Binance CEO CZ recently commented on the current market situation where many crypto projects are being bailed out. He also talked about the huge crypto leverage in the market and how it is even more than the 2018 bear market. CZ thinks bailing out bad crypto projects makes no sense. It is better to let these projects fail, and better projects replace them. So, he requested the community not to support and help such projects survive.
Binance CEO CZ divides crypto projects that need a bailout into three categories
He explained that there are three primary situations where a project might need a bailout. They are when the project is poorly designed, poorly managed, or poorly operated.
1) Poor Design (outright bad projects)
Coming to the first and most obvious one, which in simple words means that the project is not great. They acquire users with the help of incentives and extensive marketing. A good example of this would be UST and Luna, whose primary USP was the 20% fixed APY.
The failure of these projects gives a perspective of what works and what doesn’t. So, it’s essential to let them fail and helo the better ones take off. More importantly, it is important to educate investors that fall prey to these types of projects.
2) Poor Management (one with problems that can be fixed)
The second category of crypto projects that might need a bailout are the ones that have made small mistakes that can be fixed. For example, a project might have spent too much on advertising or haven’t prepared a cash reserve for the bear market. Such projects add value to the crypto industry, have a product-market fit, and a decent business model can be bailed out. But it is essential to ensure that the mistakes aren’t repeated.
3) Poor Operations
These projects are the ones that seem to have great potential but are short on funds to keep going. They might need a cash injection, merge with some company, or get acquired to keep growing. Such projects can also be bailed out but only after proper inspection if they are worth it or not.
Do you agree that bailing out bad crypto projects makes no sense? If yes, is there any project that was recently saved but shouldn’t have been? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Coinbase plans to merge its ‘pro’ platform with the main app.
