From ICO to Equity Tokenization: The Evolution of Crypto Market Investment

After writing about Robinhood yesterday, I browsed the internet for more information. I found that my statement that the OpenAI equity transaction would not attract much attention greatly underestimated the industry's reaction.

Moreover, the transaction involved not only the equity of OpenAIbut also the equity of SpaceX.

In fact, many heavyweight investors in the encryption ecosystem have paid attention to this transaction and are aware of the huge imagination space that may be brought about by this transaction.

This reminds me of the grand occasion of ICO in those days.

I have always believed that ICOis undeniably a great application that has emerged since the birth of encryption technology after Bitcoin.

Ethereum was born with funding from ICO.

It is great because it has greatly expanded the boundaries of investors. For the first time in human history, it has eliminated the artificially set and inherent thresholds in investment, allowing people to participate in investment from any border that the Internet can reach regardless of race, gender, nationality, or belief.

It has achieved the greatest liberalization of investment, and for the first time, people have the right to participate and choose without permission.

This kind of extremely liberalized investment will inevitably bring about an extreme wealth effect.

Of course, it also brought about a big negative effect: the vast majority of projects ended up in a mess.

I think the biggest reason for this negative effect is:

There was a lack of a relatively mature project evaluation system at the time, and the vast majority of investors had no data to refer to or learn from.

But this system is actually quite mature in the traditional investment field, especially in the venture capital field.

This has led to a mixed bag of projects, with good and bad projects.

But if those projects back then were like today's OpenAIandSpaceX, which had relatively credible institutions participating in the fundraising process and had continuously accumulated data for reference, I believe that the negative effects on investors would be much less harmful.

In recent times, there are two traditional fields of AIprojects that are quite eye-catching; one is Cursor, whose parent company is Anysphere; the other is Scale AI.

the former has now become a unicorn in the field of AIprogramming, and the latter has just been invested in byMetawith US$14.3 billion.

Cursor's parent companyAnyspherewas founded in 2022. In its early days, OpenAI invested 11 million in its seed round. I haven't found the valuation of its seed round on the Internet, but I estimate it to be around 100 million US dollars. If this is true, then OpenAI invested $11 million in a company valued at $100 million.

Scale AIwas established earlier, in 2016. The earliest investor was Paige Craig, who invested $245,000 in Ava Labs (the predecessor of Scale AI) with a valuation of $3 million at the time. Later, top Silicon Valley venture capital firms such as Accel, YC, and Founders Fund all participated in its fundraising rounds. The reason these companies have been able to grow and develop to this day is that, on the one hand, they have gone through the screening of venture capital firms one after another, and on the other hand, their products have been tested by the market to a considerable extent.

These two companies are not listed companies so far. Although they have gone through rounds of financing since their inception, the investors or institutions that participated in the investment can only wait for subsequent rounds of financing or the company's listingIPOto realize their equity.

The liquidity of the target they hold is greatly discounted.

On the other hand, there are many investors who really want to participate in such projects, but they cannot find such projects at all due to the narrow investment channels and information gap.

If such private equity can be tokenized and put on the chain for the participation of the general investors, on the one hand it can directly provide liquidity, making it convenient for the early investing institutions to exit at any time without having to wait for subsequent financing or IPO; on the other hand it can also facilitate those general investors who have a strong interest in these projects but have no way to invest.

I even think that if a large number of private equity in such projects in traditional fields (such as AIprojects) can be tokenized and traded before listing and introduced into the crypto ecosystem, the current phenomenon of mindlessly chasing meme coins in the crypto ecosystem will soon disappear---------When investors have solid and good projects, who would chase emotions all day long and treat gambling as investment?