Crypto’s $4T Mirage: A Professor’s Daring Dare 🚀💸

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What a marvel! The crypto market has achieved a historic milestone, nearing $4 trillion, as if the universe itself had decided to throw a party for the wealthy. 🎉💸

Amid this bullish surge, a Columbia professor, with the gravitas of a Shakespearean villain, has delivered a scathing critique of the crypto industry. 🐍

The Professor’s Profound Profundity: Industry’s Integrity and Long-Term Viability at Risk

In a detailed post published on X (formerly Twitter), Omid Malekan, an adjunct professor at Columbia Business School, publicly criticized the crypto industry, raising several concerns. A man of few words and many warnings. 🧠

His argument centered on three core points. First, he contended that many crypto projects are driven by team profit motives rather than a commitment to decentralized solutions and innovation. A tragicomedy of errors, if you ask me. 🤡

Malekan highlighted a concerning trend in which projects, especially those that raise significant funds, often lose sight of their original vision. He explained that raising a huge sum of capital can ultimately become a distraction. This shifts the focus away from decentralization, a core value within the crypto ecosystem. A noble ideal, now as elusive as a unicorn in a cryptocurrency mine. 🦄

“Funds raised are negatively correlated with long-term success. The data is indisputable. Bitcoin raised no money, ETH raised a little (by modern standards), Punks were given away, etc, while there is a long tail of projects that raised hundreds of millions or even billions and achieved abos-Fing-lutely-nothing,” he said. A masterclass in irony, if you can call it that. 🤯

Furthermore, Malekan pointed to the issue of conflict of interest, particularly when projects simultaneously raise funds through both tokens and equity. A dance of shadows and self-interest. 🕵️♂️

He suggested that this dual approach to fundraising often leads to decisions that benefit insiders rather than the broader community. This, in turn, undermines trust and the project’s long-term potential. A recipe for disaster, served with a side of hubris. 🍽️

“The most likely motivation of a central player (founder, Labs, Foundation, whale) who contributes in kind (giving tokens in exchange for shares) to a public treasury vehicle is backdoor exit liquidity. Tokens are trackable, shares are not….VCs that encourage projects to do a token (which is most of them) are trying to make money for their LPs as soon as possible, as opposed to funding successful long-term projects,” Malekan claimed. A revelation so profound, it’s almost worth the price of admission. 🤯

Second, Malekan stressed the issue of widespread market manipulation. He cited practices such as pump-and-dump schemes, inflated total value locked (TVL) metrics, and questionable staking mechanisms. A circus of chaos, if you will. 🎪

These tactics, he argues, artificially inflate project valuations and mislead investors about the health and adoption of certain platforms. It’s like a magician’s trick, but with more crypto and less magic. 🎩🐇

“Every meme coin fan or philosopher is one degree of separation removed from someone who is in a bunch of chat groups coordinating the next pump and dump scheme (many do this themselves),” he remarked. A world where everyone’s a conspirator, and no one’s innocent. 🤷♂️

Third, the author expressed skepticism about the growing number of new Layer 1 (L1) blockchains and Layer 2 (L2) solutions entering the market. According to him, the launch of new L1 blockchains is often unnecessary. He believes any technological innovation can be integrated into existing chains or developed as L2 solutions. A case for simplicity, though it’s unlikely to be heeded. 🧠

“The most likely reason a new project (dApp, RWA, CEX going on chain, Web2 firm doing new Web3 stuff) picks a specific L1 or L2 is because they were paid to. It’s not “because they like the tech,” he added. A revelation so profound, it’s almost worth the price of admission. 🤯

He also critiqued the rise of permissioned blockchains. Malekan sees them as a form of ‘innovation theater.’ He stressed that they hinder the adoption of public blockchains. A performance so lackluster, it’s a wonder anyone watches. 🎭

Meanwhile, Malekan reserved particularly pointed criticism for Ondo Finance, a decentralized finance (DeFi) protocol. He labeled its operations as ‘shady.’ A word that’s become as common as a cryptocurrency in a wallet. 🕵️♂️

“Years ago, I watched one of the founders wondered publicly whether Ethereum stakers should all be required to get broker-dealer licenses. That’s the least cypherpunk thing I’ve ever heard. Even Gensler didn’t believe that,” Malekan alleged. A statement so absurd, it’s a wonder it wasn’t met with a standing ovation. 🙋♂️

The professor’s remarks sparked a discussion among the crypto community. Notably, several industry leaders have expressed agreement with his points. A gathering of minds, as rare as a sunny day in London. ☀️

“I don’t know this guy Omid, but he makes a lot of sense. There are a lot of scams and scammy behavior in crypto. That’s why most of us have been calling for sensible regulation of the space. Because we want to see the technology thrive,” MetaLawMan replied. A sentiment as refreshing as a cold drink in a desert. 🍹

Agree with most all of this, I would add:

Be weary of people rebranding coins to memecoins or Culture Tokens or Internet Capital Markets or AI Tokens etc, if it’s just a token on an AMM with an exponential price then it’s the same zero sum game and most buyers will get wrecked.

— Sterling Crispin (@sterlingcrispin) July 25, 2025

Thus, as the crypto market celebrates its latest milestone, Malekan’s warnings serve as a sobering reminder of the challenges it faces. With investor confidence at a high, the question remains whether the crypto stakeholders can address these criticisms and deliver on their promise of a decentralized, transparent financial future. A question as old as time itself, and just as answerless. 🤷♂️

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2025-07-25 12:59