Last weekend, Du Jun, co-founder of ABCDE, officially announced that "ABCDE Capital has ceased investing in new projects and suspended the fundraising plan for its second fund."

This news sent shockwaves through the market. Some believe it marks the dire state of primary investment in the crypto market, making it difficult even for investment institutions to survive. Others view this move as a necessary choice to cut losses in time. Still, others suggest that the emergence of subsequent incubators indicates a shift in crypto capital towards direct token issuance. Odaily Planet Daily will delve into the aftermath of this event in this article and briefly discuss the possible direction of crypto capital.

ABCDE Ends Investments, with Vernal Incubator Taking the Reins

Below the tweet announcing ABCDE Capital's cessation of new project investments, Du Jun briefly shared his plans for the future:

• Launching a new incubator brand, Vernal, with shareholders, incubation rules, and the first batch of projects to be announced in May.

• Entering the secondary trading market. Detailed buy targets, volumes, and rationales will be announced in May.

• Briefly summarizing the investment overview of ABCDE's first fund: investing nearly $40 million, supporting over 30 projects, and leading more than 50% of them.

In addition, Du Jun emphasized that this move "is purely a personal choice for me to change my approach and rethink how to participate in the industry's development. The team is excellent, and there are no issues with fundraising. Our cornerstone LPs have ample funds and are willing to continue supporting us. This is not a problem of capital or ability, but a choice of direction."

In other words, after experiencing the fiery yet short-term profit-driven ecosystem of primary investments, Du Jun's interest has shifted towards "truly advancing the industry," hoping to "accompany mission-driven teams and incubate enterprises that can bring long-term value to the industry and society. As a member of the industry, I believe we have a responsibility to push the ecosystem towards rationality and health, rather than being dragged into short-term games."

It must be said that, judging from this statement, this can be seen as a setback for a long-term value investor with idealistic sentiments.

In an era where everyone is caught up in the frenzy of Meme coin speculation, the VC token market participation has cooled, and countless projects have fallen into a deadly cycle of "funding - listing - dumping - disappearing," leaving investors and retail market participants in disarray, footing the bill for their losses. The market is increasingly inclined towards short-term "one-wave" mutual harvesting rather than long-term technological development, genuine user growth, and gradually rising token prices.

Of course, this is a systemic mechanism that no single institution or individual user can determine. This cycle has seen mainstream coins including ETH and altcoins decline to varying degrees, and projects invested in by ABCDE are no exception. According to crypto KOL @Anymose 96's statistics, the token prices of ABCDE's invested projects that have already issued tokens have seen a maximum decline of up to 95.5%.

VC Tokens Plunge 95%: Crypto Capital Embraces Secondary Markets and AI Narratives

A Microcosm of Altcoin Carnage

Given this, capital institutions in the upstream ecosystem of the crypto industry can no longer sit idly by and urgently need an update to better navigate the current market pain period.

New Choices for Crypto Capital: Balancing Primary and Secondary Markets, Embracing New Narratives

Looking at the current market, crypto capital is gradually differentiating into two major routes:

1. Route One: Represented by ABCDE, some choose to balance primary investments while transitioning towards secondary market investments and trading, seeking better market performance and financial returns.

2. Route Two: Others choose to bet on new narratives such as AI and MCP, seeking potential future outcomes through broader attention, capital volume, and application products. This is also one of the key reasons why recently funded projects have primarily focused on computing, data, AI, and other fields.

The main changes in the market are reflected in the effective contraction of capital forces and the shift in narrative trends. What remains unchanged, however, is the main logic of the crypto market—constantly evolving asset types and asset issuance methods.

In this regard, crypto KOL Weituo's summary is quite apt:

"The market continuously rewards teams that can consistently create assets and markets with high volatility and liquidity at the lowest cost. Narratives without the ability to create volatility and liquidity, such as those reconstructing Web2 under the guise of Web3 logic in social, gaming, and ID fields, have basically failed. These projects are essentially products of traditional large companies' 'platform-application' logic, ultimately commercialized through applications (harvesting). This logic requires scale and decreasing marginal costs, not liquidity.

But what is the crypto world? Tokens can be 'commercialized' from day one, and liquidity is an inherent 'commercialization' indicator. Abandoning this primary indicator means you don't belong to the crypto world, and your valuation model and competitive comparison will fall back to Web2, where you can't compete with Web2 products. In the crypto world, liquidity is the moat, and the mechanism is the primary asset (not 'application' products)."

This aligns with our previous viewpoint in the article "Web2 VS Web3 AI Projects: Both Are About Money, But Why Such a Big Gap?" Web3 projects are about creating assets, honing them as products, and ultimately feeding back into applications or detaching from them, thereby gaining liquidity accumulation and attention resource allocation over a longer timescale.

From this perspective, it is somewhat inevitable for crypto capital to move towards secondary market investments—because in a capital market where liquidity is increasingly concentrated, attention and volatility persist, and gambling and probability coexist.

Aside from RWA, PayFi, and other tracks that tell stories to outsiders, the main game for everyone will eventually return to trading, which is the main battlefield for crypto players.