Last week, a headline cut through the noise: Liang Wenfeng's institutions banked 1.1 billion yuan in floating profit from Yushu Technology's IPO on the STAR Market. The number is precise. The narrative writes itself. Another capital market victory for Chinese hard tech. But I have spent the last six years auditing smart contracts and tokenomics. I have seen the same headline in crypto: "VCs book 10x paper gain on token launch." The structure is identical. The same bait. The same trap.
Floating profit is not profit. It is a number printed on a spreadsheet that no one has cashed out. In the traditional IPO, the lockup period is six to twelve months. In crypto, the unlock schedule is linear over years. The difference is timing, not substance. Both are designed to create the illusion of value creation while early investors retain control of the exit.
This is the context. Yushu Technology is a robotics company. It raised capital on a public exchange that caters to institutional liquidity. The institutions that got the shares paid a fixed price, then watched the stock surge on day one. That surge is the floating profit. But the market has already priced in the lockup. The real question is not how much they made on paper, but how much liquidity exists at the current price once the lockup expires. In crypto, we call this the "unlock cliff." The same math applies here.
Context: The Hype Cycle of Liquidity Events
The broader industry has been conditioned to worship primary market gains. In crypto, the narrative is that early token sale participants are "smart money." In traditional markets, the same institutions are called "cornerstone investors." Both groups get preferential pricing. Both groups are celebrated for their foresight. But the core mechanism is the same: the public buys the narrative, the insiders sell the reality.
Yushu Technology's IPO is a microcosm. The STAR Market was designed to fund Chinese semiconductor and robotics companies. It has succeeded in channeling capital. But the success metric is not the day-one float. It is the ability of the company to generate sustainable revenue and the ability of the market to absorb insiders' eventual sales. The macro analysis of this event, as I have seen it, focuses on industry policy and market sentiment. It ignores the structural flaw: the assumption that a paper gain is a real gain.
In crypto, the same flaw is amplified by on-chain transparency. I have audited projects where the token unlock schedule was designed to maximize the appearance of scarcity. The team would release 10% of the supply at launch, then lock the rest for 24 months. The market would rally. Then, at month 24, the chart would collapse. The floating profit of the VCs was never realized because they were not the ones holding the bag. The retail investors were.
Core: Systematic Teardown of the Floating Profit Illusion
Let me dissect the numbers. Liang Wenfeng's institutions bought at the IPO price. The stock rose 40% on the first day. That gives a 1.1 billion yuan floating profit. The math is simple. But the assumption is that the market will sustain that valuation for the lockup period. Historically, it does not. In China's STAR Market, the average post-lockup drawdown for high-profile IPOs is 25% within the first quarter of unlocking. The data is from a 2025 study I reviewed for a client. The pattern is consistent: the initial hype is a liquidity premium, not a value premium.
In crypto, the pattern is even more pronounced. I audited a Layer-2 project in 2024 that had a similar structure. The team sold 5% of the token supply to strategic investors at a $0.50 price. The token launched at $2.00. The floating profit was 4x. But the lockup was six months, followed by a 12-month linear vest. By the time the first unlock happened, the price had dropped to $0.80. The investors barely broke even. The floating profit vanished. The narrative had shifted.
The same will happen to Yushu Technology if the underlying business does not deliver. Robotics is a capital-intensive industry with long R&D cycles. The IPO provides a one-time capital injection. But the institutions are not long-term holders. They are event-driven. They will sell at the first opportunity. The market will absorb the supply only if the fundamentals justify the valuation. If not, the floating profit will evaporate.
My experience with the Anchor Protocol collapse taught me that sustainability is not a function of initial demand. It is a function of continuous cash flow. Anchor's 20% yield was unsustainable because the underlying assets did not produce enough yield. Yushu Technology's valuation is similarly dependent on future revenue growth. The IPO price was set by a book-building process that favors institutional demand. That demand is not a vote of confidence in the business. It is a vote of confidence in the short-term liquidity premium.
Contrarian: What the Bulls Got Right
I am not a cynic by default. The bulls have a point. The capital raised is real. Yushu Technology now has 1.5 billion yuan in cash to deploy. That cash can fund research, hire talent, and build factories. The institutions that participated are not all flippers. Some are long-term strategic holders. The STAR Market has produced winners like SMIC and Cambricon. The floating profit, while not realized, reflects a real market belief that the company is undervalued at the IPO price.
In crypto, the same argument applies. Some token launches are genuinely undervalued. The floating profit of early investors can be a signal of strong fundamentals. I have seen projects where the unlock schedule was designed to align with product milestones. The VCs did not sell because the project was delivering value. The floating profit became real profit over time. The key is the alignment of incentives.
But the alignment is the exception, not the rule. Most projects use the floating profit as a marketing tool. The headline is designed to attract retail attention. The institutions know the unlocking schedule. The retail investor does not. The asymmetry is the core of the problem.
Takeaway: The Accountability Call
The 1.1 billion yuan floating profit is a number. It is not a verdict. The real verdict will come in six months when the lockup expires. If the institutions hold, that is a signal. If they sell, that is a different signal. The market will interpret. But the interpretation should be based on data, not narrative.
In crypto, we have the advantage of on-chain data. We can track the exact movement of tokens. We can see who is selling. We can calculate the real realized profit. The traditional market lacks that transparency. The institutions can hide behind dark pools and OTC deals. The floating profit is a mirage that can be manipulated.
Logic > Hype. ⚠️ Deep article forbidden.
The next time you see a headline about billions in paper gains, ask yourself: who is the counterparty? The answer is always the same. The retail investor who arrives after the hype. The one who buys the narrative. The one who holds the bag.
Watch the unlock. Watch the liquidity. The floating profit is a distraction. The real profit is the one that hits the bank account. And that is a much harder number to find.