When KOL influence surpasses VC: A wealth experiment driven by traffic manipulation

Exploring the rise of KOL rounds in the cryptocurrency market, analyzing the triangular game relationship among project teams, KOLs, and retail investors, and how influence is becoming a new form of capital. (Background: How to determine if you are a leek?)

Once upon a time, the gameplay in the primary market was relatively straightforward: VCs invested money, KOLs promoted, and retail investors provided liquidity. But today, this approach seems to be breaking down. The backing of VCs is no longer foolproof, and project teams are starting to redesign the rules around “influence.” Meanwhile, KOLs are no longer just traffic roles—they hold chips, walk into the game, and can even decide the fate of a project.

To some extent, KOL rounds are a new token distribution method born after VCs exit and retail investors lose voice, under the narrative of “influence supremacy.” Over the past 7 days, XHunt statistics show that tweets mentioning “KOL” in the crypto space reached as many as 3,860, while “VC” was mentioned 3,078 times—a covert battle over influence has quietly begun.

This article does not discuss grand principles but tells the real story behind KOL rounds—where they come from, who is laughing, who is crying, who is behind the scenes counting money, and who is insomnia at midnight.

1. How did KOL rounds step by step come into the spotlight?

Rewind to late 2022. The winter of crypto VCs arrived. The primary market was overvalued, exit cycles lengthened, and secondary markets couldn’t absorb the supply. Large institutions hesitated to act, and small projects struggled to raise funds. Meanwhile, retail investors quietly returned—each liquidity explosion in Blast, ZKsync, Friend.tech… was a signal of retail returning.

The easiest influence on these people was not institutional research reports but those seemingly “knowledgeable” KOLs who were actually “selling goods.” Project teams also realized: VCs might not be able to help me go viral, but KOLs can. Instead of spending money on advertising, it’s better to put low-cost chips into KOLs’ hands, have them tweet, and set the rhythm.

Thus, a new gameplay emerged:

• Project teams give KOLs credit lines, sometimes at prices lower than VCs;
• KOLs shout about the project desperately before TGE to create FOMO;
• When unlocked, traffic explodes, and KOLs cash out and exit.

KOL rounds thus appeared. You can think of it as a “task-driven private placement”—low price, quick unlocking, even with “guaranteed minimum” clauses.

Project teams are very clear: giving tokens to those with followers and influence will naturally push up the price once they go online. KOLs also see it as a good deal: buy tokens at low prices, generate some traffic, and sell after unlocking part of the tokens—seems like a guaranteed profit.

But is reality really so straightforward?

2. The truth about KOL rounds: some get rich, others go to zero

2.1 The gains and losses of KOL rounds

The performance of KOL rounds varies greatly depending on the project and market conditions. In a bull market, KOL rounds are often seen as a “win-win”: projects get funding, KOLs get early low-cost positions, and retail investors can profit from riding the wave. But in a bear market, the script changes entirely.

As liquidity declines, projects often crash immediately after listing. KOLs, locked in their positions, can’t sell in time and suffer heavy losses. @realChainDoctor admitted that last year he invested in over ten KOL rounds, none of which was profitable; some tokens weren’t even issued. According to龐教主 @kiki520_eth, KOL rounds have systemic traps—they might not get tokens or the tokens might rise and then change rules.

Top KOL @jason_chen998 said his most profitable investments were Aster and Mira, which he acquired at lower valuations during market downturns, and because the project teams were trustworthy, and TGE coincided with a bull market. Therefore, making money from KOL rounds still depends on bear market ambushes and connections to acquire projects. But he also admits most KOL rounds are just high-yield financial products—if lucky, you gain some profit; if unlucky, you spend money working for others, pressured by project teams to produce content, with tokens being withheld or not unlocked, leading to unhappy endings.

Recent case reviews:

• Aster: When the price broke $1.79, KOL rounds yielded over 70x profit at peak. If only 30% of tokens were unlocked at the time, profit was 21x, meaning an investment of $50,000 could yield $1,050,000.
• Holoworld AI: On-chain address 0x3723, suspected KOL investor, received about 10.24 million HOLO tokens at a cost of $0.088. Later sold around an average of $0.6, cashing out over $4.71 million, with a single-round return of over 444%, netting more than $4 million.
• WalletConnect: After unlocking, ICO and KOL investors only gained about 1.5x returns.

However, many KOL rounds have also experienced price crashes after opening or project issues. For example:

• SatoshiVM in early 2024: The token $SAVM was hyped with many KOLs, soared over $11, but soon rumors of KOLs cashing out at high prices caused trust issues, and the project cooled off. Those who didn’t sell early likely lost money; $SAVM has fallen to about $0.075.
• ZKasino: After KOL participation and promotion, the project changed rules unilaterally after user lock-up, siphoning assets. KOLs involved were accused by fans of being complicit, suffering both financial and reputational damage.
• Eclipse: Launched months ago with a valuation of $600 million, Series A at $1 billion, but after listing, the actual market cap was only about $380 million—far below the rumored valuation. @_FORAB, a research KOL, said some KOL allocations were even distributed to media and community, and the tokens didn’t make it onto Binance.

In response, well-known KOL @yuyue_chris pointed out that the real problem with KOL rounds isn’t losing money but that project teams and middlemen use KOL promotion as a pretext to pull others into the trap, making KOLs use their followers to recover their principal. This kind of familiar-friend exploitation is the most irresponsible.

2.2 The profits behind: a triangular game among projects, KOLs, and retail investors

As mentioned earlier, KOL rounds reflect a shift in the power structure of the primary market. In the past, project teams relied on VCs for funding, and VCs filtered projects through their influence. Now, project teams find KOLs cheaper, faster, and more effective at creating hype. VCs are unhappy: after investing millions, they see project teams inviting low-cost influencers with even greater influence to promote, leading some VCs to withdraw.

Retail investors are even more dissatisfied: they buy tokens after KOLs unlock and promote, only to see the tokens dumped on the same day, with the hype turning into sell-offs.

Project teams are also not necessarily happy: since KOL hype is often short-term, the volume, liquidity, and high opening prices on launch days don’t always last.