Every web3 protocol seems to shine brightly in its initial stages, particularly in the months before its Token Generation Event, only to experience a sharp decline as soon as the initial incentives, like airdrop farming, dry up.

Why do these protocols fail to maintain sustainability even as users and liquidity continue to flood into the web3 ecosystem? The answer appears to be twofold: poor incentive structures and a lack of meaningful data access.

Starting with the incentive problem, the harsh truth is that many blockchain projects offer little of unique value. They may boast marginally faster transaction times or slightly lower fees, but these advantages are often minor and not enough to sustain long-term interest. As a result, these projects resort to paying for their ecosystems through grants. They offer cash upfront for integrations in the hope that attracting enough dApps will bring users.

However, this strategy is widely seen as ineffective. Without naming names, those familiar with the industry will recognize the pattern of "ETH killers" that emerge suddenly, form numerous partnerships, and then fade away as quickly as they appeared when a new, hyped chain emerges.

As the initial excitement fades, these protocols often resort to promoting extensive airdrops, creating points programs that encourage mass participation from bots and result in spammy promotions. This approach ultimately dilutes their brand value, artificially inflates their user base, and leads to a significant drop in token value on the first day, followed by a gradual decline into obscurity.

The solution to this widespread issue can be learned from the web2 sector: the strategic use of data. In web2, data is akin to digital gold or virtual oil; it’s a critical asset that drives resilience. Data helps apps create experiences that truly resonate with the user. It enables apps to understand, intimately, who the user is and how they can tailor the UX to meet their needs and keep them engaged.

Furthermore, data can be leveraged not only to engage existing customers but also to streamline customer acquisition. Currently, web3 applications cast a wide net in hopes of attracting users without specific targeting information. If these apps had access to the kind of data managed by web2 media giants like TikTok and Instagram, they could strategically place their advertisements to reach already interested audiences, thereby reducing acquisition costs and enhancing user retention. With precise data, dApps can display the right ads to the right people at the right time, revolutionizing their marketing efficiency and effectiveness.

The problem with data being so valuable to startups is that it’s aggregated and owned by a small handful of tech giants. When these companies hold user data, users lose control over privacy and are compromised on data security. IF there was a leak or a cyber attack, massive amounts of users’ personal information would be leaked, which damages the end user more than the tech company. Instead, the next generation of the internet will be powered by control over user data by the user itself.

Camp. Lol.

Every web3 protocol seems to shine brightly in its initial stages, particularly in the months before its Token Generation Event, only to experience a sharp decline as soon as the initial incentives, like airdrop farming, dry up.

Why do these protocols fail to maintain sustainability even as users and liquidity continue to flood into the web3 ecosystem? The answer appears to be twofold: poor incentive structures and a lack of meaningful data access.

Starting with the incentive problem, the harsh truth is that many blockchain projects offer little of unique value. They may boast marginally faster transaction times or slightly lower fees, but these advantages are often minor and not enough to sustain long-term interest. As a result, these projects resort to paying for their ecosystems through grants. They offer cash upfront for integrations in the hope that attracting enough dApps will bring users.

However, this strategy is widely seen as ineffective. Without naming names, those familiar with the industry will recognize the pattern of "ETH killers" that emerge suddenly, form numerous partnerships, and then fade away as quickly as they appeared when a new, hyped chain emerges.

As the initial excitement fades, these protocols often resort to promoting extensive airdrops, creating points programs that encourage mass participation from bots and result in spammy promotions. This approach ultimately dilutes their brand value, artificially inflates their user base, and leads to a significant drop in token value on the first day, followed by a gradual decline into obscurity.

The solution to this widespread issue can be learned from the web2 sector: the strategic use of data. In web2, data is akin to digital gold or virtual oil; it’s a critical asset that drives resilience. Data helps apps create experiences that truly resonate with the user. It enables apps to understand, intimately, who the user is and how they can tailor the UX to meet their needs and keep them engaged.

Furthermore, data can be leveraged not only to engage existing customers but also to streamline customer acquisition. Currently, web3 applications cast a wide net in hopes of attracting users without specific targeting information. If these apps had access to the kind of data managed by web2 media giants like TikTok and Instagram, they could strategically place their advertisements to reach already interested audiences, thereby reducing acquisition costs and enhancing user retention. With precise data, dApps can display the right ads to the right people at the right time, revolutionizing their marketing efficiency and effectiveness.

The problem with data being so valuable to startups is that it’s aggregated and owned by a small handful of tech giants. When these companies hold user data, users lose control over privacy and are compromised on data security. IF there was a leak or a cyber attack, massive amounts of users’ personal information would be leaked, which damages the end user more than the tech company. Instead, the next generation of the internet will be powered by control over user data by the user itself.

Camp. Lol.