The new project "Four Major Illusions" is debunked by data, revealing the KOL hype trap!

On Crypto Twitter (abbreviated as CT), there seems to be a standard script regarding how new projects can "take off": accumulating millions of followers, crazy participatory marketing, gaining the support of top venture capital, and creating extreme scarcity at the time of token issuance. However, these successful principles that are regarded as benchmarks appear to be fragile in the face of cold data. A recent research report ruthlessly reveals that the "wealth secrets" that crypto KOLs talk about with great enthusiasm are actually four major illusions that mislead the public. When these flashy appearances are ruthlessly debunked by data, can your Wallet still remain unscathed?

1. The Lie About Participation: Likes, Retweets, and Price Performance Are Not Related

Everyone is obsessed with various metrics on Twitter: likes, retweets, replies, impressions—all these vanity metrics. Project teams spend thousands of dollars on engagement farming, task platforms, and buying followers. However, research shows that these engagement metrics have almost zero correlation with price performance over a week. Simplicity Group's regression analysis shows that the correlation coefficient R² between engagement metrics and price performance is only 0.038. In short: engagement barely explains Token success.

Even more surprisingly, likes, comments, and shares actually show a slight negative correlation with price performance. This means that projects with higher engagement sometimes perform worse. The only indicator that shows a positive correlation is the number of shares in the week prior to the release, but its statistical significance is extremely low, and the correlation is weak. Therefore, when you spend money externally to buy traffic and carefully plan complex task activities, you are essentially just "burning money" in a "meaningless" way.

2. Low Circulation Myth: Initial Market Value is Key

CT is obsessed with projects that have "low circulation and high FDV," believing that issuing with a very small circulating supply creates artificial scarcity, and then watching the price skyrocket. But the truth has proven otherwise. The percentage of initial circulation relative to total supply has no correlation with price performance, and there is no statistically significant relationship at all.

What really matters is the dollar value of the initial market capitalization. Research shows that for every unit increase in initial market capitalization (IMC), the return rate one week later decreases by about 1.37 units. In short, for every 2.7 times increase in initial market capitalization, the price performance in the first month declines by about 1.56%. This relationship is so tight that it could almost be considered a causal relationship. The lesson is that the key is not the proportion of tokens unlocked, but the total dollar value entering the market.

3. The Illusion of VC Support: The Financing Amount is Unrelated to Token Performance

"Wow, they raised $100 million from a16z, it’s definitely going to skyrocket!" — But it didn’t. Research shows that the correlation between the amount of funding and the weekly return rate is 0.1186, with a p-value of 0.46. The correlation between the funding amount and the monthly return rate is 0.2, with a p-value of 0.22. Both are statistically insignificant. The amount of funds raised by a project actually has no relationship with the performance of its Token.

Why? Because the more funds raised, it usually means a higher valuation, which also means needing to overcome greater selling pressure. Extra funds do not magically translate into better tokens. However, CT views financing announcements as a buy signal. It's like judging a restaurant's quality based on the rent paid by the owner. Projects that raise massive amounts of funding in research do not necessarily perform better than those with limited funding. A financing amount of $100 million does not guarantee a better token economy or a stronger community than a financing amount of $10 million.

4. Fallacy of Speculation Timing: Paying Attention Before Launch is More Important than Speculation During Launch Week

The traditional view holds that the most important news should be saved for the project launch week to maximize the "FOMO" atmosphere and attract everyone's attention when the Token goes live. However, data shows that the reality is quite the opposite. After the project launch, user engagement declines. Users shift their focus to the next project with an airdrop, and the content you have meticulously prepared gets overlooked.

Projects that can maintain good performance continuously establish their reputation before the launch week, rather than during the launch week. They understand that pre-launch attention can bring in real buyers, while attention during the launch week only attracts "passersby." User engagement peaks before the TGE, when they release the launch preview, rather than after the launch, when everyone has already turned to the next opportunity.

5. Truly Effective Methods: Product Utility, Reasonable Market Value, and Sincere Communication

Since Twitter engagement, low circulation, VC support, and timing of hype are not important, then what is?

Actual product utility: Projects that generate natural content (such as Bubblemaps with on-chain survey functionality or Kaito with narrative tracking capabilities) perform better than accounts primarily based on memes.

Transaction retention rate: Tokens that maintain trading volume after the initial hype tend to perform significantly better in price.

Reasonable initial market value: The strongest predictor of success. By listing with a reasonable valuation, you create room for growth. Listing with a market value of over 1 billion USD is going against the tide.

Authentic communication: a consistent tone that aligns with the product. The $5.2 million funding for Powerloom and its overly cynical tone are misaligned—POWER plummeted 77% in the first week and has dropped 95% since its launch. Meanwhile, Walrus tweeted with sincere humor, and a month later, the token issuance (TGE) price rose by 357%. Hyperlane maintained a pragmatic update, soaring 533% in the first week.

6. Why does CT go wrong? The impact of centralized influence economy

The disconnection in CT is not malicious, but structural. CT rewards participation rather than accuracy. Posts about "10 ways to achieve 100 times token issuance" get more shares than "what the data actually shows." KOLs accumulate followers by "catering" to plans rather than challenging them. Telling users that their participatory farming is meaningless and does not yield returns. Furthermore, most KOLs on CT have actually never issued a Token. They are just commenting on a game they have never played. Projects like Story Protocol, which actually launch products, continue to perform well, regardless of their Twitter follower count.

CT brands itself as the most decentralized information network in the financial sector, but the reality is that around 100 accounts control the views of millions on Crypto Assets, which projects gain attention, and where funds flow. This is the most centralized influence economy dressed in the guise of grassroots community building. This complex influence mechanism even makes traditional media executives envious.

The influence of CT is not just reputation—it is a complex business model that directly monetizes through paid promotions, consulting positions, speaking fees, newsletter sponsorships, and more, while indirectly gaining value through early access to project information, favorable financing allocations, and networking.

7. Breaking the Cycle: Recommendations for Builders, Investors, and Users

For builders: Understand that technical excellence without storytelling means being obscure. Either learn to play the influence game or find allies willing to help.

For investors: The opinion on CT is a lagging indicator of first-level account opinions, rather than a true market sentiment. By the time something becomes "popular", it is already too late.

For users: Pay attention to accounts that consistently share different perspectives and in-depth technical analysis, rather than those that merely echo mainstream views and engage in paid promotions.

For the entire ecosystem: It is important to recognize that the concentration of influence on CT undermines the efforts that should be directed towards decentralization.

Conclusion:

CT is not malfunctioning—it is operating exactly as designed. The issue is not the existence of the influence network—but rather that people pretend CT represents organic, decentralized discussions, when in fact it is a complex influence economy with centralized power and undisclosed economic incentives. Only when the community can identify and shed these illusions, and truly focus on product utility, reasonable valuation, and sincere communication, can new projects in Crypto Assets achieve sustainable success.