Written by: Kyrian Alex

Compiled by: TechFlow

existBlockchainAcross the space, narratives have consistently proven to be a powerful driver of attention, investment, and growth. The ever-changing landscape has seen the rise and fall of a variety of themes, from ICOs to DeFi and NFTs, leaving behind important lessons for investors, founders, and enthusiasts.

By firstTokenThe evolution of the narrative can be observed in the transition from ICOs to launch platforms. The ICO boom of 2017 promised a revolution in venture capital, but many projects failed to maintain their momentum. As the industry matures, attention turns to more sophisticated investment mechanisms.exchangeThese narrative shifts highlight the dynamic nature of the Web3 space, where trends emerge quickly, peak, and then fade away.

The narrative sweeps across thecryptocurrencyLet’s look at some recent examples that illustrate this phenomenon.

First, we experienced Bitcoin DeFi. Bitcoin is not usually associated with experimentation, but the introduction of Ordinals, which represent Bitcoins through unique identifiers, opened the door to complex DeFi applications. BRC-20 tokens built on Ordinals are designed to mimic the fungibility of ERC-20 tokens through unique features, potentially paving the way for DeFi on Bitcoin, including fractional ownership, smart contracts, and more.contract, decentralized exchanges, lending platforms, and insurance platforms. But as we often say, cryptocurrencyCommunityThe attention span of a product is less than two months. Only the earliest users/developers actually profit from it.

Then we had the LSD-Fi craze. LSDs dominated the DeFi space due to Ethereum's transition to PoS. It provided users with staking rewards without locking up assets, and LSDfi protocols like Lybra Finance and Pendle Finance built on this concept to expand the ecosystem by increasing liquidity and reducing risk. The annualized yield soared. But guess what? After the initial speculators entered, the annualized yield dropped sharply, and the hype faded.

We saw the same thing with the Memecoin craze. Tokens like $PEPE and $BEN surged on social media, the popularity of NFTs, and the desire for quick profits. Even though people knew these tokens were risky and highly volatile, they just wanted to make 100x in the shortest possible time. The hype was due to the relative ease of buying and the potential for good profits in a stagnant market. Well, like all meme seasons known to man, the hype ended abruptly with a slew of scandals, scams, hacks, and pushback.

Oh, how can we forget the recent popularity of Chatgpt’s Artificial Intelligence AI What about coin hype? What drives the hype? Is it speculation of progress? Is it transformative potential? Or is it speculative rebranding?

Or can we forget the so-called VR revolution? Rumors about Apple VR headsets and Meta’s makeover sparked interest and speculation about the Metaverse. Tokens like Decentraland (MANA), The Sandbox (SAND), Axie Infinity (AXS), and Render Network (RNDR) have gained many times over amidst these rumors. Old players have profited, and newcomers have lost.

Narratives have their limitations.

They can bring a subject to the forefront, but they cannot guarantee long-term success.As a result, founders are often faced with a dilemma: the challenge of getting the timing right within a fluctuating narrative cycle.

Note that most of the projects I mentioned earlier were very good projects, but the narrative that drove their price and popularity ended up hurting them. Therefore, founders try to live with the fact that they are earning enough revenue/profit to cover operating costs during a down market. Because even a bear market can expose the fragility of projects that were caught up in the attention frenzy, leading to a reduced user base and weakened market prospects.

The Web3 investment space resembles uncharted territory, where pioneers must rely on a mix of foresight and calculated risk.

For founders navigating the Web3 landscape, several survival strategies have emerged:

1. Understanding the narrative: It is critical to distinguish between investor-driven narratives and themes with deep potential. Founders should determine whether they are getting in early on a narrative or riding the wave of an existing narrative.

2. Early Action: Early mover advantage often means months of investor education and persuasion. This double-edged sword is both a boon and a challenge for founders seeking support and investment.

3. Flexible survival: Survival in an environment where many of your peers are likely to fail is a remarkable achievement in itself. Prudent financial management designed to weather the storm may be the key to long-term success.

4. Consumer concerns take precedence over capital: Prioritizing user engagement and iterating on your product based on consumer feedback before seeking investor capital is a smart strategy. Meeting consumer needs promotes more sustainable organic growth.

5. Identifying the Right Moment: Timing is critical; entering a collapsing theme or misinterpreting a short-term price rally as genuine consumer demand can lead to challenges in obtaining follow-on funding support.

The Dichotomy of DeFi

Once touted as a beacon of innovation, DeFi has now moved from inflated expectations to a more pragmatic stage of enlightenment. Despite the decrease in attention and usage, the potential user base remains relatively stable, indicating that many users are still actively engaged in the space.

This dichotomy raises a key question: Can DeFi maintain its relevance outside of the volatility of market narratives?

The answer depends on the ability of the DeFi ecosystem to address the challenges that emerged during the initial hype phase. This includes addressing high transaction fees, network congestion, andSafetyVulnerabilities and other issues.

We must then turn our focus to tangible practicality and real-world use cases.

DeFi projects that can demonstrate concrete value propositions, solve real problems, and provide sustainable financial products are likely to find a more stable footing. A balance needs to be struck between innovation and compliance. We must shift the transition from speculative trading tokens to products that provide real financial services.

The current emphasis on ownership and exclusivity in the Web3 ecosystem can be compared to free content access in the early days of the Internet. The shift toward ownership comes at a cost, both in terms of monetary investment and user engagement.

Emerging topics such as DeFi, NFTs, and Web3 games continue to be unfolding stories, each with its own unique trajectory. The shift from relying solely on investor capital to facilitating consumer engagement is a critical shift that founders must embrace. It is no longer enough to chase trends, founders must build products that solve real needs and provide real value.

In seeking to create value while retaining user attention, models that combine a “free” experience and ownership (like Reddit) offer a potential path forward.

In the Web3 investment space, a new paradigm is emerging, one that places a higher value on sustainability, user engagement, and meaningful differentiation. Unlike the frenzied ICO era, investors are now scrutinizing projects’ long-term viability and their ability to withstand market volatility — caused by rising market rates and drying up liquidity. The concept of “survival of the fittest” applies not only to the projects themselves, but also to investors and entrepreneurs who adapt and evolve with the tide of change.

As the Web3 investment space continues to evolve, the challenge lies in striking a delicate balance between risk and reward. Correctly timing investments within narrative cycles, understanding a project’s intrinsic value beyond speculative hype, and fostering user engagement are the cornerstones of success. Investors, founders, and enthusiasts must navigate this complex space with long-term potential in mind, by learning from past experiences and commitment to a more sustainable future.

in conclusion

The Web3 investment space is a complex landscape of narrative, attention, capital, and survival. It is a space where trends rise and fall, and hype can both propel projects forward and extinguish them. The definition of success depends on a combination of foresight and adaptability. As the industry matures, the focus should shift from short-term price action to long-term value creation. The path ahead requires a strategic approach. As such, builders, creators, and users alike should understand the changing dynamics and remain steadfast in their commitment to innovations that stand the test of time.

The article comes from the Internet:Focus on long-term value: How should crypto projects navigate narrative ups and downs?