From the Decline of Meme Coins to Yield Capture: Reviewing the New Logic of Encryption Investment

Recently, the encryption market has undergone a transition from a pure Meme coin craze to real profit models. Mike Dudas, a general partner at 6th Man Ventures, shared his views on the success of Pump.Fun, the Hyperliquid buyback mechanism, and new trends in encryption investment during a podcast.

Investment Strategy of 6th Man Ventures

Mike introduced that 6th Man Ventures is a venture fund focused on early-stage encryption investments, primarily concentrating on the application layer rather than the infrastructure layer. They are looking for founders who can leverage public chain technology to build businesses that cannot be realized in the Web2 world, covering multiple areas such as DeFi, DePIN, stablecoins, and payments.

Pump.Fun Trend Analysis

The success of Pump.Fun indicates a strong market demand for tokenized assets. It has created the most explosive income event on-chain outside of traditional perpetual contracts and spot markets. Mike believes Pump.Fun is the "0 to 1" innovation of this cycle, bringing a brand new original asset structure to the Solana ecosystem.

However, Mike expresses concern about the practices of some imitators. He specifically points out that platforms claiming that their tokens are "related" to a certain business or enterprise may pose a risk of misleading. In contrast, Pump.Fun clearly emphasizes that its token is a "worthless Meme coin," avoiding unnecessary expectations.

The End of the Pure Meme Coin Era

Mike believes that it will become increasingly difficult for purely Meme coins to sustain themselves in the future. The market is shifting towards tokens that can provide real value. He predicts that teams unable to adapt to market changes within the next 3 to 12 months will struggle to attract investors.

Currently, the two most common token value feedback models in the market are buyback and fee distribution. The buyback model is particularly popular as it directly returns project value to token holders.

Hyperliquid Case Study

Mike believes that Hyperliquid's buyback mechanism is very successful. By using real and continuous income for buybacks, the project has established strong market confidence. This model not only supports the token price but also creates a positive cycle.

Encryption Investment New Logic

The current market has entered "Hard Mode". Projects need real products, revenue, and users to build token value. Mike pointed out that now is a good time to invest in early founders who genuinely want to build long-term businesses.

They have observed that a batch of new projects is making progress in areas such as stablecoins, DeFi, and consumer wallets. The commonality among these projects is that they enable users to participate on-chain in the long term and establish self-asset sovereignty.

Criticism of the "Invest Only in Infrastructure" Strategy

Mike criticized some funds for treating infrastructure projects merely as tools for arbitrage. He believes that this behavior does not bring value to the industry and may instead cause long-term damage.

Summary of Venture Capital Experience

1. In the encryption field, the role of individuals and teams is crucial. The direction of a project may change, but strong team execution is the key to success.

2. The level of respect for the spirit of the contract among encryption founders is generally low, and investors need to be prepared to deal with possible changes to the terms.

3. The encryption market is highly volatile and unpredictable, which may bring extreme returns, but it also comes with high risks.

4. Investors need to learn "emotion regulation" and "time extension" to cope with the ups and downs of the market.