From story-driven token issuance, to subsidy-driven user acquisition, and then to validating real scenarios, ultimately leading to ecological structuring.
Written by: Jiayi
Some say that crypto is a Ponzi scheme, a bubble, a speculative game destined to go to zero.
Others say that Web3 is a revolution, a paradigm shift, a new stage of civilization built on technological continuity.
Two voices, a scene of narrative fragmentation.
Not rushing to take sides, let’s first present a more straightforward conclusion:
The underlying logic of business has not changed.
Whether it’s the transition from portals to apps in Web2, or from issuing tokens to building infrastructure in Web3, behind the prosperity lies the same old path—only this time, the narrative is wrapped in protocols, and capital is hidden in the code.
Looking back over the past decade, the trajectory of the Chinese internet is quite clear: concept-driven, financing outpacing user growth; subsidies driving traffic, capital-driven growth; followed by layoffs, efficiency improvements, and profitability; then platform transformation and technological restructuring. Today’s Web3 is also following a similar development rhythm.
In the past year, competition among projects has evolved into a competition arena using TGE and Airdrop to acquire users. No one wants to fall behind, but no one knows how long this "user exchange" competition will last. Therefore, I write this article in an attempt to break down those seemingly chaotic narratives into a few more traceable stages.
Let’s follow the footprints of history to see how Web3 has come to today and where it might head next.
1. Review of the Development Stages of the Internet Industry: From Token Issuance Expansion to Industrial Collaboration
Most people are likely familiar with this history:
The early internet was a national carnival, with dozens of apps vying to let you "get something for nothing." A single phone number could be used for dining, hailing a ride, getting a haircut, or enjoying a massage, like celebrating the New Year.
Today’s internet, however, is a system engineering project that has already completed more than half of its journey: you know where to buy the cheapest items, which app is most efficient in which scenario, and the ecological pattern has long been established, with innovation hidden within efficiency.
So, without further ado, let’s simply break down four stages—reviewing these logics may help better understand the path that Web3 is currently replicating.
1. Narrative-Driven, Mass Innovation Stage (Before 2010)
It was an era defined by "nouns" that set trends.
"Internet +" became the universal key; no matter if you were in healthcare, education, transportation, or local living, as long as you attached those three words, you could leverage hot money and attention. Entrepreneurs at that time were not in a hurry to create products; instead, they first sought out tracks, built concepts, and wrote business plans. Investors were not chasing revenue curves but rather whether a "sufficiently new, large, and easy to imagine" story could be told.
O2O, social e-commerce, sharing economy—under the rotation of these terms, project valuations soared, and the pace of financing was dominated by the rhythm of narratives. The core asset was not users, products, or data, but a financing PPT that told a smooth story fitting the trend.
This was also an era of "whoever positions first has the opportunity." Validating products and running through models was the second step; first, you had to tell the story on the wind, to qualify for the arena.
2. Money Burning Expansion, Traffic Competition Stage (2010–2018)
If the previous stage relied on stories to gain attention, this stage was about hard subsidies to seize the market.
From the ride-hailing war between Didi and Kuaidi to the bike-sharing battle between Mobike and Ofo, the entire industry fell into a highly consistent strategy: using capital to exchange for scale, using price to change habits, and using losses to gain entry. Whoever could burn through a round of financing had the right to continue expanding; whoever could secure the next round of investment could maintain their position on the battlefield.
This was a period where "capturing users" was placed above all else. Experience, efficiency, and product barriers were pushed to the back; the key was—who could first become the default choice for users.
Thus, the subsidy war intensified, with low prices almost becoming the standard: rides costing less than 5 yuan, bike rides for a penny, offline stores plastered with app QR codes, waiting for you to eat, get a haircut, or enjoy a massage for free. It seemed like service was being popularized, but in reality, it was a traffic competition controlled by capital.
It was not about whose product was better, but who could burn more money; not about who could solve problems, but who could "enclose land" faster.
In the long run, this also laid the foundation for the subsequent refined transformation—when users are bought, more effort must be spent to retain them; when growth relies on external forces, it is destined to be difficult to self-close the loop.
3. Landing, Refined Operation Stage (2018–2022)
When stories are told for too long, the industry will eventually return to a real question: "After growth, how to land?"
Starting in 2018, as the growth rate of mobile internet users slowed, the traffic dividend gradually faded, and customer acquisition costs continued to rise.
