Why is 2025 the year of "list to dump"? Because in the business plans of top-tier projects, there has never been a line item called "profit through technical services." Selling tokens is the only business model.
When Token = Product = Only Revenue, the industry is destined to be a game of hot potato — not a value-creating BUIDL.
2023 to 2025 represents a structural transformation period in crypto history worth remembering, marking the fundamental decoupling between protocol utility and asset valuation. Any traditional Fujian merchant who saw this would immediately cry out: "Jia lat" (this is painful/hopeless).
Introduction: The Ruins of Ukraine and the Fujian Merchant's Abacus
In the business world, the Fujian merchant community ("Minshang") is renowned for their razor-sharp commercial instincts: wherever there is a price gap, there is a business; wherever there is chaos, there is arbitrage. Even amid the fires of war in Ukraine, there are Fujian merchants seeking fortune in danger.
The Fujian merchant community understands one fundamental truth: in a gold rush, the most certain path to wealth is not speculative gold-panning, but supplying the prospectors with the necessary production tools (shovels) and logistical services.
In the context of the crypto economy, "selling shovels" theoretically corresponds to providing blockchain infrastructure (L1, L2, cross-chain bridges), with revenue derived from gas fees and transaction throughput ("toll fees"). However, from 2023 to 2025, with technical upgrades like EIP-4844 and the oversupply of L2/L3 infrastructure, the commercial viability narrative of "selling shovels" as a standalone revenue source began to collapse.
As a result, the industry pivoted to a distorted "global arbitrage" model. Project teams stopped striving to sell infrastructure services to users and instead began selling the financialized equity of the infrastructure (Tokens) as the core commodity to retail investors. The "shovel" was thus reduced to a traffic acquisition tool and marketing vehicle — existing for the sole purpose of justifying a high-valuation token issuance.
This article will dissect the mechanisms of this transformation in detail — particularly the "low float, high FDV" phenomenon, the predatory market maker structure, and the industrialization of airdrops — and arrive at a conclusion: the primary commercial output of the 2023–2025 infrastructure cycle was not technical utility, but the systematic exit of venture capital into retail liquidity.
Chapter One: The Fujian Merchant Archetype — Commercial Pragmatism and the Global Arbitrage Network
1.1. The Wisdom of Secondary Markets: From California to the World
The maxim "sell shovels in a gold rush" is typically attributed to the California Gold Rush of 1849. At that time, merchants like Samuel Brannan grew wealthy not by panning for gold in riverbeds, but by monopolizing the supply chain of tools that miners needed. In the Chinese business context — and for the Fujian merchant community in particular — this philosophy extends beyond simple supply and demand into a complex "global arbitrage" system.
Fujian, as a mountainous, ocean-facing province with limited arable land, historically forced its merchant class to look outward to the sea. This geographic environment cultivated a distinctive commercial DNA built on two core beliefs:
Risk Transfer: The prospector bears the entire risk of "finding no gold," while the merchant pre-locks profit through selling tools. Regardless of whether the prospector succeeds, the shovel's value is realized the moment of the transaction.
Networked Arbitrage: Using tight clan and kinship networks to move capital and goods between jurisdictions with different levels of economic development — for example, sourcing goods from low-cost Chinese coastal production centers and selling them in higher-margin African or South American markets, profiting from information asymmetry and regulatory gaps.
This Fujian merchant spirit — daring to take risks, "love to fight and you'll win," and skilled at exploiting regulatory arbitrage — has found its perfect modern manifestation in cryptocurrency: a borderless, still-imperfectly-regulated digital ocean.
1.2. The Parallel Mapping to the Crypto World: From Gas to Governance Rights
In the early days of the crypto industry (2017–2021), the "sell shovels" metaphor largely held. Exchanges (like Binance, Coinbase), mining hardware manufacturers (like Bitmain), and Ethereum miners all earned enormous cash flows by servicing retail speculation. They strictly followed the merchant model: extracting a commission from every transaction (gas fees or trading fees).
However, entering the 2023–2025 cycle, the market underwent a fundamental bifurcation.
The impoverishment of the "prospectors": Retail investors doing on-chain transactions became capital-constrained and more sophisticated, no longer willing to pay high toll fees.
The inflation of "shovel sellers": Infrastructure projects grew exponentially. Layer 2, Layer 3, modular blockchains, and cross-chain bridges — the supply of "shovels" far exceeded actual "gold-panning" demand (real transactions).
