The era of "picking up money" is over, and it will become increasingly difficult for retail investors to make money through crypto assets such as Bit

Original title: "The era of "picking up money" is over, and it will become increasingly difficult for retail investors to make money through Bitcoin and other crypto assets"

Original author: Terry, Plain Language Blockchain

 

In the past year, have you encountered a Rug Pull (withdrawal from the pool, running away) project? Have you encountered "buy-in peak" due to the advocacy of KOLs? Or suffered losses caused by increasingly rampant phishing attacks? Or have you bought a newly launched token on a top platform and it has been falling all the way?

 

It is estimated that many users feel the same way and have been hit by at least one of these scenarios. It can be said that this should be a portrayal of the investment experience and true state of mind of most ordinary investors in the past period of time:

 

Whether it is on-chain security issues or asset shrinkage issues, it is hard for users to guard against them. Many pitfalls that were commonplace before have even begun to be industrialized. To put it bluntly, even the "leek roots" have been uprooted.

 

This article will review the increasingly various pitfalls in the crypto world recently, and whether there are still opportunities for ordinary users to make money in the crypto industry?

 

Ordinary users' "fancy ways to lose money"

 

1) Industrialization trend of Rug Pull

 

First of all, the setup of Rug Pull's money-swindling is getting more and more high-end, and the most outrageous one is the ZKasino incident:

 

On April 20, a community user found that ZKasino deleted the sentence "Ethereum will be returned and can be bridged back at this point." from the Bridge funds on its official website Bridge interface based on the comparison of the Wayback Machine historical pages.

 

At the same time, community users were unable to withdraw funds, the ZKasino official Telegram was banned by administrators, and social media also stopped updating. The total amount of funds abducted was more than 20 million US dollars.

 

 

But what’s interesting is that just one month ago in March, ZKasino just announced that it had completed its A round of financing with a valuation of 350 million US dollars. The specific amount was not disclosed, but several trading platforms and VCs participated in the investment…

 

In addition, zkSync, which is jokingly called the "Rug Chain", not only has frequent ecological project security incidents, but also has an increasingly obvious industrial trend of taking advantage of hot spots and quickly completing harvests, just like the recent Rug Pull of the zkSync ecological DEX Merlin, which has the same name as Merlin, affecting millions of dollars in funds.

 

I can only emphasize again that the current many projects in the zkSync ecosystem are indeed uneven. While participating in the experience of the zkSync ecosystem, everyone should remain vigilant and guard against risks at all levels.

 

2) Increasingly rampant hacker/phishing attacks

 

The most eye-catching case in the field of on-chain security recently is undoubtedly the "same first and last number phishing attack" that everyone seems to have become accustomed to:

 

A whale address was phished by an address with the same first and last number, losing 1,155 WBTC, up to more than 400 million yuan! Although the hacker chose to return the funds due to various factors, it still revealed the extremely high risk-return ratio of this phishing behavior of "three years of no business, a lifetime of business after opening".

 

In addition, similar phishing attacks have been industrialized in the past six months - hackers often generate a large number of on-chain addresses with different first and last numbers as a prepared seed library. Once a certain address transfers funds with the outside world, they will immediately find an address with the same first and last number in the seed library, and then call the contract to make a related transfer, casting a wide net and waiting for the harvest.

 

Some users sometimes directly copy the target address in the transaction record and only check the first and last few digits, thus being attacked. According to Yu Xian, the founder of SlowMist, for phishing attacks on the first and last digits, "hackers are playing a net attack, willing to take the bait, a probability game."

 

This is just a microcosm of the increasingly rampant hacker attacks. For ordinary users, in the colorful world of chains, tangible and intangible risks are almost exponentially increasing, and personal risk prevention awareness is difficult to keep up.

 

In general, there are endless forms of attacks on chains, wallets, DeFi, and even social engineering attacks are popular, making DeFi security risks like an asymmetric one-way hunt: for technical geniuses, it is undoubtedly an inexhaustible free ATM, but for most ordinary users, it is more like a sword of Damocles that may fall at any time. In addition to being vigilant and not participating in authorization casually, it is more about luck.

