# Investment Opportunity Imbalance in the Cryptocurrency Market: A Continuing Debate

The imbalance of investment opportunities between retail investors and venture capital in the cryptocurrency market remains a topic of ongoing debate. Platforms like Fair Launch are striving to address this disparity by offering equitable investment opportunities, yet they remain constrained by structural limitations. Innovative approaches such as offering investors data-driven opportunities or experimenting with AI agent-based transparent fair launch mechanisms are gaining attention as potential solutions.

# Introduction

Recently, launchpad platforms such as Pump.fun and DAOS.Fun have garnered attention in the cryptocurrency market due to high trading volumes and active user participation. These platforms introduce the Fair Launch model, which, unlike traditional ICOs or IEOs, allows all users to invest freely from the token issuance stage without pre-sales for venture capitalists. This provides retail investors with the opportunity to participate in the ecosystem from the early stages and share in its value, capturing significant interest. This trend reflects the structural issues that have long excluded retail investors from investment opportunities and ignites hope for new investment models. This research aims to closely analyze whether Fair Launch platforms can mitigate the investment opportunity imbalance for retail investors and contribute to the sustainable development of the cryptocurrency market.

# Retail vs. Venture Capital: The Background of the Conflict

The investment opportunity imbalance between retail investors and venture capital is a longstanding structural issue seen in traditional financial markets and is also prevalent in the cryptocurrency market. Venture capitalists often secure large amounts of tokens at low prices during early private sales and realize profits by selling them at higher prices in the public market. Retail investors face structural limitations, having to enter the market at already elevated prices, thus increasing dissatisfaction over the imbalance in investment opportunities.

Concrete data confirm this issue. According to Binance Research, the Market Cap (MC) to Fully Diluted Valuation (FDV) ratio in the cryptocurrency market has continuously declined from 41.2 percent in 2022 to 12.3 percent in 2024. This indicates that the proportion of tokens actually traded in the market out of the total issuance has decreased, while the proportion of locked tokens has increased. Such limited supply induces artificial price increases, creating a favorable environment for early investors like venture capitalists. However, when the large locked amounts are released into the market, oversupply leads to price drops, and the resulting losses are primarily borne by retail investors. Consequently, inflated prices in the market’s early stages often result in losses for retail investors.

Given such circumstances, it is natural for retail investors to pay attention to Fair Launch platforms. These platforms provide an environment where all tokens are immediately circulated from the beginning, eliminating token unlock risks and offering equitable conditions for participation. This approach aims at fair distribution and the establishment of a healthy ecosystem, meeting the needs of retail investors eager to engage actively from the early stages.

# Fair Launch Platforms: Fair Alternative or Another Imbalance?

Fair Launch platforms present new opportunities for retail investors as an alternative to existing structures. However, whether this approach has completely addressed the investment opportunity imbalance remains debatable. Despite providing a seemingly fair environment where all participants can start under the same conditions, other imbalances and issues still emerge.

For instance, with Pump.fun’s Token Generation Event (TGE), automated tools like snipers and trend bots often capture trades ahead of regular retail investors. Moreover, some projects grant participation priority to specific groups through whitelisting or form cabals, thus favoring insiders and undermining fairness. Such issues make the value proposition of fair token distribution questionable, showing that merely the subjects of imbalance have changed, but retail investors still face challenges in participating under fair conditions.

More critically, these phenomena repeat more frequently than before. Particularly on Fair Launch platforms, the project verification process conducted by venture capitalists is often skipped, leading retail investors to engage in inadequately evaluated projects and take greater risks. As a result, the fundamental problem of investment opportunity imbalance remains unresolved and has evolved into new forms that further disadvantage retail investors.

# Root Causes of Investment Opportunity Imbalance

Fair Launch platforms reveal limitations in completely resolving investment opportunity imbalances. Hence, there’s a need to approach these issues from a more fundamental perspective, beyond the conflict between retail and venture capital or the fairness of investment opportunities. This concern pertains to the sustainability of the ecosystem.

If a project’s sole purpose were fundraising, then opening investment opportunities equally to everyone might be rational. However, the token-based ecosystem aims beyond mere investment. It must grow with investors and continuously create and develop value. For this, genuine participants interested in the ecosystem’s growth, rather than short-term profit-seeking investors, are essential.

In this context, the role of venture capital remains crucial. Venture capital provides more than just funding, offering a broad network and supporting projects with various resources, hence contributing to ecosystem expansion. They also verify projects’ stability and reliability through initial research and due diligence. Hence, it’s understandable that some Fair Launch platforms offer early participation incentives to verified participants.

