Embracing the New Reality of Crypto: HODL is Dead, DAO is a Joke, Saying Goodbye to DeFi

Original Article Title: Crypto's New Realities: HODL is Dead, DAOs are LMAOs, Bye DeFi and More

Original Article Author: Ignas, DeFi Research

Original Article Translation: Deep Tide TechFlow

As part of finance and trading, what fascinates me about the crypto market is its ability to clearly tell you right from wrong. Especially in this chaotic world where the line between truth and lies is blurred in politics, art, journalism, and many other industries, cryptocurrency is straightforward: if you're right, you make money; if you're wrong, you lose money. It's that simple.

Yet, despite this, I still fell into a very basic trap: when market conditions changed, I did not reassess my investment portfolio. When trading altcoins, I became too complacent with those "untouchable HODL" assets, like ETH. Of course, adapting to a new reality is easier said than done. There are too many variables to consider, so we often opt for a simple narrative like HODL (Hold On for Dear Life) because it doesn't require us to actively monitor the market.

But what if the era of HODL has come to an end? In this ever-changing world, what is the role of cryptocurrency? What have we missed? In this blog post, I will share what I believe are significant changes that have occurred in the market.

The End of the HODL Era

Let's travel back to early 2022:

ETH's price, after a significant drop, hovered around $3,000, down from a previous high of $4,800. BTC's price was around $42,000. However, both subsequently dropped by 50% due to interest rate hikes, the collapse of centralized finance (CeFi), and the closure of FTX.

Nevertheless, the Ethereum community remained optimistic: ETH was about to transition to PoS (Proof of Stake), and just a few months ago, the EIP proposal for ETH burning was introduced. The narrative of ETH as "Ultrasound Money" and an eco-friendly, highly efficient blockchain was very hot.

However, in the remaining time of 2022, ETH and BTC performed poorly, while SOL experienced a brutal downturn, with its price plummeting by 96%, leaving only $8. Ethereum won the L1 (Layer 1 network) war, and other L1s either migrated to L2 (Layer 2 network) or faced extinction. I remember attending a conference during the bear market, where most people firmly believed that ETH would have the strongest rebound, so they heavily bought ETH, while neglecting BTC and completely ignoring SOL. The strategy was simple: HODL, then sell at the peak of the bull market in 2024/25. Easy.

However, reality hit hard!

Since then, SOL has rebounded, while Ethereum faced its strongest-ever Fear, Uncertainty, and Doubt (FUD) sell-off. The narrative of the "ultrasound money" has died (at least for now), and the Environmental, Social, and Governance (ESG) narrative never truly gained popularity. HODLing ETH was my biggest mistake in this cycle. I believe this is a common regret for many.

My bullish thesis on ETH was: it would become the most productive asset in the crypto market.

Through Restaking, ETH would gain "superpowers," not only protecting Ethereum but also safeguarding critical DeFi and crypto infrastructure. ETH's Restaking rewards would soar, and airdrop rewards would continue to accumulate through Restaking ETH.

With the increasing yield, demand for ETH and its price should rise. In short: to the moon! Obviously, this did not happen because the value proposition of Restaking was never clear, and Eigenlayer also underperformed in token issuance. So, what does all this have to do with the demise of the HODL Metaverse?

For many, ETH has always been a "buy and forget about it" asset. If BTC rises, ETH usually rises even more, making holding BTC seem pointless. When my bullish thesis on ETH based on the Restaking narrative failed to materialize, I should have promptly recognized and adjusted my strategy. However, I became lazy and complacent, unwilling to admit my mistake. I told myself: ETH will bounce back someday, right?

HODL is not only bad advice for ETH but even more so for other assets, with perhaps the only exception being BTC (which will be discussed in detail later). The crypto market changes too quickly, and expecting to hold an asset for months or even years and then retire is unrealistic. Looking at the chart, it's evident that most altcoins have retraced their gains from this bull market cycle. Clearly, profits come from selling, not holding.

A successful meme coin trader has stated that instead of HODLing, he often holds a meme coin for less than a minute. While some still try to sell you the HODL dream, it's more like a "quick in and out" cycle rather than true HODL.

BTC Is the Only Macro Crypto Asset

In the "quick in and out" strategy, the only exception is BTC. Some attribute BTC's stellar performance to Michael Saylor's "infinite buy orders," as we have successfully marketed BTC as "digital gold" to institutional investors.

