Original title: Cryptos New Realities: HODL is Dead, DAOs are LMAOs, Bye DeFi and More
Original author: Ignas, DeFi Research
Original translation: TechFlow
What fascinates me about the crypto market as a part of finance and trading is that it clearly tells you what is right and what is wrong. Especially in this chaotic world, whether it is politics, art, journalism or many other industries, the line between truth and lies is blurred. Cryptocurrency is simple and direct: if you are right, you make money; if you are wrong, you lose money. It is that simple.
But even so, I fell into a very basic trap: I didn’t reevaluate my portfolio when market conditions changed. When trading altcoins, I became too complacent with “untouchable HODL” assets like ETH. Of course, adapting to the new reality is easier said than done. There are so many variables we need to consider that we often choose simple narratives, such as HODL (hold for the long term), because it does not require us to actively monitor the market.
But what if the era of HODL is over? What is the role of cryptocurrencies in this changing world? What are we missing out on? In this blog, I will share what I think are the big changes happening in the market.
The End of the HODL Era
Lets travel back to the beginning of 2022:
ETH’s price is currently hovering around $3,000 after a sharp drop, down from its previous high of $4,800. BTC’s price is around $42,000. However, both subsequently fell by 50% due to rising interest rates, the collapse of centralized finance (CeFi), and the collapse of FTX.
Despite this, the Ethereum community remains optimistic: ETH is about to migrate to PoS (Proof of Stake), and the EIP proposal for ETH destruction was launched just a few months ago. The narrative of ETH as Ultrasound Money and an environmentally friendly, energy-efficient blockchain is very hot.
Yet for the rest of 2022, ETH and BTC underperformed, while SOL suffered a brutal fall, with its price plummeting 96% to just $8. Ethereum won the L1 war, while other L1s either migrated to L2 or faced extinction. I remember attending meetings during the bear market, where most people were convinced that ETH would rebound the strongest, so they bought ETH heavily, underweight BTC, and completely ignored SOL. The strategy was simple: HODL, then sell at the peak of the bull market in 2024/25. Easy peasy.
However, reality slapped me in the face!
Since then, SOL has rebounded, while Ethereum has faced the strongest panic selling (FUD) ever. The ultrasonic currency narrative is dead (at least for now), and the environmental protection (ESG) narrative never really caught on. HODLing ETH was the biggest mistake I made in this cycle. I believe it is also a common regret for many people.
My bullish logic for ETH is that it will become the most productive asset in the crypto market.
Through restaking, ETH will gain superpowers to protect not only Ethereum, but also the entire critical DeFi and crypto infrastructure. ETHs restaking income will soar, and airdrop rewards will continue to accumulate through restaking ETH.
As yields increase, demand for ETH and the price should rise. Bottom line: moonshot! Obviously, this didn’t happen, as the value proposition of restaking was never clear and Eigenlayer didn’t do well with token launches. So what does all this have to do with the HODL metaverse being dead?
For many, ETH has been a “buy it and forget it” asset. If BTC goes up, ETH usually goes up more, so it seems pointless to hold BTC. When my bullish logic for ETH based on the re-staking narrative failed to materialize, I should have recognized and adjusted my strategy in time. However, I became lazy and complacent and unwilling to admit my mistakes. I told myself: ETH will rebound one day, right?
HODL is bad advice not only for ETH, but for other assets as well, with perhaps the only exception being BTC (more on that later). The crypto market moves so fast that it is unrealistic to expect to retire after holding an asset for a few months or even years. Looking at the charts, most altcoins have given back the gains they made in this bull cycle. Clearly, profits come from selling, not holding.
One successful memecoin trader said that instead of HODLing, he usually holds a memecoin for less than a minute. Although there are still people who try to sell you the dream of HODLing, it is more of a quick in and out cycle than a true HODL.
BTC is the only macro crypto asset
The only exception to the “quick in and out” strategy is BTC. Some people attribute BTC’s outstanding performance to Michael Saylor’s “unlimited buy order” because we have successfully promoted BTC as “digital gold” to institutional investors.
However, the battle is far from over. Many crypto commentators still view BTC as a high-volatility risk asset, similar to betting on the SP 500.
