Token2049: The current state of the industry: winners and losers, dangers and opportunities

Author: Sankalp Hashtalk Source: X, @HashtalkSankalp

Foreword: Background

Every week I spend hours reading, researching, and talking to some of the smartest entrepreneurs and investors. This article is my attempt to give you a very real snapshot of the current state of the crypto industry - these contents are derived from my personal participation in the Token 2049 and Solana Breakpoint conferences.

I have been involved in this field since 2013, so believe me, what I am about to tell you is the real situation today. Most of the conferences were my one-on-one exchanges with people, but I also shuttled through the maze of Token 2049 booths like Alice in Wonderland and explored the mysteries.

First of all, a big round of applause to Singapore, Marina Bay Sands and the organizers of Token 2049 - the event was perfectly organized. It is unparalleled that Singapore can still hold such a high-quality event during its busiest week (F1 weekend is coming up).

Without further ado, let's now break down the atmosphere, projects, founders, VCs, narratives, and of course the winners and losers of the event. Buckle up...we're diving in!

I.Overall Atmosphere

For the past decade, we have been sold a dream - that cryptocurrencies will change the world, solve real-world problems, and usher in a large number of Web2 users into this brave new world. But to be honest, cryptocurrencies have not fully delivered on this promise.

Instead, we have collectively become thrill-seeking gamblers, jumping from one Ponzi scheme to another like squirrels on espresso.

The 500+ side events on Token 2049 are a perfect example of this phenomenon. Projects are overfunded to the point where their marketing budgets are larger than their actual revenue (if they have any revenue), and flashy booths and five-star venues mask the fact that user adoption is minimal. VCs, who once casually invested billions, are now hitting the pause button.

The good news is that only serious projects are getting funded now; the bad news is that it hasn’t been until now.

As a result, we’re seeing a fragmented market with 100+ L1/L2s all vying for the same crypto audience — with less engagement and fewer meaningful conversations.

From Solana to Ethereum memes, to Base, and now Justin Sun flying too close to the sun like Icarus. This is great for short-term drama, but where is the long-term vision? Where is the mass adoption we were promised? The act of jumping from one meme to another chain is not doing real business.

Over the years, we have gone from ICO hype to DeFi yield farming, to NFT mania to GameFi's distribution Ponzi scheme, to PoS staking and re-staking schemes, and now even to Bitcoin re-staking (is this real?), culminating in a pyramid of points and airdrops.

What's the next gimmick? I and people in my circle are very worried about the direction this industry is heading. There is a lot going on, but there is almost nothing worth showing.

VCs are frustrated that they didn't foresee the meme coin craze and they can't get involved in this space with regulated funds. Founders complain that VCs no longer fund every project that pops up, and farmers are disappointed that airdrops and points have not brought the expected wealth (such as Grass, Eigen, Blast, etc.). The only ones who can laugh are traders (CEX, DEX, perpetual contract trading), gambling platforms (such as Rollbit, Shuffle, Polymarket, meme coins) and the infrastructure that supports it all. This is obvious from F1 sponsorship, giant booths and multi-million marketing budgets.

Meanwhile, AI and stocks are stealing the show, and NVIDIA is delivering returns like cryptocurrencies. Better returns, less risk, better regulation, and more convenient UI/UX for depositing with fiat currency.

Smart traditional financial money is earning returns from stocks, which are much less risky than cryptocurrencies (yes, I know stocks are risky too, but look at the current crypto market). Why bother with cryptocurrencies, can't you just buy options on MSTR or COIN to get exposure to cryptocurrencies?

Okay, okay, not all is bad. There are still some silver linings. Some great founders are still getting funded, and some real use cases with real revenue potential are starting to emerge. VCs are getting more selective, thank goodness. And we’re also seeing more enterprise players, like Sony, global banks, and financial firms, tiptoeing into this space. But let’s be clear — this is not the mass adoption we were promised.

So where are the opportunities? I’ll explore that below, but I think the answer depends on the perspective of the “coin holder.” Where you are, the game you’re playing, the community you’re a part of, and your situation will determine everything.

In crypto, two types of games have emerged:

1. Short-term narrative-driven games, quick in and out:There’s nothing wrong with this type of game, but it’s mostly played by gamblers, short-term founders, VCs, and KOLs, all looking to get rich quick by picking up bargains on the knife edge.

2. Long-term, big VC-backed games:Big funds backing top developers and founders in the hope of huge returns from IPOs and potential future “Solana” or infrastructure projects.

So, while the atmosphere of these events is a bit like parading in the rain, there are still bright spots—some founders, projects, and VCs that may surprise us in the next few years.I’ve been in this crypto rabbit hole for 11 years, and I’m going to stay there. But let me be clear: if Bitcoin goes to $100,000, we will all be quickly back in the "Ponzi Scheme" paradise, and no one will care about fundamentals - until the market rings the alarm bells for us, and then it will be too late.