Faced with compressed margins on their core service (block space), infrastructure projects began emulating the Fujian merchant's "intertemporal arbitrage" strategy — but with a financial engineering twist: rather than exchanging goods on this shore for currency on that shore, they began exchanging "expectations" (narrative) on this shore for "liquidity" (dollars/stablecoins) on that shore.
Crypto VCs and market makers industrialized the Fujian merchant's arbitrage concept:
Regulatory arbitrage: Foundations registered in the Cayman Islands or Panama, development teams in Silicon Valley or Europe, marketing targets being retail investors in Asia and Eastern Europe.
Liquidity arbitrage: Acquiring tokens at extremely low valuations in the primary market (seed rounds), then dumping at extremely high valuations (high FDV) via market makers in the secondary market.
Information arbitrage: Profiting from the enormous information gap between the public narrative of "community governance" and the private terms of "insider unlock schedules."
Chapter Two: The Mutation of the Business Model — Infrastructure as a "Loss-Leader"
2.1. The Collapse of Protocol Revenue and the Technology Paradox
By 2025, the traditional "sell shovels" revenue model for Layer 2 scaling solutions faced an existential crisis. The technical success of Ethereum's scaling roadmap — particularly the implementation of EIP-4844 (Proto-Danksharding) — introduced "Blob" data storage, dramatically reducing the cost for L2s to submit data to L1.
From a technical perspective, this was a tremendous victory — user transaction costs fell by over 90%. But from a commercial perspective, it destroyed L2 profit margins. Previously, L2s could earn high margins by reselling expensive Ethereum block space. Now, with data costs approaching zero, L2s were forced into a "race to the bottom" on fees.
According to reports from 1kx and Token Terminal, despite daily transaction volumes in the first half of 2025 growing 2.7x compared to 2021, total gas fee revenue across blockchain networks fell 86%. This means the "shovel" has become so cheap it can no longer support the valuation of the factory making it — the miners can no longer afford to keep the lights on.
2.2. ZkSync Era: The Illusion of Revenue Shattered
ZkSync Era provides the most brutal case study on the nature of revenue. Before its Token Generation Event (TGE) in June 2024, the ZkSync network generated enormous sequencer revenue daily, peaking at over $740,000 per day. On the surface, this looked like a thriving "shovel shop."
However, this was actually a false prosperity driven by "airdrop expectations." Users were paying gas fees not to use the network (mining utility) — but to buy a lottery ticket that might pay out (the airdrop).
What happened next is well known. After the lottery was drawn (the airdrop landed) in June 2024, ZkSync's daily revenue immediately plummeted to approximately $6,800 — a decline of 99%.
If a physical store's foot traffic instantly drops to zero after stopping the issuance of discount coupons, it means there is zero genuine demand for its core product.
2.3. Starknet: The Extreme Mismatch Between Valuation and Revenue
Starknet equally demonstrates the absurdity of this valuation logic. Despite being at the frontier of zero-knowledge proof technology, its financial data cannot support its primary market pricing.
In early 2024, Starknet's (STRK) fully diluted valuation (FDV) once exceeded $7 billion, even reaching $20 billion in the OTC futures market.
Meanwhile, its annualized protocol revenue after EIP-4844 was only in the tens of millions of dollars. This implies a Price-to-Sales ratio of 500x to 700x. By comparison, the true "shovel seller" of the AI era — NVIDIA — typically trades at a P/S ratio of 30–40x.
Investors buying STRK were not doing so based on discounted future cash flows (traditional equity investment logic) — they were operating on a game-theoretic logic: believing that there would be buyers "even more convinced of the narrative" to take the bag at higher prices.
The traditional Fujian merchant model of "thin margins, high volume, steady cash flow" has been abandoned in crypto, replaced by a financial alchemy model: manufacturing technical barriers and narrative to conjure a high-valuation financial asset from thin air and sell it to retail investors who lack the means to distinguish quality.
Chapter Three: The Mechanism of Financialization — The "Low Float, High FDV" Trap
To sustain the "sell tokens" business model in the absence of real revenue, the industry normalized a specific market structure between 2023 and 2025: "Low Float, High Fully Diluted Valuation."
