Revealing the KOL Cycle: A Wealth Experiment Wrapped in Traffic

Abstract: In the dark forest of web3, the transition from hunter to prey often happens in an instant. Author: Biteye Core Contributor @viee7227 Once upon a time, the gameplay in the primary market was relatively clear: VCs provided funding, KOLs voiced their opinions, and retail investors provided liquidity. But today, this set of rules seems to be breaking. The endorsement of VCs is no longer omnipotent; project parties are starting to redesign the rules of the game around “influence.” KOLs are no longer just simple traffic roles. They hold the chips, sit at the poker table, and can even determine the life or death of a project. To some extent, the KOL round is a token distribution method that emerged after VCs exited and retail investors became voiceless, under the narrative of “influence above all.” In the past 7 days, XHunt statistics show that there have been as many as 3860 tweets mentioning “KOL” in the crypto space, while “VC” has 3078 tweets, marking the quiet beginning of a shadow battle around influence. This article does not talk about grand theories, but rather the real story behind KOL circles - where it came from, who is laughing, who is crying, who is counting money behind the scenes, and who is losing sleep at night.

1. How did KOLs step by step walk into the center of the stage? The time goes back to the end of 2022. The winter of crypto VC has arrived. Valuations in the primary market are excessively high, exit cycles are lengthening, and the secondary market can't absorb the supply. Large institutions are hesitant to invest, and small projects can't raise funds. On the other side, retail investors have quietly returned. Blast, ZKsync, Friend.tech… each wave of liquidity explosion signals the return of retail investors. What affects these people the most is not institutional research reports, but those KOLs who seem to be “in the know” but are actually just promoting products. The project party also understands: VC may not necessarily help me break out, but KOLs can. Instead of spending money on advertisements, it's better to put low-priced chips in the hands of KOLs, let them tweet, and create momentum. So, a new way to play was born: The project party grants KOL a quota, and the price is sometimes lower than that of VC; KOL desperately promotes the project before TGE, creating FOMO; at the moment of unlocking, traffic explodes, and KOL cashes out and exits. The KOL round has arrived. You can think of it as a “private placement with tasks.” Low price, quick unlock, and even a “guarantee clause.” The project team is very clear: give coins to those who have fans and influence, and after the launch, they will naturally bring people to raise the price. KOL also thinks it's a good deal: buying coins at a low price, bringing some traffic, and being able to sell a portion after launch unlocks, it sounds like a guaranteed profit. But in reality, is it really so? II. The Truth About the KOL Round: Some Become Rich, Some Go to Zero 2.1 KOL Round's Earnings at Both Ends The profit and loss performance of KOL rounds varies greatly due to differences in projects and market environments. In a bull market, KOL rounds are often seen as a “triple win”: projects secure funding, KOLs position themselves at low prices, and retail investors can also make some profits by following the trend. However, in a bear market, the script changes completely. As liquidity decreases, the norm of dropping right after listing has become common, and KOLs find it difficult to sell in time due to lock-up, which can lead to significant losses. KOL @realChainDoctor once admitted that he invested in more than ten KOL rounds last year, with none being profitable, and some didn’t even receive any tokens. In the view of Master Pang @kiki520_eth, KOL rounds have certain systemic traps, where tokens may not be obtainable, or if they rise, the rules may even change.

Top KOL @jason_chen998 stated that his most profitable investments were Aster and Mira, as he acquired them at lower valuations when the market was sluggish and no one was paying attention, and the project teams were reliable. The key to making money in the KOL round is still to scout during bear markets and leverage connections to obtain projects. However, he also admitted that for most KOL rounds, it’s just high-yield financial management; if luck is on your side, you might see some returns, but if not, you end up working for free, pressured by project teams for content, with coins withheld and unlocks delayed, ultimately leading to an unhappy conclusion. We reviewed some recent KOL round cases of projects, and some projects can indeed bring high returns, such as: Aster: When the coin price breaks through 1.79 USD, KOL's maximum floating profit exceeds 70 times. If we only consider the 30% that has been unlocked at the opening, the profit is 21 times, equivalent to a 50,000 U entry profit of 1,050,000 U. Holoworld AI: Lookonchain has detected that the on-chain address 0x3723 is suspected to be a KOL investor, who received approximately 10.24 million HOLO in September, with a cost price of only $0.088. Subsequently, they gradually liquidated around an average price of $0.6, cashing out over 4.71 million U, with a single round yield of up to 444%+, netting more than 4 million U. WalletConnect: After the tokens are unlocked, ICO and KOL round investors only received about 1.5 times the return. However, there have been many KOL round projects that experienced price crashes after launching, or the project parties encountered issues. Typical cases include SatoshiVM in early 2024, where the project's token $SAVM was heavily promoted by numerous KOLs before its launch, surging to over $11 at one point. However, news soon emerged about KOLs cashing out at high prices, leading to a crisis of trust, and the project gradually cooled down. It is estimated that KOLs and retail investors who did not sell are unlikely to profit, and currently, $SAVM has fallen to about $0.075.

