Paradigm falls from grace? From top VCs to the "master of the game" that everyone avoids

Original Title: "Paradigm Falls from Grace? From Top VC to the Avoided 'Master of Schemes'"
Original Source: Deep Tide TechFlow

In the crypto world, the endorsement of a project is worth its weight in gold.

Whether in investment research or project engagement, players once shared an unspoken understanding:

A project backed by a major VC often signifies a big opportunity.

Due to the extreme information asymmetry in the industry, major VCs have, to some extent, been regarded as "information filters." That is, when professionals use their expertise, substantial funds, and valuable reputation to endorse a project, following them likely means I can also benefit.

For example, Paradigm, a top VC in the crypto industry, has invested in Coinbase, Maker, Uniswap, and the once-thriving FTX, demonstrating a sharp eye for selecting projects.

During the last bull market cycle, the saying "Paradigm leads, no small hair" circulated widely.

However, recently, distancing from Paradigm seems to have become a new consensus among retail investors.

On social media, you can increasingly hear a growing sentiment that any project backed by Paradigm should be avoided;

Some even jokingly complain that Paradigm's office is in Shenzhen, and the projects they invest in exhibit a style reminiscent of Shenzhen's funding schemes, suggesting that this VC has become adept at scheming rather than executing…

From being a top VC that served as a barometer to becoming the avoided "master of schemes," how did Paradigm gradually fall from grace in the eyes of retail investors?

From Paradigm to "Puadigm"

The initial shift in sentiment can be traced back to FriendTech.

FriendTech (hereafter FT) sparked a social frenzy last year. While the promotion by KOLs in FT and the economic design of purchasing shares played a role, what truly ignited user influx was the news that Paradigm invested in FT's seed round.

With the subconscious belief that a major VC's investment indicates potential, user activity and transaction fees for FT saw a significant increase after the announcement.

But everyone knew that the interest in social engagement was a facade; the real motivation was the airdrop.

FT's points system later became known: the more active you are and the more shares you purchase, the more points you earn, and your ranking improves. These points would eventually be exchanged for token airdrops.

But that future has yet to arrive, even as SocialFi has cooled down.

The crypto market experiences rapid shifts in focus, and social products are particularly evident in this regard. Subsequently, activity plummeted, and TVL gradually withdrew. Even if you persisted in being active on FT, it became challenging to find someone to engage with.

As retail investors awakened from their dreams, they began to realize that this felt a bit like PUA, didn't it?

Encouraging you to keep investing, maintaining control over you, and dangling a promise of a reward that never materializes.

Until this feeling resurfaced with Paradigm's investment in Blast.

The first self-sustaining L2, where the more TVL you contribute over time, the more points you earn, making the future reward even more enticing… A familiar formula and taste.

Although Paradigm's research director publicly expressed disagreement with certain execution strategies of Blast, and Pacman openly stated that Paradigm had no control over Blast's GTM (Go-To-Market) strategy;

the same VC, the same PUA flavor, made it hard not to associate Paradigm with the backlash, and players gradually developed an impression that Paradigm was quite adept at PUA.

Not to mention Blast's further PUA points strategy after its mainnet launch, which left many early participants who had deposited ETH feeling trapped, with frustration and anger reaching a peak:

Whether Paradigm truly participated in the design or collaborated with the project to absorb TVL is no longer important; what matters is the repeated PUA experience that the projects they invested in brought to retail investors, reinforcing this perception of rights protection:

Paradigm has transformed into "PUAdigim." Once you felt that having it meant you could benefit, now it seems that having it guarantees you won't have a good outcome.

Things happen in threes, but similar events occurred recently with Aevo, where the greater the expectations, the greater the disappointment. The ambiguity surrounding wash trading left those who followed Paradigm's investment mantra feeling demoralized.

Note that we still cannot determine whether Paradigm and the project reached a PUA understanding; however, the longer it drags on, the less clear the rules become, and the higher the opportunity cost, leading to greater uncertainty, which is an undeniable fact.

What further complicates matters for retail investors is that Paradigm's prestigious name remains, creating a clear "chicken rib" effect:

If you don't engage, others will.

If you refrain from participating due to being troubled by PUA, a host of competitors will be delighted, and the competitive pressure diminishes. After all, the crypto market has never lacked those who are willing to endure hardships for a free lunch, especially when they know that if you don't partake, their own slice of the pie will grow larger.

Tasteless to consume, yet fearing others will feast.

Caught between potential gains and the possibility of none, it's understandable that retail investors would focus their ire on Paradigm.

Long-Termism, a Burden for Retail Investors

However, a decline in reputation does not necessarily mean Paradigm is without merit.

Founded in 2018, Paradigm's initial backers included the endowment funds of Yale, Harvard, and Stanford universities. Scholars and researchers are not fools; they wouldn't blindly give money to an organization without investment capability.

Paradigm's first fund of $400 million came from Yale's endowment, which included investments in foundational DeFi projects like Uniswap and infrastructure giants like StarkWare.

Let’s not forget that the term "Paradigm" itself means "model." In terms of business model selection, Paradigm's portfolio includes many innovative projects that represent new paradigms.

FriendTech is one such example, as is Blast, and Aevo, all of which differ from existing market offerings.

When top VCs lean towards finding projects that can trigger paradigm shifts, it inevitably indicates that these projects possess some genuine potential to alter certain operational models or business formats;

the only issue is that the time it takes for potential to materialize can indeed be quite long.

Long enough for retail investors to grow weary of PUA, earning points, accelerated growth, and invitations, leading to aversion.

If the focus is on long-term project development, there will inevitably be marketing strategies that involve casting a wide net to catch big fish; the aforementioned tactics are merely one part of the strategy, which is naturally reasonable from the perspective of VCs and project incubation;

but retail investors despise the term long-termism.

In the crypto profit arena, no one will continuously accompany a project to maturity without a tangible interim reward; all companionship without immediate benefits is illusory.

Moderate PUA may be acceptable, but sustained PUA is shameful; this is the true consensus among retail investors.

Because I Can't Benefit, It Can't Be Good?

Finally, we need to clarify:

Paradigm may be the ceiling of crypto investment, but it may not be the ceiling that elevates your personal investments.

The goal of a VC is not, and will never be, to guarantee the success of your personal investments; launching a good project and how much you can gain from it sometimes exist in irreconcilable conflict, as you are currently experiencing with PUA.

VCs are inherently risk investors; how can you ensure that following them will lead to success?

If a project succeeds, you may not necessarily benefit. But if you declare a VC to be worthless simply because you can't benefit, that may also be unfair.

Today, Paradigm is the target of PUA sentiment; tomorrow, which VC will be vilified next? Criticizing all crypto VCs and avoiding all PUA projects won't necessarily increase your returns.

Consider the inscriptions and fair launches; VCs didn't benefit either. In the crypto world, roles at different ecological niches have their own ways of obtaining profits.

As some KOLs have said, abandon idolization, question authority, and think independently.

Not being led by the nose and finding your own way to benefit is the beginning of demystifying the crypto world.