VC vs Community: Where Are the Real Excess Returns?

Core Viewpoint

2025-12-30 20:09:52

Collection

Both have the potential to rise. Only one side always decides who wins and who loses, whose share is diluted, and who is eliminated first.

Author: Green But Red

Compiled by: Ken, ChainCatcher

The cryptocurrency space is primarily composed of two types of tokens:

Those backed by hundreds of millions in venture capital
And those supported by users

Both have the potential for appreciation.

Only one side consistently determines who wins and loses, whose share gets diluted, and who gets eliminated first.

This series of articles does not compare different narratives.

It contrasts community-funded MetaDAO issuance with its VC-backed competitors to identify the true factors driving long-term token performance: structure, incentives, dilution, and who captures the upside.

1. Solomon vs. Ethena: The Yield Battle

Solomon (community-funded) and Ethena (venture capital-funded) are at the intersection of the three dominant forces shaping today's crypto finance:

The growing demand for "yield-bearing dollars"
The quest for safer, more sustainable leverage
The migration of on-chain bond-like yields

Both aim to create efficient digital dollars, but their design philosophies are starkly different. One is synthetic, market-driven, while the other is backed by reserves and treasury-managed.

Two Models, Two Yield Engines

Ethena uses a delta-neutral structure to build its synthetic stablecoin. By hedging futures positions, it creates an asset pegged to the dollar that can generate floating yields directly tracking derivative market financing rates.

Research from both academia and industry consistently shows that these strategies can yield extremely high returns when market conditions are favorable. However, they are also highly dependent on liquidity and financing cycles. When financing dries up or negative yields occur, returns can plummet quickly—sometimes even dramatically.

In contrast, Solomon issues USDv, a reserve-backed stablecoin supported by a diversified on-chain treasury. Its yields come from a combination of staking, lending, and basis strategies, rather than perpetual futures.

The result is a lower nominal annual yield but greater yield stability. Architecturally, Solomon resembles a tokenized digital asset management platform rather than a trading engine.

Market Perception Divergence

On the surface, both protocols promise the same thing:

A globally accepted crypto dollar.

However, the market positions them quite differently:

Ethena's trading characteristics are marked by speed, high liquidity, and significant yield volatility.

Solomon's trading strategy is based on trust, capital preservation, and slow compounding.

Their long-term trajectories may ultimately answer a deeper question in the cryptocurrency market:

Will capital continue to chase the stimulus of synthetic yields, or will it turn to the patience of on-chain reserves?

Token Comparison Snapshot --- $SOLO vs $ENA

$SOLO (Solomon)

Issue Price: $0.800

Current Price: $0.780

Performance: -2.5%

Largest Supporter: MetaDAO ($8 million)

Listing Status: DEX only (Solana)

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 100%

Market Cap / FDV: $32 million / $32 million

CMC Ranking: Not Ranked

$ENA (Ethena)

Issue Price: $0.78

Current Price: $0.28

Performance: -64.1%

Largest Supporters: Dragonfly, Polychain, Pantera Capital (Total $165 million)

Listing Platforms: Binance + Multiple CEXs

TVL: $6.9 billion

Annual Revenue: $98 million

Circulating Supply: 51%

Market Cap / Final Price: $2.1 billion / $4.1 billion

CMC Ranking: #40

Conclusion

Ethena dominates in liquidity, exchange access, and raw trading volume—but at a cost, suffering significant capital retracement and token dilution risk post-TGE.

Meanwhile, Solomon's liquidity market size is much smaller, with limited price discovery and currently no significant revenue—but it benefits from a fully circulating supply and lower structural reflexive pressure.

This highlights the core contradiction between venture-scale stablecoin engineering and community-scale reserve finance—and sets the tone for the upcoming comparisons.

2. Paystream vs. Kamino Finance: The Liquidity Optimizer Battle

Paystream and Kamino operate as the routing layer of DeFi, abstracting cumbersome manual operations like lending, liquidity mining, and incentive mining into streamlined automated products.

Their true advantage lies not just in higher nominal APYs.

