The demise of a DAT company

Yesterday, several well-known media outlets in the crypto ecosystem reported a piece of news, which I have divided into three sections:

The $1 billion Ethereum DAT plan led by Li Lin, Shen Bo, Xiao Feng, Cai Wensheng, and others has been shelved, and the funds raised have been returned. This plan was the largest DAT led by Asian investors.

Regarding the reason for the shelving, relevant news reported:

Industry insiders speculate that the main reason for the halt is due to the bear market following the 1011 incident, with many DAT companies experiencing significant stock price declines recently.

As for the follow-up plans, the news reported:

Regarding whether the plan will be restarted, relevant individuals stated that investor interests will be prioritized, and it is still pending market observation, going with the flow.

I have been paying attention to the news about these celebrities preparing this Ethereum DAT company since it first came out. There are two main reasons:

First, in my impression, some of these individuals are capable of focusing on long-term interests while rejecting short-term behaviors.

Second, some of these individuals have made significant contributions to the early growth of Ethereum.

In my view, having such individuals lead the establishment of this Ethereum-based DAT company is a rational choice, capable of not being swayed by market emotions and making independent judgments.

Moreover, they are investing in Ethereum, which, in my opinion, is undoubtedly the right choice in the long run. From the perspective of asset selection, the risks are quite controllable.

Therefore, this DAT company is worth paying attention to, at least it is much more rational than some mindless Ethereum DAT companies that shout about Ethereum reaching XXX dollars by the end of this year or next year.

The only point I was skeptical about at that time was:

Given that Ethereum had already risen to over $4,000, was it the right timing to enter the market? Could a more suitable entry point be found?

Of course, from a longer-term perspective, entering at $4,000 could also be acceptable, but the whole team might have to bear the pressure brought by the market in the short term.

Now, time has passed, and in recent days, the market has been flooded with news of crashes—I've been waiting for this day for several months.

I check daily to see if Ethereum has fallen below $2,500 and whether the S&P 500 index has been hit hard.

Then I came across the news I divided into three sections above.

I divided the news into three sections because each section is worth thinking about and exploring.

Let's first look at the second section, which can be summarized as follows: the reason for shelving the plan is due to the bear market.

According to common sense, if you are optimistic about an asset in the long term and believe in its future potential, shouldn't you enter the market when it is bearish, being greedy when others are fearful?

I can't comment on whether entering at the current price of $3,000 is a good idea, but it is certainly better than entering at the previous price of $4,000, right?

Why is it that now, when the price has dropped, people are hesitant to enter?

Is it because the fundamentals of Ethereum have changed?

I haven't seen any news proving that the fundamentals of Ethereum have changed.

I also thought of another explanation: the team believes that the current price level is still not good.

But if that's the case, they could simply wait a bit longer for a lower price; there is no need to return funds to investors now. Instead, they should intensify efforts to raise funds and tell investors: the price is low now, making it a better time to enter, and we need more money to seize the opportunity.

So this explanation also seems to not hold water.

The third section seems to explain the deeper reason for shelving the plan, summarized as: pending observation, going with the flow.

What does this going with the flow mean?

What I can think of is the "trading mindset" of the vast majority of people:

The market is rising now, so I (regardless of the method) judge that the market will continue to rise in the future, meaning I have the ability to predict that the market will keep rising for a while. At this point, I will buy.

Conversely, if the market is falling, I judge that the market will continue to fall, so I cannot buy.

In fact, if we follow this "trading mindset," there are countless meme coins in the market that can make this approach work; there is really no need to target Ethereum—because if you have the ability to predict the market's next moves, why not find a more volatile asset?

There is another statement in the third section that is even more thought-provoking: "Relevant individuals stated that investor interests will be prioritized."

"Prioritizing investor interests"?

Isn't buying a long-term potential asset at a lower price the best way to prioritize investor interests?

Shouldn't we buy when the market is rising to prioritize investors' interests?

I suspect that what this statement really wants to express is probably not "prioritizing investor interests," but rather "prioritizing investor emotions."

Why?

Because the vast majority of investors often care more about emotions and short-term market feedback. If you buy something and it doesn't rise for three days, they become anxious. If you tell them what will happen in a few years or even a year, they lack the patience to listen. They want to know why it hasn't risen in the past three days. If you can't comfort them at that moment, it becomes troublesome.

Currently, the crypto ecosystem is facing such an environment.

In a less than ideal market environment, if one enters the market now, what if Ethereum's price drops even lower afterward? How will investors react emotionally?

So it’s better to shelve the plan to avoid the risk of investors' money facing potential losses in the short term. As for the long-term potential and future prospects that were once envisioned, it is simply impossible to explain that to investors at this time; even if explained, it may not be useful.

The situation of investors is a problem that many fund managers face.

In the past few days, I saw an interview with Lin Yuan discussing this issue.

In the interview, the reporter asked him: What if your investors have objections to your investments?

He answered quite straightforwardly: Why care about them? The agreement is already written.

The reporter then asked: How do you explain it to them?

He answered just as straightforwardly: No explanation.

Regarding Lin Yuan, I appreciate many of his views, but I also find some of his views to be half sea water and half fire.

However, after watching this interview, I genuinely think he is a very interesting person.

Warren Buffett and Charlie Munger have also shared strong views on how to treat investors.

A questioner asked why they don't split Berkshire Hathaway's stock to lower the price per share to allow more investors to participate.

The two gentlemen answered just as straightforwardly (in essence): We don't want many investors buying our stock; we want to maintain this threshold. Investors who do not agree with our approach should sell our stock and look for other investors.

Later, because too many groups on Wall Street misused the names of the two gentlemen to issue a bunch of "copycat" stocks, the two gentlemen were forced to issue some B shares. However, since then, there has been no similar stock split behavior.

Whether it is Lin Yuan or Buffett and Munger, the message they convey is quite similar in my view: fund managers should not be disturbed by the emotions of investors. Moreover, the best practice is to initially filter investors with strict standards. Those whose philosophies and values differ should not have their money accepted; such individuals do not need to be together, and they are even less likely to work together to reach the shores of victory.