Author: danny; Source: X, @agintender
Why is 2025 considered a year of "listing and selling"? Because in the business plans of top-tier projects, there is never a section on "profiting from technical services"; selling tokens is the only business model.
When token = product = sole revenue, this industry is destined to be a game of musical chairs, not a value-creating BUIDL.
2023 to 2025 is a structural transformation period worth remembering in the history of the cryptocurrency industry, marking a fundamental decoupling between protocol utility and asset valuation.
The period from 2023 to 2025 is a period of structural transformation worth remembering in the history of the cryptocurrency industry, marking a fundamental decoupling between protocol utility and asset valuation.
Traditional Fujianese merchants would exclaim "Struggling!" upon seeing this (Jia lat)
Introduction: The Ruins of Ukraine and the Fujianese's Acumen
In the business world, the Fujianese merchants ("Minshang") are known for their keen business intuition: wherever there is a price difference, there is business; wherever there is chaos, there is arbitrage. Even amidst the war in Ukraine, Fujianese people sought opportunities to make a fortune through risk.
The Fujianese merchants ("Minshang") deeply understand one principle: in the gold rush, the most certain path to wealth is not speculative gold panning, but providing speculators with the necessary production tools (shovels) and logistical support.
In the context of the crypto economy, "selling shovels" theoretically corresponds to providing blockchain infrastructure (L1, L2, cross-chain bridges), with revenue derived from gas fees and transaction throughput ("tolls"). However, from 2023 to 2025, with technological upgrades such as EIP-4844 and an oversupply of L2/L3 infrastructure, the narrative of the commercial viability of "selling shovels" as an independent source of revenue began to crumble. Therefore, the industry shifted to a distorted "global arbitrage" model. Project teams no longer focused on selling infrastructure services to users, but instead began selling the financial rights (tokens) of the infrastructure itself as the core commodity to retail investors. At this point, the "shovel" became a tool for attracting users/marketing, its sole purpose being to justify the issuance of overvalued tokens. This article will dissect the mechanisms of this shift in detail—particularly the phenomenon of “low liquidity, high FDV,” the predatory market-making structure, and the industrialization of airdrops—and conclude that the main commercial output of the 2023-2025 infrastructure cycle is not technological utility, but rather the systemic exit of venture capital from retail liquidity. Chapter 1: The Prototype of Fujian Merchants: Commercial Pragmatism and Global Arbitrage Networks 1.1 The Wisdom of Secondary Markets: From California to the Global The adage “selling shovels during the gold rush” is often attributed to the California Gold Rush of 1849. At that time, merchants like Samuel Brannan did not amass wealth by panning for gold in riverbeds, but by monopolizing the supply chain of tools needed by miners. In the context of Chinese commerce, particularly for the Fujianese merchant class, this philosophy transcends simple supply and demand; it extends into a complex system of "global arbitrage." Fujian, a mountainous province with limited arable land and facing the sea, historically forced its merchant class to rely on the ocean. This geographical environment fostered a unique commercial DNA, primarily comprised of two core tenets: 1. Risk Transfer: Gold prospectors bear the full risk of "not finding gold," while merchants lock in profits by selling tools. Regardless of the prospector's success, the value of the shovel is realized instantly in the transaction. 2. Networked Arbitrage: Utilizing close-knit networks based on clan and kinship to move capital and goods between markets with different jurisdictions and economic development levels. For example, procuring goods from the low-cost coastal areas of China and selling them to higher-profit markets in Africa or South America, profiting from information asymmetry and regulatory gaps. This spirit of Fujianese merchants—characterized by their willingness to take risks, their belief in the power of hard work, and their ability to profit from arbitrage—has found a perfect modern counterpart in the borderless and still-developing digital ocean of cryptocurrencies. 