As an investor in Web3, distinguishing between hype and conviction is critical to building a successful portfolio. Hype-driven projects might deliver quick gains, but those built on conviction provide sustainable growth and resilience during market downturns.

Pros of Investing in Conviction Over Hype:

• Long-Term Gains: Conviction-based projects are focused on real utility and tend to grow steadily.

• Lower Risk: These projects have dedicated communities and teams committed to their vision, reducing the likelihood of rug pulls or abandonment.

• Market Resilience: Conviction-driven projects survive bear markets better because their value isn’t tied solely to speculation.

Cons of Chasing Hype:

• High Volatility: Hype-driven investments often experience extreme price swings.

• Short-Term Mindset: FOMO-driven decisions can lead to poor timing and losses.

• Unsustainable Growth: Projects built on hype rarely deliver on promises, leaving investors with devalued assets.

Example:

Compare Ethereum’s consistent growth—fueled by its role as the backbone of decentralized applications—to the boom-and-bust cycles of meme coins that rely solely on social media hype.

Investor Strategy:

Research projects thoroughly before investing. Focus on fundamentals like team credibility, use cases, and roadmap progress. Avoid speculative plays unless you’re prepared for the high risk.

Community Will Outperform Cabal: Back Open Ecosystems

Investing in projects that prioritise open, inclusive communities over exclusivity is often a more sustainable choice. Communities create organic growth, while cabals (small, exclusive groups) limit a project’s potential.

Pros of Community-Driven Investments:

• Wider Adoption: Open communities invite more users, developers, and investors.

• Transparency: Community-driven governance ensures decisions are made openly, reducing the risk of manipulation.

• Loyalty: Communities create strong bonds, resulting in long-term engagement and support.

Cons of Exclusive Projects:

• Limited Growth: Closed ecosystems struggle to scale as they alienate outsiders.

• Reputation Risk: Lack of inclusivity often raises concerns about centralisation and unfair practices.

Example:

Bitcoin’s decentralised, community-driven ethos has made it a global store of value. In contrast, exclusive DAOs with high entry barriers often struggle to gain traction beyond their niche audience.

Investor Strategy:

Prioritise projects with active, engaged communities. Look for open governance models, frequent updates, and robust discussions on platforms like Discord or Twitter.

PVE Will Outperform PVP: Collaborate to Win

As an investor, look for projects that foster collaborative ecosystems (Player vs. Environment or PVE) rather than overly competitive (Player vs. Player or PVP) models. Collaboration aligns incentives, creating a more sustainable environment for growth.

Pros of PVE Investments:

• Sustainable Ecosystems: Collaborative models encourage participants to work together for mutual benefit.

• Reduced Risk: PVE environments often have lower volatility compared to cutthroat competitive projects.

• Broader Appeal: Collaborative systems attract a wider audience, making adoption easier.

Cons of PVP Models:

• High Churn: Competitive systems can create winners and losers, discouraging participation.

• Limited Growth: PVP models often fragment user bases, limiting scalability.

Example:

Play-to-Earn ecosystems like Axie Infinity’s scholarship model initially thrived due to collaboration between participants. On the other hand, hyper-competitive NFT trading platforms often alienate newcomers.

Investor Strategy:

Seek out projects that reward cooperative behaviors, such as staking pools, community rewards, or collaborative gaming environments. These projects are more likely to grow sustainably.

Cult Will Outperform Tech: Invest in Belief Systems

As an investor, remember that successful Web3 projects often feel more like movements than products. Projects with strong narratives and passionate communities—“cults” in the positive sense—tend to outperform purely technical projects.

Pros of Cult-Like Projects:

• Unmatched Loyalty: Investors and users become evangelists, driving organic growth.

• Network Effects: Shared beliefs lead to exponential adoption and word-of-mouth promotion.

• Stronger Market Presence: Narratives create emotional connections that technical superiority alone cannot achieve.

Cons of Tech-Only Projects:

• Low Engagement: Without a compelling story or community, even great tech can struggle to gain traction.

• Easily Replicated: Competitors can often replicate technical innovations, but they can’t copy a movement.

Example:

Dogecoin, built on memes and community identity, has endured years of market turbulence despite lacking advanced technology. Conversely, many technically superior projects have faded into obscurity due to weak community engagement.

Investor Strategy:

Invest in projects with a strong narrative and engaged following. Look for memes, cultural relevance, and viral potential as key indicators of a project’s ability to build a loyal base.

Holding Will Outperform Trading: Patience Pays

Web3 rewards those who hold. While trading may seem enticing, long-term investors often see the greatest returns as projects mature and ecosystems expand.

Pros of Holding:

• Compounded Gains: Long-term investors benefit from exponential growth as projects scale.

• Community Alignment: Holding assets signals support for the project, increasing your influence within the ecosystem.

• Reduced Costs: Fewer trades mean lower fees and less stress from constant market monitoring.

Cons of Trading:

• Emotional Stress: Short-term trading can lead to poor decisions driven by fear or greed.

• High Risk: Frequent trades expose investors to higher market volatility and transaction fees.

Example:

Investors who held Ethereum since its ICO in 2015 have seen staggering returns, while traders who sold early or at the wrong time missed out on generational wealth.

Investor Strategy:

Adopt a “buy and hold” mentality for projects with strong fundamentals. Utilise staking or yield farming to earn passive rewards while holding. Avoid panic-selling during market dips and focus on long-term value.

Conclusion: Investing in Web3 with a Winning Mindset

Web3 investing is about more than just chasing the next big thing—it’s about understanding where real value lies. Projects rooted in conviction, collaboration, and belief systems outperform those driven by hype, competition, or technical superiority alone. By taking a patient, community-focused approach, you can position yourself for sustained success in the decentralised future.

Written by Ants.