The truth that encryption KOLs won't tell you: the four major illusions of new project launches and data refutation.

Author: rosie, encryption KOL

Compiled by: Felix, PANews

Cryptocurrency Twitter (CT) always likes to tell you how to issue tokens: such as accumulating 100,000 followers first, increasing engagement through tasks, raising funds from tier-one venture capital, controlling the circulating supply at 2% during the issuance, and maximizing hype during the week of the token generation event (TGE).

The problem is: this is all nonsense.

Simplicity Group recently released a research report analyzing 50,000 data points from 40 major token issuances in 2025. The findings indicate that the traditional methods promoted on CT are not feasible in actual token issuance.

The Lies About Participation

Everyone (including the author) is obsessed with various metrics on Twitter. Likes, retweets, replies, impressions—all these vanity metrics. Project teams spend thousands of dollars on engagement farming, task platforms, and buying followers.

Correlation with price performance over a week: almost zero.

Simplicity Group's regression analysis shows that the correlation coefficient R² between the engagement metrics and price performance is only 0.038. In short: engagement hardly explains the success of the token.

Likes, comments, and retweets are actually slightly negatively correlated with price performance. This means that projects with higher engagement sometimes perform worse. GoPlus, SonicSVM, and RedStone continuously release content, but their user engagement does not correspond to their user base.

The only indicator that shows a positive correlation is surprisingly the number of shares in the week prior to the release. The p-value coefficient is 0.094, which is almost statistically insignificant, but even so, the correlation is weak.

So, when you spend money on buying bots and meticulously planning complex task activities, you are essentially just "meaningless" burning money.

Low Circulation Myth

CT is obsessed with projects that have "low circulation and high FDV." This means issuing with a very small circulating supply to create artificial scarcity, and then watching the price soar.

But it turns out to be wrong again.

The percentage of initial circulation to total supply has no correlation with price performance. Research shows that there is no statistically significant correlation at all.

What really matters is: the dollar value of the initial market capitalization.

R² is 0.273, and the adjusted R² is 0.234, with a very clear relationship between the two: for every 1 unit increase in initial market capitalization (IMC), the return rate one week later decreases by approximately 1.37 units.

In short: for every 2.7 times increase in initial market value, the price performance in the first month will decline by about 1.56%. This relationship is so close that it can almost be described as a causal relationship.

Lesson: The key is not the proportion of unlocked tokens, but the total dollar value entering the market.

VC illusion supported

"Wow, they raised $100 million from a16z, this is definitely going to skyrocket!"

Narration: The result did not surge.

The correlation between the financing amount and the weekly return rate is 0.1186, with a p-value of 0.46. The correlation between the financing amount and the monthly return rate is 0.2, with a p-value of 0.22.

Both are statistically insignificant. The amount of funds raised by a project has no actual relationship with the performance of its tokens.

Why? Because the more funds raised, it usually means a higher valuation, which also means needing to overcome greater selling pressure. Additional funds do not magically convert into better tokens.

However, CT views the financing announcement as a buy signal. It's like judging the quality of a restaurant based on the rent paid by the restaurant owner.

Perfect example: Projects that raise huge amounts of funding in research do not necessarily perform better than projects with limited funding. A funding amount of 100 million dollars does not guarantee a better token economy or a stronger community than a funding amount of 10 million dollars.

Timing Fallacy in Speculation

Traditional views suggest that the most important news should be reserved for release during the project launch week to maximize the "FOMO" atmosphere and attract everyone's attention when the token goes live.

But the data shows the exact opposite.

After the project starts, user engagement will decline. Users will turn to the next project with an airdrop, and the content you have carefully prepared will be overlooked.

Projects that can consistently maintain good performance establish their reputation before the launch week, rather than during it. They understand that pre-launch attention can attract real buyers, while the attention during launch week only brings in "passersby." User engagement peaks before the TGE when they release the launch teaser, not after the launch, when everyone has already moved on to the next opportunity.

real and effective method

Since Twitter engagement, low circulation, VC support, and the timing of hype are not important, then what is important?

Actual Product Utility

Projects that generate content naturally (such as Bubblemaps with on-chain survey capabilities or Kaito with narrative tracking features) outperform meme-based accounts. Bubblemaps and Kaito have a large and sustained user engagement because their products can naturally create alpha-full content.

Transaction Retention Rate

Tokens that maintain trading volume after initial hype show significantly better price performance. The Spearman rank correlation coefficient (PANews note: a non-parametric measure of the dependency between two variables) is -0.356 (p = 0.014) — tokens with a larger decline in trading volume often perform worse in price. One month after issuance, the top quartile of trading volume retention (PANews note: a type of quantile in statistics, which divides all values into four equal parts, where the values at three partition points are the quartiles) shows significantly higher median and mean price performance.

Reasonable Initial Market Value

The strongest predictive indicator of success. The correlation coefficient is -1.56 and is statistically significant. If listed at a reasonable valuation, you have room for growth. Listing with a market capitalization of over 1 billion dollars is going against the trend.

Real Communication

A consistent tone that matches the product. The $5.2 million funding of Powerloom and its overly cynical tone are not in harmony – POWER plummeted 77% in the first week and has dropped 95% since its launch. Meanwhile, Walrus tweeted with genuine humor, and a month later the token generation event (TGE) price increased by 357%. Hyperlane maintained a pragmatic approach with its updates, skyrocketing 533% in the first week.

CT Why did it go wrong?

This disconnection is not malicious, but structural.

CT rewards participation rather than accuracy. Posts about "10 ways to achieve 100 times token issuance" get more shares than "what the data actually shows."

KOL accumulates fans by "catering to" projects rather than challenging them. Tell users that their engagement farming is meaningless and does not bring returns.

In addition, most KOLs on CT have actually never issued tokens. They are only commenting on a game they have never played. In contrast, projects like Story Protocol that have actually launched products perform consistently well, regardless of their number of Twitter followers.

genuine Meta

The following are the actual practices of successful projects (based on data):

• Focus on building products that people want to use
• Reasonable pricing at the time of token issuance
• Communicate sincerely with the audience
• Measure what truly matters, not the number of likes.

This is definitely revolutionary stuff.

Taking Quai Network as an example - they focus on technical explanations and educational posts about their unique blockchain consensus model. During the TGE period, the average view count was around 24,000. QUAI surged by 150% in the first week after its launch. This was not because they had millions of fans, but because they genuinely sparked people's interest in their innovation.

In contrast, tokens of projects that burn money on task platforms and participatory marketing have plummeted because no one truly understands or cares about what they are building.

Ironically, while everyone is catering to Twitter's algorithm, it is actually the projects that quietly build useful things and publish wisely that achieve real success.

Case Study: Zora failed to disclose the details of its token economics in a timely manner, resulting in a 50% drop one week after the TGE. Meanwhile, projects that employed transparent methods and focused on product-driven content consistently performed well.

CT does not intentionally lie. However, when the incentive mechanism rewards popular opinions instead of hard data, useful information gets drowned out in the noise.

Related reading: The impact economy of encryption Twitter: How a few accounts control the narrative?