Crypto Primary Market Faces Four Structural Risks
Liquid Capital co-founder Yi Lihua says the crypto primary market is facing its worst downturn in a decade. He identifies four structural problems: narrative-driven investing is losing credibility, project supply is excessive, the “1+3” token unlock model is unfair, and centralised exchange listing costs are too high.
Under the “1+3” model, project teams, market makers and exchanges often gain liquidity faster, while venture capital investors face longer lock-ups and weaker exit terms. Yi says this shifts downside risk to crypto VC funds and may increase selling pressure after token listings.
Listing fees at major exchanges can reportedly reach millions of dollars. Projects respond by seeking larger funding rounds and higher valuations, creating a cycle of expensive listings, excess token supply and weak secondary-market performance. Yi calls for stronger Binance-style listing standards, the removal of the “1+3” structure, and a return to sustainable revenue, cash flow and token buybacks or other value-sharing mechanisms.
The crypto primary market could face further professional VC withdrawals if reforms fail, leaving more influence with established token issuers and memecoins. For traders, unlock schedules, venture-backed supply, exchange listings and launch valuations remain key risks for newly listed assets.
Neutral
The report does not announce a direct change to Binance, BNB or any specific token, so its immediate price impact is likely limited. Traders may nevertheless react negatively to the broader warning about excessive supply, high valuations and post-listing unlock pressure, particularly in newly listed tokens.
In the short term, the comments could increase scrutiny of token unlock calendars, venture capital allocations and exchange-listing valuations. This may lead to weaker sentiment toward projects with large near-term unlocks or limited revenue. However, the news is commentary rather than a confirmed policy change, so it is unlikely to create a broad market move on its own.
Over the long term, stricter listing standards, fairer unlock terms and stronger revenue or buyback models could improve market quality and reduce dilution risk. A prolonged withdrawal of crypto VC capital, however, could reduce project funding and liquidity. Because no specific cryptocurrency is directly affected and the outcomes depend on future reforms, the expected impact on the mentioned cryptocurrency is neutral.