Long the application layer, long Chinese entrepreneurs in WEB3!
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Long the application layer, long Chinese entrepreneurs in WEB3!
LONG CHINESE！
Navigating Web3 tides with focused insightsAt some point, Web3 Chinese entrepreneurial projects became synonymous with "shitcoins."
First-stage VC investors ask: Is the project founded by Chinese? If yes, then we should be cautious about investing, or at least lower our valuation.
Secondary market investors ask: Is this a Chinese project? If yes, then exit quickly—Chinese projects tend to rug-pull after making a quick profit.
When “Web3 has nothing to do with China” floods social media feeds, it ironically proves exactly the opposite: "Web3 is deeply connected to Chinese people."
At this lowest ebb for Chinese Web3 founders, we raise our banner clearly:
Bullish on application layer, bullish on Chinese entrepreneurs going global!
Bullish on Application Layer
Our long-time readers may recall an article we previously published titled “Crypto Heroes: The Chinese Gap,” in which we proposed a potentially “politically incorrect” view:
Whether in the internet or crypto space, Chinese or overseas Chinese are not particularly strong in building底层 infrastructure and protocols. Their advantage lies in the application layer—especially in areas tied closely to human nature, such as running casinos, building social platforms, e-commerce, gaming…
The success of Chinese internet companies in the application layer during the Web2.0 era seems to confirm this.
TikTok swept the globe, joining the elite club of apps with over 1 billion monthly active users within just four years. Genshin Impact topped global RPG mobile game revenues within six months of launch, with Mi Fans (military of miHoYo fans) spread across the world... In Web2.0, Chinese applications could “dominate globally.” The same potential exists in Web3.0.
In the crypto world, there's always been a prevailing mindset that prioritizes protocols over applications—likely influenced by the so-called “Fat Protocols” investment thesis.
In 2016, Joel Monegro, then at USV, published an essay titled “Fat Protocols,” arguing that value capture in blockchain differs from the traditional internet. During the internet era, most value was captured at the application layer—companies like Google, Facebook, Alibaba, Tencent—while foundational protocols like TCP/IP and HTTP generated little economic return.
Blockchain, however, flips this model: value concentrates at the shared protocol layer, with only a small portion flowing down to applications. Hence the terms “fat” protocols and “thin” applications—an idea that helped fuel the L1 (Layer 1) investment boom.
Looking back, Layer 1s were indeed the biggest alpha generators over the past few years.
But is the “Fat Protocol” theory eternal truth?
I don’t think so.
First, the relationship between protocol and application isn't necessarily “fat” vs. “thin,” but rather “before” and “after.” Infrastructure must mature first before applications can flourish.
Therefore, rather than saying Layer 1 captures more value, it’s more accurate to say L1s inherently require massive scale to ensure security—especially under PoS as the dominant consensus mechanism today.
As public chain competition intensifies, L1s will gradually become commoditized—the new beta. The real alpha will shift to the application layer.
The reason is simple: For Web3’s narrative to continue evolving, it needs far more users. "Going mainstream" becomes the next frontier.
Applications acquire users. Unlike protocols, which rely solely on fixed rules to capture value, applications can build user trust and strengthen engagement. Users follow applications—not protocols.
Once you have enough users, your application gains leverage over any single L1.
On one hand, applications can expand across multiple chains, freeing themselves from dependence on a single network.
More importantly, when a super app emerges—driving massive traffic and capital into the ecosystem but still forced to pay fees (“taxes”) to underlying protocols—it has strong incentives to fork the protocol and launch its own chain, becoming infrastructure itself. And the original protocol can do nothing to stop it.
This is an inevitable trend.
When Axie Infinity grew large enough, Ronin—a dedicated Ethereum sidechain—was created specifically for it;
After DeFi Kingdoms became Harmony’s dominant traffic source, it partnered with Ava Labs to launch its own subnet: DFK Chain;
Yuga Labs, after the Otherside metaverse sale caused severe congestion on Ethereum, proposed that Apecoin DAO create its own chain…
The future of Web3 belongs to the application layer. Building breakout apps that attract mass adoption—this is where Chinese entrepreneurs shine.
Execution Power
In 2018, a documentary called "Ignition Point" was released. Zhang Ying, founding partner of Matrix Partners China, made a controversial statement:
“Overseas entrepreneurs treat startups as competitions. In China, entrepreneurship is warfare—either you die or I live. If you go head-to-head with Chinese founders, you’ll be wiped out completely.”
Then came the mockery.
“Well yeah, how shameless can you get? —Yu Qian,” commented a Zhihu user.
Still, I personally believe Zhang Ying had a point. There’s an objective reality: “Chinese teams are more competitive, and their execution is stronger.”
Take STEPN, the recently viral Move-to-Earn project. In an AMA, the founders revealed that STEPN accomplished in four months what overseas teams might take a year and a half to achieve (and frankly, European teams might never finish). This includes developing wallets, NFT marketplaces, game economy systems, GPS signal processing, AI anti-cheat mechanisms—and all while two co-founders took turns working 24/7. Especially early on, hiring was tough, so each person often did the work of ten.
Success doesn’t come from nowhere. Greatness is earned through endurance.
As the application layer becomes Web3’s main battleground, competition will grow fiercer, demanding ever-greater execution speed and efficiency. When it comes to hustle, Chinese teams fear no rivals.
Not to mention, China enjoys an engineer dividend—so much so that even Silicon Valley projects actively recruit engineers from China. Highly capable and cost-effective.
Breaking Cultural Barriers
During the Web2.0 era, Chinese teams attempting to start up in Silicon Valley were often criticized for being too “Chinese”—unable to integrate into American cultural DNA, thus struggling to truly understand local market demands or penetrate the U.S. market.
This is the universal challenge facing all Chinese entrepreneurs going global: cultural barriers between nations and ethnicities. As a result, most Web2 companies adopt aggressive localization strategies to bridge cultural gaps.
But in Web3.0, you only need to master one culture: “GM, WAGMI, LFG, APE…” Web3 culture transcends national and ethnic boundaries, creating a new foundation. A single global language system where making money is the ultimate consensus.
This marks a key shift from Web2 to Web3—one requiring deeper understanding of community and culture, rather than assuming technical or product superiority grants “dimensional dominance” in Web3.
Conversely, once you grasp and immerse yourself in this cultural narrative, globalization becomes easier, cheaper, and broader in reach than in Web2.
Buying the Dip on Chinese Founders
“Buy when no one cares, sell when everyone’s talking.”
In both primary and secondary markets, the greatest alphas often come from non-consensus views formed before broad agreement.
A telling example: during its early fundraising phase, almost no VCs wanted to invest in STEPN for the first three months. Western VCs didn’t get it; Chinese-background VCs looked at it and said, “Isn’t this just QuBu?” (a reference to a previous Chinese fitness-to-earn app accused of being a scam).
Only after Jason, founder of Folius Ventures, and Mable, partner at Multicoin Capital, stepped in to support and endorse the project did overseas VCs begin to show interest...
Compared to hyped-up, crowded sectors, perhaps the biggest alpha opportunities lie in overlooked, underestimated “blind spots” shaped by prejudice.
For instance, instead of chasing $1B-valuation Silicon Valley darlings, maybe spend more time looking at the real builders among Chinese entrepreneurs around you.
Recently, a traditional USD-based VC practitioner asked me how to approach today’s Web3 primary market. Honestly, I have no idea (mu ji / “don’t know”). But here’s a humble suggestion: now is precisely the time to buy the dip on outstanding Chinese entrepreneurs going global—it’s rock bottom right now.
LONG CHINESE!
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