Stay hungry, stay stupid, stay hedged, always

Second, Cryptocurrency Audience

1. Crypto Investors and Traders (65%)

These newbies are like excited puppies, chasing every shiny target, mainly to catch the next Bonk, WIF or Poppet, hoping to exit quickly and leave with profits. Their characteristics include:

• Hopeful Speculators:They believe they can get rich overnight by cycling from one meme coin to another in the short term, like kids jumping for candy at a carnival.

• Freebies:They are mainly interested in the freebies - gifts at booths, parties, and countless peripheral events that promise free drinks and snacks.

• Short-term Thinkers:They focus on immediate gains and often ignore the more complex game going on behind the scenes.

• Project Creators:Some even try to launch their own projects, usually funded by like-minded short-term VCs. But most of these founders have difficulty obtaining further financial support.

2. "Smart" developers and VCs (25%)

This group is the "smart" people who think they are elites. They try to imitate the success of Vitalik, Anatoly or Raj, while selling their dreams to VCs. Their strategies include:

• Priority financing:Their first goal is to raise funds for operations in the next 2-3 years, creating hype through cooperation with KOLs and flashy announcements.

• Token hedging:They typically sell a large pool of tokens from their treasury to fund more operations, and gradually sell them off once the token is listed, while letting the price fall.

• Letting others take over:If a bear market comes, VCs and retail investors will be the ones to take over, while these founders continue to enjoy their fat salaries and business class travel.

• Disguised long-term vision:They pretend to be champions of change until the token is launched, then their true intentions are revealed - think of Blast and Friend.tech, who everyone knew would quickly jump to the next Ponzi scheme. There are hundreds of examples of this type of project.

3. True builders (10%)

The last category is the true dreamers - those true "warriors" who are committed to building their "French future" (or whatever their vision is). Their characteristics include:

• Smart minds:These people are not just selling dreams, they focus on creating revenue-generating businesses that truly add value.

• Tenacity:Although they may have difficulty gaining attention at first, they are steadfast and refuse to launch tokens just to exit liquidity.

• Long-term commitment:They take a long-term view, are down-to-earth, dare to speak out, and advocate for the sustainable development of the industry.

In short, these three groups show the spectrum of attitudes in the crypto space - from impulsive gamblers to cunning planners and finally to real builders who may lead us to a brighter future.

III. L1/L2 and Infrastructure

• Ethereum's identity crisis:Ethereum is in an identity crisis - you can imagine it is in a mid-life crisis and wants to buy a sports car while others choose electric cars. Now that most of the attention (and development power) has turned to Solana and some specific EVM Layer 2, many users are beginning to cast a shadow on Ethereum. In the end, price is more important than block size. I often ask myself, have Ethereum's opinion leaders become too comfortable to interact with the developer community? Why can't they be like Solana? Is Vitalik really the "savior"?

• Solana:The Clear Frontrunner:In my opinion, Solana is confidently walking the runway like a model who has won the “Best in Show” award. I have been a strong advocate for Solana in our Telegram channel and Hashtalk newsletters. After Breakpoint, the heat in the Solana ecosystem is even more electric. Not only are they putting their money where their mouth is, they are also shipping products faster than a pizza delivery on game night. Looking at Firedancer, the Solana community is very organized, especially compared to the chaotic scene of Ethereum global events. Solana’s single-chain focus and unified community give them an advantage - focus is key! If you want detailed analysis on Solana, subscribe to 5-Minute Macro and Crypto or 52 Trades in 52 Weeks.

• TON:The Huge Success of TADA and TON Crypto Payments: On Token 2049, almost everyone and their mother is passing around referral codes using TADA and TON. It’s been an extremely successful marketing campaign. TON is the next most promising L1, with the potential to really drive mass adoption with its own 800 million users. I’m very bullish on TON.

• VC Interest and Investments in the Next Solana Killer: Venture capital continues to flow in to find the next possible Ethereum or Solana killer. Mathematically, it’s obvious: if you can find a project that will return 1,000x in the next few years, investing in it is like finding a golden ticket in a chocolate bar. There are currently more than 10 L1s with almost no activity that are still trading with market capitalization valuations (FDV) in the $1 billion range. This in itself is a huge return for any VC. This strategy works — until it doesn’t. So invest until it doesn’t work anymore.

