Opinion: Crypto projects need to demonstrate meaningful progress and appeal, rather than just selling dreams
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Opinion: Crypto projects need to demonstrate meaningful progress and appeal, rather than just selling dreams
Capital and attention concentrate on what is useful, desirable, and engaging.
Navigating Web3 tides with focused insightsAuthor: Joel John
Translation: TechFlow
I believe the most important thing founders can offer to communities and VCs is real market traction.
You can sell hope and dreams at launch, but if people have no reason to hold, they will sell. At that point, no matter how well-designed your tokenomics are, people will exit. And when they leave in large numbers, the numbers only move one way—down. No interest rate, Bitcoin price, or Ethereum TPS (transactions per second) can change that.
The price will drop sharply.
Often, well-intentioned founders do put in effort, generating media buzz by securing numerous partnership logos and various metrics. This makes sense because it's a narrative-driven market. You want to show people you're working hard, but ultimately, we're in capital markets, and economic functionality must be achieved.
If all this news, logo-collecting, and community engagement fail to translate into value capture or any real reason to hold the token, people will eventually exit. We're in an era of low float and high FDV games, because many founders assume initial liquidity is all their token will ever get. Roughly 18 months later, the token could be down 90%.
I see this especially clearly in DeFi—the power law is particularly harsh here. The first two or three lending platforms benefit from high TVL (total value locked) and thus achieve high valuations. But as the market saturates, by the time the seventh or eighth platform arrives, TVL or fee rates no longer matter; the market only recognizes the dominant leaders (like Aave and Compound). However, when new forms of lending emerge (such as Pendle, Ondo, etc.), the market adjusts accordingly.
It's the same in the perpetuals (perps) market. Early on, you might be the first perpetuals platform on a chain, earning a valuation premium. But eventually, the market consolidates based on volume (e.g., GMX), asset types (e.g., Aevo), and user experience (e.g., Hyperliquid).
In other words, the market operates quickly and ruthlessly efficiently. In the late 1990s, you could become popular simply by being "online." In the early 2020s, you could gain popularity just by being "on-chain." But as markets mature, capital and attention concentrate on what's useful, desirable, and compelling.
In discussions around "low float, high FDV," many details are overlooked, and many projects lack real traction or core metrics. In short, what we're (likely) witnessing is simply the market repricing protocols and venture investments. Unfortunately, many retail investors bought these tokens at extremely high prices and suffered losses. That said, I believe regulatory measures (implemented at exchanges) are steadily addressing this issue.
In 2018, if you invested in 10 seed-stage projects, and were smart enough, you might have seen 7–8 of them list on exchanges. By 2021, that number dropped to 3–4. I believe in 2024, it will fall further to 1–2. Why? Because exchanges now require evidence of traction, key performance indicators (KPIs), backers, standardized tokenomics, and community engagement before listing a token. For capital-intensive products like staking, you can rely on strong VC backing and some hedge funds to demonstrate TVL. But for consumer-facing applications, this is much harder to fake.
Finally, startup principles also apply to crypto entrepreneurs.
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Tokens are force multipliers. If you have market traction, they amplify your strength. If not, they become a drag.
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Exchange regulations mean founders must think more carefully before launching a token.
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What kills you isn't FDV or float—it's spending 18 months making noise without delivering real results.
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Another way to think about it: Do users of your product actually want to hold equity? If I use Hyperliquid (which I do), I probably don’t want to sell my stake. And my stake should make me more inclined to participate in governance and stewardship.
In my view, even in 2024, the potential of tokens as tools for retention and governance remains underexplored.
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