Why Hyper Growth in Crypto May Be Sustainable?

Our newly formed fund Espeed Growth under the umbrella of Espeed Capital has just achieved a phenomenal growth of its first quarter. QoQ return is more than 300%. If we annualize the return, it would be over 25,600%.

I know this annualization most likely won’t happen. However, it won’t be unreasonable to expect we continue to grow at a much faster rate than traditional common sense. Other than luck, there are some fundamental factors contributing to such hyper growth.

The key paradigm shift is tokenization. Tokenization has greatly democratized economics participation from both sides of entrepreneurs and investors. In the traditional startup and venture capital world, only highly accredited investors have access to quality entrepreneurs. On the other hand, it is very difficult for entrepreneurs to realize value through market liquidities. Traditional venture to liquidity cycles are typically 5 years or longer. The long cycle unnecessarily filtered out many innovations as they couldn’t secure enough resources to sustain. The long cycle also keeps unproductive projects for too long before these projects finally diminish, which is a big waste of resources of our society.

With a shorted cycle to capital liquidity thanks to tokenization, entrepreneurs can bring their projects to market as fast as a few months. Though this may incentivize speculations or even worse scams, quality projects will emerge faster from the noise. Agile entrepreneurs can iterate faster to better satisfy market demands. Investors rely less on privileges but more on judgements to gain access to the most potential projects.

A shortened cycle means that the expected return of each quarter in the token world could match that of each year or even each decade in the traditional security world.

From the capital market perspective, tokenization may be a greater catalyst than decentralization. In fact, tokenization could happen before decentralization in a parallel universe.