Emma Nelson 
Binance founder Changpeng Zhao (CZ) has been vocal in his criticism of the ‘degen’ mentality prevalent in the cryptocurrency world, especially when it comes to the rush for quick, short-term profits. CZ emphasizes that rather than chasing these fleeting rewards, investors should focus on backing credible projects that are built for long-term success. His message, conveyed via X (formerly Twitter), highlights the risks involved in speculative investments and stresses the importance of sustainability in crypto investments.
Binance Founder
The Cost of Chasing Quick Gains in the Crypto Space
Zhao’s remarks come at a time when high-profile rug pulls have rocked the crypto ecosystem, leading to significant financial losses for many investors. “Degen” behavior, which refers to investing recklessly in low-cap tokens, meme coins, and leveraging positions without sufficient research, has been a growing trend among traders looking for quick rewards. CZ points out that in such cases, the investments rarely pay off, leaving most of these investors without returns. This reckless behavior, he warns, can result in massive fortunes being lost, as these assets often fail to provide any long-term value or stability.
According to CZ, investors should redirect their focus towards projects developed by ethical teams who prioritize long-term growth rather than chasing short-lived market trends. He firmly believes that big money is made slowly, requiring patience and strategic thinking, rather than relying on speculative and hype-driven investments. CZ’s criticism of the degen approach is a call to arms for investors to reconsider their strategies and avoid getting swept up in the speculative fervor. He pointed out the alarming frequency of rug pulls, liquidity drains, and exit scams that have plagued the crypto industry, especially in the meme coin space.
The U.S. Securities and Exchange Commission (SEC) has also weighed in, declaring that memecoins do not qualify as securities, urging investors to exercise caution in this highly speculative area. CZ echoed this sentiment, urging the community to be wary of investing in highly speculative and volatile assets that promise quick gains without real utility.
Focusing on Long-Term Projects and Ethical Teams
In his advice, CZ advocates for investing in projects that are backed by ethical teams with strong reputations and clear objectives. He emphasizes that credible projects should aim to build for the long term, creating value and utility for users rather than relying on hype-driven surges. By backing such projects, investors not only protect themselves from the risks of rug pulls but also contribute to a more sustainable and trustworthy cryptocurrency ecosystem.
“In crypto, too much money is spent chasing small, quick gains,” said CZ. “Focus on ethical teams that build for the long term. Big money is built slowly with stamina.” This philosophy encourages investors to think beyond the short-term volatility and take a more patient, measured approach to their investments in the crypto space.
CZ’s Tokenomics Suggestions to Prevent Rug Pulls
CZ also introduced suggestions for improving the tokenomics of crypto projects to reduce the likelihood of rug pulls and other risks. One key aspect of his proposal is the idea of vesting tokens over time, ensuring that the team behind a project has a vested interest in its success. Under CZ’s plan, only 10% of the tokens would be unlocked at launch, with the remaining tokens to be released in phases over a period of time, contingent upon meeting strict conditions. This structure is designed to ensure that projects maintain their long-term focus and commitment to their community.
Moreover, CZ proposed that new tokens should only be unlocked after every six months, with 5% of tokens being released each time. This gradual release would be controlled by smart contracts and overseen by third-party entities to ensure transparency and fairness in the process. This approach aims to mitigate the risk of developers abandoning their projects or making a quick exit with the funds raised in initial token sales.
Support for Victims of Recent Memecoin Crashes
In addition to his advocacy for ethical investing, CZ has taken practical steps to help victims of recent memecoin crashes. After the BROCCOLI and TST memecoin crashes, which led to significant financial losses for investors, CZ rallied the community and raised over $1 million in cryptocurrency to support those affected. This initiative shows Binance’s commitment to supporting its users and ensuring that the broader crypto ecosystem remains healthy and transparent.
AI and Blockchain Synergy
CZ also sees potential in the convergence of artificial intelligence (AI) and blockchain technology. He believes that AI projects can benefit greatly from leveraging Layer 1 (L1) and Layer 2 (L2) blockchains to achieve their efficiency and decentralization objectives. This could lead to further innovation in the crypto space, helping to enhance the scalability and performance of AI solutions built on blockchain infrastructure.
In conclusion, Changpeng Zhao has strongly emphasized the need for investors to be more cautious in their approach to cryptocurrency investments. Instead of rushing into speculative projects, he advocates for focusing on long-term growth, supporting ethical projects, and ensuring that tokenomics are structured in a way that minimizes risk and maximizes value for all stakeholders. This is a critical message as the crypto industry continues to evolve and mature, with many opportunities for those who approach the space responsibly and strategically.
