Ponzi VCs Are Strangling Blockchain Innovation

Web3's promise of a user-owned internet is being undermined by a flood of capital chasing quick token exits rather than sustainable revenue. Global venture financing plummeted to $23 billion in April—just a third of March's total—yet token deals designed for rapid liquidity extraction continue to dominate. The SEC's recent $198 million fraud case, where insiders allegedly siphoned $57 million while promoting "risk-free" yields, exemplifies this toxic trend.

Traditional venture capital builds long-term value through early-stage patience, but token-centric funds prioritize immediate liquidity via staking subsidies, exchange listings, and insider unlocks. Product-market fit becomes an afterthought. Regulatory crackdowns and talent flight signal a reckoning: unless capital shifts focus from Ponzi-like structures to genuine utility, decentralization risks becoming a hollow slogan.