Ethena Labs Founder Discusses Challenges and Opportunities in Altcoin Market

According to BlockBeats, Ethena Labs founder Guy Young expressed concerns on social media about the potential exhaustion of crypto-native capital, which may hinder altcoins from surpassing previous cycle peaks. He noted that the nominal market cap peaks of altcoins in the fourth quarters of 2021 and 2024 both stalled at approximately $1.2 trillion, adjusted for inflation. Young questioned whether this represents the valuation ceiling for global retail capital in 99% of speculative projects.Young highlighted a significant opportunity for tokens with real business models, producing tangible products and generating revenue for actual users, to expand channels to institutional investors in the stock market. Compared to the global stock market valuation, the altcoin market is relatively small. He mentioned that the current NAV premium arbitrage is fleeting, with Michael Saylor being an exception due to his unique leverage advantage in capital structure.Despite these challenges, Ethena Labs supports StablecoinX's ENA treasury strategy, aiming to create pathways for stock market funds. These funds have a substantial demand for stablecoins and digital dollar enterprises experiencing hyper-growth. The focus is on unlocking untapped capital pools rather than short-term NAV arbitrage. Young acknowledged the pressure Ethena faces from venture capital unlocking and reflected on his fundraising mistakes, noting the severe capital mismatch in the crypto world, where private VC capital exceeds the liquidity needed to support token valuations, contrasting with the Web2 world.Young clarified that this does not apply to all speculative tokens, as projects with zero revenue remain speculative despite any equity facade. However, he believes that a select few tokens, endorsed by traditional finance and aligned with long-term growth trends, will benefit significantly. Apart from mainstream cryptocurrencies, there are fewer than ten such tokens globally, which will eventually differentiate themselves from those ignored by traditional finance.