However, this battle is far from over. Many crypto commentators still see BTC as a highly volatile risk asset, similar to a bet on the S&P 500.

This view contradicts Blackrock's research. Blackrock found that BTC's risk and return drivers are different from traditional risk assets, making it unsuitable for the "Risk On/Risk Off" mode in the traditional financial framework, an analysis method used by some macroeconomic commentators. In my article "The Crypto Truths and Lies of 2025: What Do You Believe Is True?" I shared some observations on the not-so-obvious truths.

I believe that Bitcoin (BTC) is shifting from those who see it as a high-leverage stock bet to those who view it as a digital, hedging, gold-like asset. Mexican billionaire Ricardo Salinas is an example as he insists on holding BTC. BTC is the only true macro crypto asset. The value of ETH, SOL, and other crypto assets is often assessed based on fees, transaction volume, and Total Value Locked (TVL), while BTC has transcended these frameworks to become a macro asset even Peter Schiff can understand.

This transition is not yet complete, but the shift from a risk asset to a hedge asset is an opportunity. Once BTC is widely recognized as a hedge asset, its price will reach $1 million.

The Corruption of the Private Sale Market

When every relatively successful Key Opinion Leader (KOL) starts morphing into a "venture capitalist" (VC) to invest at low valuations and dump post-Token Generation Event (TGE), you know the market is off. However, nothing describes the state of the crypto private sale market better than Noah's post.

The following is the core content of the private market's evolution over the past few years:

In the early days (2015-2019), participants in the private market were true believers. They supported Ethereum, funded DeFi pioneers like MakerDAO and ETHLend (now Aave), and advocated for long-term holding (HODLing).

The goal was not just quick profits but creating something meaningful. Then came the DeFi summer of 2020-2022, and everything changed. Suddenly, everyone was chasing after new, hotter tokens.

Venture capital firms went wild, funding projects with absurd valuations and no practical use case. The game was simple: participate in the private sale rounds at a low price, hype up the project, then dump the tokens on retail investors. When these projects collapsed, we should have learned our lesson, but nothing changed.

Post FTX event (2023-2025), the private market became more nihilistic. VCs started funding "soulless token machines" (projects recycling old ideas, founders with questionable backgrounds like Movement, and lacking real-world use cases). Private round valuations were set at 50 times revenue (if the project even had revenue), eventually leading to the public markets having to absorb these losses. As a result, 80% of tokens in 2024 dropped below the private sale price within six months of listing.

This was a plundering phase. Today, retail trust has evaporated, and VCs are in disarray.

Many VC-backed projects are trading even below seed round valuations, and some of my KOL friends are deep in losses.

However, there are signs of recovery in the private market:

1. Movement's co-founder and Gabagool (former "exit scammer" at Aerodrome) faced public backlash and were ousted from the industry. We need more of such cleansing actions.

2. Valuations in both private and public markets are decreasing.

3. Crypto VC funding is finally rebounding: Q1 2025 saw funding reach $48 billion, the highest since Q3 2022, with money flowing into areas with practical utility.

According to CryptoRank's "2025 Q1 Crypto Venture Investment Status Report":

· The first quarter of 2025 was the strongest quarter since the third quarter of 2022. While the $20 billion Binance deal played a key role, there were also 12 deals of over $50 million demonstrating a resurgence of institutional interest.

· Capital flowed into areas with real-world utility and revenue potential, including Centralized Finance (CeFi), blockchain infrastructure, and services. Emerging focus areas such as Artificial Intelligence (AI), Decentralized Physical Infrastructure Network (DePIN), and Real World Assets (RWA) also attracted strong attention.

· DeFi led in the number of funding rounds but with smaller funding sizes, reflecting a more conservative valuation.

We are experimenting with new token issuance models to reward early supporters rather than insiders. Echo and Legion are leading this trend, with Base already launching a group on Echo. Meanwhile, Kaito InfoFi's metaverse is also showing a strong bullish trend, as even those without financial capital can benefit if they have social influence.

The market seems to have learned its lesson, and the ecosystem is gradually recovering (though KOLs still control the top resources).

Goodbye DeFi, Hello Onchain Finance

Remember the short-lived narrative of Yield Aggregators? Yearn Finance once led the trend, followed by countless forks. Now, we are entering the era of Yield Aggregators 2.0, but now we call them "Vault Strategies."

As DeFi becomes increasingly complex, with various protocols emerging, Vaults have become an attractive choice: deposit assets and receive the best risk-adjusted returns. However, compared to the first phase of Yield Aggregators, the main difference now is the rapidly increasing level of asset management centralization.

