Why are "airdrop projects" in the Crypto Assets field so popular?

In the world of Crypto Assets, an interesting phenomenon has caught people's attention: projects that have only a beautiful website but no substantial product often manage to easily raise millions of dollars in funding. This phenomenon is not merely a result of luck or scams, but rather a consequence of game theory playing a role behind the scenes.

This situation reminds me of a scene from the American TV series "Silicon Valley": those companies without revenue are valued higher than those that are truly profitable. The venture capitalists' explanation is that if revenue is shown, people will ask about the specific numbers, and that number will never be high enough; but if there is no revenue, people can fantasize about infinite possibilities.

In the field of Crypto Assets, this logic is pushed to the extreme: the more ethereal the project, the more funds it may raise. This is not a flaw; rather, it has become one of the most profitable characteristics of the field.

The limitations of reality on valuation

When a project has a viable product, it has to face some unpleasant realities:

• Actual number of users (often disappointing)
• Real technical limitations (often frustrating)
• Measurable indicators that cannot be faked (extremely powerful)

In contrast, if a project only has a white paper, its potential value is limited to people's imagination. This creates a strange situation: projects that take their work seriously may actually be penalized by the market.

complete information game

In the process of fundraising for Crypto Assets, the main participants include:

• Project founder (master all information)
• Venture capitalists (understand some situations)
• Ordinary investors (know almost nothing)

For project founders without products, the best strategy is obvious:

• Keep the statements vague yet exciting
• Emphasize potential rather than reality
• Create a sense of fear of missing out (FOMO) as much as possible.

The more ambiguous the statement, the harder it is to be falsified. The fewer functions there are, the fewer chances of failure.

Why is no one asking for better results

The famous "prisoner's dilemma" in game theory reveals why people make choices that are detrimental to themselves and beneficial to others. There are similar situations in Crypto Assets investment: if everyone demands to see viable products before investing, the market would be healthier.

However, anyone who waits may miss out on early substantial returns. Investors who enter the market earliest often reap the most profits, even if the project ultimately fails.

Therefore, the seemingly wise actions of each investor (entering the market early based solely on promises) may lead to unfavorable outcomes for everyone (valuing hype while neglecting substance).

The trade between dreams and reality

A project with only one article can claim to completely change everything and create trillions of dollars in value. In contrast, a project with actual code must face:

• Actual User Count
• The specific capabilities and limitations of technology
• Reasons for falling behind in competition

This gives rise to the so-called "nonsense premium" - a valuation premium obtained completely unconstrained by reality.

collaborative speculation

When no one can distinguish the quality of a project, everyone will look for the same signals:

• What are influential people talking about
• Which exchanges will list it
• The speed at which the token price rises

Projects without products can allocate all resources to create these signals, rather than engaging in actual development. The more invested in marketing, the fewer resources there are for development. In the Crypto Assets field, marketing is often more important than development.

Real Case: Star Project Without Products

In the field of Crypto Assets, there are many projects that have obtained huge financing without having actual products:

• A certain blockchain project: It has achieved a valuation of billions without launching its mainnet, proving that in the field of Crypto Assets, the less real the product is, the more people can project their dreams onto it.
• A high-performance blockchain: A project claiming to "process 162,000 transactions per second" raised $350 million, but upon launch, it could only handle 4 transactions per second. The less evidence required for technical claims, the more funding it receives.
• A biometric recognition project: proposed the concept of "exchanging biometric data for tokens," attracting hundreds of millions of dollars in venture capital investment.

These examples all follow a common pattern: the more abstract or technically complex the commitment, the more funds are raised, and the greater the likelihood of eventual failure.

Why is it difficult to change this situation?

Logically, investors should demand to see viable products. However, game theory explains why this situation is difficult to change:

• FOMO emotions are real: early investors profit the most, which creates pressure to invest early before the project is validated.
• Difficult to verify the claimed content: Most investors lack the technical capability to assess the feasibility of the project.
• Short-term orientation of fund managers: Their compensation depends on the returns of the current season, rather than long-term success.
• The incentive mechanism has problems: actions that are beneficial to individuals may be harmful to the market as a whole.

This is why projects without products often raise more funds than those that are truly developing practical products. It's not that the rules of the game are broken, but rather that some people are too skilled at exploiting these rules.