This is risk-adjusted yield:

Venue Diversification
Dynamic Rebalancing
Automated Liquidation and Incentive Management

Same vertical.

Completely different heavyweights.

Kamino: The Heavyweight Optimizer

Kamino is the primary, chain-native yield engine for Solana:

Deeply integrated with money markets and LSTs for massive throughput
Advanced concentrated liquidity automation
Intentional loans tailored for treasuries, funds, and structured vaults

It not only optimizes yield—it industrializes yield. Billions in mining now flow into Kamino, effectively turning Solana itself into a yield processing machine.

This is what it looks like when venture-scale infrastructure reaches escape velocity.

Paystream: The Lightweight Streamer

Paystream completely disrupts traditional architecture by embedding yield routing directly into the payment process:

Every idle dollar in the stream is immediately deployed into carefully curated strategies.
Lean design optimizes P2P efficiency and leverage vaults
Actively shifts idle base liquidity from protocols like Kamino into higher turnover matches

Paystream does not own a balance sheet; it rides on top of it.

It does not aim to become the base layer.

It seeks to be the spread extractor.

Stack Dynamics and Market Realities

Unlike the competition among stablecoins, this is not a winner-takes-all battle.

They can stack:

Kamino = VC-backed base layer

Huge TVL
Emission-driven growth
Institutional-grade liquidity depth

Paystream = Community-funded routing layer

MetaDAO growth of about $750,000
Post-ICO retracement
Experimental but capital-efficient design

Kamino wins with scale and gravity.

Paystream competes on capital turnover and efficiency per dollar.

Broader Signals

This combination illustrates the actual direction of DeFi yield development:

From:

Manually flipping vaults
Chasing emission rewards
Static strategy sets

To:

Middleware wars
Strategic intelligence
Automated risk control
Native wallet and new bank integration

Kamino expands the base.

Paystream sharpens the edge.

Token Comparison Snapshot --- $PAYS vs $KMNO

$PAYS (Paystream)

Issue Price: $0.075

Current Price: $0.051

Performance: -32.3%

Largest Supporter: MetaDAO ($750K)

Listing Status: DEX only (Solana)

TVL: N/A

Annual Revenue: N/A

Circulating Supply: ~100%

Market Cap / FDV: $0.9M / $1.7M

CMC Ranking: Not Ranked

$KMNO (Kamino)

Issue Price: $0.04

Current Price: $0.06

Performance: +50%

Largest Supporters: Delphi Ventures, LongHash Ventures ($6M+)

Listing Status: Binance, MEXC, Gate + DEXs

TVL: $2.53B

Annual Revenue: $42.7M

Circulating Supply: 34%

Market Cap / FDV: $221M / $647M

CMC Ranking: #155

Conclusion

$KMNO wins in scale, liquidity, revenue, and institutional adoption—but still bears the structural burden of significant unlocking and FDV overhead risk.

$PAYS occupies a less liquid niche, but benefits from:

Full circulation
Extremely high capital efficiency
And the asymmetric upside potential if embedded yield becomes a true distribution wedge

The key to this showdown is not who can win today, but whether the routing layer can ultimately extract meaningful economic benefits from the yield giants.

3. ZKLSOL vs. Starknet: The Zero-Knowledge Battle

ZKLSOL and Starknet both rely on ZK—but they apply the technology to completely different problems.

One is built for transaction anonymity.

The other is for scalable computational infrastructure.

The same mathematical principles.

Completely opposite priorities.

ZKLSOL: Solana's Native Privacy Mixer

ZKLSOL directly provides transaction-level privacy protection on Solana:

Deposits fragmented into shielded pools
ZK circuits can prove the validity of transfers without exposing sender, receiver, or amount.
Provides DeFi users with mixer-style anonymity and staking-like yield mechanisms

Conceptually, it is a blend of Tornado Cash and Solana's native liquidity hooks—purely expressing the argument that, regardless of regulatory pressure, private capital flows will always exist.

This is not a strategy taken to scale.

It is a bet against censorship of financial privacy.

Starknet: Scalability-First ZK Infrastructure

Starknet achieves zero-knowledge from the opposite direction:

General scalability, not default privacy protection.