Another example is ZKasino, where KOLs participated in the financing and promotion, but the project party unilaterally changed the rules and took the assets after users completed the locking process. In this incident, the KOLs who participated in the financing and promotion were condemned by their fans as accomplices for their interests, suffering not only financial losses but also facing significant public pressure. A few months ago, Eclipse, which issued tokens, had a KOL round valuation of up to $600 million and a Series A valuation of $1 billion. However, after launching, its actual circulating market value was only about $380 million, far below the rumored $600 million valuation. Research analyst KOL @_FORAB stated that part of the KOL round allocation of Eclipse was also distributed to media and the community, and in the end, it didn't even make it to Binance contracts.

In this regard, well-known KOL @yuyue_chris once tweeted that the real problem with KOL rounds is not losing money, but that project parties and intermediaries use KOL rounds under the guise of promotion to recruit people to take over, allowing KOLs to use their fans to redeem their own capital. This kind of play that exploits acquaintances is the most irresponsible. 2.2 The Earnings Behind: The Triangular Game of Projects, KOLs, and Retail Investors As mentioned earlier, the KOL rotation reflects changes in the power structure of the entire primary market. In the past, project teams relied on VCs for funding, and VCs filtered projects based on their influence. Now, project teams have found that KOLs are cheaper, faster, and more effective at generating buzz. VCs are unhappy: they invested millions of dollars, but the project team allowed a bunch of low-priced influencers to come in, and their influence is even greater than their own… So some VCs choose to “exit.” Retail investors are even more displeased: what they bought in the secondary market were tokens sold off after being unlocked by KOLs. On the day of launch, they saw KOLs promoting it, but in reality, it was just a sell-off. The project team may not be happy either: because the hype created by KOLs is often a short-term behavior, and the volume, liquidity, and high opening on the launch day do not represent the long-term trend of the project. Thus, a tense triangular relationship was formed on the stage of the KOL round. KOL is calculating: how can the invested money and reputation safely exit? The project party is wondering: can the given quota exchange for the expected volume and increase? Retail investors are asking: is this following order an opportunity or a trap? The interests of these three parties are like forces pulling in different directions, tugging at each other. Unless the project itself is strong enough to firmly attract these three forces like a magnet, any party exerting too much force could cause the entire triangle to collapse. 3. The “intermediary” you cannot ignore - Agency In the KOL round, project parties often do not connect directly with KOLs, but rather distribute and manage through third-party agency institutions. They are the “resource allocators” in this game. Help the project team design KOL round terms (price, amount, unlocking); select and invite suitable KOLs; supervise the progress to ensure content delivery. Some reliable agencies will also design mechanisms such as guaranteed returns, promotional rewards, or principal refunds to help KOLs reduce risks. They are the “intermediaries” in the entire KOL wheel system, controlling both traffic and resources. So if you are a newly started KOL looking to participate in the KOL wheel, the first thing to do is not to find a project, but to find the right Agency. You may have heard of the names of these agencies: LFG Labs (@dubailfg): Founded by @snow949494 (XHunt Chinese ranking 134), focusing on China, Japan, South Korea, and the Middle East, primarily connecting top projects, skilled in integrating KOL resources, content dissemination, and KOL round financing linkage. JE Labs (@JELabs2024): Founded by @0xEvieYang (XHunt Chinese ranking 244), established in 2024, mainly building brands and communities for early-stage high-potential projects, connecting with Chinese audiences, helping projects grow from 0 to N. BlockFocus (@BlockFocus11): Founder “Er Gou” @CryptoErgou (XHunt Chinese ranking 469) is one of the earliest in the Chinese region to lay out Agency business, Blockfocus emphasizes the accumulation of project value and medium to long-term operation. Shard (@ShardDXB): Founded by @ciaobelindazhou (XHunt Chinese ranking 784), a marketing agency incubated by a crypto investment fund, focusing on providing strategic narratives and global growth services for Web3 infrastructure projects, covering key multilingual markets including Chinese, English, Korean, Japanese, and Russian. XDO: Led by seasoned first-tier investor @mscryptojiayi (XHunt Chinese ranking 213) from a major firm with years of market experience, preferring to work on “few but refined” projects, handling everything from mechanism design, strategic consulting, to market narrative shaping and execution. Mango Labs (@MangoLabs_): Founded by @dov_wo (XHunt Chinese ranking 112), focusing on marketing in the Chinese region and KOL placements, providing a full set of services from narrative creation to community operation for projects. Cipher Dance (@Cipher_Dance): Founded by @Jeffmindfulness (XHunt Chinese ranking 2178), focusing on content marketing in the Pre-TGE stage, skilled in amplifying project narratives in creative forms, and multilingual KOL placements. 