 

And so far, C-end risks such as phishing and social engineering attacks are the most common ways for ordinary users to lose money in Web3, and the problem is getting worse due to the additional risk points of smart contracts.

 

Behind every successful scam, there will be a user who stops using Web3, and the Web3 ecosystem will have nowhere to go without any new users, which is also one of the biggest harms to the crypto industry.

 

3) KOL fancy calls

 

For most ordinary users, paying attention to the social media calls of various crypto KOLs is an important source of Alpha passwords.

 

This also gave rise to the so-called "KOL Round" - As a role with greater influence on secondary market investors, KOLs can even obtain shorter unlocking periods and lower valuation discounts than institutional VCs:

 

For example, Monad Labs recently completed a new round of financing with a large valuation of US$3 billion, and people familiar with the matter said that some KOLs in the industry were allowed to invest at a maximum of one-fifth of Paradigm's valuation.

 

So can following KOLs' orders really guarantee a steady profit? According to a study conducted by Harvard University and other researchers on the performance of crypto-related returns mentioned in approximately 36,000 tweets from 180 of the most famous crypto social media influencers (KOLs), covering more than 1,600 tokens, the following conclusions were not satisfactory:

 

The average one-day (two-day) return of a KOL tweeting a certain token was 1.83% (1.57%), and the return of crypto projects outside the top 100 by market value was 3.86% after one day of tweeting. The earliest time for returns to decline sharply was five days after the tweet was published, with an average return of -1.02% from the second to the fifth day, which indicates that more than half of the initial gains were eliminated within five trading days.

 

 

4) VC Token goes online and keeps falling

 

A VC Token with high FDV (fully diluted valuation) and low circulation, and a completely "dog" Memecoin that is responsible for its own profits and losses, which one would you choose?

 

The market has recently begun to change, and the Meme trend has emerged as a new force, boosting the extreme prosperity of Solana and Base chain transactions, just like PEPE, which has firmly established its position as the leader of the new Memecoin, has set a new record. In fact, in today's market environment, in addition to short-term speculation, the general public's call for fairness represented by Meme has gradually become a trend, and funds are voting with their feet.

 

Corresponding to this is the VC with extremely high FDV and falling trend after a series of recent listings on the top platforms. Typical representatives are AEVO, REZ and even BN Megadrop's first project BounceBit's Token BB, which have ended with a negative line almost every day since listing, and all users who entered the market have been deeply trapped.

 

By contrast, the discussion and questioning about Memecoin and VC will inevitably become the mainstream of the community again. Meme at least has user flow to bring continuous incremental funds and attention, while the new projects with valuations of billions of dollars are all old concept products with grand narratives or old gameplay, which will inevitably be disliked by the community. This also sounded the alarm for VCs and project parties who are accustomed to path dependence.

 

 

Where should ordinary players go?

 

Previously, in the article "Web3 sleepless, the "flower era" of the crypto world will never end?", it was mentioned that "we don't love "Flower", but the era of opportunities everywhere".

 

I believe that many friends in the crypto industry have thought about how to participate in this wave of the times if we have the opportunity to go back 10 years ago?

 

Hoard BTC? Become a miner? Found another Bitmain? Or become an early employee of BN? The best options seem to be countless. The past ten years of the crypto world were really a golden age that broke through the limits of imagination, and also gave birth to waves of industry legends and bigwigs.

 

In any case, the question of whether to make money or not is an eternal topic in the Web3 world and the lifeline of Web3 development.

 

When trading platforms, market makers, VCs, project parties, and KOLs all start to make money, but only most ordinary users continue to lose money, it means that the deep-seated structural problems of the entire market have been deformed to a certain extent and are destined not to last long.

 

Again, behind every "fancy way of losing money", there may be a group of users who stop using Web3 products, stay away from VC Tokens, and choose to embrace Memecoins, which are more fair and grassroots. This is a kind of resistance of funds voting with their feet.

 

Before some Web3 ecological applications can truly run through the value closed loop, ordinary users will have "nowhere to go". Of course, this may be the "twists and turns" that Web3 must go through in its development, and the crypto industry is still moving forward in exploration.

 

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