1.2 Parallel Mapping of the Crypto World: From Gas to Governance In the early days of the crypto industry (2017-2021), the metaphor of "selling shovels" was largely apt. Exchanges (such as Binance and Coinbase), mining equipment manufacturers (such as Bitmain), and Ethereum miners amassed huge cash flows by catering to the speculative frenzy of retail investors. They strictly adhered to a merchant model: taking a commission (gas fee or transaction fee) from every transaction. However, entering the 2023-2025 cycle, the market underwent a fundamental divergence. The impoverishment of "gold miners": Retail investors interacting on the blockchain are becoming increasingly cash-strapped and savvy, no longer readily paying exorbitant tolls. The inflation of "shovel merchants": Infrastructure projects are growing exponentially. The supply of "shovels" such as Layer 2, Layer 3, modular blockchains, and cross-chain bridges far exceeds the actual demand for "gold mining" (real transactions). Faced with shrinking profit margins in core services (block space), infrastructure projects are beginning to emulate the "intertemporal arbitrage" strategy of Fujianese merchants, but with a financial engineering transformation: instead of exchanging goods on this side for currency on the other side, they are exchanging "expectations" (narratives) on this side for "liquidity" (USD/stablecoins) on the other side. Cryptocurrency VCs and market makers have industrialized the arbitrage concept of Fujianese merchants: Regulatory arbitrage: Foundations are registered in the Cayman Islands or Panama, development teams are in Silicon Valley or Europe, while the marketing target is retail investors in Asia and Eastern Europe. Liquidity arbitrage: Acquiring shares in the primary market at extremely low valuations (seed rounds), and dumping them in the secondary market at extremely high valuations (high FDV) through market makers. Information arbitrage: Profiting from the huge information gap between the public narrative of "community governance" and the private terms of "insider unlocking." Chapter 2: The Sudden Change in Business Models: Infrastructure as a "Loss-Making Product" 2.1 The Collapse of Protocol Revenue and the Technological Paradox By 2025, the traditional "shovel-selling" revenue model for Layer 2 scaling solutions faces an existential crisis. The technical success of the Ethereum scaling roadmap, particularly the implementation of EIP-4844 (Proto-Danksharding), introduced "Blob" data storage space, significantly reducing the cost of L2 submitting data to L1. From a technical perspective, this is a huge victory, with user transaction costs decreasing by more than 90%; however, from a business perspective, it destroys L2 profit margins. In the past, L2 could earn high profits by reselling expensive Ethereum block space. Now, with data costs approaching zero, L2 is forced into a "race to the bottom." According to reports from 1kx and Token Terminal, although the average daily transaction volume in the first half of 2025 increased 2.7 times compared to 2021, the total gas fee revenue of blockchain networks decreased by 86%. This means that the price of "shovels" has become so cheap that it can no longer support the valuation of shovel manufacturing plants, and miners can no longer afford the startup costs. 2.2 ZkSync Era: The Demise of the Revenue Illusion ZkSync Era provides a stark example of the true nature of revenue. Before the Token Generation Event (TGE) in June 2024, the ZkSync network generated huge daily sorter revenues, peaking at over $740,000 per day. On the surface, it was a thriving "shovel shop." However, this was actually a false boom driven by "airdrop expectations." Users paid gas fees not to use the network (mining utility), but to buy a lottery ticket with a chance to win (airdrop). What happened next is well-known: after the lottery (airdrop) took place in June 2024, ZkSync's daily revenue immediately plummeted to approximately $6,800, a drop of 99%. If a physical store's foot traffic instantly drops to zero after it stops giving out coupons, it indicates that there is no real demand for its core product. 2.3 Starknet: Extreme Mismatch Between Valuation and Revenue Starknet also demonstrates the absurdity of this valuation logic. Despite its leading position in zero-knowledge proof technology, its financial data could not support its pricing in the primary market. In early 2024, Starknet's (STRK) fully diluted valuation (FDV) exceeded $7 billion, even reaching $20 billion in the over-the-counter futures market. Meanwhile, its annualized protocol revenue after EIP-4844 was only in the tens of millions of dollars. This meant its price-to-sales ratio was as high as 500 to 700 times. In contrast, NVIDIA, the true "shovel seller" in the AI field, typically has a price-to-sales ratio between 30 and 40 times. Investors bought STRK not based on the discounted value of its future cash flows (traditional equity investment logic), but on a game theory logic: believing that buyers who "believe more in the narrative" will take over at a high price. The traditional Fujianese business model of "small profits but quick turnover, stable cash flow" has been abandoned in the cryptocurrency world. It has been replaced by a model based on financial alchemy: creating an overvalued financial asset out of thin air by building technological barriers and narratives, and then selling it to retail investors who lack discernment. Chapter 3: The Mechanism of Financialization: The "Low Float, High FDV" Trap. To maintain the "selling tokens" business model in the absence of real revenue, the industry popularized a specific market structure between 2023 and 2025: "Low Float, High FDV". 