This view contradicts research from Blackrock, which found that the risk and return drivers of BTC are different from those of traditional risk assets, making it unsuitable for the Risk On/Risk Off model in traditional financial frameworks, an analytical approach used by some macroeconomic commentators. I share some observations on the non-obvious truth in my post Crypto Truths and Lies in 2025: What Do You Believe in Truth?
I believe Bitcoin (BTC) is moving from those who view it as a highly leveraged stock bet to those who view it as a digital, safe-haven, gold-like asset. Mexican billionaire Ricardo Salinas is an example of someone who holds on to BTC. BTC is the only true macro crypto asset. While the value of ETH, SOL, and other crypto assets is often assessed based on fees, trading volume, and total value locked (TVL), BTC has transcended these frameworks to become a macro asset that even Peter Schiff can understand.
This transformation is not yet complete, but the transition from a risky asset to a safe haven asset is an opportunity. Once BTC is generally recognized as a safe haven asset, its price will reach $1 million.
Corruption in the private equity market
When every relatively successful key opinion leader (KOL) began to transform into a venture capitalist (VC), investing in projects at low valuations and selling after the token generation event (TGE), I felt that something was wrong with the market. However, nothing can better describe the current state of the crypto private equity market than this post by Noah.
Here are the core elements of the private equity market changes over the past few years:
In the early days (2015-2019), private market participants were true believers. They supported Ethereum, funded DeFi pioneers like MakerDAO and ETHLend (now Aave), and advocated long-term holding (HODLing).
The goal wasn’t just to make a quick profit, but to create something meaningful. In the DeFi summer of 2020-2022, everything changed. Suddenly, everyone was chasing the newer, hotter tokens.
Venture capital firms (VCs) poured money into projects with ridiculous valuations and tokens that had no utility. The rules of the game were simple: participate in private rounds at low prices, hype the project, and then dump the tokens on retail investors. When these projects collapsed, we should have learned lessons from them, but nothing changed.
After the FTX incident (2023-2025), the private market became more nihilistic. VCs began to fund soulless token machines (i.e. projects that recycled old ideas, had questionable founders (such as Movement), and had no real use cases). Private valuations were set at 50 times revenue (if the project had revenue), and the public market eventually had to absorb these losses. As a result, 80% of tokens in 2024 fell below the private price within six months of listing.
This is a predatory phase . Today, retail investors’ trust is gone and VCs are in tatters.
Many VC investment projects are traded at prices even lower than their seed round valuations, and some of my KOL friends are also suffering from losses.
However, the private equity market is showing some signs of recovery:
1. Movement co-founder and Gabagool (former Aerodrome “runaway”) were hit by public backlash and kicked out of the industry. We need more clean-ups like this.
2. Valuations in both private and public markets are falling.
3. Crypto VC financing finally rebounded: Financing in the first quarter of 2025 reached US$4.8 billion, the highest level since the third quarter of 2022, and funds began to flow into areas with practical utility.
According to CryptoRank’s “State of Crypto Venture Capital in Q1 2025” report:
Q1 2025 was the strongest quarter since Q3 2022. While the $2 billion Binance deal played a central role, 12 large financings of over $50 million showed the return of institutional interest.
Capital has flowed to areas with real utility and revenue potential, including centralized finance (CeFi), blockchain infrastructure and services. Emerging focus areas such as artificial intelligence (AI), decentralized physical infrastructure networks (DePIN) and real world assets (RWA) have also attracted strong attention.
DeFi leads in number of funding rounds, but funding rounds are smaller, reflecting more conservative valuations.
We are experimenting with new token issuance models that reward early supporters rather than insiders. Echo and Legion are leading the way, and Base has already launched a group on Echo. The Kaito InfoFi metaverse is also showing a strong bullish trend, as even people without financial capital can benefit from it as long as they have social influence.
The market seems to have learned its lesson, and the ecosystem is gradually recovering (although KOLs still occupy the best resources).
Goodbye DeFi, Welcome Onchain Finance
Remember the short story of Yield Aggregators? Yearn Finance led the trend, and then countless forked projects followed. Today, we have entered the era of Yield Aggregators 2.0, but now we call it “Vault Strategies”.
As DeFi becomes more complex and various protocols emerge, Vaults become an attractive option: deposit assets and get the best risk-adjusted returns. However, the main difference now compared to the first phase of yield aggregators is that the centralization of asset management is increasing rapidly.
