GuShiio.com High valuation, long lockups, and low returns have gradually become the three major specifications of the KOL round. The goal of many project parties is no longer long-term construction, but short-term cash out.
Author: Fairy, ChainCatcher
Editor: TB, ChainCatcher
The once-booming KOL round of financing has now become a “nightmare” for many KOL:
“Last year, I invested in more than a dozen KOL rounds, and all of them lost money. Most of them didn’t even issue coins, they were gone.”
“Let me tell you this way, basically all KOL rounds in this round are not making much money.”
“I voted for more than a dozen last year, and finally I successfully issued 2. The 5000U that has been issued will go in and 400U will go out.”
It was thought to be a shortcut to participate in high-quality projects at low cost and achieve wealth appreciation, but the result was a loss across the board. Someone had no choice but to tease: “I lost face and lost money at the same time.”
KOL wheel seems to be soon becoming a derogatory term, transforming from a wealth code to a “capital hunting ground”.
Win-win “person design”, unbalanced result
The KOL round of financing was originally set up as a mutually beneficial and win-win early financing model, aiming to build a win-win ecosystem for project parties and KOL.
The project party leverages the influence of KOL to quickly increase its popularity, attract initial traffic, and establish an active community to promote the long-term development of the project. KOL participates in early investment at a lower cost. If the project is successful, it will not only gain returns, but also enhance the influence of the industry and achieve both fame and wealth.
However, the real market is not so ideal. The ideal “win-win” has gradually become a unilateral harvest game.
High valuation, long lockups, and low returns have gradually become the three major specifications of the KOL round. The goal of many project parties is no longer long-term construction, but short-term cash out.
With chicken feathers everywhere, the KOLs gradually lost their way in this game and were even harvested in reverse.
Why did this round of KOL lose money across the board? Listen to what the KOL themselves have to say:
- Lack of lasting narrative support
@realChainDoctor said: “There are no particularly lasting narratives (hot spots) in this round.”
For projects without long-term hot spot support, the KOL round is essentially just a “paid announcement round”. Once the market popularity subsides, it will be difficult for the project to maintain its valuation, and the return on investment will be greatly reduced.
- High valuation + long lockup, becoming a “fixed point pit”
@blockphd7 said: “Kol rounds are basically fixed-point pits, with high valuations and long-term lockups.”
- Primary market space has been severely compressed
@0xcryptowizard said: “The project now directly compresses the space for level 1 and kol to 2-3 times expected, and also locks it for one year and adds cliff.”
This design has greatly reduced investors ‘profit margins, resulting in lower returns than the bull market.
- The market environment has deteriorated and project parties have increased money-gathering behavior
@yuyue_chris said: “The market environment is bad. At the high point in November and December, a large number of project parties are trying their best to make money, especially to find people around them. While shipping through OTC, retail investors can become out of liquidity. There are also scams, using the name of investment to make money rug…”
Many project parties lack long-term planning and sell off at the opening of the market, pursuing the strategy of “engaging in more projects and making small cuts to ensure safety”. This short-term thinking makes the return on KOL round of investment extremely unstable, and even the principal is difficult to recover. In addition, after the market environment deteriorated, the project party resorted to any means to collect money.
- KOL has limited capabilities and asymmetric information
@yuyue_chris said: “Although KOL needs to identify the quality of the project themselves, most KOL are only large retail investors and do not have the ability to fully identify the authenticity of the information, so they are deceived and killed based on false news and false information.”
Can I still play KOL rounds?
According to @YeruiZhang, KOL rounds can be roughly divided into three categories:
- Black slave wheel: Generally, you can earn up to 2 times the principal or refund the principal
- Investment round: Risks and returns coexist, accompanied by big losses and big gains
- OTC call for single round: Buy coins at a discount after TGE
The terms of the Black Slave Wheel are strict and suitable for small investors who want to gain quotas through accumulating connections. The benefits are limited, but the requirements for vision are low. The core strategy is to establish a relationship with the project party to strive for more quotas.
The investment round requires a “no regrets” mentality and a deep understanding of the underlying logic, team background and market prospects of the project. KOL needs to have pricing capabilities to avoid falling into traps due to high valuations. This is also the category where “accidents” are most likely to occur.
The key to OTC calling for a single round lies in hedging strategies, and KOL needs to have a deep understanding of liquidity.
Each of these three categories has its own unique risk and benefit models. Overall, the KOL round of first-level projects tests investors ‘eyesight, while the KOL OTC round of second-level projects tests the understanding of liquidity. However, the most important thing is KOL’s ability to negotiate prices. If pricing cannot be negotiated well, everything will be empty talk.
Nowadays, the threshold of KOL ecology is getting lower and lower, so fans can brush it and barriers can be broken down. The more this is the case, the easier it is to be targeted. At present, many KOLs choose to stay away from KOL rounds of financing, and some retail investors have also made it clear that they will “never engage in KOL rounds of projects.”
Of course, the KOL round of financing is not without high-quality projects. The future KOL round may not completely disappear, but it must return to rationality. When speculators exit, only those who truly have the ability to capture value can survive this game.
