From "burning money" to industrial ecology: Web3 is walking through the old path of the Internet

Author:jiayi Add one

To those who are confused during the period of blockchain change

Some people say that Crypto is Ponzi, a bubble, and a speculative game destined to return to zero.

Some people also say that Web3 is a revolution, a paradigm leap, and a new stage of civilization above the continuation of technology.

Two voices, one narrative tearing scene.

Don't rush to take a team, let me give you a simpler conclusion first:

The underlying logic of business has not changed.

Whether it is from the portal to the App, or from the issuing coins to tell stories to competing with infrastructure, behind the prosperity, we are actually following the same old path - but this time, the narrative is surrounded by agreements and capital is hidden in the code.

Looking back at the past decade, China's Internet path is very clear: concept-driven and financing are running on user growth; subsidies drive traffic and capital-driven growth; then layoffs, improve efficiency, and make profits; then platform transformation and technology reconstruction. Today's Web3 is also stepping on a similar development pace.

In the past year, the competition among the project parties has evolved into a competition competition using TGE and Airdrop as users. No one wants to fall behind, but no one knows how long this "user-changing" competition will last.

So, I wrote an article to try to dismantle those seemingly messy narratives into several more traceable stages.

You might as well follow the footsteps of history to see how Web3 has come to this day and where it may go.

1. Review of the development stage of the Internet industry: From

spreading coins to industrial collaboration

I believe most people are familiar with this history:

The Internet used to be a national carnival, with more than a dozen apps rushing to make you "free" every day. One mobile phone number can eat, take a taxi, cut your hair, and do massages, just like celebrating the New Year.

Today's Internet is a system project that has been running for most of the time: do you know which platform to buy the cheapest things on, and which app is the most efficient in which scene, the ecological pattern has long been established, and innovation is hidden in efficiency.

So I won't go into details, I will simply disassemble the four stages -reviewing these logics, which may better understand the path that Web3 is currently copying.

1. Narrative-driven, innovation stage (2010)

It was an era when trends were defined by "noun".

"Internet+" has become a master key. No matter what you are doing in medical care, education, travel, or local life, just by putting these three words into it, you can leverage hot money and attention. At that time, entrepreneurs were not in a hurry to make products, but first looked for tracks, created concepts, and wrote BP. What investors are chasing is not the income curve, but whether they can tell a story of "new enough, big enough, and imaginative".

O2O, social e-commerce, and sharing economy, under the rotation of nouns, the project valuation soared, and the financing rhythm was dominated by the narrative rhythm. The core assets are not users, products, or data, but financing PPT that is smooth and worthy of trends.

This is also an era of "whoever stands first will have the opportunity." Verifying the product and running mode is the second step. Let’s first tell the story to the forefront before you are eligible to enter the arena.

2. Expansion of money and traffic competition stage (2010–2018)

If the previous stage was to rely on stories to gain attention, this stage was to rely on subsidies to seize the market.

From Didi and Kuai Taxi battle to Mobike and ofo's bicycle melee, the entire industry has fallen into a highly consistent approach: exchange capital for scale, price for habits, and losses for entry. Whoever can invest one more round of financing will be qualified to continue to expand; whoever can get the next round of investment will be able to leave a place on the battlefield.

This is a period of putting "snatching users" above everything. Experience, efficiency, and product barriers are all in the back row. The key is - who can be the first to become the default choice for users.

As a result, the subsidy war became more and more intense, and low prices almost became the standard: you can take a taxi for less than 5 yuan, scan the code to ride a bike for a cent, and offline stores have App QR codes posted, waiting for you to have free meals, cut your hair, and do massages. It seems to be a popularization of services, but in fact it is a traffic battle controlled by capital.

This is not who has better products, but who can burn money better; it is not who can solve the problem, but who "encircle" faster.

In the long run, this also laid the foundation for subsequent refined transformation - when users are bought, they must spend more effort to retain them; when growth is driven by external forces, it is destined to be difficult to close the loop.

3. Implementation, fine operation stage (2018–2022)

When the story is told for too long, the industry will eventually return to a realistic question: "How to implement after growth."

Since 2018, as the growth rate of mobile Internet users slowed down, the traffic dividend gradually faded, and the cost of acquiring customers continued to rise.

