ABCDE Halts New Investments, Cites Industry Concerns

ABCDE, a $400 million investment fund focused on Web3 and blockchain technology, has announced that it will cease new investments and fundraising efforts. The decision was revealed by Du Jun, co-founder of ABCDE and Huobi exchange, in an April 19 post. Despite halting new investments, the fund remains committed to supporting its existing projects, ensuring post-investment support and exit arrangements for entrepreneurs and liquidity providers.

Jun's announcement comes nearly three months after ABCDE's last investment in an Ethereum layer-2 (L2) solution, Soon (Solana Optimistic Network), which raised $22 million through a non-fungible token sale. The Soon mainnet claims to outperform Solana in speed and efficiency, delivering average block times of 50 milliseconds compared to Solana’s 400 milliseconds.

ABCDE's investment portfolio is diversified, with 28% in Bitcoin (BTC) scaling technology, 16% in Ethereum liquid staking derivatives finance (LSDFi) infrastructure, and 12% in L2s, restaking, and smart contract platforms. Over the past three years, the fund has invested over $40 million in more than 30 projects, maintaining a high internal rate of return (IRR) despite the current market environment.

Jun's decision to halt fundraising is not due to financial constraints but rather a concern over the current development trajectory of the crypto industry. He expressed dissatisfaction with the short-sighted approach of many projects, which prioritize quick listings on exchanges over long-term value creation. Jun also criticized some primary funds for hyping up their 'listed projects' and short-term market value performance without focusing on the intrinsic value of the projects themselves.

This announcement follows the launch of a new incubator brand, Vernal, by Jun. The new incubator is set to announce its shareholders, incubation rules, and first investments in May. Jun's shift in focus from financial investment in the primary market to strategic investment-led and deep incubation-based efforts reflects a broader concern for industrial synergy and long-term value creation.

Jun's concerns echo those of Cardano founder Charles Hoskinson, who has urged fourth-generation cryptocurrency projects to embrace more collaborative tokenomics to compete with major centralized tech companies entering the crypto industry. Hoskinson emphasized the need for a cooperative equilibrium in tokenomics and market structure to build a global ecosystem and win against larger incumbents.