It’s Time to Build a Sustainable Blockchain Ecosystem

Even
in
the
midst
of
what
many
consider
a
bull
run
—
Bitcoin
up
126%
and
Ethereum
up
53%
year-over-year
—
retail
investors
are
feeling
a
sense
of
stagnation
in
the
token
markets.
Earlier
in
the
year,
memecoins
stole
the
spotlight,
but
as
the
dust
settles,
it’s
clear
that
only
a
small
fraction
of
investors
actually
profited.
Now,
with
even
the
most
hyped
infrastructure
projects
showing
declining
charts,
the
question
looms:
where
should
retail
investors
put
their
money
next?

The
answer
lies
in
identifying
blockchain
ecosystems
that
offer
builders
the
tools
to
build,
launch,
and
scale
real
companies
with
sustainable
valuations
—
opportunities
with
genuine
long-term
potential,
rather
than
just
another
meme-driven
gamble.
One
that
will
start
to
resemble
an
actual
stock
market
of
sorts.

In
the
current
Web3
landscape,
the
consensus
is
clear:
people
are
growing
weary
of
yet
another
infrastructure
company
raising
funds;
instead,
they’re
eagerly
awaiting
the
next
big
consumer
application.
While
defining
what
a
“consumer
application”
entails
could
be
an
article
in
itself,
it’s
crucial
first
to
understand
why
venture
capitalists
(VCs)
continue
to
pour
money
into
infrastructure.
The
reality
is
that
venture
capital
is
driven
by
the
pursuit
of
a
100x
return
—
like
finding
the
next
Solana.
Many
large
VCs
hedge
their
bets
by
diversifying
their
portfolios,
hoping
that
one
big
win
will
offset
the
losses
from
those
that
didn’t
pan
out.
However,
even
among
VCs,
there’s
a
growing
recognition
that
infrastructure
investments
won’t
yield
returns
if
there’s
no
surge
in
applications
building
on
them.

Read
more:
Azeem
Khan
–



What
Does
It
Actually
Take
to
Build
a
Blockchain?

A
common
criticism
of
venture
capitalists
is
that
they
aren’t
willing
to
invest
in
consumer
applications,
but
that’s
not
entirely
accurate.
If
we
look
back
to
2021,
after
Axie
Infinity’s
success,
nearly
every
VC
funneled
billions
into
the
GameFi
industry,
hoping
to
replicate
that
success.
While
it’s
likely
that
little
of
that
money
will
ever
be
returned
to
investors
as
profits,
it’s
clear
those
investments
were
aimed
at
consumer
applications
—
or
at
least,
attempts
at
them.
Even
if
most
of
these
GameFi
projects
were
essentially
DeFi
applications
disguised
as
games
with
Ponzi-style
tokenomics,
they
were
still
consumer-facing
efforts.

VCs
will
invest
in
consumer
applications
once
they
spot
a
winner.
For
instance,
we’ve
seen
40
replicas
of
Polymarket
(my
estimate)
since
its
recent
success.
The
main
takeaway
here
is
that,
despite
the
expectation
that
VCs
should
have
contrarian
views
to
generate
returns
for
their
investors,
they
often
resort
to
being
copycat
investors,
playing
a
financial
version
of
“follow
the
leader.”
Who
those
leaders
are
tends
to
coincide
with
who
has
the
most
money.

So,
assuming
the
ideal
blockchain
infrastructure
is
in
place,
what
would
it
mean
for
tens
or
even
hundreds
of
millions
of
users
to
seamlessly
interact
on-chain
in
the
future?
And,
crucially,
how
does
this
scenario
create
opportunities
for
retail
investors
and
even
VCs
to
achieve
returns
on
their
investments?

In
a
market
like
this,
builders
from
around
the
world
would
have
the
freedom
to
choose
their
preferred
blockchain
based
on
their
specific
needs
and
the
resources
those
blockchains
offer.
From
there,
these
builders
would
ideate
on
the
companies
they
want
to
launch,
start
building,
and
eventually
bring
their
products
to
market.
Ideally,
they
would
then
raise
venture
capital
to
scale
their
operations
once
they
gain
traction.
After
proving
their
model,
they
might
launch
a
token
on
exchanges
to
grow
their
treasury,
using
those
funds
to
fuel
further
growth
according
to
their
tokenomics.

If
this
model
sounds
familiar,
that’s
because
it’s
similar
to
Web2.
Then,
a
common
path
for
companies
is
to
build
a
minimum
viable
product,
gain
traction,
raise
venture
capital
to
scale,
and
eventually
either
get
acquired
or
go
public
through
an
IPO.
These
companies
raise
funds
at
realistic
valuations
and
focus
on
creating
sustainable
businesses,
with
investors
who
believe
in
their
long-term
potential.

For
retail
investors,
this
model
presents
an
exciting
opportunity.
Instead
of
pouring
money
into
infrastructure
projects
with
already
inflated
valuations
or
gambling
on
memecoins
with
near-zero
chances
of
success,
investors
could
back
companies
launching
on
different
chains
at
smaller,
more
reasonable
valuations
with
real
growth
potential.
Savvy
investors
in
this
space
might
invest
in
a
company
whose
token
initially
launches
at
a
$10
million
valuation
and
watch
it
grow
to
something
like
$100
million,
based
on
their
confidence
in
the
company’s
ability
to
deliver
value
to
users
over
time.

We’d
likely
find
ourselves
in
a
scenario
with
multiple
iterations
of
projects
across
DeFi,
SocialFi,
GameFi,
and
various
consumer
applications.
Each
project
on
different
chains
would
require
a
fresh
set
of
metrics
to
determine
which
ones
are
primed
for
success.
This
dynamic
environment
would
be
particularly
exciting
for
savvy
investors
eager
to
explore
innovative
methods
for
evaluating
and
capitalizing
on
on-chain
companies.

There
would
undoubtedly
be
missteps
in
valuing
and
investing
in
these
companies.
However,
over
time,
the
market
would
stabilize,
shifting
away
from
gambling
for
returns
and
toward
more
strategic
investments.
Investors
would
begin
to
identify
the
diamonds
in
the
rough
through
solid
investment
strategies,
and
the
ecosystem
would
gradually
mature
into
a
more
sustainable
market.
This
isn’t
to
downplay
the
inherent
risks
that
always
accompany
investing,
especially
when
valuing
companies
at
the
cutting
edge
of
innovation.
Web3
is
already
rife
with
scams,
so
it’s
likely
that
a
more
sophisticated
investing
landscape
could
also
give
rise
to
more
elaborate
schemes.
But,
despite
these
risks,
the
potential
upside
in
such
a
market
could
be
enormous.

Note:
The
views
expressed
in
this
column
are
those
of
the
author
and
do
not
necessarily
reflect
those
of
CoinDesk,
Inc.
or
its
owners
and
affiliates.