Validity proofs generated through Cairo for Ethereum L2 execution
Privacy is an emerging feature of applications, not a core protocol guarantee.
What the system hides is the computation process, not user identity.

Starknet is designed as industrial ZK infrastructure—a settlement layer that can build both private and public applications, but never presupposes anonymity.

It pursues developer freedom and throughput, not financial confidentiality.

Broader ZK Divide

This showdown reflects the most profound divide in today's zero-knowledge research field:

Application-Level Privacy

Mixers, shielded pools, strict user anonymity
Maximum sovereignty, maximum regulatory pressure

Infrastructure-Level Zero-Knowledge

Aggregation, validity proofs, correctness guarantees
Developer flexibility, regulatory compatibility

ZKLSOL represents a permissionless privacy layer.

Starknet represents a fully zero-knowledge proof-based L2 architecture focused on scaling Ethereum itself.

Both are "ZK".

They just address different political and economic issues.

Token Evaluation: Efficiency vs. Capital Flood

$ZKLSOL, despite raising less than $1 million, has seen its stock price drop only 11.9% from the issue price of $0.097.

In contrast, $STRK, despite absorbing $282.5 million in venture capital (nearly 300 times the funding amount), has seen its stock price drop 93.6% from the issue price of $2.34.

Here are the original results:

Streamlined capital structure retains optionality.
Significant early sell pressure from venture capital.
Scale advantages do not protect tokens from the effects of oversupply.

For now, privacy flows outperform bloated infrastructure betas.

Token Comparison Snapshot --- $ZKLSOL vs $STRK

$ZKLSOL

Issue Price: $0.097

Current Price: $0.085

Performance: -11.9%

Largest Supporter: MetaDAO / IDO (~$970K)

Listing Status: DEX only (Solana)

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 50%

Market Cap / FDV: $1.05M / $2.1M

CMC Ranking: Not Ranked

$STRK (Starknet)

Issue Price: $2.34

Current Price: $0.15

Performance: -93.59%

Largest Supporters: Paradigm, Sequoia, etc. ($282.5M)

Listing Status: Binance, Bybit + DEXs

DeFi TVL: $222.45M

Annual Revenue: N/A

Circulating Supply: 48%

Market Cap / FDV: $545M / $1.13B

CMC Ranking: #88

Conclusion

$ZKLSOL remains a robust, streamlined privacy investment with minimal dilution pressure.

$STRK is a classic example of what happens when venture-scale capital meets weak token demand:

Massive infrastructure, real usage rates—along with a catastrophic post-launch supply shock.

In the ZK market, capital efficiency currently trumps capital dominance.

4. Loyal vs. Arkham: The Intelligence Protocol Challenge

Crypto intelligence is becoming an independent asset class.

Not yield.

Not block space.

But raw information.

Loyal and Arkham represent two starkly opposing ways to monetize on-chain intelligence:

One views intelligence as a public utility owned by users.
The other sees it as proprietary institutional alpha.

The same market.

Opposing power structures.

Loyal: User-Centric AI

Loyal is building on-chain conversational agents to interpret wallets, protocols, and social dynamics without routing sensitive behavior through centralized Web2 intermediaries.

AI assistants optimized for user privacy and autonomy
Conceptually aligned with decentralized analytics like Ritual, Bittensor, and Dune
Intelligence is viewed as a networked public service, not a closed garden.

The stakes are simple:

If data is user-generated, then the intelligence layer built on that data should also belong to the users.

Loyal is not trying to invest more in data labeling than existing companies.

It aims to surpass them in trust.

Arkham: Surveillance-Level Analysis

Arkham takes the opposite approach:

Maximum tagging, maximum attribution, maximum extraction.

Proprietary entity graphs
Active de-anonymization bounty market
Converts wallet behavior into institutional dashboards for:

Trading advantages
Compliance tools
Investigative intelligence

This places Arkham in the same commercial lineage as Nansen, Chainalysis, and TRM Labs—monetizing blockchain transparency as a premium surveillance product.

Loyal seeks to protect identity information,

While Arkham is designed to make them collapse.

