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From ICO to equity tokenization: The evolution of investment in the crypto market
Yesterday, after finishing the article on Robinhood, I browsed related information online. I found that my understated remark about OpenAI equity trading in the article greatly underestimated the industry's reaction.
Moreover, at that time, not only were there transactions involving OpenAI's equity but also SpaceX's equity.
In fact, many heavyweight investors in the cryptocurrency ecosystem have noticed this transaction and are aware of the enormous potential that may come from it.
This makes me uncontrollably recall the grandeur of the ICO boom back in the day.
I have always believed that ICOs are undeniably a great application that emerged after Bitcoin since the birth of cryptocurrency technology.
Ethereum was born out of an ICO funding.
Its greatness lies in the fact that it has pushed the boundaries of investors to the extreme, for the first time in human history eliminating the thresholds set by humans and inherently imposed in investments, allowing people to participate in investments from anywhere within the reach of the global internet, regardless of race, gender, nationality, or belief.
It has realized the maximum liberalization of investment, allowing people to participate and choose without permission for the first time.
This extreme liberalization of investment will inevitably bring about an extreme wealth effect.
Of course, it also brought about a significant negative effect: the vast majority of projects ultimately turned into a mess.
The main reason I think there is such a negative effect is:
At that time, there was a lack of a relatively mature project evaluation system, and the vast majority of investors had no data available for reference or imitation.
However, this system is actually quite mature in the traditional investment field, especially in the venture capital sector.
This has led to a mixed bag of projects, with varying degrees of quality.
But if those projects from back then had relatively credible institutions participating in multiple rounds of fundraising like today's OpenAI and SpaceX, and had continuously accumulated data for reference, I believe the negative effects on investors would have been much smaller.
In recent times, there have been two standout AI projects in traditional fields: one is Cursor, whose parent company is Anysphere; the other is Scale AI.
The former has now become a unicorn in the field of AI programming, while the latter was recently invested in by Meta for 14.3 billion USD.
The parent company of Cursor, Anysphere, was founded in 2022 and was initially funded by OpenAI with 11 million in seed round investment. I couldn't find its seed round valuation online, but I estimate it to be around 100 million. If that's true, then OpenAI invested 11 million in a company valued at 100 million.
Scale AI was established earlier, in 2016. The earliest investor was Paige Craig, who invested $245,000 in Ava Labs (the predecessor of Scale AI), which was then valued at $3 million. Later, top Silicon Valley venture capital firms such as Accel, YC, and Founders Fund participated in its round after round of fundraising.
The reason these companies have been able to grow and develop to this day is partly because they have gone through one round of venture capital screening after another, and partly because their products have been tested by the market to a considerable extent.
Neither of these two companies is publicly listed up to now. Although they have gone through multiple rounds of financing since their inception, the investors or institutions that participated can only realize the equity in their hands by waiting for subsequent rounds of financing or for the company to go public in an IPO.
The liquidity of the assets they hold is heavily discounted.
On the other hand, many investors are eager to participate in such projects, but they are struggling with the narrow investment channels and information asymmetry, making it difficult to find such projects.
If such private equity can be tokenized and put on the chain for a wide range of investors to participate, on the one hand, it can directly provide liquidity, allowing early participating institutions to exit at any time without having to wait for subsequent financing or an IPO; on the other hand, it can also facilitate general investors who are struggling with investment opportunities but have a strong interest in these projects.
I even think that if a large number of private equity projects in traditional fields (like AI projects) can be tokenized and traded before going public, and be introduced into the crypto ecosystem, the phenomenon of blindly chasing meme coins within the crypto ecosystem will quickly disappear--------- when investors have solid good projects, who would chase emotions all day long and treat speculation as investment?