There’s a narrative that’s been going on in the ICP community for the past four years, and by now most people treat it as a fact. The rumor is that early VCs, like a16z and Polychain got in early, watched the price spike at launch, then quietly offloaded their bags and moved on to shinier things.
Except once you analyze the actual data, it doesn’t seem to support that conclusion, and a closer look at the numbers tells us something different.
BobbyO posted two videos that when taken together, make one of the more compelling on-chain arguments I’ve seen for why the “VCs dumped” narrative is probably wrong, and why the actual “forces” suppressing the ICP price have almost NOTHING to do with insider selling. Prepare to be mind blown, so let me walk you through the whole thing.
Long Liquidation: when a leveraged long position is forcibly closed by an exchange because the collateral can no longer cover the loss.
OTC (Over-the-Counter): large asset trades conducted directly between two parties, bypassing public exchanges entirely.
Open Interest: the total value of outstanding derivative contracts on an asset.
It’s not hard to understand how people got here. ICP launched in May 2021 at prices that briefly touched $700 on some exchanges, and has been dumping ever since. Andreessen Horowitz, which co-led a $102 million raise for DFINITY back in 2018 alongside Polychain Capital, hasn’t publicly mentioned ICP in years. Chris Dixon’s last notable public moment with ICP was a 2020 sit-down with Dominic Williams. Polychain has been equally silent throughout the years.
When something you invested in goes down 99.5% from its all-time high and the investors who were loudly behind it go completely quiet, the obvious interpretation is that they cut their losses and left. Now here’s the thing about “obvious” interpretations: they aren’t always the correct ones.
Here’s where Bobby’s argument gets interesting, so let’s look at the actual numbers.
ICP launched with a total supply of roughly 470 million tokens, and today that number sits around 550 million. An increase of about 80 million ICP over nearly four years. That number breaks down into roughly 60 million in voting rewards, and 20 million in node provider rewards.
Now here’s the number that matters most: the total ICP sitting on centralized exchanges right now is around 60 to 62 million, starting from zero at launch.
The amount of ICP on exchanges is entirely accounted for by inflation alone, which is the minting of new tokens through governance and node rewards. You don’t need a single VC dumping a single token to explain what we see on exchanges today, because the math already covers it without them.
Bobby frames this as a simple question: “If a16z, Polychain, and other VCs offloaded tens of millions of ICP, where is it and why doesn’t it show up anywhere?” For those tokens to be on exchanges, they should have been there on top of the already minted 80 million ICP through normal inflation.
Another thing worth mentioning: not all of that 60 million on exchanges is actually liquid. A percentage (perhaps 20 to 30 million of it), is held by institutions using centralized exchanges as custodians. Large players use platforms like Coinbase Prime, Kraken, and Binance to hold assets in custody rather than to trade them actively, which means that supply shows up in the exchange balance but is illiquid. The liquid ICP may be closer to 30 to 40 million or so.
To understand the supply, we need to break down who’s actually been selling. There are three distinct groups and they each have their own logic:
The First Group: Seed investors. People who got into ICP at around $0.03 per token. These holders are sitting on returns of around 100x even at today’s low prices, which means selling voting rewards is essentially painless for them. They can redeem and liquidate their staking rewards and never touch a single token of their original position.
The Second Group: Node providers. They receive ICP as compensation for running the network infrastructure and are incentivized to sell a portion or even all of it to cover their operating costs. Running a node costs real money in hardware, bandwidth, electricity, and operations, so this isn’t “dumping”, it is a cost that’s baked directly into how the network functions.
The Third Group: Early VCs. This is the group everyone is worried about, like a16z and Polychain who came in at average prices somewhere in the $3 to $4 range. These are the potential “dumpers” in this narrative, but here’s how Bobby thinks through the numbers.
If any percentage of their position was liquid in the first 8 to 10 months after launch, when ICP was trading between $30 and $100, they could have sold 5-10% of their holdings at a 10 to 20x profit, recovered most or all of their initial investment, and still be sitting on 90% of their original position today.
That kind of move would be completely normal, and it would also be nearly invisible in the data, because the exchange inflow spike in that early period is entirely consistent with partial profits being taken at elevated prices, after which the trend flattens out and aligns with normal inflation.
There’s one more scenario worth addressing directly, which is what happens if the large VCs really did exit most of their position. Bobby points out that even in that case, the impact would be invisible, because a transaction of that size would never happen on an open exchange. It would be an OTC deal negotiated directly between institutions and completely off the books of any public market.
OTC trades don’t move the spot price and don’t show up as exchange inflows, so all they would mean is that one large holder was replaced by another. New money stepped in, old money stepped out, and the underlying holder base of ICP remained concentrated in institutional hands either way.
I’ll make an argument that an OTC deal would be more bullish than the original VCs simply holding on. Firms like a16z and Polychain got into ICP in 2018 for one reason: they expected a financial return, and that’s entirely what venture capital is designed to do. But if another institution quietly bought those tokens on the OTC market, the motivation behind that purchase could be different.
It could be a builder looking to deploy infrastructure on ICP. It could be an institution that has studied the technology closely and sees something the broader market is still missing. It could be a sovereign entity or an enterprise with a concrete use case already in mind. The original profit driven money may have been replaced by conviction money, and conviction money doesn’t sell at the first sign of a recovery.
This would be in check with the latest news about the Swiss and Pakistani subnet.
This bit is going to be longer, so bear with me, because it’s very important information, so I’ll split it into two parts to be easier to follow. This is the part of Bobby’s argument I find most compelling, because it doesn’t require any “conspiracy” and it just requires you to think critically about incentives.
