Web3 Investment Trend Analysis: The Retreat of the Primary Market and the Rise of Emerging Models

Recently, the Web3 investment sector is undergoing profound structural adjustments. While some opinions remain optimistic about the prospects of crypto VC, data and market sentiment indicate that the Primary Market indeed faces severe challenges, a trend that will become even more apparent in 2025.

The Dilemma of the Primary Market

In the second half of 2024, while the secondary market is fervent for MEMECoin and BTC, the primary market has fallen into a winter. Data shows that the scale of crypto VC fundraising has dropped from a peak of $33.7 billion in 2021 to less than $4 billion in 2024.

The reasons for this predicament include:

1. The amount of crypto VC funding is limited and has not yet fully integrated with mainstream financial markets.
2. Facing longer exit cycles and high volatility risks.
3. During the lock-up period, the project valuation has significantly shrunk, with some projects experiencing a decline of over 95%.
4. The vicious cycle of financing - listing - price crash: the lack of secondary market support leads to a price collapse after the token is listed.

Data shows that new cryptocurrency projects launched in 2023-2024 have an average decline of 45% within 90 days, with 60% of projects breaking even within six months. This not only reflects a decline in market enthusiasm but also reveals failures in model design.

The Rise of Incubation Models

Faced with the dilemmas of the Primary Market, incubation investment models are becoming popular. Multiple platform-based institutions are ramping up their incubator models, and it is expected that by 2032, the global Bitcoin project incubator market size will reach 5.7 billion dollars.

Reasons for the popularity of the incubation model:

1. Comprehensive Involvement: From resources, market to product collaboration, deeply participate in project development.
2. Multiple exit options: In addition to issuing tokens, there are also various choices such as internal digestion within the ecosystem, product profitability, etc.
3. Flexible capital investment: Cash input can be reduced through the "resource exchange for equity/Token" method.

However, the incubation model has higher requirements for investors, necessitating comprehensive industrial resources and team capabilities support.

The Development of the Secondary Market

The secondary market has become a real safe haven for current funds. In 2024, the total trading volume of the crypto secondary market is expected to rebound to nearly $13 trillion, a year-on-year increase of about 40%.

Characteristics of the current secondary market boom:

1. Institutional entry, strategy-driven: Traditional financial institutions are pouring significant amounts of capital, making the market increasingly mature.
2. Liquidity First: High liquidity and high volatility assets such as MEMECoin, AI, RWA are in high demand.
3. Short-term speculation is prevalent: Investors tend to pursue liquidity to achieve high profits within short cycles.

Choices for Web3 Investors

Despite the current challenges faced by the VC model, the market cycle continues, and there are still opportunities for crypto VC to rise again in the future. For high-net-worth investors, the available investment paths include:

1. Incubation Model: Suitable for investors who can deeply participate in project development, potentially bringing returns beyond traditional VC.
2. Secondary Market: Provides higher liquidity and strategic flexibility, allowing participation through structured products, custody configurations, and other means.

No matter which path is chosen, compliance is a core issue. As global cryptocurrency regulations tighten, investors need to fully consider the compliance requirements, legal risks, and tax arrangements of different paths. Compliance is not only a necessary course for risk prevention but also a key to navigating cycles and making stable arrangements.