Vaults have "strategist" teams—usually teams composed of "institutional investors"—who use your funds to pursue the best investment opportunities. For them, it's a win-win: they earn returns with your capital while charging management fees. Some examples include MEV Capital, Seven Seas, Gauntlet, and Veda, among other strategy teams that collaborate with protocols like Etherfi, Upshift, and Mellow Protocol. Just Veda alone has become the 17th largest "protocol" in DeFi, surpassing Curve, Pancakeswap, or Compound Finance.

However, the treasury is just the tip of the iceberg. The true decentralized vision in DeFi has long vanished, evolving into Onchain Finance.

Think about it: the fastest-growing sectors in DeFi and the crypto space are real-world assets (RWA), interest-bearing assets, and risk-free arbitrage stablecoins like Ethena and Blackrock's BUIDL, completely deviating from DeFi's original vision. Or projects like BTCfi (and Bitcoin L2), which rely on multi-sig wallets, requiring you to trust custodians not to "rug pull."

Note: Not specifically targeting Lombard, just using it as an example of the convergence of treasuries and BTCfi trends.

Since Maker transitioned from a decentralized DAI to an interest-bearing RWA protocol, this trend has been underway. Truly decentralized protocols are now rare and small in scale (Liquity being an example).

However, this may not be a bad thing: RWAs and tokenization have allowed us to move away from the era of DeFi Ponzi schemes based on recirculation and leverage. But it also means that risk factors are expanding, making it more complex to truly understand where your funds are. I wouldn't be surprised if CeDeFi protocols abuse user funds.

Remember: Hidden leverage always finds a way to seep through the system.

DAO—A Joke?

Similarly, the decentralization illusion of Decentralized Autonomous Organizations (DAOs) is also being shattered. Past theories were based on the "Progressive Decentralization" theory proposed by a16z in January 2020.

The theory suggests:

The protocol first finds product-market fit (PMF) → As network effects grow, the community gains more power → The team "hands over to the community" to achieve full decentralization. However, five years have passed, and I believe we are regressing to centralization. Taking the Ethereum Foundation as an example, they are more actively involved in expanding L1.

In my previous blog post "Market Fear and Future Outlook #6," I have already mentioned that the DAO model faces many challenges:

· Voter apathy

· Increased lobbying risk (vote buying)

· Governance Paralysis

The DAOs of Arbitrum and Lido are moving towards increased centralization (via team's more active involvement or BORG mechanism), but Uniswap is experiencing significant turmoil. The Uniswap Foundation voted to allocate $165 million for liquidity mining rewards to drive the development of Uniswap v4 and Unichain. Another conspiracy theory suggests that this funding is to meet the liquidity threshold for the Optimism OP Grant.

In any case, DAO representatives are furious. Why did the Foundation pay out all $UNI rewards while Uniswap Labs (a centralized entity) earned millions through Uniswap frontend fees? Recently, a top 20 representative stepped down from their Uniswap representative role.

Here are the author's key points:

· Governance Illusion: Formalized Governance of the DAO Uniswap's DAO appears open but has effectively marginalized different voices. Although proposals followed the process (discussion, voting, forum), these processes seem to have been 'pre-decided,' simplifying governance into a mere 'ritual.'

· Centralization of Power: Operations of the Uniswap Foundation The Uniswap Foundation further solidifies power through rewarding loyalty, stifling criticism, focusing on surface image rather than accountability.

· Failure of Decentralization If DAOs prioritize brand over actual governance, they might become irrelevant. DAOs lacking real accountability are more like 'dictatorships with extra steps.'

Ironically, a16z, as a major holder of Uniswap, has failed to drive Uniswap towards progressive decentralization.

It could be argued that DAOs are merely a 'smokescreen' to avoid the regulatory scrutiny that centralized crypto companies may face. Therefore, tokens serving solely as voting tools are no longer worthwhile investments. Real revenue sharing and actual utility are key.

Farewell DAO, welcome LMAOs—Lobbied, Mismanaged, Autocratic Oligopolies.

DEX vs CEX Challenge: The Rise of Hyperliquid

Here's my conspiracy theory:

FTX introduced Sushiswap because they were concerned that Uniswap might threaten their spot market dominance. Even if FTX didn't directly launch Sushiswap, they might have provided close support in terms of development and funding.