3.1. Binance Research's Warning
In May 2024, Binance Research published a landmark report titled "Low Float & High FDV: How Did We Get Here?"providing a systematic critique of this phenomenon. The report identified this distorted circulating supply structure as having become the industry standard for infrastructure token launches. (https://www.binance.com/en/research/analysis/low-float-and-high-fdv-how-did-we-get-here)
The Operating Mechanism:
Primary market pricing: VC institutions enter seed rounds at valuations of $50–100 million.
Artificial scarcity: When listing on exchanges, only 5–10% of total supply is released. Market makers exploit this razor-thin liquidity, needing only modest capital to push the token's unit price up dramatically.
Market cap illusion: A token with 100 million circulating supply at $1 per token has a "circulating market cap" of $100 million — looking cheap (small cap). However, if total supply is 10 billion, its FDV is $10 billion.
Systematic dumping: Over the subsequent 3–5 years, the remaining 95% of tokens will continuously unlock. To maintain the $1 price, the market needs to absorb $9.5 billion in new capital. In a zero-sum market, this is mathematically near-impossible — the price must collapse.
3.2. Psychological Anchoring Against Retail Investors
This structure precisely exploits the cognitive biases of retail investors. Retail investors tend to focus only on "unit price" (Unit Bias — feeling that $0.10 is cheaper than $100) or "circulating market cap," ignoring the inflationary pressure represented by FDV.
For VCs and project teams as shrewd as Fujian merchants, this is a perfect intertemporal arbitrage:
a. They lock in enormous paper returns (100x gains from seed round to FDV). b. They use retail investors' chasing of short-term price rises caused by "low float" as the liquidity source for their exit. c. Through years-long linear unlock schedules, they disperse selling pressure — harvesting market liquidity like the proverbial frog being slowly boiled.
3.3. Data Comparison: The 2025 Valuation Chasm
By 2025, this valuation bubble had become grotesquely distorted. According to the 1kx report, the median Price-to-Fees (P/F) ratio for Layer 1 blockchains was a staggering 7,300x — while DeFi protocols generating actual cash flows traded at just 17x. (https://1kx.network/writing/2025-onchain-revenue-report)
This enormous valuation gulf reveals an obvious market truth: the valuation logic for infrastructure projects is not based on their profitability as "shovels" — it is based on their ability to sell themselves as "financial assets." Project teams are essentially operating a money-printing factory, not a technology company.
Chapter Four: The Evolution of Crypto Through the Fujian Merchant Lens — From "Selling Services" to "Selling Goods"
4.1. The Traditional "Sell Shovels" Logic (2017–2021)
In the early ICO era or DeFi Summer, the logic closely resembled the traditional Fujian business playbook:
Scenario: Retail investors want to pan for gold (trade/speculate).
Shovel: Exchanges, on-chain gas, lending protocols.
Logic: You use my shovel to dig gold, I charge you rent (transaction fees).
Token: Similar to a "pre-sale service voucher" or "membership card" — representing future rights to use the shovel or share in dividends.
4.2. The Alienation of 2023–2025: "Token Is the Product"
By 2025, with infrastructure oversupply (the L2 flood), "collecting toll fees" was no longer profitable (gas fees reduced to negligible). Project teams and capital discovered that rather than painstakingly building a good shovel to earn thin rent, it was far easier to directly sell "shares in the shovel company" (Tokens) as goods to retail investors.
In this new model:
The actual product: is the Token. It is the only product capable of generating sales revenue (USDT/USDC).
The marketing material: is the public chain, the game, the tooling. Their only purpose is to provide narrative context for the Token, adding credibility to the "goods."
Business model: Selling Tokens = Sales Revenue.
This is a profoundly sad regression — the industry is no longer pursuing profitability through technical services but is instead using financial engineering to price and sell "air."
4.3. Production and Packaging: The High-Valuation Endorsement and the "Credibility" Game
If Token is the goods, then selling it at a high price (dumping it) requires top-tier packaging.
Institutional Endorsement: Not for Investment — for the Brand Label
In the 2023–2025 cycle, the VC's role shifted from "risk investor" to "brand franchisor."
The truth behind massive fundraises: Starknet raised at an $8 billion valuation; LayerZero at $3 billion. These astronomical figures are not based on future fee revenue (Starknet's annual revenue doesn't even cover team salaries) — they're based on "how many tokens can be sold to retail in the future."
The names of top VCs like a16z and Paradigm are like the "Nike" label stuck on a Fujian shoe factory. Their function is to tell retail investors: "This goods (Token) is the real deal — worth paying a premium for."
