The Evolution of Investment in the Crypto Market from ICOs to Equity Tokenization

Yesterday, after finishing the article on Robinhood, I browsed related information online. I found that my statement in the article about the OpenAI equity transaction being somewhat unnoticed greatly underestimated the industry's reaction.

Moreover, the transaction involved not only OpenAI's equity but also SpaceX's equity.

In fact, many heavyweight investors in the crypto ecosystem have noticed this transaction and realized the enormous potential it could bring.

This made me reminisce about the ICO boom back in the day.

I have always believed that ICOs are undeniably a great application that emerged after Bitcoin since the birth of crypto technology.

Ethereum was funded through an ICO.

Its greatness lies in the fact that it pushed the boundaries of investors to the extreme, eliminating the artificially set and inherently added thresholds in investments for the first time in human history, allowing people from any corner of the world reachable by the internet to participate in investments regardless of race, gender, nationality, or belief.

It achieved the maximum liberalization of investment and for the first time granted people the right to participate and choose without permission.

This extreme liberalization of investment inevitably brings about an extreme wealth effect.

Of course, it also brought a significant negative effect: the vast majority of projects ended up in disarray.

I believe the main reason for this negative effect is:

At that time, there was a lack of a relatively mature project evaluation system, and most investors had no data to refer to or draw from.

However, such a system is quite mature in traditional investment fields, especially in venture capital.

This led to a mix of good and bad projects.

But if those projects back then had relatively credible institutions participating in funding rounds like today's OpenAI and SpaceX, and had continuously accumulated data for reference, I believe the negative effects on investors would have been much smaller.

Recently, two AI projects in traditional fields have been quite prominent; one is Cursor, whose parent company is Anysphere; the other is Scale AI.

The former has now become a unicorn in the AI programming field, while the latter was recently invested in by Meta for $14.3 billion.

Cursor's parent company, Anysphere, was established in 2022 and was initially funded by OpenAI with $11 million in the seed round. I couldn't find its seed round valuation online, but I estimate it to be around $100 million. If that's the case, then OpenAI invested $11 million in a company valued at $100 million.

Scale AI was founded even earlier, in 2016. The earliest investor was Paige Craig, who invested $245,000 in Ava Labs (the predecessor of Scale AI) when it was valued at $3 million. Later, top Silicon Valley venture capital firms like Accel, YC, and Founders Fund participated in its successive funding rounds.

The reason these companies have been able to grow and develop to this point is partly because they have undergone one venture capital screening after another, and partly because their products have been significantly tested by the market.

As of now, neither of these companies is publicly listed. Although they have gone through one funding round after another since their inception, the investors or institutions that participated can only realize their equity by waiting for subsequent funding rounds or the company's IPO.

The liquidity of the assets they hold has a significant discount.

On the other hand, many investors are very eager to participate in such projects, but due to narrow investment channels and information gaps, they simply cannot find such projects.

If such private equity could be tokenized and placed on the blockchain for widespread investor participation, it would not only provide liquidity directly, allowing early-stage participating institutions to exit at any time without waiting for subsequent funding or IPO; it would also facilitate general investors who are eager to invest but have no access to such projects.

I even believe that if a large number of private equity projects in traditional fields (such as AI projects) could be tokenized and traded before going public, and introduced into the crypto ecosystem, the phenomenon of blindly chasing meme coins in the current crypto ecosystem would quickly disappear—when investors have solid good projects, who would spend all day chasing emotions and treating speculation as investment?