Likewise, the Binance team (or BNB ecosystem) launched PancakeSwap for the same reason. Uniswap posed a significant threat to centralized exchanges (CEXs), but it didn't challenge CEXs' more profitable perpetual futures trading business.

How lucrative are perpetual futures? It's hard to know for sure, but you can glean some insights from the comments.

Hyperliquid, on the other hand, poses a different threat. It not only targets the perpetual futures market but also seeks to enter the spot market while building its own smart contract platform. Currently, Hyperliquid's market share in the perpetual futures market has grown to 12.5%.

Shockingly, Binance and OKX actually launched a public attack on Hyperliquid with JELLYJELLY. Although Hyperliquid survived, HYPE investors must now take potential attack risks more seriously.

This attack may no longer be a similar tactic but could come from regulatory pressure. Especially as CZ (Changpeng Zhao) gradually becomes a "national strategic crypto advisor," who knows what he will tell politicians? Maybe something like, "Oh, these non-KYC perpetual trading platforms are really bad."

Nevertheless, I hope that Hyperliquid can challenge CEXs' spot market business, provide a more transparent asset listing process, and avoid excessive costs that could cripple protocol finances. I have a lot to say about HYPE, as it is one of the altcoins I hold the most. But one thing is certain, Hyperliquid has become a movement challenging CEXs, especially after the Binance/OKX attack.

Protocol Evolves into Platform

If you follow my X (Twitter), you might have seen my post recommending Fluid in the context of the protocol evolving into a platform.

The core point is that the protocol faces the risk of commodification, while user-facing applications can capture most of the value.

Has Ethereum already fallen into the commodification trap? To avoid this trap, the protocol needs to become like the Apple App Store, allowing third-party developers to build on top of it, thereby keeping value within the ecosystem. Uniswap v4 and Fluid are trying to achieve this through Hooks, while teams like 1inch and Jupiter have developed their own mobile wallets. LayerZero has also just announced vApps.

I believe this trend will accelerate. Projects that can capture liquidity, attract users, monetize traffic, and simultaneously reward token holders will be the big winners.

The Evolution of the Crypto Industry and the New World Order

I wanted to discuss more areas of significant change in the crypto industry, from stablecoins to the loss of Crypto Twitter's relevance, as the industry is becoming more complex. Crypto Twitter now offers less "Alpha" (exclusive information) because this industry is no longer a closed, small circle.

In the past, we could easily label things as a "Ponzi scheme" under simple game rules, and regulators either misunderstood crypto or ignored it, thinking it would fade away on its own. But over time, regulatory discussions have become more common on CT. Fortunately, the U.S. is becoming more supportive of the crypto industry, with the rise of stablecoins, tokenization, and Bitcoin as a store of value, making us feel on the brink of mass adoption.

But this situation could change rapidly: the U.S. government may eventually realize that Bitcoin is indeed undermining the dollar's status. Outside the U.S., regulatory and cultural environments are very different. The EU is increasingly focused on control, especially in the process of transitioning from welfare states to warfare states, and many controversial decisions are pushed through under the guise of "security."

The EU does not prioritize the crypto industry but rather sees it as a threat:

· "European Central Bank warns US crypto promotion may pose financial contagion risk"

· "EU plans to ban anonymous crypto accounts and privacy coins by 2027"

· "If blockchain data cannot be deleted individually, the entire blockchain may need to be deleted"

· "EU regulators to impose punitive capital rules on insurers holding crypto"

We need to assess attitudes towards crypto in conjunction with the overall political situation. The overall trend is towards deglobalization, with countries gradually shutting their doors to incoming and outgoing flows.

· EU Close to Implementing Visa-Free Ban on "Golden Passport" Countries

· European Court Cracks Down on Golden Visa Schemes

· In China, Exit Bans Become More Common as Political Control Tightens

The role of crypto in the new world order and its transition period remains a major unknown. As capital controls begin, will crypto become a tool for financial freedom? Or will countries attempt to suppress crypto through stricter regulations? Vitalik explains in his "Cultural and Political Cycles Model" that the crypto industry is still shaping its norms and has not solidified like banking or intellectual property law.

The 1990s internet took a "let it grow freely" approach with almost no rules and restrictions. By the 2000s and 2010s, social media shifted to "this is dangerous, it must be controlled!" In the 2020s, crypto and AI are still in a fierce battle between openness and regulation.

Governments once lagged behind the times, but now they are catching up. I hope they choose to embrace openness, but the global trend toward closed borders worries me deeply.

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