The Evolution of the Crypto Market Landscape: From Exchange Dominance to the Rise of On-chain Ecosystems

Recently, the crypto market has seen some noteworthy trends. A well-known exchange has sparked controversy over the listing process of certain projects, while also taking strict measures against some market makers. These events reflect the changing landscape of the current encryption market.

In past market cycles, venture capital (VC) and market makers have been important partners for exchange platforms. However, with the rise of airdrops and popular tokens, the on-chain value system is being reassessed. At the same time, some project teams have designed more complex token economic models in an attempt to mask their sluggish growth.

Looking back at recent events, it can be observed that under the trend of gradual decline of VC tokens, some so-called "value coins" have become tools for project parties, VCs, and market makers to cash out. They often complete a series of operations such as establishing foundations, releasing airdrop plans, and listing on exchanges quickly during market volatility.

In the foreseeable future, some emerging projects may repeat this pattern. It is worth noting that the price trends of certain projects after listing have little correlation with their actual performance, but rather show a positive correlation with the purchasing power of investors in specific regions. There may be a joint operation behind this phenomenon involving market makers, project parties, and exchanges.

In this context, some emerging projects have chosen different development paths. For example, a certain decentralized derivatives exchange adopted a strategy of no external investment, not relying on large exchanges, and aligning interests. The project attempts to strike a balance between the development team and early users, using all protocol revenues to support its native token to meet the value preservation needs of later buyers.

From the performance of certain projects, it can be seen that when the project team remains united and committed to empowering the token, they can indeed withstand to some extent the concentration of external capital holdings and selling pressure.

As a major exchange platform brings market makers to the forefront, its industry barriers are rapidly collapsing. Since 2021, with the involvement of large cryptocurrency venture capital in Europe and the United States, the initial valuation of the entire industry has been significantly boosted. Taking the cross-chain bridge sector as an example, the valuations of multiple projects far exceed their current fully diluted valuation (FDV).

This phenomenon of high valuations is actually at the expense of retail investors. From the "VC coin storm" that began in mid-2024 to the controversial events involving executives of a certain exchange at the beginning of 2025, the relationship between exchanges and VCs has become difficult to maintain on the surface. In the context of the meme coin frenzy, the endorsement and ability of VCs to promote coin listings no longer seem so important, and their only remaining role appears to be providing funding.

In this case, cryptocurrency VCs are in a dilemma. They are unable to invest in traditional Web2 projects and find it difficult to enter the emerging Web3 ecosystem. This marks the end of an era.

After the decline of VC influence, trading platforms can only rely on market makers as a buffer when facing retail investors. Users trade small-scale tokens on-chain, while market makers are responsible for handling the liquidity within the exchange and the market-making tasks for a few listed tokens.

For market makers and trading platforms, there is not much difference in pricing between meme coins and VC-backed tokens. If even so-called value coins struggle to reflect their value, then purely speculative tokens are even harder to price reasonably. As a result, quick in and out has become the common choice for most market makers.

When the entire industry falls into such a cycle, it is not the fault of certain exchanges being quickly "broken into" by market makers, but rather reflects the crisis faced by the entire industry. As the last link in liquidity, large exchanges have found it difficult to uncover tokens that truly have long-term value, which is the root cause of the industry crisis.

Although some exchanges may give individual projects a break and take strict measures against market makers, this does not fundamentally change the existing model of the industry. In the future, there will still be a large number of overvalued tokens waiting to be listed.

With Ethereum Layer 2 solutions continuously emerging, many decentralized applications ( dApp ) may eventually evolve into independent blockchains. At the same time, token economics and airdrop schemes are becoming increasingly complex, from Bitcoin as Gas to various intricate incentive mechanisms, which have far exceeded the understanding of average users.

Since a certain decentralized exchange began to gain market share by conducting token airdrops to competitors' users, airdrops have become an effective marketing tool to stimulate early users. However, under the scrutiny of various anti-witch-hunting mechanisms, airdrops have evolved into a game between professional "shearing" teams and project parties, with ordinary users being excluded.

"Fur pulling" participants want to acquire tokens, project parties need trading volume, VC provides initial funding, trading platforms require new coins, and ultimately retail investors bear all the risks, leaving only the continuously falling prices and the anger of being unable to change the situation.

Shifting to meme coins is just the beginning; the more serious issue is that retail investors across the entire industry are reassessing their interests and losses. What would happen if they trade not on traditional exchanges, but choose to engage in contract trading on emerging platforms or decentralized protocols?

Currently, the daily trading volume of on-chain contracts has reached about 15% of a major exchange, with a decentralized derivatives platform accounting for 10%. This is not the end, but the true beginning of the on-chain process. At the same time, the trading volume of the decentralized exchange (DEX) accounts for about 15% of the centralized exchange (CEX), with a leading DEX accounting for about 6% of a major CEX, highlighting the rise of Solana's DeFi ecosystem.

In terms of user numbers, a large exchange has about 250 million users, while a certain decentralized derivatives platform has only 400,000 users, and a leading DEX has 600,000 active users, with Solana reaching 3 million daily active users. Overall estimates suggest that the on-chain user base is around 1 million, still in the very early adoption stage.

However, with the increase of Layer 2 solutions and the growing complexity of dApp token economics, project parties face great challenges in balancing their own interests with those of retail investors. Without the support of VC and exchanges, it is difficult for projects to launch; however, accepting their profit distribution will inevitably sacrifice the interests of retail investors.

From the perspective of biological evolution, when a certain organism becomes enormous and structurally complex, it often indicates an impending extinction. Similarly, the current complexity and gigantism of the crypto market may also herald the arrival of some transformation.

Overall, the regulation of market makers by trading platforms is essentially a market redistribution under the existing competitive landscape. Retail investors still face pressure from VCs and project parties, and the situation has not fundamentally improved. The migration of users to the on-chain ecosystem is still ongoing, and even the most successful decentralized platforms are not yet prepared to welcome hundreds of millions of users.

In each market cycle, the fluctuations of value and price, as well as the game of interests and distribution, will continue to unfold, constituting the difficult journey of retail investors participating in the crypto market.