According to QuestMobile data, by the end of September 2022, the number of monthly active users of mobile internet in China approached 1.2 billion, an increase of only about 100 million since 2018, taking nearly four and a half years, with growth rates significantly slowing. Meanwhile, the number of online shopping users reached 850 million in 2022, accounting for nearly 80% of the total number of internet users, indicating that user growth space was nearing saturation.
At the same time, many "story-driven" projects that relied on financing gradually exited the stage. O2O and the sharing economy were the areas most concentrated in this phase of reckoning: projects like Street Power, Xiaolan Bike, and Wukong Travel fell one after another, behind which was a whole set of growth models that lacked coherence and user loyalty being eliminated by the market.
However, it was also in this tide of retreat that a batch of truly successful projects emerged. They shared a common characteristic: not driven by subsidies to stimulate short-term heat, but through real demand scenarios and systemic capabilities, they completed the construction of a closed commercial model.
For example, Meituan gradually built a complete service chain from ordering to fulfillment, from traffic to supply in the local living track, becoming a platform-based infrastructure; Pinduoduo rapidly penetrated user minds in the sinking e-commerce market with extreme supply chain integration and operational efficiency; social networking was firmly controlled by Tencent, e-commerce was fully occupied by Alibaba, and gaming was concentrated in Tencent and NetEase.
Their commonality was not that they "thought further," but that they ran more steadily and calculated more clearly—structurally completing the closed loop from traffic to value, truly becoming a sustainable product system.
In this stage, growth was no longer the only goal; the ability to convert growth into structural retention and value accumulation became the true dividing line determining the life and death of projects. Extensive expansion was eliminated in this stage, and what remained were those systematic projects that could build a positive feedback mechanism between efficiency, product, and operation.
This also meant that the era of narrative-driven business had passed, and business logic must possess the ability to "self-close the loop": retaining users, sustaining models, and running through structures.
4. Ecological Basic Structuring, Technological Transformation Seeking Opportunities Stage (2023 to Present)
After leading projects emerged, the survival issues of most projects have been resolved, and the real differentiation has just begun.
Competition between platforms is no longer a user acquisition battle but a competition of ecological capabilities. As leading platforms gradually close off growth paths, the industry enters a period of structural stabilization, resource concentration, and collaborative capability dominance. The true moat is not necessarily a leading function but whether the internal circulation of the system is efficient, stable, and self-consistent.
This is a stage belonging to systematic players. The pattern is basically set; if new variables want to break through, they can only seek gaps at the structural edges and technological breakpoints.
In this stage, almost all high-frequency essential tracks have been delineated by giants; in the past, one could still compete for position by "going online early and burning money quickly," but now, growth must be embedded within systemic capabilities. The platform logic has also been upgraded: from multi-product stacking to ecological flywheels, from single-point user expansion to organizational-level collaboration.
Tencent integrates WeChat, mini-programs, and advertising systems to build an internal circulation closed loop; Alibaba reorganizes Taotian, Cainiao, and DingTalk, horizontally connecting commercial chains, attempting to regain efficiency leverage. Growth no longer relies on new users but on the structural compounding brought about by the system's self-operation.
As user paths, traffic entry points, and supply chain nodes are gradually controlled by a few leading platforms, the industrial structure begins to trend towards closure, leaving less and less space for new entrants.
However, it is also in this structurally converging environment that ByteDance has become an outlier.
It did not attempt to compete for resource positions within the existing ecology but instead took a shortcut, reconstructing the content distribution logic from the ground up using recommendation algorithms. In a context where mainstream platforms still rely on social relationship chains for traffic scheduling, ByteDance built a distribution system based on user behavior, thereby establishing its own user system and commercial closed loop.
This is not an improvement of the existing pattern but a technological breakthrough that bypasses existing paths and rebuilds growth structures.
The emergence of ByteDance reminds us: even if the industrial pattern tends to solidify, as long as there are structural fractures or technological gaps, new players may still emerge. However, this time, the path is narrower, the rhythm is faster, and the requirements are higher.
Today, Web3 is in a similar critical interval.
2. Current Stage of Web3: A "Parallel Mirror" of Internet Evolution Logic
If the rise of Web2 was completed through the push of mobile internet and platform models, then the starting point of Web3 is a systematic reconstruction based on decentralized finance, smart contracts, and on-chain infrastructure.
The difference is that Web2 built strong connections between platforms and users; while Web3 attempts to break and distribute "ownership" and reorganize new organizational structures and incentive mechanisms on-chain.