Thus, the problem of investment opportunity imbalance cannot be resolved merely by providing equal participation opportunities. For the ecosystem’s long-term growth and sustainability, it’s necessary to identify participants capable of making substantial contributions and offer them appropriate incentives. This systematic structure is a fundamental challenge that the current Web3 ecosystem must address.

# Finding a New Balance: Value-Centric Ecosystem

Currently, the cryptocurrency market struggles to balance between two extreme approaches: providing equal opportunities to all participants and the traditional model centered around verified investors. Both approaches fail to fully realize the intrinsic value of the Web3 industry.

In this situation, what we should focus on is the strategy of ‘value-centric participant selection.’ Instead of focusing on the size of capital or investor type, there should be mechanisms to effectively identify participants who can genuinely contribute to the ecosystem and offer them appropriate investment opportunities. Recent examples highlight the potential of such new approaches.

## Legion: Community Investment Round Platform

Legion is a community-focused investment platform that selects investors who can genuinely contribute to the ecosystem and provides fair investment opportunities. Legion aims to establish sustainable collaborative relationships between projects and investors, not just seeking capital.

The core system, “Legion Score,” evaluates various on- and off-chain data, including investors’ on-chain activities, social influence, GitHub contributions, and project team endorsements. This score helps select investors based on their ability to contribute to the ecosystem rather than their financial capacity.

Legion opens opportunities to everyone while allowing projects to evaluate investors’ activities and willingness to participate comprehensively, thus selecting suitable investors for the ecosystem. Investors create a cover letter along with the Legion Score, proposing how they can contribute to the project, thereby forming trust relationships.

This approach not only increases the fairness of investment opportunities but also creates meaningful interactions between projects and investors. Through this, Legion strengthens the reliability and sustainability of the cryptocurrency market, establishing itself as a new investment model focusing on community contribution.

## AI-Pool: AI Agent-Based Fair Launch Platform

AI-Pool is an experimental fair launch platform proposed by user Skely on December 24, 2024, utilizing AI agents. The idea quickly spread, raising over five million dollars shortly after being proposed, indicating substantial interest.

Note: The Skely account is currently suspended due to reports from impersonating accounts, but the exact reason is unclear. The platform itself is still in the early experimental stage, lacking verified stability and reliability. Nonetheless, the idea proposed by the user is significant.

AI-Pool attempts to overcome structural limitations of existing fair launch platforms by leveraging AI agents. While traditional platforms have seen fairness compromised by centralized operations and insider trading, AI-Pool is designed to manage all processes transparently using trusted execution environments (TEE). TEE securely protects the secret keys of AI wallets and allows AI agents to autonomously manage transactions without external intervention. This reduces the unfairness caused by centralized operations and insider trading, aiming to create a fairer ecosystem.

However, AI-Pool is still in its early experimental phase, and challenges such as market distortions from automated bots or liquidity shortages remain. Despite these limitations, AI-Pool has made significant implications by securing fairness in token issuance and initial distribution. It suggests the possibility of addressing unfair distribution problems prevalent in centralized platforms and shows potential for raising trust and transparency in the cryptocurrency market with further development.

# Conclusion

The investment opportunity imbalance in the cryptocurrency market is often viewed as a conflict between retail and venture capital, but the problem lies deeper. Practices like Key Opinion Leader (KOL) rounds create environments favoring specific groups, and even Fair Launch platforms fail to achieve complete fairness, leading to new forms of imbalance. Therefore, it is essential to focus on the root causes of investment opportunity imbalance and seek fundamental solutions.

Legion and AI-Pool propose new approaches to address these issues. Legion emphasizes fair investment opportunities based on on- and off-chain data, identifying contributors who can significantly benefit the ecosystem. AI-Pool uses AI agents to automate processes and enhance transparency, attempting to mitigate problems arising from centralized operations and insider trading. Both projects focus on strengthening ecosystem trust and sustainability beyond mere capital investment.

Ultimately, the core value of the Web3 industry lies in providing equal opportunities and a fair environment for all participants through decentralization. Achieving this requires building a balanced ecosystem that does not favor specific entities and creating cooperative structures where investors and projects add value to each other. Such efforts are expected to be the first step towards realizing a truly decentralized system.

*This article is a professional work from the global Web3 specialized research institution, Tiger Research. The original report can be found on the Tiger Research official website.*