Evolution of the encryption industry: From retail investors to on-chain migration

The recent dynamics of the cryptocurrency market have sparked thoughts on the direction of industry development. From the on-chain processes of certain projects to the handling of market makers by trading platforms, it reflects that the entire ecosystem is undergoing significant changes.

Retail investors have experienced some setbacks recently. The launch process of certain high-profile projects has been tortuous, ultimately resulting in retail investors being unable to prevent them from being listed on major trading platforms. At the same time, a certain platform has taken a tough stance against market makers, demonstrating its dominance in the industry.

In the current market environment, some so-called "value coins" have become tools for project parties and early investors to cash out. Many projects hastily complete key steps such as establishing foundations, releasing airdrop plans, and listing on exchanges during periods of market volatility. This model may reappear in some emerging ecosystems.

It is worth noting that certain projects have adopted different strategies. For example, some projects choose not to introduce external investments and do not rely on large exchanges, but instead seek a balance between the project team and early users. This approach can resist the selling pressure from centralized holders to some extent.

As a large trading platform brings market makers to the forefront, the original barriers in the industry are rapidly collapsing. In the past, exchanges became the end point for token circulation due to their advantages in traffic and liquidity. However, in recent years, the participation of some large investment institutions has pushed the initial valuations of many projects to unreasonable levels. This overvaluation is actually at the expense of retail investors' interests.

Since the mid-year investment institution token turmoil last year, to the controversies involving executives of a certain exchange earlier this year, the superficial cooperative relationship has become difficult to maintain. In the current market environment, the endorsement role of traditional investment institutions has greatly weakened, and their investments in the Web3 field are also facing challenges.

As the influence of traditional investment institutions declines, the buffer between exchanges and retail investors mainly relies on market makers. However, for emerging tokens, market makers often adopt a quick in-and-out strategy, which reflects problems in the pricing mechanism across the industry.

It is worth noting that on-chain transactions are on the rise. Currently, the daily trading volume of on-chain contracts has reached about 15% of a certain large centralized exchange. The trading volume of decentralized exchanges also accounts for about 15% of centralized exchanges. Although the number of active on-chain users is still relatively small, the growth potential is enormous.

However, with the increase of Layer 2 solutions and the growing complexity of token economic models, ordinary users may feel confused. Project parties may find it difficult to strike a balance between their own interests and those of users, which could lead to more users turning to on-chain transactions.

Overall, despite the measures taken by exchanges towards market makers, retail investors still face numerous challenges. The migration to the on-chain ecosystem is still ongoing, but even some leading on-chain platforms are not yet ready to welcome a massive influx of users. In each market cycle, the fluctuations of value and price, as well as the game of interest distribution, will continue to constitute a complex experience for cryptocurrency investors.