiltrate the system.

DAO - A Joke?

Similarly, the illusion of decentralization of Decentralized Autonomous Organizations (DAO) is also being shattered. The past theory was based on the "Progressive Decentralization" theory proposed by a16z in January 2020.

The theory suggests that:

The protocol first finds the product-market fit (PMF) → As the network effect grows, the community gains more power → The team "hands over the baton to the community" to achieve full decentralization. However, 5 years have passed, and I believe we are returning to centralization. Take the Ethereum Foundation as an example; it is becoming more actively involved in expanding L1.

In my previous blog "Market Fear State and Future Outlook #6", I mentioned that the DAO model faces numerous issues:

· Voting Apathy

· Lobbying risks increased (ticket buying behavior)

· Execution paralysis

The DAOs of Arbitrum and Lido are moving towards greater centralization (through more active team involvement or the BORG mechanism), while Uniswap is experiencing significant turmoil. The Uniswap Foundation voted to allocate $165 million for liquidity mining rewards to promote the development of Uniswap v4 and Unichain. Another conspiracy theory posits that this funding is intended to meet the liquidity threshold for the Optimism OP funding program.

Regardless, the DAO representatives are very angry. Why is the foundation paying all the $UNI rewards while Uniswap Labs (a centralized entity) has earned millions of dollars through Uniswap's front-end fees? Recently, a representative ranked in the top 20 resigned from their position as a Uniswap representative.

The following are the author's core viewpoints:

· Governance Illusion: The Formal Governance of DAO The Uniswap DAO appears to be open, but in reality, it marginalizes different voices. Although proposals follow the process (discussion, voting, forums), these processes seem to have been "pre-determined," simplifying governance into a kind of "ritual."

· Concentration of Power: The Operations of the Uniswap Foundation The Uniswap Foundation has further consolidated power by rewarding loyalty, suppressing criticism, and focusing on image rather than accountability.

· The Failure of Decentralization If DAOs prioritize branding over actual governance, they may become irrelevant. A DAO that lacks true accountability resembles a "dictatorship with some extra steps."

Ironically, a16z, as a major holder of Uniswap, has failed to promote the progressive decentralization of Uniswap.

It can be said that DAO is just a "smoke screen" to avoid the regulatory scrutiny that centralized crypto companies may face. Therefore, tokens that serve merely as voting tools are no longer worth investing in. True revenue sharing and actual utility are the key.

Goodbye DAO, welcome LMAOs——Lobbied, Mismanaged, Autocratic Oligopolies.

The Challenge of DEX to CEX: The Rise of Hyperliquid

Here is one of my conspiracy theories:

FTX launched Sushiswap because they were concerned that Uniswap might threaten its spot market position. Even if FTX did not directly launch Sushiswap, it may have provided close support in terms of development and funding.

Similarly, the Binance team (or BNB ecosystem) launched PancakeSwap for the same reason. Uniswap poses a significant threat to centralized exchange platforms (CEXs), but it does not challenge the more profitable perpetual contract trading business of CEX.

How profitable are perpetual contracts? It's hard to know for sure, but we can get a glimpse from the comments.

Hyperliquid presents a different threat. It not only targets the perpetual contract market but also attempts to venture into the spot market while building its own smart contract platform. Currently, Hyperliquid's market share in the perpetual contract market has grown to 12.5%.

Shockingly, Binance and OKX have openly attacked Hyperliquid using JELLYJELLY. Although Hyperliquid has survived, HYPE investors must now take the potential risks of future attacks more seriously.

This type of attack may no longer be similar tactics, but rather a result of regulatory pressure. Especially as CZ (Zhao Changpeng) gradually becomes a "national strategic crypto advisor," who knows what he will tell the politicians? Perhaps it will be: "Oh, these perpetual trading platforms that do not conduct KYC are truly terrible."

In any case, I hope that Hyperliquid will challenge the spot market business of CEXs, provide a more transparent asset listing process, and avoid the high cost of cripping down the protocol's finances. I have a lot to say about HYPE because it's one of the altcoins I hold the most. But what is certain is that Hyperliquid has become a movement to challenge CEXs, especially in the wake of the Binance/OKX attacks.

Protocol Evolution to Platform

If you follow my X (Twitter), you may have seen my posts recommending Fluid in the context of the protocol evolving into a platform.

The core idea is that protocols face the risk of commoditization, while user-facing applications can capture most of the benefits.

Has Ethereum fallen into the commoditization trap? To avoid this trap, the protocol needs to become like the Apple Store, allowing third-party developers to build on top of it, thereby keeping value within the ecosystem. Uniswap v4 and Fluid are trying to achieve this through Hooks, while teams like 1inch and Jupiter are developing their own mobile wallets. LayerZero has also just announced vApps.

I believe this trend will accelerate. Projects that can capture liquidity, attract users, and monetize traffic while rewarding token holders will become the big winners.

The Transformation of the Crypto Industry and the New World Order

I originally wanted to discuss more about the significant changes in the cryptocurrency industry, from stablecoins to the confusion of Crypto Twitter (CT), as the cryptocurrency industry is becoming more complex. The "Alpha" (exclusive information) provided by Crypto Twitter nowadays is becoming less and less, as this industry is no longer a closed circle.

In the past, we could easily derive the "Ponzi scheme" with simple game rules, while regulators either misunderstood crypto or ignored it, thinking it would disappear on its own. However, over time, regulatory discussions have become increasingly common in the CT. Fortunately, the United States is becoming more supportive of the crypto industry, with the rise of stablecoins, tokenization, and Bitcoin as a means of value storage, making us feel like we are on the brink of mass adoption.

But this situation may change rapidly: the US government may eventually realize that Bitcoin is indeed undermining the status of the dollar. The regulatory and cultural environment outside the United States is quite different. The European Union is increasingly focused on control, especially during the transition from welfare state to war state, where many controversial decisions are being pushed forward in the name of "security."

The EU has not prioritized the cryptocurrency industry, but rather sees it as a threat:

· "European Central Bank warns that US crypto promotion may pose a risk of financial contagion"

· "The EU plans to ban anonymous cryptocurrency accounts and privacy coins by 2027"

· "If blockchain data cannot be deleted individually, it may be necessary to delete the entire blockchain."

· "EU regulators will establish punitive capital rules for insurance companies holding cryptocurrencies"

We need to assess the attitude towards cryptocurrency in conjunction with the overall political situation. The overall trend is deglobalization, and countries are gradually closing their doors to entry and exit.

· The EU is nearing a visa ban on countries with "investment for citizenship" programs.

· The European Court Targets Golden Visa Programs

· In China, as political control strengthens, exit bans are becoming more frequent.

The role of cryptocurrency in the new world order and its transitional period remains a significant unknown. When capital controls begin, will cryptocurrency become a tool for capital freedom? Or will countries attempt to suppress cryptocurrency through stricter regulations? Vitalik explained in his "Cultural and Political Year Wheel Model" that the cryptocurrency industry is still forming its norms and has not yet solidified like banking or intellectual property law.

The internet in the 1990s adopted a "let it grow freely" attitude, with almost no rules or restrictions. By the 2000s and 2010s, the attitude of social media had shifted to "this is dangerous, it must be controlled!" In the 2020s, cryptocurrency and artificial intelligence continue to struggle intensely between openness and regulation.

The government was once behind the times, but now they are catching up. I hope they choose to embrace openness, but the global trend of closed borders worries me deeply.

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