Interestingly, why can VCs post such high valuations? Because retail investors believe their entry price is on par with — or even lower than — the top VCs. Little do they know, valuations only go lower and lower before anyone gets there.
4.4. KOL Shilling: Not Promotion — "Distributors"
KOLs in this chain are no longer providing value analysis — they are distributors at various levels of the supply chain.
Shilling is dumping: Project teams or market makers give KOLs low-cost tokens or "rebates." The KOL's job is to manufacture FOMO, maintain the hype of the "goods," and ensure there is sufficient retail liquidity to absorb the selling pressure during the VC unlock period.
Chapter Five: The Market Maker Industrial Complex — The Invisible Middleman
If tokens are the commodity, then market makers (a.k.a. "wild operators") are the distributors. Between 2023 and 2025, the relationship between project teams and market makers mutated from service provision into predatory collusion — echoing the Fujian merchant strategy of using clan networks to control distribution channels, but now with the purpose of harvesting the counterparty rather than circulating goods.
5.1. The Loan + Call Option Model
The standard contract form between project teams and market makers during this period was the "token loan + call option" model.
Transaction Structure: The project team lends the market maker tens of millions of tokens (for example, 2–5% of circulating supply) interest-free as "inventory." Simultaneously, they grant the market maker a call option, with an exercise price typically set at or slightly above the listing price.
Incentive Misalignment:
If the token price rises above the exercise price, the market maker exercises the option, buys tokens at the low price, then dumps them on retail investors in the market at the high price, pocketing the spread.
If the token price falls, the market maker simply returns the borrowed tokens to the project team, bearing zero capital loss. In even more extreme cases, they flood "deserving recipients" with tokens as early as the listing day.
Market makers are no longer neutral liquidity providers — they have become volatility speculators with long-call exposure. They have enormous incentives to manufacture violent price swings, pushing prices above the exercise price to complete their dump. This model mathematically guarantees that market makers must act as adversaries to retail investors.
For details, see: https://x.com/agintender/status/1946429507046645988?s=20
5.2. Derivatives Short Squeeze: The Most Efficient Way to "Find a Bag Holder"
"The derivatives mechanism is the distribution vehicle" — this is the most ruthless operational technique of the current cycle, spawning derivative narratives like "the delisting coin narrative" and "the pre-market trading kills the hedge narrative."
When no one in spot is buying (retail won't take the bag), what do you do? You manufacture people who have no choice but to buy.
Setup and supply control: On the eve of negative news or an unlock, the market is broadly bearish, funding rates are negative.
Pump: Market makers use their concentrated spot holdings (low float), needing only modest capital to launch the price skyward.
Short squeeze: Short positions in the derivatives market are force-liquidated, compelled to buy back at market price.
Distribution: Project teams and market makers ride the enormous passive buying pressure generated by the short liquidations to sell their spot holdings at high prices to these "forced bag holders."
Specific case studies:
https://x.com/agintender/status/1954160744678699396?s=20
https://x.com/agintender/status/1960713257225785516?s=20
This is like the Fujian merchant leaking word around the market that "shovels are going to get cheaper" — waiting for everyone to short shovels — then suddenly monopolizing the supply and jacking up the price, forcing the short-sellers to buy shovels at a premium to cover their losses.
5.3. The Movement Labs Scandal: "Price Manipulation" Written Into the Contract
The Movement Labs (MOVE) scandal that erupted in 2025 ripped the fig leaf off this entire gray industry chain.
A Coindesk investigation revealed that Movement Labs signed a secret agreement with a mysterious intermediary called Rentech (alleged to be linked to market maker Web3Port), ceding control of approximately 10% of the token supply (66 million tokens).
The contract astonishingly included clauses incentivizing the market maker to push the FDV to $5 billion — after which both parties would split the profits from token sales.
When Rentech began large-scale dumping in the market, Binance detected anomalies and suspended the relevant market maker accounts; Coinbase subsequently suspended MOVE trading. This event proved that so-called "market value management" is, in many cases, simply "pump and dump" written into legal contracts.
This mirrors the early operations of Fujian merchants in the gray zones of global trade — using complex intermediary networks and multi-layered shell companies to evade regulation and control pricing power — but in crypto, this operation directly plunders retail investors' principal.
Conclusion:
If these projects were truly in the "shovel business," they would be obsessively optimizing gas revenue and daily active users. But they appear indifferent — endlessly building castles in the air.