Vaults have teams of “strategists” — usually teams of “institutional investors” — who use your money to chase the best investment opportunities. For them, it’s a win-win: they earn a yield on your capital while collecting management fees. Some examples include strategy teams like MEV Capital, Seven Seas, Gauntlet, and Veda, which work with protocols like Etherfi, Upshift, and Mellow Protocol. Veda alone has become the 17th largest “protocol” in DeFi, even more than Curve, Pancakeswap, or Compound Finance.
However, vaults are just the tip of the iceberg. The true vision of decentralization in DeFi is long gone, and it has evolved into Onchain Finance.
Think about it: the fastest growing sectors in DeFi and crypto are real world assets (RWA), interest-earning assets, and risk-free arbitrage stablecoins like Ethena, Blackrock’s BUIDL, etc., which are completely different from the original vision of DeFi. Or projects like BTCfi (and Bitcoin L2), which rely on multi-signature wallets, and you have to trust the custodian not to run away.
Note: Not targeting Lombard, just using this as an example of the confluence of trends in Vault and BTCfi.
This trend has been underway since Maker transitioned from decentralized DAI to an interest-bearing RWA protocol. Truly decentralized protocols are few and far between today (Liquity is one example).
This isn’t necessarily a bad thing, though: RWAs and tokenization allow us to move beyond the days of DeFi Ponzi schemes based on loops and leverage. But it also means that the risk factors are expanding, making it more complicated to truly understand where your money is. I wouldn’t be surprised to see CeDeFi protocols misusing user funds.
Remember: hidden levers will always find a way to penetrate the system.
The DAO — a joke?
Similarly, the decentralization illusion of decentralized autonomous organizations (DAOs) is also being broken. The past theory was based on the Progressive Decentralization theory proposed by a16z in January 2020.
The theory holds that:
The protocol first finds product-market fit (PMF) → As the network effect grows, the community gains more power → the team hands over to the community and achieves full decentralization. However, 5 years later, I think we are returning to centralization. Take the Ethereum Foundation as an example, it is more actively involved to expand L1.
I have mentioned in my previous blog “Market Fear State and Future Outlook #6” that the DAO model faces many problems:
Voting apathy
Increased risk of lobbying (vote buying)
Execution Paralysis
While Arbitrum and Lido’s DAOs are moving toward greater centralization (either through more active team participation or BORG mechanisms), Uniswap has seen major upheaval. The Uniswap Foundation voted to allocate $165 million in liquidity mining rewards to drive the development of Uniswap v4 and Unichain. Another conspiracy theory is that the funds were to meet the liquidity threshold for the Optimism OP funding program.
Regardless, the DAO delegates are furious. Why is the foundation paying out all $UNI rewards while Uniswap Labs (a centralized entity) makes millions of dollars in Uniswap front-end fees? Recently, a top 20 delegate resigned as a Uniswap delegate.
The following are the author’s core points:
Governance Illusion: Formalized Governance of DAO Uniswap’s DAO appears to be open, but in fact it marginalizes different voices. Although the proposal follows the process (discussion, voting, forum), these processes seem to have been predetermined long ago, simplifying governance to a ritual.
Concentration of Power: The Operations of the Uniswap Foundation The Uniswap Foundation further consolidates power by rewarding loyalty, suppressing criticism, and focusing on surface image rather than accountability.
Failure of decentralization If DAOs focus more on branding than actual governance, they may become irrelevant. A DAO lacking real accountability is more like a dictatorship with a few extra steps.
Ironically, as the main holder of Uniswap, a16z has failed to promote the progressive decentralization of Uniswap.
It can be said that DAO is just a smoke bomb to avoid the regulatory scrutiny that centralized crypto companies may face. Therefore, tokens that are simply used as voting tools are no longer worth investing in. Real revenue sharing and actual utility are the key.
Goodbye DAOs, welcome LMAOs — Lobbied, Mismanaged, Autocratic Oligopolies.
DEXs Challenge to CEX: The Rise of Hyperliquid
Heres one of my conspiracy theories:
FTX launched Sushiswap because they were concerned that Uniswap could threaten their spot market position. Even if FTX did not directly launch Sushiswap, it may have provided close support in terms of development and funding.