• Gen Z L1s Are the Talk of the Season:Projects like Monad and Berachain are the hot spots right now, while SUI and Base are also on the radar. In contrast, older generation chains like Aptos, SEI, and TIA (Millennial L1s) are slowly losing steam, and even older chains like Polygon, Algorand, and Cosmos are fading from view as quickly as your New Year’s resolutions. Yes, occasionally we see price surges driven by market movers and new narratives — look at FTM and AVAX — but these are usually as fleeting as Snapchat stories. If you could show me a standout app on one of these chains that has captured the public’s attention (like GMX, Hyperliquid, Polymarket, or Friend.tech), I might reconsider.

• Specialization of niche chains:We are witnessing the specialization of chains towards specific niche markets: Solana focuses on memes, payments, and trading, Ronin focuses on GameFi, and Arbitrum focuses on DeFi. This trend, coupled with chain abstraction and cross-chain solutions, is improving the user experience and making interactions smoother.

• Moving towards B2B infrastructure and service providers:Some OG chains are starting to offer CDKs, SDKs, rollups, and app chains. While this may keep their tokens relevant, it feels more like a stopgap measure - great for continuing to enjoy a luxurious life, but does not substantially help the sustainability of the ecosystem.

In summary, while Ethereum is struggling with an identity crisis like a teenager with an uncertain haircut, Solana is constantly moving forward, driving innovation and community engagement. It will be very interesting to see how these dynamics evolve and which projects can truly stand the test of time down the road.

4. Projects and Founders

• The Harsh Reality of Crypto Fundraising:Let’s face it — most projects are dying a slow and painful death in the crypto wilderness. The glory days are gone when all it took was a shiny PowerPoint presentation to attract funding like a disco ball. Today, it’s like trying to sell ice to Eskimos — good luck with that!

• Funding Cycle: The Never-Ending Hamster Wheel:Projects that do get funded aren’t much better. They’re stuck in a hamster wheel of burning money. Once they run out of money or run seriously low on it, they either raise more money or launch a token. If the token works, they might be able to survive another 2-3 years; if not, they’ll have to start all over again. Without new users or real revenue, the path to profitability is like driving down a deserted country road on a foggy night.

• New Projects Rise:Old projects are like the toys that no one wants to play with anymore. Why invest in something that’s outdated? New options like SUI, Aptos, Berachain, and Monad are offering grants to attract investors. It’s no different than the past, just old wine in new bottles — and the bottles may not even be fresh anymore.

• Ponzi Schemes 2.0:Then come the Ponzi schemes, which seem to keep popping up like mushrooms after rain. This reminds me of the Celsius and BlockFi days, when the lending business got out of control and led to a catastrophic crash. Now, we’re seeing a similar cycle — staking, re-staking, and “your tokens generate my tokens, and together we generate yield!” — but this time on multiple chains at 10x scale. Where does it end? No one knows!

• The Technical Founder’s Dilemma:Most technical founders seem oblivious to the fact that crypto is a completely different space. They’re often unaware that buzzwords like token economics, product-market fit, and community building are critical to success. It’s not enough to just have a great product; you need a large network and a bit of luck to make it work. If you’re not in the right VC circles or don’t belong to the “KOL mafia,” then good luck to you.

In short, crypto is a strategy game, and if you want to play, you better know the rules, or you could become yet another cautionary tale in the crypto world.

V. VC Funds

• A Year for VCs Navigating the Crypto Quagmire:Let’s face it—most VCs had a tough year: they either entered the market too early and watched their investments depreciate, or invested this year only to find out that they have to wait 12-18 months for their tokens to vest. In the time dimension of cryptocurrency, this is like waiting for a snail to finish a marathon!

• A Few Smart Players:However, there are a few VCs who play this game as cleverly as chess masters. They help projects go public at high prices with full market value dilution (FDV), hedge their risks, and then buy back at low prices when the token prices hit the bottom. It’s like buying an expensive suit at a discount after a fashion show—the key is when to hold and when to sell!

• The Race to Revenue:Most VCs have finally realized that there are projects that can generate actual revenue — like Friend Tech, Pump Fun, and Polymarket. Now, almost everyone is racing to catch the next big thing. The challenge is to sift through the crowd of competitors to identify the winners and losers — there are over 100 alternatives to Pump Fun alone! Imagine being at a networking event where everyone in the room is trying to stand out.

• The Liquidity Conundrum:Liquidity providers are becoming the new darlings of the crypto world as projects desperately need more total locked value (TVL) and funding to successfully launch their tokens. Looking back on the year, it’s hard to ignore that most liquidity funds have underperformed Bitcoin — unless they’re well-versed in trading meme coins or crypto stocks.

• Meme coins are out of reach: Regulated funds cannot get exposure to meme coins, and unfortunately, the entire crypto market this year is almost all about meme coins.

