The investment logic for the upcoming cryptocurrency market

A reader wrote in the comment section at the end of the article:

"I really don't know what is worth investing in anymore…"

I don't think this is a bad thing. If it were me, I would refrain from buying anything in a state of confusion and hesitation, observing more and acting less, waiting until I have clarified my thoughts before making a move—during this time, I have only bought Ethereum and no other coins.

In fact, excluding those projects that are purely for fun or speculation, there shouldn't be many projects that are truly worth our serious investment.

This should be the case in any investment market.

In this regard, the investment masters of the past have set a good example for us:

Among thousands of publicly listed companies in the U.S. stock market, Mr. Buffett holds only a little over a dozen stocks. The number of stocks he heavily invests in is even fewer.

After some time of organizing my thoughts, I have roughly categorized the tokens in the current crypto ecosystem into the following types:

The first type is collectibles in the crypto ecosystem.

The most typical tokens in this category are Bitcoin, CryptoPunks, and some on-chain artworks (NFTs), etc.

For these types of assets, I firmly believe that the future of the crypto ecosystem will flourish, and this prosperity will inevitably lead to value spillover into some highly collectible categories.

Therefore, I will choose valuable varieties to buy at appropriate prices.

The second type is tokens with commodity value or utility value.

This type of token is most typically represented by Layer 1 blockchains (L1), where the token is an inseparable part of the project and is the driving force behind its operation.

For these types of assets, I believe that the future of the crypto ecosystem will flourish, and the tokens that can support ecological development will certainly have hope in the future.

Thus, I will also choose valuable ones to buy at appropriate prices.

The third type is governance tokens that occupy a large market share and only have voting functions.

In the future, for these types of tokens, no matter how good the underlying project is, how great the team is, or how profitable it is, I will be very cautious if I have to spend real money to buy them. I will mostly just take advantage of airdrops when time and energy permit.

The fourth type is tokens with vague positioning and unclear attributes.

For these types of tokens, the project parties describe them very ambiguously, neither clarifying their utility nor their rights attributes. At most, they might indicate some level of "importance" to the tokens by repurchasing them using project profits in certain situations.

For these types of tokens, I will observe and be cautious in my approach until their functions and attributes are clarified.

There is also a type of true equity token.

These tokens are essentially like stocks. If someone buys all the tokens of this project, it is equivalent to owning all the rights of the project, allowing them to completely reorganize the management at will and take all the profits of the project as they please.

Currently, this type of token seems to be nonexistent in the crypto ecosystem. I will pay attention if it appears in the future.

Using this method to reassess the tokens in the ecosystem, I feel clearer about how to participate: that is, over 95% of the tokens in the ecosystem require great caution when spending money to buy them—this applies to some well-established classic projects, as well as the AI proxy projects that have emerged this past year.

Following this line of thought, I will first conduct a strict review of those tokens in my possession that only have governance functions and for which the project parties have not clearly defined their future development. I will eliminate all those that continue to be positioned as governance functions, regardless of how good their underlying stories are, how advanced their frameworks are, or how promising their technologies are.