3.1 Binance Research's Warning In May 2024, Binance Research released a major report titled "Low Circulation and High FDV: How Did We Get Here?", systematically criticizing this phenomenon. The report pointed out that this distorted circulation structure has become the industry standard for infrastructure token issuance. Operating Mechanism: Venture capital firms (VCs) enter the seed round with valuations of $50 million to $100 million. Artificial Scarcity: When a project is listed on an exchange, only 5%-10% of the total supply is released. Market makers exploit this extremely thin liquidity, using only a small amount of capital to drive up the price of a token. Market Value Illusion: A token with a circulating supply of 100 million and a price of $1 has a "circulating market capitalization" of $100 million, which seems cheap (Small Cap). However, if the total supply is 10 billion, its FDV is as high as $10 billion. Systemic Dumping: Over the next 3-5 years, the remaining 95% of the tokens will continue to unlock. To maintain the price of $1, the market needs to absorb $9.5 billion in new funds. In a zero-sum game market, this is mathematically almost impossible, and the price will inevitably crash. 3.2 Psychological Anchoring for Retail Investors This structure precisely exploits the cognitive biases of retail investors. Retail investors often focus only on "unit bias" (the perception that $0.10 is cheaper than $100) or "market capitalization," ignoring the inflationary pressure represented by FDV (Free-to-Vend). For shrewd VCs and project teams, like those from Fujian, this presents a perfect opportunity for intertemporal arbitrage: a. They lock in huge paper returns (a hundredfold increase from seed round to FDV). b. They capitalize on retail investors' pursuit of short-term price increases caused by "low liquidity" as a source of exit liquidity. c. Through a linear unlocking process spanning several years, they disperse selling pressure, gradually reaping market liquidity like a frog being slowly boiled in water.
3.3 Data Comparison: The Valuation Gap in 2025
By 2025, this valuation bubble had become extremely distorted. According to a 1kx report, the median price-to-sales ratio (P/F ratio) of Layer 1 blockchains was as high as 7,300 times, while the P/F ratio of DeFi protocols that generate actual cash flow was only 17 times.
This huge valuation gap reveals an obvious market truth—the valuation logic of infrastructure projects is not based on their profitability as "shovels," but on their ability to be sold as "financial assets." The project teams are essentially running a money printing factory, not a technology company.
Chapter 4: The Evolution of the Crypto World from the Perspective of Fujian Merchants: From "Selling Services" to "Selling Goods" 4.1 The Traditional "Selling Shovels" Logic (2017-2021) In the early ICO or DeFi Summer era, the logic was similar to traditional Fujian business practices: Scenario: Retail investors want to mine for gold (trading/speculation). Shovels: Exchanges, public chain gas, lending protocols. Logic: You use my shovel to dig for gold, I charge you rent (transaction fees). Token: Similar to a "pre-sale service voucher" or "membership card," representing the right to use the shovel or the right to receive dividends in the future. 4.2 The Alienation from 2023 to 2025: "Token as Product" By 2025, with an overabundance of infrastructure (L2 proliferation), "collecting tolls" is no longer profitable (gas fees have dropped to negligible levels). Project teams and investors discovered that instead of painstakingly making a good shovel and earning meager rent, it's better to directly sell "shovel company stock" (Token) to retail investors as a commodity. In this new model: The real product is the Token. This is the only product that can generate sales revenue (USDT/USDC). Marketing materials: These include public blockchains, games, and tools. Their sole purpose is to provide a narrative context for the token, increasing the credibility of the "goods." Business model: Selling tokens = sales revenue. This is an extremely tragic regression—the industry no longer pursues profit through technological services, but instead uses financial means to price and sell "air." 4.3 Production and Packaging: High Valuation Endorsement and the "Credibility" Game If tokens are goods, then top-notch packaging is needed to sell them at a high price (ship). Institutional Endorsement: Not for Investment, but for "Branding" In the 2023-2025 cycle, the role of VCs shifted from "venture capitalists" to "brand franchisees." The Truth Behind High-Value Funding: Starknet's valuation was $8 billion, and LayerZero's was $3 billion. These astronomical valuations were not based on future transaction fee revenue (Starknet's annual revenue wasn't even enough to cover team salaries), but rather on expectations of "how many tokens could be sold to retail investors in the future." The names of top VCs like a16z and Paradigm are like "Nike" labels on shoe factories in Fujian. Their role is to tell retail investors: "This product (token) is genuine and worth buying at a high price." Interestingly, why can VCs offer such high valuations? Because retail investors believe their purchase price is the same as, or even lower than, that of top VCs, unaware that valuations can only go lower, never truly bottom. 