The investment fund ABCDE, concentrated on Web3 and blockchain technologies, is halting fresh investments, although the $400 million fund remains steadfast in its support for ongoing projects.
In a post on April 19 via X, co-founder Du Jun, who also established the Huobi exchange, stated that the fund will not pursue further investments in new ventures or collect additional capital for its second phase.
Nonetheless, Jun indicated that the fund will persist in providing “post-investment support and exit plans for existing projects,” to affirm the organization’s dedication to entrepreneurs and liquidity providers (LPs).
“My personal focus will gradually transition from financial investments in the primary market to strategic investment-led initiatives and intensive incubation, concentrating more on industry synergy and long-term value generation,” Jun emphasized.
This announcement follows almost three months after ABCDE’s latest investment in an Ethereum layer-2 (L2) solution, Soon (Solana Optimistic Network), which secured $22 million through a non-fungible token sale in conjunction with the launch of its mainnet, as reported by Cointelegraph on January 22.
The Soon mainnet claims to outpace Solana in terms of speed and efficiency, achieving an average block time of 50 milliseconds versus Solana’s 400 milliseconds.
ABCDE is operating a $400 million fund, with 28% of its allocations in Bitcoin (BTC) scaling technologies, 16% in Ethereum liquid staking derivatives finance (LSDFi) infrastructure, and an extra 12% implicated in L2s, restaking, and smart contract platforms, as depicted in Cryptorank data.
Over the past three years, ABCDE has allocated more than $40 million across over 30 projects, with an internal rate of return (IRR) “still at a globally leading level,” even amidst the current market conditions, Jun remarked.
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New incubator brand Vernal announced
The cessation of fundraising efforts by ABCDE was revealed a month following the co-founder’s introduction of a new incubator brand, Vernal.
The new incubator intends to announce its stakeholders and incubation protocols for the initial wave of projects in May, in addition to its inaugural investments.
Jun clarified that the choice to suspend ABCDE’s fundraising was not motivated by financial limitations or a shortage of resources, but rather a fundamental worry concerning the current trajectory of development within the crypto sector.
Related: Crypto and stocks enter a ‘new phase of trade conflict’ as US-China tensions escalate.
“Honestly, I increasingly find it difficult to concur with the prevailing ecological climate of the primary market,” Jun noted in an April 19 X post, further stating:
“Numerous projects exhibit extreme short-sightedness, fixated on how quickly they can get listed on an exchange, leaving a chaotic aftermath.”
“What concerns me more is that certain primary funds not only fail to reflect on this reality but also amplify the hype surrounding their ‘listed projects’ and short-term market value, neglecting the actual value creation of those projects,” he added.
Cardano’s founder Charles Hoskinson has called for fourth-generation cryptocurrency projects to adopt more collaborative tokenomics to effectively compete against major centralized tech firms entering the crypto landscape.
“The current challenge with our approach in the cryptocurrency arena is that tokenomics and market structures are fundamentally adversarial. It’s a zero-sum game,” Hoskinson stated at the Paris Blockchain Week on April 9. “Rather than engaging in conflict, it is crucial to discover tokenomics and market structures that facilitate cooperative equilibrium.”
“One cannot cultivate a global ecosystem under these circumstances, and victory is unattainable this way,” he insisted. “The reality is that incumbents are significantly larger.”
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