Written by: Liu Honglin
In the impression of many non-crypto veterans, Web3 entrepreneurship is equated with issuing a token.
Although this statement may sound a bit insulting, it somewhat represents the misunderstandings of some friends in the current Web3 industry. For many entrepreneurs just entering the Web3 circle, the biggest obstacle in transformation is how to develop a token, how to connect and list on exchanges, and how to navigate the crypto space for market operations. These technical and market challenges leave many entrepreneurs feeling at a loss. With barriers between industries, when unsure of how to proceed, 'one-stop services' have emerged to attempt to solve complex issues in a simple and quick manner.
As observed by Lawyer Honglin in a certain WeChat group, the one-stop service for issuing tokens in the crypto space has recently become increasingly active, with all-encompassing service providers handling everything from token development, DApp development, private placements to community operations, exchange listings, and even subsequent legal services. For project parties without technical and market experience, this is undoubtedly a windfall—just pay a fee, and the token issuance, listing, and promotion can be completed in one go. However, behind this apparent convenience lurks many pitfalls.
Misunderstandings about Web3: it’s not just about issuing tokens.
In fact, the connotation of Web3 is much richer than merely issuing a token. Web3 is the next generation of internet development, emphasizing decentralization, user autonomy, data privacy, and the widespread application of blockchain technology. It involves not just the financial sector but also encompasses social media, entertainment, content creation, supply chain management, and more.
However, the current market has a lot of projects focused on issuing tokens, leading many people to equate Web3 with 'issuing tokens'. This narrow perspective not only limits people's understanding of Web3's potential but also buries truly valuable Web3 applications. In such a context, entrepreneurs are often forced to focus their energy on token issuance and market speculation, neglecting the deeper technical and application development of Web3.
To meet the customized needs of clients, some service providers in the industry may create a false impression of false users and false prosperity through various means. On the surface, the project seems hot, the community active, and token trading activity high, but these 'prosperities' are often the result of human manipulation. In reality, there are not many genuine users participating; the vast majority of active accounts are organized and disciplined '10U warrior groups'. These so-called 'warrior groups' typically create market activity through buying and manipulating tokens to attract more investor interest.
More seriously, some service providers, in pursuit of short-term results, even adopt pyramid schemes to attract people, exaggerating the project's potential and prospects to lure uninformed novice investors. These service providers induce investors to invest heavily through inflated market forecasts and false success cases. However, once these investors enter, they find that the project lacks substantial progress and that the token price cannot be maintained.
When service providers fail to deliver on their promises, project parties naturally face investors' doubts and accusations. Many entrepreneurs who initially hoped to simplify the token issuance process through 'one-stop services' ultimately find themselves trapped in pitfalls set by competitors, making it difficult for the project to continue, and even facing legal risks. This crisis of trust leaves many entrepreneurs aspiring for long-term development in the Web3 field feeling distressed.
Returning to the fundamentals of business, does issuing a token really equal success?
Setting aside legal risks, returning to the basics of business, entrepreneurs need to consider: does issuing a token itself really determine the success of a project? In other words, even if you can successfully issue a token and list it on an exchange, a good start may still be difficult. After all, what truly determines whether a project can operate long-term is a clear business model, market demand, and ongoing operational capability.
Issuing a token, as a financing tool, is essentially similar to traditional companies raising funds by issuing stocks or bonds. Token issuance can provide initial funding support for a project, but it cannot directly determine the project's success. True business success relies on the project's intrinsic value creation, real user demand satisfaction, and continuous innovation and operational capability.
Understanding and meeting market demand is key to the success of any business project, and Web3 projects are no exception. A successful Web3 project first needs a clear and feasible business model. The existence of tokens is not only to raise funds through issuance but also to ensure that the project can realize its value in the future. The business model needs to address key questions such as what problem the project solves, who the target users are, and how it will achieve profitability. Entrepreneurs need to deeply study the target market, understand the real needs and pain points of users, in order to design truly attractive and competitive products. Ignoring market demand and solely relying on token speculation without substantial product and service support will significantly reduce its long-term sustainability. Conversely, a project with a clear business model and practical application scenarios can maintain long-term stable development even with significant fluctuations in token prices.
