Jademont Zheng, co-founder and CEO of Waterdrip Capital, said the crypto industry has ended up in a position that most people would not have expected a few years ago. After a painful stretch, he said the road ahead is still under pressure, but he sees two developments as the only ones that may be able to open a new growth cycle.
Zheng wrote that Web3 token-launch projects have been dying in batches. He said almost no founder of a tokenized project has avoided rights-defense campaigns, lawsuits, or community-led liquidation. Some founders, he added, did start with the intention of building products and ecosystems, but once the avalanche began, very few were able to stay untouched.
He also said major centralized exchanges, or CEXs, have been losing their influence in the industry. Even as trading volumes keep hitting new highs, he argued that these platforms increasingly look like traditional brokerages: they handle trading, but no longer control asset issuance or pricing power. Compared with market infrastructure such as Nasdaq, he said, the gap is getting wider rather than narrower.
On the primary market, Zheng said investment institutions have been exiting as a group. The problem, in his view, is not a lack of capital but a lack of exit mechanisms. Some institutions, he wrote, have tolerated price manipulation by project teams and joined them in transferring value. Others have simply left the sector. Without long-term returns or any emotional payoff, he said, investors are better off putting money into other tracks.
Zheng said that in an avalanche, no snowflake is entirely innocent, but not every snowflake carries the same level of responsibility. In his view, a few are especially heavy.
The factors he singled out
First were FTX and Luna.
He said the collapse of both at the height of the industry’s boom destroyed traditional capital’s trust in crypto and left a large amount of institutional money still unwilling to come back.
Second were the leading CEXs.
Zheng said that at the industry’s peak, those platforms should have acted like leaders by setting higher listing standards, helping the market identify stronger projects, promoting long-term thinking, and shaping a healthier industry culture.
Instead, he argued, the opposite happened. Short-term profit overran everything else, while token-issuing groups mass-produced “air coins” and quickly harvested liquidity. Platforms collected listing fees and trading volume, he wrote, but in the process they also spent down the industry’s credibility. When the tide went out, he said, there were no winners because everyone was on the same boat.
Third was the Ethereum Foundation.
Zheng said he has long believed Ethereum’s move from Proof-of-Work, or PoW, to Proof-of-Stake, or PoS, was a severely overrated decision. It did reduce energy consumption, he wrote, but the cost savings were negligible compared with the development opportunities he believes were lost.
He added that if Ethereum had continued evolving along the PoW path and kept pushing computing infrastructure, it could have had the chance to become the world’s largest blockchain-based AI computing network and hold a more important strategic position in the AI era. In his view, the switch to PoS ended that possibility early.
The two opportunities he still sees
Asked whether the industry still has a chance, Zheng’s answer was yes.
At the same time, he said the number of variables that can truly reverse the trend is now limited when set against the earlier decisions that shaped the sector’s direction. In his view, only two developments may be capable of restarting a new round of prosperity.
- The United States adds BTC to a national strategic reserve and continues actual purchases, rebuilding global capital’s confidence in crypto assets.
- A true on-chain super app emerges with hundreds of millions of users and the ability to create real value, allowing blockchain to prove again that it can do more than issue assets and can also create demand.
Zheng said other positive developments would look more like cyclical rebounds than the start of a new era.