According to QuestMobile data, as of the end of September 2022, China's mobile Internet monthly active users were close to 1.2 billion, an increase of only about 100 million from 2018, which took nearly four and a half years, and the growth rate slowed down significantly. At the same time, the number of online shopping users reached 850 million in 2022, accounting for nearly 80% of the total number of netizens, and the user growth space tends to be saturated.

At the same time, a large number of "story-type" projects driven by financing are gradually withdrawing. O2O and the sharing economy are the areas with the most concentrated liquidation in this stage: projects such as Jiedian, Xiaolan Bicycle, and Wukong Travel have fallen one after another, and behind it is a complete set of growth models that are unconsistent and lack user loyalty have been eliminated by the market.

But it was also during this tide that a number of projects that really emerged were revealed. They have a common feature: they are not short-term popularity stimulated by subsidies, but through real urgent needs scenarios and system capabilities, the closed-loop construction of the business model is completed.

For example, Meituan has gradually built a complete service chain from ordering to fulfillment, from traffic to supply in the local life track, becoming a platform-based infrastructure; Pinduoduo has quickly penetrated users' minds in the sinking e-commerce market with its ultimate supply chain integration and operational efficiency; social networking is firmly controlled by Tencent, e-commerce is fully occupied by Alibaba, and games are concentrated in the hands of Tencent and NetEase.

Their commonality is not to "think further", but to run more steadily and calculate more clearly - they have completed the closed loop from traffic to value structurally, and truly lived into a sustainable product system.

At this stage, growth is no longer the only goal. Whether growth can be transformed into structural retention and value precipitation is the real watershed that determines the life and death of the project. Extensive expansion is eliminated at this stage, and what is really left behind are systemic projects that can build a positive feedback mechanism between efficiency, products, and operations.

This also means that the narrative-driven era has passed, and business logic must have the ability to "close the loop": it can retain users, hold on to models, and run through structures.

4. Basic ecological formation, and the stage of seeking opportunities for technological change (2023 to present)

After the leading projects came out, the survival problem has been solved by most projects, and the real differentiation has just begun.

The competition between platforms is no longer a competition for users, but a competition of ecological capabilities. As the leading platforms gradually close their growth paths, the industry has entered a cycle of stable structure, concentrated resources, and coordinated capabilities. A true moat does not necessarily mean that a certain function is leading, but whether the internal circulation of the system is efficient, stable and self-consistent.

This is a stage for a system-based player. The pattern is basically set. If new variables want to break through, they can only find gaps and technical breakpoints at the edge of the structure.

At this stage, almost all high-frequency urgently needed tracks have been demarcated by giants. In the past, they could still rely on "going online early and burning money quickly", but now, growth must be embedded in the system capabilities. Platform logic has also been upgraded: from multi-product stacking to ecological flywheels, from single-point user expansion to organization-level collaboration.

Tencent connects WeChat, mini programs, and advertising systems to build a closed loop of internal circulation; Alibaba reorganizes Taotian, Cainiao, and DingTalk to horizontally open up commercial links, trying to regain efficiency leverage. Growth is no longer based on the addition of new users, but on the structural compound interest brought by the system's own operation.

As user paths, traffic entrances, and supply chain nodes are gradually controlled by several leading platforms, the industrial structure has begun to become closed, leaving more and more limited space for new entrants.

But it is also in this structurally converged environment that ByteDance has become an alien.

It did not try to compete for resource positions in the existing ecosystem, but overtook the curve, and reconstructed the content distribution logic using the recommendation algorithm based on the underlying technology. Against the background that mainstream platforms still rely on social relationship chains for traffic scheduling, Byte builds a distribution system based on user behavior, thereby establishing its own user system and business closed loop.
This is not an improvement to the existing pattern, but a technological breakthrough to bypass existing paths and rebuild the growth structure.

The emergence of bytes reminds us: even if the industrial structure tends to solidify, as long as there are structural faults or technical gaps, new players may still appear. But this time, the path is narrower, the pace is faster and the requirements are higher.

Today, Web3 is in a similar critical range.

2. The current stage of Web3: "parallel mirror" of Internet evolution

logic

If the rise of Web2 is an industrial restructuring driven by the mobile Internet and platform models, then the starting point of Web3 is a system reconstruction based on decentralized finance, smart contracts and on-chain infrastructure.

The difference is that Web2 builds a strong connection between the platform and the user; while Web3 tries to break down and distribute "ownership", and reorganize new organizational structures and incentive mechanisms on the chain.