The success of Web3 projects relies not only on initial token issuance but also on long-term operation and maintenance. This includes continuous technical iteration, community building and management, market promotion, and maintenance. If a project lacks effective operational strategies after issuing tokens, leading to a decline in user experience and an inability to maintain user activity and participation, then the value of its tokens will also find it difficult to stabilize and increase.
There are too many projects in the market that, by ignoring these fundamentals, ultimately see their token prices plummet, facing immense survival pressure even after issuance. Countless cases prove that relying solely on token issuance for fundraising, due to a lack of a clear business model and sustained operations, leads to token prices soaring temporarily before rapidly declining, investor confidence waning, and project teams facing a financial crisis.
Lawyer Mankun's advice.
In practice, the trust relationship between service providers and project parties is often built on contracts and agreements, but these contracts cannot fully protect the rights and interests of project parties. Once a service provider encounters problems, project parties often lack effective legal avenues to safeguard their own interests. In such cases, project parties not only have to bear financial losses but may also suffer damage to their reputation and future development opportunities due to project failure.
When faced with the temptation of one-stop services, entrepreneurs need to have a clear understanding to avoid falling into traps set by 'friendly competitors'. The following are some suggestions from Lawyer Honglin to help entrepreneurs make wiser decisions when selecting service providers.
1. Choose reputable service providers with transparent cooperation models.
Jack Ma once said something very practical: there are no businesses dealing with businesses, only business people dealing with business people. When in the game, character is the most important. When choosing a one-stop service provider, priority should be given to companies with a good reputation and word-of-mouth in the industry. Reliability can be assessed by reviewing the service provider's past project cases, client evaluations, and industry reputation. A reputable service provider usually places more emphasis on the long-term development of the project rather than just short-term market effects.
When entrepreneurs collaborate with service providers, they should ensure the transparency of the cooperation model. Clearly define the responsibilities and obligations of both parties, sign detailed contracts specifying the content and delivery standards of each service. Avoid choosing service providers that are vague or make overly ambitious promises to prevent disputes and trust crises during the cooperation.
2. Dual support of technology and market.
The technical foundation of Web3 projects is crucial. Whether it's the security of smart contracts, the stability of blockchain networks, or the user experience of DApps, solid technical capability is required. A technically strong project can ensure the security of user data, the efficiency of transactions, and the stable operation of systems, thus winning users' trust and support.
The community is the lifeline of Web3 projects. An active and high-quality user community can provide continuous support and momentum for the project. Entrepreneurs need to invest resources in building and maintaining the community, attracting and retaining user participation and contributions through transparent communication, effective incentive mechanisms, and valuable content. An excellent service provider should not only provide technical support like token development but also possess market operation and promotion capabilities. It is recommended that entrepreneurs prioritize those who can provide independent and professional community management services, avoiding those who rely on fake users and short-term prosperity, ensuring the community's genuine activity and users' long-term participation.
3. Legal and compliance safeguards.
As countries around the world tighten regulation on cryptocurrencies and blockchain technology, compliant operations have become a crucial aspect for Web3 projects. Entrepreneurs need to understand and comply with relevant laws and regulations to ensure that projects operate within a legal framework. Through legal and compliant operations, projects can not only avoid legal risks but also enhance trust from investors and users.
Web3 projects involve complex legal and compliance issues, and entrepreneurs should choose service providers that can offer comprehensive legal services. Ensure that the project complies with relevant laws and regulations during the token issuance, exchange listing, and subsequent operations to avoid project failure due to legal risks.
Summary
Issuing a token is just the starting point of a project, not the end. Entrepreneurs may wish to simplify the token issuance process through 'one-stop services'; this mindset is understandable, but one must not regard token issuance as a universal solution to all problems. To succeed in the Web3 world, the real moat lies in solid technical capabilities, a clear business model, and compliant operational pathways, rather than simple token issuance or short-term market speculation.
Only by organically combining these three aspects can one stand out in the highly competitive Web3 field and achieve true long-term development. I sincerely hope that all entrepreneurs transforming into Web3 maintain a clear mind, deeply understand the essence and potential of Web3, and avoid being misled by transient market trends. Only by being grounded can one create a brilliant chapter in this field full of opportunities and challenges.