4XLabs: “Strategic advisor + KOL matrix”, helping global projects achieve growth from 0 to 1 in the Chinese market. Team members include @jason_chen998 (XHunt Chinese ranking 34); @Bitwux (XHunt Chinese ranking 24); @Phyrex_Ni (XHunt Chinese ranking 8); @KuiGas (XHunt Chinese ranking 31). 4. How to get the attention of the project party/Agency? Typically, the project party or agency allocates quotas based on the KOL's influence metrics (such as the number of fans, past tweet popularity, etc.) and specifies the content production and unlocking requirements. To gain KOL round opportunities, the key is to enhance “content + data” and establish a trustworthy personal brand: Continuously output professional content: persistently publish market analysis, on-chain data insights, or project evaluations and other valuable content. Actively interact on Twitter: engage with project parties and other KOLs, participate in AMAs, live broadcasts, and tweet discussions to enhance activity within the industry. Use tools to optimize data: leverage analytical tools to improve account visibility, such as using @xhunt_ai to check your account's influence ranking, capability model, attention, etc., and make precise adjustments to content output. XHunt has also launched scoring systems such as the “Soul Index,” which has become an important reference for many project parties and agencies in evaluating KOLs. Establish connections through multiple channels: in addition to online promotion, you can also attend offline industry events or hackathons to meet project parties. 5. How to select projects as a KOL? KOL rounds are not charity; every participant has the pressure to recoup their investment. Mistakes in project selection not only lead to losses but also damage to reputation, which can affect the interests of ordinary users. Therefore, it is best to conduct a systematic screening before cooperation, similar to investing in private equity, and focus on the following key dimensions: Valuation and FDV: Is the overall valuation of the project reasonable, and is the KOL round price relatively discounted? Unlock Design: Is the TGE unlocking ratio and linear period healthy, and is there a risk of concentrated selling pressure? Capital Background: Check if there are leading VC investments and whether the institutional lineup has an endorsement effect. Participation Lineup: Which leading KOLs have participated, and is there a signal of joint participation by institutions and individuals? Agency Source: Understand whether the agency responsible for matchmaking is professional, how their past performance has been, and whether they have participated in quality projects. Team Reputation: Does the founding team have past project experience or industry reputation, and is there any history of controversy? Terms and Requirements: Does the promotional content need to be reviewed in advance, and are there any special arrangements such as minimum guarantees or refund clauses? In addition, tools like XHunt can be used to analyze the reliability of projects, using plugins to view financing information, team information, the number of followers of Chinese and English KOLs, community sentiment, and project influence rankings. 6. Conclusion: The KOL round is a narrow door left for ordinary people in the primary market. From a higher-dimensional perspective, the KOL round is a financing tool that has naturally evolved in the context of the crypto industry, characterized by traffic prioritization, narrative leadership, and community-driven initiatives. It lowers the financial barrier, spreads faster, and indeed helps some small projects stand out without VC support. Of course, the KOL round sometimes also has issues such as lack of standards and ambiguous responsibilities. But from another perspective, this may also be one of the few opportunities for retail investors to “squeeze into the primary market.” Compared to traditional private placements dominated by elite VCs with high information barriers, the KOL round at least has a certain level of liquidity and openness. Any ordinary person, as long as they can consistently create content and have influence, has the potential to obtain a quota and truly participate in the primary pricing game. This is not a perfect mechanism, but it is a “stopgap solution” for the current crypto-native capital market. In a stage where rules are not yet formed and trust mechanisms are still being built, the KOL round, as a new market solution, still has its significance. Because in this era, Influence itself is a new form of capital. About XHunt @xhunt_ai It is an AI-driven Web3 KOLFi platform that provides transparent KOL measurement metrics, instant project research, and connects project parties with trusted KOLs.