Core Research Themes in Crypto Intelligence

This showdown reveals three structural truths about the intelligence market:

The real moat is data, not models.

Address labels, entity graphs, and behavioral clustering are more important than LLM wrappers.

There is always a tension between the two:

Intelligence as a public good → Open, user-owned, anti-censorship
Intelligence as alpha → Closed, exclusive, monetized for institutions

Token value reflects attention and trust, not always TVL.

Adoption by influential users, perceived neutrality, and revenue consistency are more important than sheer sales.

This is the little-known battlefield behind most "AI x cryptocurrency" narratives.

Market Structure Conflict

This is not just a distinction between decentralization and centralization.

It is a conflict between:

User-centric intelligence

→ Slow to monetize, hard to scale, high trust ceiling

Institutional surveillance intelligence

→ Quick to monetize, high compliance requirements, low trust tolerance

Both will exist.

But they will attract entirely different capital and user bases.

Token Comparison Snapshot --- $LOYAL vs $ARKM

$LOYAL (Loyal)

Issue Price: $0.250

Current Price: $0.212

Performance: -15.2%

Supporters: Community / IDO ($2.5M)

Listing Status: DEX only

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 100%

Market Cap / FDV: $2.3M / $6.09M

CMC Ranking: Not Ranked

$ARKM (Arkham)

Issue Price: $0.65

Current Price: $0.248

Performance: -61.85%

Supporters: Ribbit Capital, Coinbase Ventures ($14.5M)

Listing Status: Binance, Gate, Bybit + DEXs

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 23%

Market Cap / FDV: $51M / $226M

CMC Ranking: #426

Conclusion

$ARKM aims to expand institutional-grade alpha and compliance intelligence—but with only 23% of the supply in circulation, it carries extremely high FDV and release excess risk.

$LOYAL remains a streamlined, fully circulating decentralized intelligence investment—low liquidity, slow monetization, but with higher structural consistency between users, data, and tokens.

This is not a debate about dashboards.

This is a war for control of the collective intelligence layer of cryptocurrency.

5. Avici vs. Plasma: The Infrastructure Victory

Web2 neobanks like Revolut and N26 package traditional banking systems into sleek mobile applications.

The trend in cryptocurrency is quite the opposite.

It is not about perfecting closed systems, but about rebuilding "accounts + cards + yields" as an open on-chain financial stack—where balances, treasuries, and solvency are all publicly verifiable.

This is not a disruption of user experience.

This is an inversion of infrastructure.

Stack Inversion

The operating model of traditional fintech is:

Closed databases
Opaque balance sheets
Slow, permissioned settlements
Extracting yield through opaque money market structures

Crypto neobanks disrupt every layer:

Deposits → Tokenized dollars (USDC, USDT, USDv)
Balance sheets → Public, real-time supply chain transparency
Yields → DeFi protocols, not internal funding transparency

Users no longer just hold balances.

They own auditable financial states.

Two prototypes emerge.

This inversion creates two distinctly different paths to the same ultimate market.

Avici: Protocol-Native Neobank

Avici starts with DeFi and then builds a fintech system on top:

On-chain governance and fund management
Credit cards, exit mechanisms, and credit scoring as modular add-ons
Capital formation occurs after product validation, not before.

This is a bottom-up banking model:

Protocol first, compliance second, user experience paramount.

It optimizes for:

Capital efficiency
Full token circulation
Direct connection between users and funds

Plasma: Capital-Intensive Fintech Company Transitioning to Crypto

Plasma takes the opposite path:

First raises significant venture capital
Has licenses, rails, and front-end distribution
Then expands into L1 tokens, tokens, and DeFi integration

This is full-stack control:

User experience, custody, compliance, liquidity, and token issuance are all under one roof—structurally similar to companies like Nexo.

It optimizes for:

Accelerated path to mass market
Regulatory defensibility
Distribution dominance

The cost is:

High dilution

Slow token supply release
Huge FDV backlog
True disruption: equity-like deposits

The real shift is not cheaper effects or prettier applications.

It is this:

Yield-bearing stablecoin deposits
Revenue-sharing cards
On-chain solvency visible in real-time to users, regulators, and investors

Deposits no longer operate like liabilities.

