Let Grok analyze the first principles behind the gap in the technology diffusion model. Grok said that the explanation behind the gap is related to behavioral economics. The different objective functions behind early adopters and early masses. Early adopters: insensitive to losses, with a reference point to future possibilities, willing to take high risks for innovative visions. They are 'risk averse', driven by potential returns (such as social status, technological leadership). Early majority: high loss avoidance, reference point is the current solution, and decision-making is based on reducing uncertainty. They need innovation to provide clear value (such as cost savings, efficiency improvements) and reduce psychological risks through social proof. This perspective is quite interesting, which also explains why both the 2017 ICO Summer and the 2021 DeFi Summer were accompanied by extremely high on chain profits and benefits. It seems that ETH still needs to put more effort into safety and ease of use to enter the mass market. Currently, most on chain applications are not yet complete products. The key to driving ETH to win in the mass market is the popularity of unprofitable applications such as stablecoins and U-cards. However, at the same time, these two application directions may not be either or, but rather mutually reinforcing. Here is Grok's answer. What is the innovation diffusion gap theory? The Diffusion of Innovations theory, proposed by Everett Rogers in 1962, describes the process of how new products, technologies, or ideas are disseminated and adopted in social systems. According to this theory, adopters can be divided into five categories based on the time of adoption: Innovators (2.5%): Dare to take risks and be willing to try new technologies. Early Adopters (13.5%): Influential, willing to accept innovation but more cautious. Early Majority (34%): Prudent, adopting only after seeing actual results. Late Majority (34%): Conservative, requiring social pressure or widespread adoption before acceptance. Laggards (16%): resistant to change, usually adopted last. The Chasm theory, proposed by Geoffrey Moore in "Crossing the Chasm" (1991), points out that there is a significant "Chasm" between early adopters and early majority in the process of innovation diffusion. This gap is a key obstacle for innovation to enter mainstream markets (large-scale commercialization) from early markets (niche, experimental markets). Many innovations fail due to their inability to bridge this gap after achieving early success. Why is there a gap? The emergence of the gap stems from fundamental differences in psychology, behavior, and needs between early adopters and early majority, leading to the rupture of innovation dissemination. The specific reasons include: Differences in motivation for adoption: Early adopters: attracted by the potential, uniqueness, or technological advantages of innovation, willing to take risks, and valuing "being the first". Early majority: More pragmatic, focusing on the practicality, reliability, cost-effectiveness, and improvement of existing solutions in innovation. They need to see clear evidence of value and social recognition. Due to the fact that the early market (innovators+early adopters) only accounts for about 16%, while the mainstream market (early majority+late majority) accounts for 68%, innovation must shift from "early adopters" to "pragmatists", but the conflicting needs of the two lead to communication stagnation. The fragmentation of social networks: Early adopters are usually opinion leaders, active in technology or innovation circles, and have a wide range of information sources. In the early days, most relied on localization and mainstream social networks (such as industry standards or peer recommendations), and were skeptical of the cutting-edge experiments of early adopters. This difference in social structure makes it difficult for innovation to "spread" from the circle of early adopters to the mainstream group. Insufficient product maturity: In the early market, innovation was often "crude", with incomplete functionality, suitable for tech enthusiasts to try and make mistakes. In the early days, most required a 'Whole Product', including support services, compatibility, training, etc. If the product does not reach this stage, mainstream users will refuse to adopt it due to high risk. Market positioning and communication issues: Early markets relied on vision driven marketing (such as "changing the world") to attract early adopters. In the early stages, most require specific and targeted value propositions to solve specific problems (such as "increasing efficiency by 20%"). If a company fails to adjust its marketing strategy, mainstream users will feel that innovation is not related to their own needs. Analyzing the Gap Using First Principles First principles require breaking down the problem into the most fundamental truths or assumptions, and reconstructing the answer from these foundations. We will break down the gap theory into the most fundamental driving factors and search for underlying theories to explain the gap. 1. Breaking down the essence of the divide The core drivers of human behavior: people's decisions when facing new things are driven by perceived value (benefit cost) and risk aversion. Obstacles to innovation adoption: Adopting innovation requires changing existing habits, learning new skills, or taking on uncertainty, which increases psychological and practical costs. Group differences: Different groups have different perception thresholds for value and risk, leading to stage differentiation in adoption behavior. The essence of the divide: The significant gap in value risk perception between early adopters and early majority leads to a disconnect in innovation dissemination between the two. 2. Basic Theory: "Loss Avoidance" and "Reference Point Dependence" in Behavioral Economics Starting from first principles, the underlying theory of explaining the divide can be summarized as the following principles in behavioral economics: Loss Aversion: Proposed by Kahneman and Tversky's Prospect Theory, it states that people are much more sensitive to losses than to equivalent returns (the psychological weight of losses is about twice that of returns). In the early stages, most people were more sensitive to the potential risks of innovation, such as time, money, and failure, so stronger value evidence was needed to offset the risks. Reference Dependence: People's decisions are based on the current state (reference point). The reference point for early adopters is the "technological frontier" and they are willing to pay a premium for potential; In the early days, most of the reference points were "existing solutions", which were only adopted when innovation significantly outperformed the status quo. Network effects and social proof: Early decisions were mostly driven by "credible signals" in social networks (such as peer recommendations or industry standards). In the early market, insufficient social proof led mainstream users to be cautious. 3. Using behavioral economics to explain the gap Early adopters: insensitive to losses, with a reference point to future possibilities, willing to take high risks for innovative visions. They are 'risk averse', driven by potential returns (such as social status, technological leadership). Early majority: high loss avoidance, reference point is the current solution, and decision-making is based on reducing uncertainty. They need innovation to provide clear value (such as cost savings, efficiency improvements) and reduce psychological risks through social proof. The formation of a divide: Innovation in the early market only needs to attract risk seekers, without the need to improve products or gain widespread social recognition. But to enter the mainstream market, innovation must meet the needs of loss averse individuals (complete products, clear value, low risk), which requires significant resource investment and strategic adjustments. Many companies have failed to overcome this transformation, resulting in communication failures. 4. Derive strategies to address the gap Based on the first principles of behavioral economics, the key to bridging the gap is to reduce the perceived risk of the early majority and amplify the perceived value: Niche Targeting: Select a specific user group, customize to meet their needs, quickly establish successful cases, and create social proof. Provide a complete product: Ensure that the product includes support services, compatibility, etc., reducing learning and implementation costs. Adjust marketing strategy: shift from vision driven to data-driven, emphasize specific benefits (such as "saving 30% costs"), and eliminate uncertainty. Utilizing opinion leaders: Leveraging the influence of early adopters to bridge the social networks of mainstream users. summarize The gap theory of innovation diffusion describes the communication gap between early adopters and early majority, stemming from differences in their psychology and needs. The existence of the gap is due to the early majority of loss avoidance and reliance on social proof, which required innovation to reach higher maturity and clear value, while early markets did not require these conditions. From a first principles analysis, loss avoidance and reference point dependence in behavioral economics are the fundamental theories that explain the gap, revealing the core drivers of human decision-making in terms of risk and value perception.