Analyst: Waning VC influence could lead to fairer token launches

The declining influence of venture capital (VC) in token launches is expected to reduce insider dumping, according to crypto analyst The DeFi Edge. The analyst noted that 85% of tokens launched last year have fallen below their issue price, with projects backed by VCs either barely breaking even or recording significant losses. While the participation of a major VC was once considered a major positive signal, this is no longer the case. The DeFi Edge pointed out that in 2022, crypto VCs raised $17 billion through more than 80 new funds in a single quarter. In contrast, the current number of new funds has hit a five-year low, and funding volume last quarter was only 12% of the level seen in the second quarter of 2022. The analyst emphasized that the old model of conducting investment rounds, launching a token, and then offloading it onto retail investors is losing its effectiveness. With diminished VC influence, the real winners will be projects with actual users and substantial revenue, leading to fairer token launches and less selling pressure from insiders.