They begin to function like productive financial assets.

This will blur the lines between:

Banking
Asset management
And on-chain capital markets

Strategic Questions

The focus of this debate is not on functionality.

The key is which capital structure can prevail in the long term:

Lean, community-funded protocol financing (Avici)
Or venture-scale, vertically integrated fintech companies (Plasma)

The former achieves compounding through user consistency.

The latter expands through distribution and regulation.

Token Comparison Snapshot --- $AVICI vs $XPL

$AVICI (Avici)

Issue Price: $0.350

Current Price: $7.170

Performance: +1,948.7%

Supporters: IDO ($3.5M)

Listing Status: MEXC + DEXs

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 100%

Market Cap / FDV: $70.62M / $70.62M

CMC Ranking: #3651

$XPL (Plasma)

Issue Price: $0.83

Current Price: $0.21

Performance: -75.3%

Supporters: Framework Ventures, 6th Man Ventures ($75M)

Listing Status: Coinbase, Binance + CEXs

TVL: $3.1B

Annual Revenue: N/A

Circulating Supply: 18%

Market Cap / FDV: $309M / $1.71B

CMC Ranking: #132

Conclusion

$AVICI is a textbook case of what happens when fully circulating tokens meet real user demand: price discovery is brutal, rapid, and positively reflexive.

$XPL shows the opposite trade-offs:

Huge TVL, strong distribution capabilities, regulatory positioning—but serious dilution ahead leads to weak token performance.

This is the battle of new banks in cryptocurrency:

Transparent protocols vs. closed capital systems.

So far, the market favors alignment with existing strategies over excessive hoarding.

6. Umbra vs. zkSync: Privacy vs. Scalability

Umbra and zkSync both rely on zero-knowledge cryptography, but they apply it to opposite economic goals.

Umbra is optimized for transaction confidentiality
zkSync optimizes for infrastructure throughput

The same cryptographic toolbox.

Completely different outcomes.

Umbra: Pure Transaction Privacy

Umbra's design has one goal: to hide who is paying whom and the payment amount.

Obscured addresses, viewing keys, and ZK circuits
Disrupts the identity association between sender and receiver during transactions and transfers

Conceptually, it lies between:

Tornado-style mixers
And protected DEX executions

It provides instant, default anonymity at the transaction layer—but also comes with some known trade-offs:

Reduced user experience simplicity
Regulatory friction
Narrow composability

Umbra's goal is not to scale DeFi.

It seeks to maintain the flow of private capital in adverse environments.

zkSync: Scalability-First ZK Aggregation

zkSync applies ZK proofs to the opposite problem:

How to compress Ethereum at scale.

Validity proofs efficiently verify transactions in batches.
By default, achieves transparent state through elastic chains and shared sequencers.

The priorities of this roadmap include:

Throughput
Fee compression
Modularity
Developer tools

Privacy is not an inherent feature of the underlying architecture.

It may appear through:

Account summaries
Encrypted memory pools
Or higher-layer privacy modules

But these are not zkSync's primary design constraints.

zkSync hides computational costs.

It does not hide user identities.

The ZK Privacy Paradox

Academic research is clear on one point:

True aggregate-level privacy requires encrypted memory pools, shielded pools, or trusted hardware—none of which are standard configurations in today's production aggregates.

Thus, this divide is structural:

Umbra = Narrow, direct secrecy

Privacy is the product
Everything else is secondary.

zkSync = Broad composability and scalability

Privacy settings are optional
And pushed to higher layers

They are not substitutes.

They reflect different threat models.

Non-Converging Convergence

This is a deeper pattern prevalent in the ZK market:

Privacy tools first pursue anonymity.
Rollups first need throughput.

They may one day be able to interoperate—

But they will never be the same product.

