Tôi đã làm VC trong Web3 suốt chín năm: Các quỹ châu Á đang trải qua "Chế độ địa ngục"

Original author: Joe Zhou, Foresight News

A large number of Asian Crypto VCs have disappeared.

In the past week, I contacted over twenty investor friends in my address book, and more than half of them have already left. Some have transitioned to AI, some have started their own ventures, and some funds have completely ceased investing.

Going back to 2021 or even 2024, the Web3 investment market was so frenzied that a dozen or even nearly 20 fundraising news pieces would appear in a single day, with multi-million dollar rounds being commonplace. Back then, many believed Crypto would experience explosive growth. VCs scrambled to raise funds, projects rushed to issue tokens, and founders sprinted relentlessly.

But by the second half of 2025, the entire industry rapidly cooled down. In today's Web3 market, it's common to see only one fundraising announcement per day. The number of VCs who are truly active on the front lines and still consistently betting on Web3 is dwindling.

What exactly happened to Crypto VCs in this cycle? During my investigation, I found several investors still active on the Web3 frontlines. Jocy, the founder of IOSG, revealed: "We still invest in about 15 Web3 projects annually, leading 30% of those rounds, even during the bear market. Just in the first half of this year, we completed 3 primary market investments."

Over nine years and three market cycles, they have witnessed the industry's most frenzied, bubble-filled moments and have trudged through its lowest troughs multiple times. In this bear market, Jocy told me his biggest takeaway is that the logic of Crypto VC has fundamentally changed, completely.

The following is a first-person account from Jocy, founder of IOSG.

I've Spent Nine Years as a VC in Web3, Experiencing Three Market Cycles

I have been a Crypto VC for nine years now.

Since founding IOSG in 2017, we have weathered three market cycles in this industry, investing in nearly a hundred projects in total. Back then, the entire industry was very small. Bitcoin had just broken through $1,000, Ethereum was under $10, and most people didn't even know what 'blockchain' was.

At that time, approximately 80%-90% of our portfolio was allocated to early-stage primary projects.

But now, as the crypto environment has changed, over the past two years we have gradually adjusted our investment strategy, continuously increasing the allocation to Post-TGE (after the project's official token launch) and OTC (over-the-counter) projects. Our portfolio now roughly forms a mix of 50% primary, 30% Post-TGE, and 20% OTC investments.

For us, the early primary market remains the core source of Alpha. However, we increasingly find that some Post-TGE and OTC assets exhibit significant value mispricing, with the secondary market beginning to offer more attractive opportunities than the primary market.

Simultaneously, this strategy provides us with better liquidity management flexibility, offering a clearer DPI (Distributed to Paid-In capital) exit path for our LPs (Limited Partners). I believe the future landscape will be: the top 20% of VCs who can clearly articulate the DPI exit path to LPs will capture 80% of the market's capital, while the remaining funds fight over the scraps of the remaining 20%.

We currently have a team of over a dozen people spread across Asia and the US. Our strategy has always been global, allowing us to keenly sense temperature changes across the industry worldwide. The current market is quite bleak, and high-quality projects are very scarce. Look at the Web3 startup scene in Silicon Valley; there are fewer and fewer newcomers genuinely building pure Crypto. A large amount of talent has been absorbed by the AI track.

The entire market is currently in a relatively pessimistic phase, and this pressure won't ease anytime soon.

Every few years, the crypto industry undergoes an extremely violent shakeout. Institutions exit, projects go to zero, sentiment plummets from euphoria to dead silence, and then it all starts again. For us, this actually presents the best phase to re-establish industry order and redefine value.

The deepest trough of every cycle is often the moment when the best projects are conceived.

Many people think VC is just about providing money. But institutions that truly last long-term must be those capable of helping entrepreneurs solve problems. One of our biggest accumulations over the past nine years is our post-investment capability. Furthermore, we have been consistently doing one thing: building the ecosystem. From Infrastructure to DeFi, to Consumer, and then to the intersection of AI and Crypto, we have been diligently piecing together a complete ecosystem map.

We hope to foster synergy between different projects. This is something we have always placed great importance on in the long term.

Crypto VC is Entering 'Hell Mode'

How crazy was the industry at the peak of the last bull run? A seed-stage project could be closed in 3 days, with 5 institutions frantically competing for allocation, and sometimes even the same project would offer three different valuations simultaneously.

We never participated in that game. That's not investing.

Now that the market has cooled down, it actually gives opportunities to institutions that focus on genuine research. We can finally sit down and properly conduct DD (Due Diligence). We can spend three weeks, not three days, to thoroughly examine a project.

So this cycle is a structural opportunity for research-driven funds. With less capital in the market, good projects will actively seek institutions that can truly provide non-financial value, rather than those that just blindly offer high valuations. Our Alpha comes from deep judgment, not the speed of grabbing allocations.

Looking around, capital across the entire industry is shrinking.

Not long ago, a16z raised a $2.6 billion fund. While still a behemoth, it's smaller than their previous fund. Major institutions like Benchmark are also reducing their fund sizes.

US funds operate somewhat differently, often on 10-year cycles. In the last cycle, their main profits didn't necessarily come from picking the right applications in the primary market, but rather from heavily weighting investments in large coins like Bitcoin. They used their massive dollar capital to push market valuations to the ceiling, but failed to chart a clear path for actual industry adoption.

As the bubble recedes, US funds have ample reserves and many options. But Asian funds, after being pushed up to the peak together, found they had no way out when they fell.

Over the past year, the VC fundraising market across Asia has been a disaster. The vast majority of VCs struggle to raise money. Hardly any LP claims they must allocate to Crypto VC.

Therefore, this cycle is an incredibly painful 'hell mode' for Asian funds.

