What is the true meaning of KOL? The truth behind the success or failure of new cryptocurrency projects

In the cryptocurrency industry, the term KOL stands for “Key Opinion Leader,” but whether the advice they give actually guarantees project success is another matter entirely. Recent research published by Simplicity Group completely overturns the four most widespread myths in the crypto community.

Analyzing 50,000 data points from the issuance of 40 major tokens in 2025, this study statistically proves that strategies heavily recommended by Twitter influencers and KOLs—such as followers count, large engagement surveys, VC funding, and maximized advertising during launch week—are in fact almost ineffective. All these efforts end up failing.

High Engagement = Success? The Statistical Reality Reveals a Reversal

Everyone obsessively tracks Twitter metrics: likes, retweets, comments, impressions—all these inflated numbers seem to guarantee success. Projects pour thousands of dollars into engagement surveys, platform utilization, and follower acquisition.

But the regression analysis results are coldly clear. The correlation coefficient between engagement metrics and price performance after one week is only 0.038. Statistically, almost no relationship exists. Even likes, comments, and reposts show a weak negative correlation with actual price performance. In other words, projects with high engagement can sometimes perform worse.

Look at projects like GoPlus, SonicSVM, RedStone. They consistently post content, but user engagement does not proportionally reflect their actual user base. The only metric showing a weak positive correlation is retweets from the previous week, with a p-value of 0.094, which is not statistically significant. The conclusion is clear: buying water armies and spending money on engagement activities is ultimately just burning money without meaning.

Awakening from the Low Circulation Myth: Discovering True Success Factors

The crypto community is obsessed with “low circulation, high FDV” projects—creating artificial scarcity through extremely limited supply and expecting prices to surge.

But this is also false. The ratio of initial circulating supply to total supply has no correlation with price performance. The study found no statistically significant relationship.

What truly matters is the USD value of the initial market capitalization(IMC). The R² value is 0.273, and the adjusted R² is 0.234, indicating a very clear relationship. Every 1-unit increase in initial market value corresponds to approximately a 1.37-unit decrease in weekly return. Simply put, every 2.7-fold increase in initial market cap results in about a 1.56% decline in first-month stock returns.

The lesson is straightforward. What matters is not the proportion of unlocked tokens, but the total dollar value flowing into the market. Only projects launched at reasonable prices have room to grow.

Larger VC investments lead to better token performance? That’s an illusion

You often hear, “Andreessen Horowitz raised $100 million. It will grow tremendously!” But the reality is much different.

The correlation between funding amount and one-week return is 0.1186, with a p-value of 0.46. The correlation between funding amount and one-month return is 0.2, with a p-value of 0.22. Both are statistically insignificant. There is essentially no relationship between the amount a project raises and its actual token performance.

Why is that? Generally, raising more funds results in higher valuation, which means greater selling pressure to overcome. Additional capital does not magically translate into better tokens. Yet, KOLs in the crypto community see funding announcements as buy signals.

This is like judging a restaurant’s quality solely by its rent. A perfect example: raising $1 billion does not necessarily outperform raising $100 million. Large investments do not guarantee better token economics or a stronger community.

Overhyped expectations during launch week end in failure

The common belief is that the most important news happens during launch week to attract attention and maximize FOMO(Fear).

But the data says the opposite. When a project launches, user engagement drops. People move on via airdrops to the next project, and carefully prepared content is ignored. Successful projects typically build awareness before launch, not during.

The reason is simple: interest before launch attracts actual buyers, while interest during launch only draws “passersby.” The peak of user engagement occurs not immediately after TGE but when previews are released before launch.

What truly works: products, trading volume, trust

So, what really matters?

First, the effectiveness of the actual product. Projects like Bubblemaps’ on-chain survey feature or Kaito’s narrative tracking naturally generate content and outperform meme-centric accounts. They produce alpha content organically, ensuring large and sustained user engagement.

Second, trading volume retention. Tokens that maintained trading volume after initial hype performed significantly better in price. Spearman’s rank correlation coefficient is -0.356(p=0.014), indicating that larger drops in trading volume correlate with poorer price performance. One month after launch, the average price performance of the top quartile tokens with high trading volume retention was quite impressive.

Third, reasonable initial market value. This is the most powerful predictor of success. The correlation coefficient is -1.56, statistically significant. Listing at a fair valuation offers growth potential. Conversely, listing with a market cap over $1 billion tends to go against market trends.

Fourth, genuine communication. Consistent tone aligned with the product is crucial. Powerloom raised $5.2 million but communicated with an overly cynical tone, resulting in disastrous outcomes: a 77% drop in the first week and a total decline of 95%.

In contrast, Walrus communicated with authentic humor, and its token price surged 357% after one month. Hyperlane maintained factual, straightforward updates, soaring 533% in the first week.

Why KOLs and the crypto community are wrong

This disconnect is not malicious but structural. KOLs in the crypto community prioritize engagement over accuracy.

Posts titled “10 ways to increase token launches by 100x” get far more retweets than “what actual data shows.” KOLs tend to rally fans with “customized” approaches rather than challenge projects directly. Instead of telling users that engagement activities are meaningless, they prefer to offer simple formulas.

A more fundamental issue is that most KOLs in crypto have never actually issued a token. They review games they have not experienced firsthand.

On the other hand, projects like Story Protocol, which have launched actual products, consistently perform well regardless of Twitter follower count. They focus on the product itself rather than follower metrics.

Meta shift: what truly successful projects do

Based on real data, successful projects do the following:

• Focus on products people want to use
• Price tokens reasonably at launch
• Communicate genuinely with the audience
• Measure what truly matters, not just likes

This is truly innovative. Look at Quai Network. This project focused on technical explanations and educational posts about its unique blockchain consensus model. During TGE, its average page views were only about 24,000.

Yet, QUAI grew 150% in the first week. Not because it amassed millions of followers, but because it genuinely sparked interest in innovation.

In contrast, projects pouring money into task platforms and engagement marketing saw their tokens plummet as no one understood or cared about what they were building.

Ironically, while everyone follows the Twitter algorithm, truly successful projects quietly create useful content and share it wisely.

Another example: Zora’s failure to release tokenomics details on time caused its share price to drop 50% within a week of TGE. Conversely, projects that maintain transparency and focus on product-centered content continue to perform well.

Conclusion: the true role of KOLs

KOLs in the crypto industry do not intentionally lie. But when incentive structures reward popular opinion more than accurate data, useful information gets buried in noise.

To be a truly meaningful KOL, one should give advice that “actually works” rather than “gathers the most engagement.” This study clearly shows the way forward. For a healthy community, it’s time to reconsider what KOLs stand for.