Liquid Capital Founder Jack Yi: The Premise of a Bull Market is That Principal Does Not Disappear
Jack Yi, founder of Liquid Capital, emphasized in a public speech that in the context of frequent on-chain security incidents, the core focus of the current market phase is not maximizing returns, but ensuring the safety of principal. He pointed out that whether it is DeFi mining, storing on exchanges, or on-chain operations, there are inherent risks, and the lack of profit-taking and stop-loss mechanisms often leads to systemic losses.
He further stated that the team currently prioritizes risk control, emphasizing the need to assess loss tolerance under extreme scenarios in any strategy. This viewpoint emerged after several recent on-chain attacks and fund loss incidents, reflecting a shift in the industry from an aggressive return-oriented approach to a defensive allocation mindset.
Source: Public Information
ABAB AI Insight
This statement essentially reflects the transition of the crypto market from a "liquidity-driven phase" to a "risk pricing phase." In a period of loose liquidity and widespread asset appreciation, risks are often masked, and the focus of strategies is on amplifying returns; however, as security incidents become frequent and returns decline, the market begins to reassess the "loss function," shifting funding behavior from offense to defense.
The frequent on-chain security issues are not just technical vulnerabilities but also incentive mechanism problems. DeFi systems heavily rely on open-source and composability, which means the attack surface continues to expand, while defensive returns cannot symmetrically grow with attack returns. This structure leads to "attacks becoming high-yield strategies," which erode the industry's trust base over the long term, resulting in an increase in risk premiums.
Emphasizing profit-taking and stop-loss mechanisms essentially reintroduces the risk management framework from traditional finance into the on-chain world. This indicates that DeFi is transitioning from "experimental finance" to "sustainable finance," but this process is accompanied by declining returns and user stratification: funds with risk control capabilities remain, while those lacking risk management are cleared out.
From a longer-term perspective, "principal first" often appears at the bottom of cycles or during consolidation periods, serving as an important signal for the market to complete deleveraging and risk repricing. When the market re-enters an upward cycle, the funds and strategies that survive will often determine the structure and dominance of the next bull market.