But looking at it from another angle, this means Asian funds must be more precise. With limited ammunition, every shot must hit. Internally, we always emphasize: don't invest in middle-tier projects. Either invest in the industry's Top 1 or Top 2, or don't invest at all. Because in a bear market, the middle layer is the most likely to collapse.

The Biggest Problem in Crypto: The Disconnect Between Tokens and Value

In this cycle, we have firmly avoided several categories of projects: pure narrative plays lacking PMF (Product-Market Fit) infrastructure, projects with excessive duplication of effort and no cash flow, and projects relying solely on grandiose visions. The market has become completely immune to those 'high FDV, low float' infrastructure tokens. Now, if you build Infra, institutions might even prefer to invest in your equity rather than your token.

For a long time, the Crypto industry has suffered from a chronic ailment: Tokens have been chronically disconnected from real value.

In the past, many project teams played a 'shell game' – the genuinely profitable business revenue and core equity were firmly locked within the real-world company entity, while the issued token was merely used as a non-interest-bearing financing tool, a liquidity exit, or even a chip to manipulate market sentiment.

Simply put, the protocol generates real profits on-chain, but token holders can't even get a slice. They have no substantive claim on the value created by the project. This extreme misalignment of incentive structures has caused a great deal of investors to lose their shirts over the past few cycles. Because what they bought was never a real 'asset', but merely an empty symbol devoid of rights.

After several brutal shakeouts, the industry is finally waking up: A good Token must be one that can capture real value.

High-quality projects are proactively seeking transparency, creating clear and strong links between their tokens and protocol profits. This will become a key differentiating competitive advantage in the next cycle. Projects like Uniswap, Hyperliquid, Polymarket, and Morpho, which we invested in, are all strongly driving this trend.

Take Morpho as an example. They have publicly committed to the market that the value generated by the protocol will accrue directly to the token through programmatic settings, and will never flow to an independent company or equity. Similarly, Uniswap, after seeing some relaxation in the US regulatory environment, is also adjusting in this direction following the trend. And Hyperliquid has demonstrated the immense power of 'token buybacks' through concrete actions.

To be frank, buybacks themselves aren't a perfect metric for measuring aligned interests, but from a structural standpoint, they truly give the token its core support. By continuously reducing circulating supply, establishing long-term incentive alignment with holders, and supplementing it with transparent and programmatic buyback schedules, project teams can forge a solid price floor for the token. For long-term holders, the nature of such tokens is fundamentally changing – they increasingly resemble government bonds or yield-bearing assets, with their scarcity and intrinsic value steadily increasing over time.

Only tokens with a genuine value capture mechanism, buyback capabilities to generate 'cash flow', and bottom support can truly transcend market cycles and become long-term financial assets, rather than pure speculative chips.

Perhaps, precisely because the industry has fallen into its most painful trough, Crypto can truly begin this hardcore evolution of 'separating the wheat from the chaff'.

Truly Great Projects are Only Born at the Most Pessimistic Point of Each Cycle

In the past few years, Crypto has actually undergone a massive 'falsification' process, plummeting towards the worst outcomes: Which products have no real demand? Which narratives cannot hold up at all? What directions are destined to be inferior to Web2?

This process of falsification has buried countless sums of money and top-tier talent, but it has also gradually clarified the answers. For VCs, the investment logic must completely change – it's no longer about betting on the industry Beta or the cycle, but must return to the fundamentals of business itself.

We no longer view Crypto as an isolated island, but as the 'digitalization of finance'. The industry has finally realized that what truly matters has never been the illusory 'big numbers', but the real value behind them. Now, when evaluating projects, we must break them down to a very granular level: scrutinize Consumer projects' retention rates, Customer Acquisition Cost (CAC), and Lifetime Value (LTV); layer by layer dissect the ARR (Annual Recurring Revenue) of token-issuing projects, stripping out sustainable, genuine revenue.

As Crypto transitions from a storytelling niche circle to a genuine financial industry, on the flip side of the mania, a massive value gap has emerged.

In the current market, people are more willing to pay for ethereal 'imagination', while incorrectly undervaluing projects that have real revenue, users, and cash flow. Examples include Morpho, Sky, and even Uniswap, which recently explicitly abandoned its IPO in favor of its token ecosystem. These veteran protocols that have weathered complete cycles have lost attention during the deep pullbacks of the bear market. However, their fundamentals haven't deteriorated; on the contrary, they have become healthier thanks to improvements in the industry environment and their own revenue capabilities.

This is why we are now allocating about 50% of our portfolio to these token-issuing projects with real revenue. We are concentrating our firepower on two directions:

• Real Yield and Financial Infrastructure: Including stablecoin payments, clearing and settlement, Neo-banks, and on-chain credit. For instance, our investments in Ether.fi, Morpho, Centrifuge, and RedotPay all have extremely clear user demand and positive cash flows.
• Intersection of AI and Crypto: We have reserved 20% to 30% of our ammunition. We are not investing in general-purpose large language models, but are absolutely focused on crypto-native AI infrastructure (such as data training and collection).

Facing this disordered and violent shakeout, VCs themselves must also evolve. Now, every colleague in our firm has their own dedicated AI Bot to handle tedious data backtesting and cross-timezone coordination. However, interacting with people and making judgments based on human nature remain our irreplaceable moats.

After nine years, my biggest takeaway is: truly great companies are almost never born during the most exciting times, but rather when many people believe the industry is finished.

In this cycle filled with layoffs, disillusionment, and confusion, many are leaving, some even questioning whether Web3 has a future. But it's only during the trough that you are forced to think: What do users really need? What can survive long-term?

I still believe that the truly important parts of this industry are just beginning. After the bubble recedes, the people who remain will be the ones who truly determine what the world looks like in the next cycle.