Token

Fortune

Celestia

<p class="is-style-lead">Kavita Gupta, founder of a blockchain venture fund, raised concerns in a recent op-ed about the sustainability of the current crypto market, suggesting it’s driven by an “artificial boom” fueled by venture capital spending rather than genuine user interest.</p> 
<p>Writing about her experience at the recent Token2049 conference in Singapore, Gupta observed a pattern of excessive spending by crypto projects, with lavish parties, high-end DJs, and extravagant marketing events.</p> 
<p>In her <a href="https://fortune.com/crypto/2024/10/01/token2049-kavita-gupta-delta-blockchain-crypto-boom-economy-bubble/" target="_blank">Fortune article</a>, Gupta wrote that, unlike the last bull cycle in 2021, when retail investors and actual capital flow drove interest, the current cycle seems primarily propped up by <a href="https://crypto.news/tag/venture-capital/" target="_blank">VC</a> money.&nbsp;</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p>“The money is coming from VCs, who are pumping funding into new layer-1 and layer-2 blockchains that have yet to even launch a testnet but are still raising at billion-plus dollar valuations,” Gupta wrote.</p> 
</blockquote> 
<p>According to Gupta, the money is being spent on marketing and events rather than building a sustainable product or community.</p> 
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"> 
 <p>“And clearly, a large portion of that funding is going to so-called “marketing expenses,” which are really just giant parties,” Gupta wrote. </p> 
</blockquote> 
<p>For those unfamiliar with crypto, layer-1 and layer-2 refer to different ways blockchain projects handle transactions. Layer-1 blockchains are the base networks, like Bitcoin (<a href="https://crypto.news/price/bitcoin/" target="_blank">BTC</a>) or Ethereum (<a href="https://crypto.news/price/ethereum/" target="_blank">ETH</a>), while layer-2 solutions build on top of these to improve speed and reduce costs.&nbsp;</p> 
<p>Gupta’s concern is that VCs are investing heavily in projects that have yet to prove their value or utility.</p> 
<p> You might also like: <a rel="" href="https://crypto.news/chaingpt-trustwallet-announce-strategic-partnership-to-celebrate-trustwallets-7th-anniversary/"> ChainGPT, TrustWallet announce strategic partnership to celebrate TrustWallet’s 7th anniversary </a> </p> 
<h2 class="wp-block-heading" id="token-valuations">Token valuations</h2> 
<p>Gupta also warned about the impact of these practices on <a href="https://crypto.news/tag/token" target="_blank">token</a> valuations. Most crypto projects raise funds by issuing tokens, which represent a share in their ecosystem.&nbsp;</p> 
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
 <div class="wp-block-embed__wrapper"> 
  <blockquote class="twitter-tweet" data-width="550" data-dnt="true">
   <p lang="en" dir="ltr">My first oped <a href="https://twitter.com/FortuneMagazine?ref_src=twsrc%5Etfw" target="_blank">@FortuneMagazine</a><br>As a crypto VC for 8 yrs, this SG trip made me introspect on who is footing the bills for crazy parties and supporting mutilbillion $ val for pre testnet product? exchanges and multibillion $ token launches with no liquidity and massive fdv hit have…</p>— Kavita Gupta (@KavitaGupta19) <a href="https://twitter.com/KavitaGupta19/status/1841097497302692155?ref_src=twsrc%5Etfw" target="_blank">October 1, 2024</a>
  </blockquote>
  <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script> 
 </div>
</figure> 
<p>However, when projects prioritize hype and parties over genuine use cases, it leads to inflated valuations that can’t be sustained. This can result in sharp declines in token prices, as seen with recent high-profile projects like Wormhole and Celestia (<a href="https://crypto.news/price/celestia/" target="_blank">TIA</a>).</p> 
<p>Gupta is an investor and entrepreneur in the blockchain and crypto space. She co-founded and served as the managing partner of ConsenSys Ventures, a $50 million blockchain venture fund.&nbsp;</p> 
<p> You might also like: <a rel="" href="https://crypto.news/kazakhstan-freezes-1-2m-in-crypto-linked-to-19-illegal-otc-platforms/"> Kazakhstan freezes $1.2m in crypto linked to 19 illegal OTC platforms </a> </p>

Crypto’s ‘artificial boom’ is VC-driven, claims Kavita Gupta

Table of Contents

crypto.news

Other articles published on Oct 1, 2024

Elon Musk’s X now worth $9bn

470 Million XRP In 10 Days. Here’s the Significance

Could XRP Price Reach $10 If Ripple Rallies Like It Did in 2018?

Regulatory approval allows Binance to launch full crypto services in Argentina

Will Ripple’s RLUSD Stablecoin Launch Boost XRP Price?

Japan’s FSA to Review Crypto Regulations: What’s Next?

Join our free newsletter for daily crypto updates!