Consider a16z’s portfolio. They have hundreds of investments across crypto and tech, and even if they still hold a significant position in ICP, it almost certainly represents less than 5% of their total assets under management. The other 95% is made up of projects that genuinely need a16z’s platform, voice, and endorsement to succeed. Many of those projects are in DIRECT COMPETITION with ICP for developer mindshare, capital, and narrative momentum.
If a16z publicly promotes ICP the way Chris Dixon used to, they are implicitly telling the market that ICP architecture is superior for most use cases. This would create a real problem for the other L1s and L2s they’ve backed. It creates a comparison that disadvantages their own book, and since ICP doesn’t need a16z to succeed given that it has been signing sovereign nation partnerships without a single VC shilling it publicly, there’s no real upside to speaking up while the downside is meaningful for them. The incentives clearly point towards VCs staying quiet.
To understand just how much is at stake in that portfolio conflict, consider what happened earlier this month. In a post on X, Vitalik Buterin said that the original rollup-centric roadmap for Ethereum’s L2 ecosystem “no longer makes sense”, and that a new path is needed. He pointed to two problems: L2s have moved far too slowly toward meaningful decentralization, and Ethereum’s base layer is now scaling on its own with gas limits expected to rise significantly through 2026, which removes the original justification for L2s existing in the first place.
He also wrote that the ecosystem doesn’t need more “copypasta EVM chains” and that chains connected to Ethereum through a multisig bridge aren’t actually scaling Ethereum in any meaningful sense.
This matters to the ICP conversation for a specific reason: VCs have poured billions of dollars into L2 projects over the past few years, and retail investors have committed tens of billions more on the theory that one of these networks would become the dominant scaling layer for the Ethereum ecosystem.
Vitalik just told the world that most of those bets were built on a premise that no longer holds. The uncomfortable truth in his post, though he doesn’t say it directly, is something the ICP community has understood for years: the vast majority of so-called “Ethereum killers” and L2 networks are essentially EVM clones that offer faster or cheaper transactions as their primary “innovation”.
ICP is a different kind of project, and the capabilities Vitalik says L2s should now be building towards, things like privacy, identity, AI, non-financial applications, and truly sovereign infrastructure, are capabilities ICP already has delivered on. The VCs who have been backing L2 ecosystems have every incentive to keep the spotlight off ICP for as long as possible.
It’s also worth noting what Chris Dixon said publicly in 2018 when the a16z crypto fund launched. He stated on the record that the firm had never sold any of their crypto investments and didn’t plan to any time soon, and that the fund was specifically structured to hold positions for ten years or more. Bobby doesn’t even cite this statement in his video, but it fits his argument precisely and adds context that the community has largely overlooked.
Here’s where Bobby’s second video becomes essential, because you’re still left with an obvious question: why has the price been grinding down for four years?
Bobby’s answer is the derivatives market.
The long-to-short liquidation ratio for ICP has sat at approximately 10:1 for as long as he’s been tracking it, while the market average across major assets is closer to 1:1. To understand why this matters, you need to understand what a long liquidation actually is.
When a leveraged long position is forcibly closed, it generates a sell order on the spot market. Imagine that a $1,000 position opened at 100x leverage becomes a $100,000 sell order when it gets liquidated, 99% of which is backed by nothing real.
When longs are being liquidated at 10 times the rate of shorts, that imbalance creates a bunch of artificial sell pressure on the spot price. In 3 to 6 month, you can have more net buying pressure on the spot market than selling, and the price can still go down, because cascading long liquidations overwhelm the buying activity entirely. This is mental.
What makes the ICP data particularly notable is that this 10:1 ratio holds consistently across multiple exchanges, which is something you wouldn’t expect to see if this were just random overleveraged retail behavior. You’d expect somewhat different trading patterns between Binance and Coinbase given different user bases and regional demographics, but the ratio stays skewed the same way across platforms.
The supply math suggests the “VCs dumped” narrative doesn’t hold up, since the 80 million ICP minted since launch through voting and node rewards more than covers everything we see on exchanges today. If large early investors did sell significant positions, the most likely venue was OTC, making those trades invisible to the market and meaning either they stayed in or were replaced by equally (or even more) sophisticated buyers.
The silence from a16z and Polychain is evidence of rational portfolio management by firms whose incentives don’t align with publicly promoting an asset that represents a small fraction of their book and doesn’t need their help to succeed in the first place. And with Vitalik himself now calling out the L2 ecosystem for building glorified EVM clones rather than genuine innovation, the contrast with what ICP has been building quietly in the background is becoming harder to ignore.
The price suppression that’s been grinding holders for four years points toward the derivatives market, specifically an abnormal and persistent long-to-short liquidation imbalance that can, mathematically, push prices down even when spot buying outweighs spot selling.
None of this means the thesis plays out tomorrow, but it does change the question you should be asking. Based on the available data, the VCs probably didn’t leave, and even if they did, someone equally large stepped in quietly to take their place.
The more interesting question is what happens when they decide it’s time to speak up.
If you made it this far, thank you for reading. And if you want more ICP articles like this one delivered straight to your inbox, consider subscribing to my Substack.
Talk to you later. BasedGiant.
BobbyO, “MAKING SENSE OF THE LAST 5 YEARS | ICP BY THE NUMBERS”
BobbyO, “EXPLAINING WHY THE CRYPTO MARKET IS FAKE”
Vitalik Buterin: “You are not scaling Ethereum”, CoinDesk
Vitalik Buterin blasts “copypasta” L2 chains, CoinDesk
TechCrunch, DFINITY raises $102M from a16z and Polychain
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