Token Comparison Snapshot --- $UMBRA vs $ZK

$UMBRA (Umbra)

Issue Price: $0.300

Current Price: $0.769

Performance: +156.3%

Supporters: IDO ($3M)

Listing Status: MEXC + DEXs (Solana)

TVL: N/A

Annual Revenue: N/A

Circulating Supply: 30%

Market Cap / FDV: $16.7M / $47M

CMC Ranking: #3730

$ZK (zkSync)

Issue Price: $0.32

Current Price: $0.04

Performance: -87.5%

Supporters: Andreessen Horowitz, Dragonfly, Paradigm ($458M)

Listing Status: Binance, Bybit + DEXs

TVL: $37M

Annual Revenue: N/A

Circulating Supply: 35%

Market Cap / FDV: $300M / $700M

CMC Ranking: #136

Conclusion

$UMBRA reflects what happens when a focused, conviction-driven privacy tool meets strong narrative demand: even with limited composability, the token retains asymmetric upside potential.

$ZK reflects the opposite extreme:

Massive venture capital, ambitious infrastructure scaling—and a token still obscured by oversupply and slow demand formation.

This showdown reinforces the broader ZK theme of this article:

Capital efficiency continues to outperform capital dominance.

In the privacy market, focus trumps scale—at least for now.

7. Omnipair vs. Morpho: The Lending Protocol Showdown

Omnipair and Morpho form the core of the next generation of cryptocurrency foundational layers:

Permissionless Lending

They transform DEXs and routers from simple trading venues into seamless lending and leverage channels—without banks, credit committees, or account-based gatekeeping.

This is the evolution from passive yield to native, composable leverage infrastructure.

From Compound to Modern Credit Markets

Early protocols like Compound and Aave created the first generation of on-chain banks:

Permissionless supply and borrowing for whitelisted assets
Risk management:

Over-collateralization
Liquidation bots
Algorithmic parameters replacing human credit committees

Morpho advances this model by acting as a meta-optimizer for liquidity:

Directing funds to the most efficient trading venues (Aave, Compound, order books)
Retaining open access for retail and institutional users.
Maximizing capital efficiency while minimizing idle liquidity.

Morpho does not compete with money markets.

It overrides them and redefines how capital flows between them.

Omnipair: DEX as the Entry Point for Credit

Omnipair disrupts the architecture again—merging spot trading and money markets into a single platform:

Converts DEX positions into instant credit risk exposure
No accounts, no permissions
Provides composable leverage only at the execution point of exchange

Here, the DEX itself becomes the lending interface.

This transformation is deeper than it appears:

DEXs are no longer:

Just price discovery engines

But rather:

The liquidity absorption valve for the entire credit system

Omnipair does not aim to dominate TVL.

It seeks to capture fee flows at the moment leverage demand is generated.

Structural Summary

This showdown showcases the increasing maturity of DeFi lending:

From:

Isolated lending pools
Manual leverage stacking
Fragmented risk exposures

To:

Unified, permissionless credit infrastructure
Where:

Router resource utilization
DEX activates it
Optimizer distributes it

Morpho achieves backbone industrialization.

Omnipair weaponizes the entry points.

Token Comparison Snapshot --- $OMFG vs $MORPHO

$OMFG (Omnipair)

Issue Price: $0.112

Current Price: $0.549

Performance: +389.9%

Supporters: IDO ($1.11M)

Listing Status: DEXs (Solana)

TVL: Growing (active lending pools)

Annual Revenue: N/A

Circulating Supply: 100%

Market Cap / FDV: $12M / $12M

CMC Ranking: #3767

$MORPHO (Morpho)

Issue Price: $1.90

Current Price: $1.50

Performance: -21.05%

Supporters: a16z crypto, Coinbase Ventures, Pantera Capital ($69.35M)

Listing Status: Binance, OKX, Bybit, Coinbase + DEXs

TVL: $6B+

Annual Revenue: N/A

Circulating Supply: 36%

Market Cap / FDV: $458M / $1.22B

CMC Ranking: #100

Conclusion

$MORPHO dominates in scale, institutional adoption, and TVL gravity—but still bears the structural burden of FDV expansion and unlocking risks.

$OMFG, in contrast, is fully circulating, ultra-lean, and precisely positioned at the surface of DeFi's most defensible—at the moment leverage is generated.

This again confirms the financing model running throughout:

Capital efficiency trumps capital dominance.