But the underlying motivation has not changed: from story pull to capital drive; from user competition to ecological flywheel, the path Web3 has gone through is almost the same as Web2.
This is not a simple comparison, but a parallel reproduction of the path structure.

But this time, the token incentives are burned; the modular protocol is built; the TVL, active address and airdrop points list are rolled out.

We can roughly divide the development of Web3 into four stages:

1. Concept-driven stage - Coin issuance drive: story comes first, capital influx

If the early days of Web2 relied on the "Internet+" story template, then the opening remarks of Web3 are written in Ethereum's smart contract.

In 2015, Ethereum was launched, and the ERC-20 standard provided a unified interface for asset issuance, making "issuing coins" a basic capability that all developers can call. It does not change the essential logic of financing, but it greatly reduces the technical threshold for issuance, circulation and incentives, thus making "technical narrative + contract deployment + token incentives" a standard template for the early stages of Web3 entrepreneurship.

The explosion at this stage is driven more by the technology layer -blockchain empowers entrepreneurs in a standardized form for the first time, turning asset issuance from a licensing system to open source.

There is no need for a complete product, no mature users. As long as there is a white paper that can explain the logic of the blockchain 1.0 era driven by blockchain technology, an attractive token model, and a runnable smart contract, the project can quickly complete the closed loop from "idea" to "financing".

The early innovation of Web3 was not because of how smart the project was, but because the popularity of blockchain technology brought imagination in the era of blockchain 1.0.

Capital has also quickly formed a "betting mechanism": whoever gets on the new track first, whoever starts the market first, and whoever plays the narrative first, may get exponential returns.

This has spawned an "unprecedented capital efficiency": between 2017 and 2018, the ICO market experienced unprecedented explosive growth, becoming one of the most controversial and iconic financing stages in blockchain history.

According to CoinDesk, the total ICO financing amounted to US$6.3 billion in the first quarter of 2018, exceeding 118% of the total financing in 2017. Among them, Telegram's ICO raised US$1.7 billion, and EOS raised US$4.1 billion in one year, setting a historical record.
In the window period of "Everything can be blockchain" - as long as you put a label and put out a narrative, even if the implementation path is not clear, it can prepare the future valuation imagination. DeFi, NFT, Layer1, GameFi... Every hot word is a "window". The project valuation soared to hundreds of millions of dollars, or even billions before the tokens were circulated.

This is an opportunity to enter the capital market at a low threshold, and it has gradually formed a relatively clear exit path: the primary market is in advance, the secondary market stimulates emotions through narrative and liquidity, and then completes exit during the window period.

Under this mechanism, the core of pricing is not how much the project has been done, but who is earlier in position, who is better at creating emotions, and who has mastered the window to release liquidity.

It is essentially a typical feature of the early new paradigm of blockchain -the infrastructure has just been implemented, the cognitive space has not yet been filled, and the price is often formed before the product itself.

Web3's "concept bonus period" comes from this: value is defined by narrative, and exit is driven by emotions. Projects and capital are in a liquidity-driven structure, looking for certainty to each other.

2. Money-burning expansion stage - projects are crowded, and the battle for users is starting in full swing

All changes begin with a "most expensive letter of thanks in history".

In 2020, Uniswap airdropped 400 UNI tokens to early users, each airdrop worth about $1,200 at the time. The project party calls it "feedback", but the industry understands another word: the optimal solution to cold start.

At first it was just a gesture of "giving back to the community", but it accidentally opened the Pandora's box in the industry: the project party discovered that sending coins can be exchanged for loyalty, traffic, or even a community illusion.

Airdrops have changed from options to standard configuration.

Since then, the project party has suddenly realized that almost all new projects have used "airdrop expectations" as the default module for cold start. In order to show the market its prosperity ecosystem, using tokens to purchase user behavior, the three-piece set of points systems, interactive tasks, and snapshot have become a must-have.

A large number of projects are trapped in a growth illusion of “incentive-driven rather than value-driven”.

The data on the chain soared, and the founder was immersed in the illusion of "success": before TGE there were millions of users and hundreds of thousands of daily active users; as soon as TGE passed, the scene cooled instantly.

I still remember that in 2024, Fusionist's on-chain DAU once exceeded 40,000, but just after the announcement of Binance Coin Listing, the on-chain activity almost went straight to zero.