Similarly, the Binance team (or BNB ecosystem) launched PancakeSwap for the same reason. Uniswap poses a significant threat to centralized exchanges (CEXs), but it does not challenge CEX’s more profitable perpetual contract trading business.
How profitable are perpetual contracts? It’s hard to know exactly, but you can get a glimpse from the reviews.
Hyperliquid poses a different threat. It not only targets the perpetual contract market, but also attempts to enter the spot market while building its own smart contract platform. Currently, Hyperliquids share of the perpetual contract market has grown to 12.5%.
It is shocking that Binance and OKX actually launched a blatant attack on Hyperliquid using JELLYJELLY. Although Hyperliquid survived, HYPE investors must now take the risk of possible future attacks more seriously.
This attack may no longer be a similar means, but from regulatory pressure. Especially when CZ (Changpeng Zhao) gradually becomes a national strategic encryption consultant, who knows what he will tell politicians? Maybe: Oh, these perpetual trading platforms that dont do KYC are really bad.
Regardless, I hope Hyperliquid can challenge CEXs spot market business, provide a more transparent asset listing process, and avoid high costs that drag down the protocol finances. I have a lot to say about HYPE, as it is one of my most held altcoins. But it is certain that Hyperliquid has become a movement to challenge CEXs, especially after the Binance/OKX attack.
Protocols Evolved into Platforms
If you follow me on Twitter, you may have seen my post recommending Fluid in the context of the evolution of protocols into platforms.
The core idea is that protocols are at risk of becoming commoditized, while user-facing applications reap the majority of the benefits.
Has Ethereum fallen into the commoditization trap? To avoid this trap, protocols need to become like the Apple Store, allowing third-party developers to build on top of it so that value stays within the ecosystem. Uniswap v4 and Fluid attempt to achieve this through Hooks, while teams like 1inch and Jupiter have developed their own mobile wallets. LayerZero also just announced vApps.
I believe this trend will accelerate. Projects that can capture liquidity, attract users, and monetize traffic while rewarding token holders will be the big winners.
Crypto Industry and the Transformation of the New World Order
I wanted to discuss more about the areas of major change in the crypto industry, from stablecoins to the loss of Crypto Twitter (CT), as the crypto industry becomes more complex. Crypto Twitter provides less and less alpha (exclusive information) today because the industry is no longer a closed circle.
In the past, we could launch a Ponzi scheme with simple rules of the game, and regulators either misunderstood crypto or ignored it, thinking it would go away on its own. But over time, regulatory discussions have become more common on CT. Fortunately, the United States is becoming more supportive of the crypto industry, and the rise of stablecoins, tokenization, and Bitcoin as a store of value makes us feel like we are on the verge of mass adoption.
But this situation could change quickly: the US government may finally realize that Bitcoin is indeed undermining the dollar. The regulatory and cultural environment outside the United States is very different. The EU is increasingly concerned with control, especially during its transition from a welfare state to a war state, where many controversial decisions are pushed forward in the name of security.
Rather than prioritizing the crypto industry, the EU sees it as a threat:
ECB warns that the promotion of encryption in the United States may bring financial contagion risks
EU plans to ban anonymous crypto accounts and privacy coins by 2027
“If blockchain data cannot be deleted individually, the entire blockchain may need to be deleted.”
EU regulators to impose punitive capital rules on insurers holding crypto
We need to assess the attitude towards encryption in the context of the overall political situation. The general trend is deglobalization, and countries are gradually closing their doors to entry and exit.
EU close to banning visa exemptions for citizenship by investment countries
European court strikes down golden visa scheme
In China, exit bans become more frequent as political control tightens
The role of crypto in the new world order and its transition remains a major unknown. When capital controls begin, will crypto become a tool for capital freedom? Or will countries try to suppress crypto with stricter regulation? Vitalik explained in his Annual Ring Model of Culture and Politics that the crypto industry is still forming its own norms and has not yet solidified like banking or intellectual property laws.
The Internet in the 1990s took a “let it grow” attitude, with few rules and restrictions. In the 2000s and 2010s, the attitude of social media became “this is dangerous, must be controlled!” And in the 2020s, encryption and artificial intelligence are still struggling fiercely between openness and regulation.
Governments were behind the times, but now they are catching up. I hope they choose to embrace openness, but the global trend toward closed borders worries me deeply.