But the underlying driving force has not changed: from story-driven to capital-driven; from user competition to ecological flywheel, the path Web3 has experienced is almost identical to that of Web2.
This is not a simple comparison but a parallel reproduction of path structures.
Only this time, what is being burned is token incentives; what is being built are modular protocols; what is being competed for are TVL, active addresses, and airdrop scoreboards.
We can roughly divide the development of Web3 to date into four stages:
1. Concept-Driven Stage—Token Issuance Driven: Story First, Capital Flows In
If the early Web2 relied on the "Internet +" story template, then the opening of Web3 is written in the smart contracts of Ethereum.
In 2015, Ethereum went live, and the ERC-20 standard provided a unified interface for asset issuance, making "token issuance" a basic capability that all developers could call upon. It did not change the essential logic of financing but greatly lowered the technical threshold for issuance, circulation, and incentives, thus making "technical narrative + contract deployment + token incentives" the standard template for early Web3 entrepreneurship.
The explosion of this stage was more driven by technological factors—blockchain empowered entrepreneurs for the first time in a standardized form, allowing asset issuance to move from a permissioned model to an open-source model.
No need for a complete product, no need for mature users; as long as there is a white paper that can clearly explain the logic of the blockchain 1.0 era driven by blockchain technology, an enticing token model, and a runnable smart contract, the project can quickly complete the loop from "idea" to "financing."
The early innovations of Web3 were not due to how smart the projects were, but because the popularization of blockchain technology brought the imagination of the blockchain 1.0 era.
Capital also quickly formed a "betting mechanism": whoever first positions themselves in a new track, whoever first launches, and whoever first spreads the narrative has the potential to achieve exponential returns.
This gave rise to an "unprecedented capital efficiency": between 2017 and 2018, the ICO market experienced explosive growth like never before, becoming one of the most controversial and iconic financing stages in blockchain history.
According to CoinDesk data, in the first quarter of 2018, the total amount raised through ICOs reached $6.3 billion, exceeding 118% of the total financing amount for the entire year of 2017. Among them, Telegram's ICO raised $1.7 billion, while EOS raised $4.1 billion in just one year, setting a historical record.
During the window period of "everything can be blockchain"—as long as you attach a label and build a narrative, even if the landing path is not yet clear, you can prepay future valuation imaginations. DeFi, NFT, Layer1, GameFi… each buzzword is a "window." Project valuations soared to hundreds of millions, even billions, before tokens were even circulated.
This was an opportunity for low-threshold entry into the capital market, gradually forming a relatively clear exit path: early positioning in the primary market, stimulating emotions in the secondary market through narratives and liquidity, and then completing the exit during the window period.
In this mechanism, the core of pricing is not how much the project has done, but who positioned themselves earlier, who is better at creating emotions, and who controls the window for releasing liquidity.
It is essentially a typical characteristic of the early blockchain new paradigm—basic infrastructure has just landed, cognitive space has not yet been filled, and prices often form ahead of the product itself.
Thus, the "concept dividend period" of Web3 emerged: value is defined by narrative, and exit is driven by emotion. Projects and capital seek certainty from each other within a liquidity-driven structure.
2. Money Burning Expansion Stage—Projects Cluster, User Acquisition War Fully Launched
All changes began with "the most expensive thank-you letter in history."
In 2020, Uniswap airdropped 400 UNI tokens to early users, with each airdrop valued at about $1,200 at the time. The project team called it "giving back," but the industry understood it as another term: the optimal solution for cold starts.
Initially just a gesture of "giving back to the community," it inadvertently opened Pandora's box for the industry: project teams discovered that issuing tokens could exchange for loyalty, traffic, and even create a community illusion.
Airdrops transformed from an option into a standard configuration.
Since then, project teams have had a revelation, and almost all new projects have made "airdrop expectations" the default module for cold starts, using tokens to purchase user behavior to showcase their prosperous ecosystem, with point systems, interactive tasks, and snapshots becoming essential.
Many projects fell into a growth illusion driven by "incentives rather than value."
On-chain data skyrocketed, and founders immersed themselves in the illusion of "success": casually boasting millions of users and hundreds of thousands of daily active users before TGE; once TGE passed, the scene instantly cooled down.
I still remember in 2024, Fusionist's on-chain DAU once broke 40,000, but right after the Binance listing announcement, on-chain activity almost plummeted to zero.