I don't deny airdrop. The essence of airdrop is the behavior of purchasing users, and it is an effective way to attract new funds without consuming financing. But its marginal effect is rapidly decaying. A large number of projects have fallen into the formulaic cycle of airdrop new recruitment. After attracting new recruitment, will your business scenarios and product capabilities be able to retain their capabilities? This is the only correct solution to the real return of value and the project party to survive. (Note: Projects that survive by relying on fund manipulation of level 2 are not within the scope of this discussion)

After all, bribing users to purchase is not the core of growth. It is not based on business in even scenarios, and airdrops ultimately consume the interests of the project party or users. When there is no closed loop in the business model, token becomes the only reason for users to act. Once the TGE is completed and the reward is terminated, the user will naturally turn around and leave.

3. Business verification stage - real scene, narrative verification

I often advise the project party to think clearly before throwing coins:

What kind of problem are you solving for which scenario? Who is the most critical contributor? After TGE, will this scenario still hold true, and will anyone still stay and use it?
Many project parties answered me that they can quickly achieve user growth through token incentives. I would ask, "What?"
Usually at this time, the project party will be silent and smile: "Oh..."
Then, there is nothing.

If you just want to exchange "incentives" for a wave of interaction, then you might as well send Meme directly. At least everyone knows that this is an emotional game and there is no need to bear the expectation of staying.

Finally, everyone began to look back: what kind of structure do these traffic, interaction, and coins sprinkled lead to? At the end of the money, I turned out to be a clown.

So the keywords at this stage have become: usage scenarios, user needs, and product structure. Only by relying on real scenes and clear structures can we find our own growth path.

To be honest, I personally don’t like Kaito’s business logic – it is more like an ultimate form of “bribery culture”, and what is implicitly implicit is the high utilization of incentive mechanisms, and it can even be said to be a repackaging of the relationship between the platform and the content.

But it is undeniable that Kaito succeeded. It is a practical business scenario. The expectations before TGE became the accelerator for the project to occupy the market, and after TGE, they continued to play music and dance. Because Kaito provides a business logic that allows KOLs to expose the project, the wool comes from the pigs and the key figures are still retained in the Kaito platform itself.

Although many KOLs may be aware that this logic will eventually backfire itself, in a structural opportunistic market, "strategic compliance" becomes the most rational choice.

At the same time, I am also very pleased to see that more and more projects are beginning to build around real scenarios, whether it is transactions, DeFi, or basic capabilities such as identity systems.

Teams that select the right direction at the right time and polish out real products are gradually taking root and sprouting through the positive cycle capabilities of vertical scenes - from use to retention, from retention to monetization - to build their own industrialization path.

The most typical example is exchange-type products: they convert high-frequency demand into structural traffic, and then complete the closed loop through asset, wallet and ecological linkage, and walk out of the "structural evolution line" in Web3 projects.

4. Structural precipitation period - platform setting, variable shrinkage

A truly positive business scenario is to get the entry ticket to the industry by getting the right to speak.

For example, Binance started with transactions and gradually opened up liquidity, asset issuance, on-chain expansion and traffic entrances to form a full-process scheduling system from the off-chain to the chain; Solana precipitates the feedback structure of the community, developers and tool systems through light asset detonation and underlying performance.

This is a cycle in which the industry shifts from project experiments to structural precipitation - no longer competing for speed, but starting to compete for the integrity of the system.

But this does not mean that the new project has lost its chance of breaking through. The projects that can really come out are not those with the largest voice or the widest narrative, but can be "compensated" in structure or "reconstructed" in model.

Do you still remember ByteDance in the mobile Internet era?

I believe that in the post-blockchain era, a new AI-powered cycle is coming. There will definitely be projects like ByteDance, which can quickly run through the structure under the correct incision and complete industrial breakthroughs and self-closing loops.

The platformization stage of Web2 left behind giants and flywheels, and also left behind gaps such as ByteDance; the structural period of Web3 may also give birth to the next variable project that uses the correct structure to "come out of the edge".

Imagine a little bit that if it is infrastructure, it should be infrastructure built for the native AI era, promoting the development of technological products in this era, just like the mission of ether in the blockchain 1.0 era mentioned above;

If it is a DAPP, it must be an application that uses AI to break the original user threshold (web3 user threshold is too high) and breaks the original business order.

If someone asks me, how will the future of web3 develop?

I would say, “Just like everything can add the Internet, its real potential is to reconstruct usage paths, lower the threshold for collaboration, and create a group of products and systems that can really be driven.