Why has this round of Fundamental Analysis completely failed?

It has been 10 years since the birth of Ethereum. In terms of the financial market, this is undoubtedly a magnificent ‘class leap’. After all, Ethereum has moved from the wilderness to the ETF track recognized by mainstream institutions on Wall Street. But is this the end of Ethereum, or the vesting of crypto assets? The reality may not be so.

At the recently concluded EthCC event, Mippo from Blockworks interviewed Ethereum founder Vitalik Buterin on a podcast, during which Vitalik said that the future focus will gradually shift from Layer1 issues to problems closer to the Application Layer.

He also believes that the ultimate decision on the success of Crypto assets depends on the actual application of technology, rather than continuous speculation, as he ironically puts it, “If the field of Crypto assets is remembered as a group of gradually decreasing idealists constantly shouting, or a group of people trading digital monkeys and celebrity photos, it will be a disappointing outcome.”

Perhaps some Web3 practitioners have awakened to the fact that what this industry needs is not just a target for everyone to ‘nonsense hype,’ but also a broader application that enters the public’s field of vision. This is why ecosystems like TON have suddenly become the focus of various institutions and investors to follow because behind it is a Web3 product that can be used by billions of users, although it is still in its early stages, it has already taken shape.

Despite the various Layer2 narratives in the market, after experiencing various ‘ghost towns’ and high market values, both institutions and ordinary participants are no longer confident that this story can succeed. After all, when Layer1 is more than enough, who still cares about Layer2.

From the ETH L2 that emerged crazily in the first half of the year to the suddenly emerging BTC L2 now, the same story is still playing out, but behind these Layer2s is the repeated obstruction of ecological development, and only explosive users who grab Airdrop, and then fall into stagnation.

When we think again about the reasons why projects with ‘high Market Cap and low circulation’ are not accepted, besides the abandonment of funds, the more important reason is that people cannot find a reason to ‘hold’. After all, projects without actual value, why do they need such high valuation? Besides the pursuit of capital, it seems that there is no explanation. We can also find references from the ‘running shoes’ and ‘crab’ that were popular in those years. When a large number of users are lost, the death spiral begins, and of course, the new public chain in the previous round also ended up like this.

And behind all these stories, they ultimately point to one place: having infrastructure alone is not enough, we also need a large number of high-quality application users to consolidate the development of L1/L2, which is why Vitalik is so nakedly ironic about Non-fungible Token.

People always say that this round of ‘Bull Market’ ‘Bull Market’ Fundamental Analysis is no longer reliable, but in my opinion, so far, except for ETFs, the industry has not really undergone any fundamental changes (which is why BTC has outperformed most of the gains). Since there is no fundamental change, how can there be the utility of fundamental analysis?

Therefore, if the above conclusion is true, then what we should be looking for in the industry is a track that brings in more long-term liquidity or a fun product that brings in more long-term users. Perhaps this is the true “flywheel” of this round of Bull Market. But so far, such products or tracks are few and far between (either still in their infancy), and what is more long-term is still the various “ghost town projects” that exploit liquidity. In this case, where does the explosive Bull Market come from?

As master of Fundamental Analysis, Graham said, the market is a scale for the long term and a voting machine for the short term. If the Web3 industry is to take another step, simply being a financial tool is not enough to move the Market Cap of 10 trillion dollars. After all, the “Seven Flowers” of the US stock market’s 15 trillion dollars did not gain users and market position by airdrops alone, unless this industry only needs BTC as “digital gold”, but at least Vitalik is not content with that.

From “proving it” to “witnessing it”, we still need the next 5 or even 10 years.