• Arthur Hayes criticizes CEXs and VC-backed projects, urging the return of the ICO model.
• Hayes argues that the crypto space has diverted from its core mission of empowering retail investors.
• ICOs provide a more democratic and inclusive way of funding projects unaffected by the biases of traditional VC firms.

In his essay “The Cure,” Arthur Hayes, founder of BitMEX, criticizes Centralized Exchanges (CEXs) and venture capital-backed projects for hindering innovation in the crypto industry. He advocates for a return to Initial Coin Offerings (ICOs) as a solution to the problems caused by CEXs and traditional venture capital.

Hayes contends that the crypto industry has deviated from its core mission of empowering retail investors, instead focusing on venture capital-backed tokens that have underperformed. He also notes the evolution of the crypto new issue market, which has become similar to traditional finance (TradFi), especially with the introduction of “memecoins.” Hayes views memecoins as tokens with no inherent value beyond their ability to spread memes and potentially generate wealth for early adopters.

Additionally, Hayes criticizes the TradFi model, asserting that it prioritizes social connections over skill and merit. This bias leads to a lack of diversity in investment choices, with VCs favoring companies based in familiar locations.

As a remedy, Hayes advocates for a return to the Initial Coin Offering (ICO) model, which allows projects to raise funds directly from the community. ICOs provide a more democratic and inclusive way of funding projects unaffected by the biases of traditional VC firms. The ICO model’s combination of memetic content virality and potential tech makes it more sensible.

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Hayes also noted that developing decentralized exchanges (DEXs) provides a liquid and vibrant trading environment. The ICO model is poised for a resurgence driven by advances in blockchain technology, improved user interfaces, and increased liquidity on decentralized exchanges (DEXs). With the ability to trade tokens immediately after issuance, projects can raise funds and build communities more efficiently.   

The author encourages project founders to adopt the ICO model and urges retail investors to reject centralized exchange (CEX) models by saying, “Just Say No.”

Furthermore, Hayes addressed the speculative nature of ICOs as a strength, not a weakness. Although many ICOs will inevitably fail, some hold the promise of delivering transformative returns for investors. He added that the resurgence of ICOs could ultimately disrupt that centralized venture capital model.