KOL Funding Rounds Under SEC Scrutiny; New Insights on Bitcoin Layer 2 and Market Dynamics
The recent Web3 conference in Hong Kong highlighted a new trend of ’KOL funding rounds,’ where key opinion leaders (KOLs) invest at highly favorable terms, raising SEC scrutiny due to potential risks to retail investors. Asian venture capitalists (VCs) like HashKey Capital and Pantera Capital discussed the evolution of project promotion strategies and the rising costs to secure TVL (Total Value Locked) in ecosystems. Discussions also covered key design decisions for Bitcoin Layer 2 solutions to enhance scalability, operability, and security, along with a proposal to reactivate Bitcoin script opcodes for more flexible second-layer solutions. Insights were also shared on why low liquidity, high fully diluted value (FDV) tokens are dropping, attributed to market dynamics and investor behaviors. The development of zero-knowledge (ZK) social applications by Rarimo to enhance privacy in digital voting was another focus. The conference signals a maturation and pragmatic approach in the crypto space, complemented by significant fundraising activities exceeding $161 million across 40 events.
Neutral
This news introduces both positive and negative elements for the crypto market. On one hand, the innovation in Bitcoin Layer 2 solutions and the development of ZK social applications by Rarimo show technological advancements, which could drive future interest and investments. On the other hand, the SEC scrutiny on ’KOL funding rounds’ creates regulatory uncertainty that can deter some investors, and the declining value of low liquidity, high FDV tokens could negatively impact market sentiment. Therefore, the overall market impact is assessed as neutral.