I do not deny the existence of airdrops. The essence of airdrops is to purchase user behavior, an effective means of user acquisition without consuming financing funds. However, its marginal effect is rapidly diminishing. Many projects fell into a formulaic cycle of airdrop-driven user acquisition, and after acquiring users, whether your business scenario and product capabilities can retain them is the true return of value and the only correct answer for the project to survive. (Note: Projects that survive by manipulating the secondary market with funds are not included in this discussion.)
Ultimately, bribing users for their behavior is not the core of growth; without a commercial foundation even in scenarios, airdrops ultimately consume the interests of either the project team or the users. When the business model lacks a closed loop, tokens become the only reason for user actions. Once TGE is completed and rewards cease, users will naturally turn away.
3. Business Validation Stage—Real Scenarios, Narrative Validation
I often advise project teams to think clearly about one thing before issuing tokens:
What problem are you solving for which scenario? Who are the key contributors? After TGE, does this scenario still hold, and will anyone truly stay to use it?
Many project teams respond that they can quickly achieve user growth through token incentives. I always ask, "And then?"
Usually, at this point, the project team falls silent and smiles: "Oh…"
And then, there is no "and then."
If you only hope to exchange "issuing incentives" for a wave of interactions, you might as well just issue a meme. At least everyone knows this is an emotional game and does not need to bear the expectation of staying.
Finally, everyone began to look back: What kind of structure did all this traffic, interaction, and distributed tokens lead to? In the end, I found myself to be the clown 🤡.
So the keywords for this stage became: usage scenarios, user needs, product structure. Only by relying on real scenarios and clear structures can one carve out a growth path of their own.
To be honest, I personally do not like Kaito's business logic—it resembles an extreme form of "bribery culture," implying a high utilization of incentive mechanisms, and can even be said to be a repackaging of the relationship between platforms and content.
But it is undeniable that Kaito succeeded. It provided a real business scenario, where the expectations before TGE became an accelerator for the project to capture the market, and after TGE, the music continued. Because Kaito provided a way for KOLs to expose the project, with the benefits falling on the pigs while key figures remained on the Kaito platform itself.
Although many KOLs may be aware that this logic will ultimately backfire on themselves, in a structural opportunistic market, "strategic compliance" has become the most rational choice.
At the same time, I am also pleased to see that more and more projects are beginning to build around real scenarios, whether in trading, DeFi, or foundational capabilities like identity systems.
Those teams that choose the right direction at the right time and refine real products are gradually taking root and sprouting through the positive cyclical ability of vertical scenarios—from usage to retention, from retention to monetization—building their own industrial paths.
The most typical example is exchange-like products: they transform high-frequency demand into structural traffic, and then complete the closed loop through assets, wallets, and ecological interactions, walking the "structural evolution line" among Web3 projects.
4. Structural Deposition Period—Platform Stabilization, Variable Contraction
Truly positively cyclical business scenarios are the tickets for projects to gain industry voice.
For example, Binance started with trading and gradually connected liquidity, asset issuance, on-chain expansion, and traffic entry, forming a full-process scheduling system from off-chain to on-chain; Solana leveraged light assets to ignite and support underlying performance, establishing a feedback structure of community, developers, and tool systems.
This is a period where the industry shifts from project experimentation to structural deposition—not competing for speed, but beginning to focus on the completeness of the system.
However, this does not mean that new projects have lost their opportunity to break through. The projects that can truly emerge are not necessarily the loudest or those with the broadest narratives, but those that can "fill positions" structurally or "reconstruct" in their models.
Do you remember ByteDance during the mobile internet era?
I believe that in the post-blockchain era, a new cycle driven by AI is coming. There will definitely be projects like ByteDance that, leveraging AI, quickly run through structures and achieve breakthroughs and self-closure in the industry under the right angles.
The platformization phase of Web2 left behind giants and flywheels, as well as gap-breakers like ByteDance; the structural phase of Web3 may similarly give birth to the next variable project that "breaks through from the edge" using the correct structure.
If we imagine a bit, if it is infrastructure, it should be the infrastructure built for the native AI era, promoting the development of technological products in this era, just as the mission of Ethereum in the blockchain 1.0 era mentioned above;
If it is a DAPP, then it must be an application that uses AI to break the original user usage barriers (the user threshold for Web3 is too high) and disrupt the existing commercial order.
If someone asks me how the future of Web3 will develop?
I would say: "Just like everything can be added to the internet, its true potential lies in the post-blockchain era, reconstructing usage paths, lowering collaboration thresholds, and giving birth to a batch of truly operational products and systems."
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