4.4 KOL Recommendations: More Than Just Promotion, They Are "Distributors" In this chain, KOLs no longer provide value analysis, but rather act as distributors at various levels. Recommendations are equivalent to selling: Project teams or market makers will provide KOLs with low-priced tokens or "rebates." The KOL's task is to create FOMO, maintain the hype surrounding the "goods," and ensure sufficient retail liquidity to absorb selling pressure during the VC unlocking period. Chapter Five: The Market Maker Industrial Complex: The Invisible Intermediary If tokens are commodities, then market makers (aka "wild manipulators") are distributors. Between 2023 and 2025, the relationship between project teams and market makers transformed from service provision to predatory collusion. This is similar to the strategy of Fujian business groups using clan networks to control channels, but the goal is no longer to circulate goods, but to exploit their counterparts. 5.1 Loan + Call Option Model During this period, the standard contract between project teams and market makers was the "loan + call option" model. Transaction Structure: The project team lends tens of millions of tokens (e.g., 2%-5% of the circulating supply) to the market maker interest-free as "inventory." Simultaneously, the project team grants the market maker a call option, with the exercise price typically set at or slightly higher than the initial listing price. Incentive Misalignment: If the price of the coin rises above the strike price, the market maker exercises their option, buying tokens at a low price and then selling them to retail investors at a higher price, profiting from the price difference. If the price falls, the market maker only needs to return the borrowed tokens to the project team, without incurring any capital loss. Even worse, some market makers initially "pour" as many tokens as possible onto those with a "chance" of listing. Market makers are no longer neutral liquidity providers but have become speculators who bullish on volatility. They have a strong incentive to create sharp fluctuations to push the price above the strike price in order to unload their holdings. This model mathematically dictates that market makers must be at odds with retail investors. 5.2 Contract Short Squeeze: The Most Efficient Way to "Find Buyers" "Contract mechanisms are the vehicle for unloading shares," representing the most ruthless manipulation tactic of this cycle, even giving rise to narratives such as "delisting narratives" and "pre-market hedging narratives." What happens when no one is buying in the spot market (retail investors aren't buying)? Create people who have no choice but to buy. Setting up a trap and controlling the supply: Before negative news or unlocking, the market is generally bearish, and funding rates are negative. Pumping the price: Market makers use their concentrated spot holdings (low circulating supply) to drive the price up with only a small amount of capital. Short squeeze: Short sellers in the contract market are forced to buy at market price to close their positions after being liquidated. Distribution: Project teams and market makers take advantage of the huge passive buying caused by the short squeeze to sell their spot goods at a high price to these "forced to take over" short sellers. This is like a Fujian businessman spreading rumors in the market that "shovels will be cheaper," and then, when everyone is shorting shovels, suddenly monopolizing the supply and raising prices, forcing short sellers to buy shovels at a high price as compensation. 5.3 Movement Labs Scandal: "Market manipulation" written into contracts The Movement Labs (MOVE) scandal, which broke out in 2025, completely tore off the fig leaf of this gray industry chain. Coindesk's investigation reveals that Movement Labs entered into a secret agreement with a mysterious intermediary called Rentech (allegedly linked to market maker Web3Port), handing over control of approximately 10% of the token supply (66 million tokens). The contract shockingly contained clauses incentivizing market makers to push the FDV (Funds to Value) to $5 billion. Once this target was reached, both parties would split the profits from the token sales. When Rentech began massively dumping tokens on the market, Binance detected the anomaly and suspended the relevant market maker's account, and Coinbase subsequently suspended MOVE trading. This incident demonstrates that so-called "market capitalization management" is often simply a legally binding contract for "pump and dump." This is strikingly similar to the early operations of Fujianese businessmen in the gray areas of global trade—using complex networks of intermediaries and multiple shell companies to circumvent regulations and control pricing power. However, in the crypto space, this operation directly plunders the principal of retail investors. Conclusion: If these projects were truly in the "shovel business," they