Why can "air" projects in the Crypto Assets field achieve high valuations?

Have you noticed a strange phenomenon in the world of Crypto Assets? Projects that raise millions of dollars often have nothing to show for it besides a flashy website. This is not a coincidence, nor is it entirely a scam; rather, it is game theory at play behind the scenes.

This phenomenon reminds one of a scene in the TV series "Silicon Valley": companies without revenue are valued higher than profitable ones. The investors' explanation is that with revenue, they will be asked "how much", and no matter how much it is, it will never be enough. But without revenue, people can imagine infinite possibilities.

The crypto assets sector has taken this logic to the extreme: the more elusive the project, the stronger its fundraising ability. This is not a flaw; rather, it is one of the most profitable characteristics of this field.

real-world valuation limitations

When you have a practically viable product, you have to face some uncomfortable truths:

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

In contrast, if a project only has a white paper, its potential value is limited to people's imagination.

This has caused a peculiar phenomenon: projects that work diligently are instead punished by the market.

Complete Information Game

In the process of fundraising for Crypto Assets, the main parties involved are as follows:

• Project Founder (Know all the details)
• Venture Capitalists (with partial information)
• Ordinary investors (know almost nothing)

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

• Keep the vague but exciting statements
• Emphasize potential rather than reality
• Spare no effort to create a fear of missing out (FOMO) emotion

The vaguer the statement, the harder it is for others to falsify it. The fewer the functions, the fewer the exposed flaws.

Why is no one asking for better results?

The "Prisoner's Dilemma" in game theory reveals why people make choices that harm others while not benefiting themselves. There are similar situations in Crypto Assets investment: if everyone demands to see viable products before investing, the market would be much healthier.

But anyone who waits may miss out on early substantial profits. The earliest investors usually profit the most, even if the project ultimately fails.

Therefore, every investor's seemingly wise behavior (entering the market early based solely on promises) has brought foolish results for everyone (heavy on hype and light on substance).

Selling dreams and reality

A project with only one online article can claim to completely transform everything and capture trillions of dollars in value.

A project with actual code must face:

• Actual number of users
• The boundaries of technical capability
• Reasons for lagging behind in competition

This has given rise to the so-called "nonsense premium" – a valuation premium obtained entirely without constraints from reality.

collaborative speculation

When no one can distinguish which projects are truly high quality, everyone will look for similar signals:

• Influencer's Evaluation
• Exchange Listing Status
• The speed of the token price increase

Projects without products can allocate all resources to creating these signals, rather than engaging in actual development.

The less you invest in development, the more you can invest in marketing. In the Crypto Assets field, the importance of marketing often outweighs development.

Real Cases: All-Star Roster without Products

The Crypto Assets field has buried billions of dollars worth of white papers, confirming the theory mentioned above:

• A certain project: Created one of the most fervent communities in the Crypto Assets field, achieving a valuation of billions without launching a mainnet. This proves that in the Crypto Assets field, the less real the product, the more people can project their dreams onto it.
• A certain blockchain project: raised $350 million for a project that claimed "processing 162,000 transactions per second," but upon launch could only handle 4 transactions per second. The less evidence required for technical claims, the more funding is obtained.
• A certain biometric project: "Providing biometric data can be exchanged for tokens", I don't know why this sounds like a brilliant idea to venture capitalists, who invested billions of dollars in it.

These examples all share a common pattern: the more abstract or technically complex the commitment, the more funds are raised, and ultimately, the harder the fall.

Why won't this situation stop ###

Logically, investors should demand to see viable products. However, game theory reveals why this will not happen:

• The FOMO sentiment is real: early investors profit the most, which creates pressure to invest early before the project is validated.
• Difficulty in verifying claims: Most investors lack the technical ability to assess whether a project can deliver on its promises.
• Short-term orientation of fund managers: Their compensation depends on the quarterly returns rather than long-term success.
• The incentive mechanism has issues: actions beneficial to individuals are harmful to the market.

This is why projects without products will raise more funds than those that are actually building practical products.

The game rules are fine; it's just that some people have become too proficient in them.