Because their actual business model is: produce tokens at minimal cost → price at extreme valuation → dump in the secondary market via derivatives and market makers → convert to USDT/USDC (real money).
This is why crypto in 2025 looks like a casino — because nobody is running a business. Everyone is just doing trades.
Chapter Six: The New Market Landscape of 2025 — The Application Layer Strikes Back
As time moved into 2025, market fatigue with the "infrastructure casino" model reached a breaking point. Data shows that capital and attention are flowing away from the "sell shovels" infrastructure layer and toward the application layer — where gold can actually be mined.
6.1. The Shift from Public Chain Narrative to DApp Cash Flow
The On-Chain Revenue Report published by venture firm 1kx in late 2025 (https://1kx.network/writing/2025-onchain-revenue-report) illustrates this phenomenon.
Revenue reversal: In the first half of 2025, DeFi, consumer applications, and wallet applications contributed 63% of total on-chain fees — while Layer 1 and Layer 2 infrastructure fees shrank to just 22%.
Growth comparison: Application layer revenue grew 126% year-over-year, while infrastructure layer revenue stagnated or declined.
Business logic restored: This data marks the end of the era of "shovel seller" monopoly profits. As infrastructure becomes extremely cheap (and commoditized), value capture has migrated upward to user-facing applications. DApps that can genuinely generate user stickiness and cash flows — such as Hyperliquid and Pump.fun — are beginning to replace L2 public chains as the market's darlings.
6.2. The Revaluation of Token as Customer Acquisition Cost
The industry has begun reexamining the economic nature of "airdrops." In 2025, tokens are no longer viewed as symbols of governance rights, dividend rights, or identity — they are viewed as Customer Acquisition Cost (CAC) and bearish news signaling sell pressure.
Data from Blockchain Ads shows that Web3 projects' cost of acquiring one genuine user through token incentives is as high as $85–100 or more — far exceeding Web2 industry standards. This is the result of path dependency. (https://www.blockchain-ads.com/post/user-acquisition-trends-report)
Projects like ZkSync that spent hundreds of millions of dollars (denominated in tokens) on incentives discovered that these users were "mercenaries" — the moment incentives stopped, liquidity withdrew. This forced project teams away from the crude "money-scattering" model toward more refined "points systems" and "real yield sharing" models.
Chapter Seven: Conclusion — The Merchant's Festival Is Over
The crypto market from 2023 to 2025 staged a grand drama of primitive capital accumulation dressed in the costume of "technological innovation." The ancient Fujian merchant wisdom — "sell shovels in a gold rush" — was twisted to its absolute extreme:
Shovel commoditization: To attract traffic, real shovels (block space) were continuously discounted — even supplied below cost (subsidized by token issuance).
Factory securitization: Merchants no longer profit from selling shovels; instead, they profit from selling "shares in the shovel factory" (high FDV tokens) to retail investors who believe the factory monopolizes the gold mine.
Arbitrage institutionalization: Market makers, VCs, and exchanges formed a tight-knit interest community, completing the transfer of retail wealth through complex financial instruments (options, lending, derivatives).
If we re-examine 2025 crypto through the eyes of a Fujian businessman, we see the following scene:
These people (project teams + VCs) claimed to be building houses (Web3 ecosystems) in Ukraine (high-risk new territory). In reality, they never cared whether the houses would be habitable. What they actually did was:
Plant a sign on the land, then use that as justification to print a pile of "brick tickets" (Tokens).
Bring in Wall Street big shots (VC institutions) to endorse them, saying the brick tickets could be exchanged for gold in the future.
Bring in the village megaphone (KOLs) to shout that brick ticket prices are going up.
Finally, use derivatives mechanisms to blow up anyone who tried to short the brick tickets, and in the chaos, convert their worthless paper (Tokens) into real gold.
This is why "listing means dumping." Because in their business plans, there has never been a line item for "profit through technical services." Selling tokens is the only business model.
When Token = Product, this industry is destined to be a game of hot potato — not a value-creating business. This may be the greatest tragedy of 2025 crypto.
It's not that altcoins have no bull market. It's that the bull market has no room for altcoins with no cash flow.
Finally, we must ask: who exactly enabled today's high FDV, low float reality? Who turned tokens into the ultimate commodity/service?
Was it the launchpads? The memes? The exchanges? The VCs? The media? The traders? The analysts? The project teams? — Or all of us?
Source: https://x.com/agintender