• LP interest is rising: LP interest is gradually rising, but they are waiting to see more "drama" events develop. I have talked to some wealth managers and family offices in Asia. After the launch of ETFs, there is indeed interest, but they need a trusted team to manage their funds, and they will retreat every time there is some shocking news, hacks or scams.

Summary: Although the overall environment is difficult and challenging, those who have firm beliefs may find a path to success in this crypto chaos.

VI. Narratives

• AI projects take up the lion’s share of mind space:Everyone seems to be building a decentralized computing network, just as everyone is working to improve L1/L2 of TPS. But I am optimistic about the combination of AI and crypto. Looking forward to communicating with and providing guidance to founders in this space. Everyone, please contact me if you need it.

• The most frequently asked question is:What do you think the next narrative is?

• Asia leads crypto development:Asia has as many developers, founders, and VCs as the West. In contrast, Singapore, Dubai, and Hong Kong have much clearer regulations than the West. Everyone I talked to wants to enter the Asian market. There are more young people here, the needs are more urgent, and the adoption rate is higher. If you need strategic help or distribution support in Asia, feel free to contact me, this is my forte.

• Perpetual Contract Narrative Returns to the Stage, Hyperliquid Leads the Way:Since GMX, perpetual DEX has hardly received any attention, except for HyperLiquid. Everyone is waiting for its listing, and some even claim that its market value could reach $100 billion after full dilution. This may set the tone for other innovative perpetual contract platforms and allow them to perform well.

• RWA (Real World Assets) is another focus for us and the entire industry. Helium and Solana are currently leading this track. Helium has an amazing real-world application through extended home Wi-Fi signals, working with telecom companies to share coverage, and now has more than 750,000 subscribers.

• You can’t kill the memecoin craze:Because we are gamblers at heart. Although memecoins have been quiet recently, they are still here to stay. Every pullback in major memecoins like WIF, POPCAT, BONK, PEPE, MEW, GIGA, SUN, MOTHER is a buying opportunity. Some of the memecoin infrastructure we have invested in has the potential to generate real revenue, and we have already made a number of deals in this space.

• Chain abstraction is exciting as an infrastructure solution. However, there were so many exhibitors at Token 2049 that I haven’t seen a clear winner yet. But for me, the use case is clear - allowing users to transact on multiple chains without knowing they are on a blockchain. I am very bullish on simple chain abstraction infrastructure for developers. Everyone, contact me.

• The Bitcoin ecosystem seems to be slowing down:Although there is a lot of activity and discussion, it is not as popular as last year. There is still a lot of confusion in the entire ecosystem, and there is still a long way to go before real applications and good user experience.

• Staking and re-staking momentum is weakening:Too many on-chain derivatives are causing fragmentation and risks in the ecosystem. I am not optimistic about this field. LIDO, the representative of staking, seems to have encountered a curse, and people are starting to shift their attention. I don't have much expectations for this whole system of staking/re-staking, but if I see interesting projects, I will keep an open mind.

Winners and Losers

• Sol is the clear winner - one chain to rule them all, followed by ETH, and TON is close behind with huge potential.

• TON and SUI currently have the highest attention of all L1s, with TON's own 800 million users ready to be tapped. I'm putting my money on TON, and I think SUI is just temporary, just like Millennium Chain before it. SUI's fully diluted market cap is close to the $25 billion cap, and that's about it. If you are developing a project on TON, contact me. I'm currently evaluating several very interesting TON apps and mini-apps.

• TAO / Bitensor is one of the most talked about projects and my favorite in the AI ​​space, definitely a winner in this category. Render is another project I like.

• Binance could cause a market tremor when CZ comes on the scene. But BSC needs to make a meme like Justin did instead of listing the wrong project "Neiro".

• $Mother is the hottest of all the meme coins, and I think Izzy is doing a great job promoting it. I haven't seen any celebrity do it like her, almost with all her might.

• Hyperliquid is having a blast: The user interface is slick and it's quickly becoming the go-to exchange for many people. Opinions are polarized — some love it, some hate it. Traders are also transparent: some are holding large points and betting on the listing of the token. It's hard to predict how it will perform initially, but it's definitely worth keeping an eye on!

• Liquidity for new projects will be an issue:There are over 40 great projects coming to market in Q4, and over 100 more waiting on the sidelines. We're talking about over $20 billion in new fully diluted market cap. If people are going to buy into projects like Monad and Berachain, they'll have to sell Millennium and older generation L1s. I don't think there's enough liquidity in the market, and many projects and their communities will suffer as a result.

• GameFi still hasn't taken off:People don't seem to be excited about GameFi anymore. But I think GameFi will recover at some point. Some of the projects we invested in last year have done well, but there are no new GameFi investments this year. I like Ronin.