would be desperately optimizing gas revenue and daily active users. But they seem unconcerned, simply building castles in the air. Because their true business model is: producing tokens at extremely low costs -> pricing them at extremely high valuations -> selling them on the secondary market through contracts and market makers -> exchanging them for USDT/USDC (real money). This is why the crypto world in 2025 looks like a casino—because no one is doing business; everyone is trading. Chapter Six: The New Market Landscape in 2025: The Application Layer's Counterattack As we enter 2025, market fatigue with the "infrastructure casino" model has reached a critical point. Data shows that funding and attention are shifting from the "shovel-selling" infrastructure layer to the "application layer," where real profits can be made. 6.1 The Shift from Public Chain Narrative to DApp Cash Flow The "On-Chain Revenue Report" released by venture capital firm 1kx at the end of 2025 illustrates this phenomenon. Revenue Reversal: In the first half of 2025, DeFi, consumer applications, and wallet applications contributed 63% of total on-chain fees, while the fee share of Layer 1 and Layer 2 infrastructure shrank to 22%. Growth Comparison: Application layer revenue increased by 126% year-on-year, while infrastructure layer revenue growth stagnated or even declined. Return to Business Logic: This data marks the end of the era of monopolistic profits by "shovel vendors." As infrastructure becomes extremely cheap (and commoditized), value capture capabilities shift to applications that directly face users. DApps that can truly generate user stickiness and cash flow (such as Hyperliquid and Pump.fun) are beginning to replace L2 public chains as the darlings of the market. 6.2 Reassessment of Tokens as Customer Acquisition Costs The industry is beginning to re-examine the economic nature of "airdrops." In 2025, tokens will no longer be seen as symbols of governance rights/dividend rights/status, but rather as negative news regarding customer acquisition costs (CAC) and market crashes. Data from Blockchain Ads shows that the cost for Web3 projects to acquire a real user through token incentives is as high as $85-$100 or even more, far exceeding the standard in the Web2 industry—a result of path dependence. Projects like ZkSync, which have spent hundreds of millions of dollars (in token terms) on incentives, have found that these users are "mercenaries"—liquidity disappears as soon as incentives stop. This forces projects to shift from a crude "money-spraying" model to a more refined "points system" and "real revenue sharing" model. Chapter Seven: Conclusion: The Merchants' Festival is Over. The cryptocurrency market from 2023 to 2025 witnessed a grand spectacle of primitive capital accumulation disguised as "technological innovation." The ancient wisdom of Fujian merchants—"selling shovels during the gold rush"—was distorted to the extreme: Free Shovels: To attract traffic, the actual shovels (block space) were continuously discounted, even supplied below cost (through token subsidies). Factory Securitization: Merchants no longer made money by selling shovels, but by selling "stocks in the shovel factory" (high FDV tokens) to retail investors who believed the factory had monopolized the gold mine. Arbitrage Institutionalization: Market makers, VCs, and exchanges form a close-knit community of interests, using complex financial instruments (options, lending, contracts) to transfer retail wealth. If we re-examine the cryptocurrency market in 2025 through the eyes of Fujian businessmen, we will see the following picture: This group of people (project teams + VCs) originally claimed to be building houses (Web3 ecosystem) in Ukraine (high-risk new area), but they didn't really care whether the houses were habitable. What they actually did was: First, put up a sign on that land, and then print a bunch of "brick tickets" (tokens). They then got Wall Street bigwigs (VC institutions) to endorse them, saying that these brick tickets could be exchanged for gold in the future. They hired a village loudspeaker (KOL) to announce that the price of tokens was about to rise. Finally, they used a contract mechanism to wipe out those trying to short the tokens, turning their worthless tokens into real money. This is why it's said that "listing a token is just a way to sell it off." Because their business plans never include "profiting from technical services"; selling tokens is their only business model. When tokens equal products, this industry is destined to be a game of musical chairs, not a business that creates value. This may be the biggest tragedy of the crypto world in 2025. It's not that altcoins don't have bull markets, but that bull markets can't accommodate altcoins without cash flow. Finally, we must ask: Who exactly has contributed to today's high FDV and low circulation? Who has molded the token into the ultimate commodity/service? Was it the launchpad? The meme? The exchange? VCs? The media? Traders? Analysts? The project team? — Or all of us?
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