The Battle Between Reality and Illusion in the Crypto Assets Field: Why Are "Air" Projects Valued Higher?

In the world of Crypto Assets, we often see projects that have only a flashy website but can raise huge amounts of funds. This is not a coincidence, but rather a result of game theory at work behind the scenes.

Thinking back to the scenes in the American TV series "Silicon Valley": companies without revenue are valued higher than profitable ones. The reason is that without actual data, people can fantasize infinitely about potential returns. The cryptocurrency field has taken this logic to the extreme: the more intangible the project, the stronger its fundraising ability.

Real Constraints and Valuation

Having real products means facing the harsh reality:

• Usually disappointing number of users
• Frustrating technical limitations
• Unvarnished measurable metrics

In contrast, the potential of projects with only a white paper is limited to imagination. This creates a paradox: projects that work diligently are punished by the market.

Game theory under information asymmetry

In Crypto Assets fundraising, the amount of information held by each party varies:

• The project founder is aware of all the details.
• Venture capitalists understand some situations.
• Ordinary investors know almost nothing

For project founders lacking products, the best strategy is obvious:

• Keep a vague yet exciting description
• Emphasize potential rather than reality
• Create an atmosphere of fear of missing out

collective action dilemma

Although it seems wise to demand to see a feasible product, it is difficult to achieve in reality. This is similar to the famous "prisoner's dilemma":

• Waiting for verification may miss out on early high returns.
• Early entrants often reap the most profits, even if the project ultimately fails.

Thus, the seemingly rational individual behaviors lead to irrational collective outcomes.

The value difference between dreams and reality

A project that only has online articles can talk about disrupting the industry and creating trillion-dollar value. However, a project that is actually being developed must face:

• Real User Count
• Technical Capability Boundary
• Market Competitive Disadvantages

This gives rise to the so-called "null premium"—an extra valuation obtained without the constraints of reality.

collusion of speculation

When it is difficult to distinguish the quality of a project, investors will look for common signals:

• Comments from industry celebrities
• Exchange Listing Status
• Token Price Increase

Projects without product constraints can fully cultivate these signals, rather than focusing on development. In the Crypto Assets field, marketing often outweighs technology.

Real Cases

The Crypto Assets industry is full of projects that raised huge funds but failed to deliver on their promises:

• Berachain: Achieving a valuation of billions without a mainnet demonstrates the powerful allure of the void.
• Aptos: Raised $350 million, claims to process 160,000 transactions per second, but only 4 transactions are actually live.
• Worldcoin: The concept of exchanging biometrics for tokens has attracted billions in investment.

These cases all follow the same pattern: the more abstract the promise or the more complex the technology, the more funding is raised, and the greater the risk of failure.

Why is this phenomenon difficult to change?

From a rational perspective, investors should demand to see actual products. But in reality:

• The FOMO mentality creates pressure for early investment.
• Most investors lack technical assessment skills.
• Fund managers are more focused on short-term returns.
• There is a contradiction between personal interests and the healthy development of the market.

This is why air projects often raise more funds than practical projects.

In this game, the rules have not changed; it's just that some participants understand how to take advantage of the rules too well.