Article sourced from: Mankun Blockchain
In the minds of many newcomers to the crypto space, starting a Web3 business is equivalent to just issuing a token.
Although this sounds somewhat insulting, it reflects the misunderstandings of some friends in the current Web3 industry. For many entrepreneurs who have just entered the Web3 circle, the biggest obstacle to transformation is how to develop tokens, how to connect to exchanges, and how to engage in market operations in the crypto space. These technical and market challenges leave many entrepreneurs feeling lost. And as the saying goes, 'In another industry, you are like in another mountain.' When unsure of how to start, 'one-stop services' emerged to try to solve complex problems in a simple and quick way.
As seen by Attorney Honglin in a WeChat group, the 'one-stop service' for token issuance 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 and exchange listings, including subsequent legal services—taking care of everything. For project parties without technical and market experience, this is undoubtedly a windfall—just pay the fee, and the project’s token issuance, listing, and promotion can be completed in one go. However, this apparent convenience conceals many pitfalls.
Misunderstanding Web3: It's Not Just About Issuing Tokens
In fact, the connotation of Web3 is much richer than merely issuing tokens. Web3 is the next developmental stage of the internet, emphasizing decentralization, user autonomy, data privacy, and the widespread application of blockchain technology. It involves not only the financial field but also encompasses social, entertainment, content creation, supply chain management, and many other aspects.
However, the current market is flooded with projects primarily focused on token issuance, leading many to equate Web3 with 'token issuance.' This narrow perspective not only limits people's understanding of Web3's potential but also causes truly valuable Web3 applications to be overlooked. In this context, entrepreneurs are often forced to concentrate their efforts on token issuance and market speculation, neglecting the deeper technological and application development aspects of Web3.
To meet the customized needs of the client, some service providers in the industry may create false users and a façade of false prosperity through various means. On the surface, the project appears hot, the community is active, and token trading is lively, but this 'prosperity' is often the result of human manipulation. In reality, there are not many genuine users involved, and the vast majority of active accounts are organized and disciplined '10U Warrior Groups'. These so-called 'Warrior Groups' typically create market activity by buying and manipulating tokens to attract more investor attention.
More seriously, some service providers, in pursuit of short-term results, even adopt multi-level marketing models to recruit participants, exaggerating the potential and prospects of the project to attract uninformed novice investors. These service providers induce investors to invest heavily through exaggerated market forecasts and false success stories. However, once these investors enter the market, they find that the project lacks substantial progress and the token price cannot be maintained.
When service providers fail to deliver on their promises, project parties naturally face scrutiny and blame from investors. Many entrepreneurs who initially hoped to simplify their token issuance through 'one-stop services' ultimately find themselves trapped in pitfalls set by friendly competitors, struggling to sustain their projects, and even facing legal risks. This trust crisis has caused many aspiring entrepreneurs in the Web3 field to feel great distress.
Returning to the fundamentals of business, does issuing tokens really equal success?
Setting aside legal risks, returning to the fundamentals of business, entrepreneurs need to consider: Can issuing tokens alone truly determine the success of a project? In other words, even if you can successfully issue tokens and go live on exchanges, good times may still be hard to come by. After all, what truly determines whether a project can operate long-term is a clear business model, market demand, and sustainable operational capability.
Issuing tokens, as a financing tool, is essentially similar to traditional enterprises raising funds by issuing stocks or bonds. Token issuance can provide initial funding support for the project, but it does not directly determine the project's success or failure. True business success lies in the value creation of the project itself, meeting the real needs of users, and sustaining innovation and operational capabilities.
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 just for issuing tokens to raise funds, but also to ensure that the project can realize its own 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 to achieve profitability. Entrepreneurs need to thoroughly research 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 merely relying on token speculation, without substantial product and service support, will greatly reduce the sustainability of long-term development. Conversely, a project with a clear business model and practical application scenarios can maintain long-term stable development, even if the token price fluctuates significantly.
The success of Web3 projects depends not only on the initial token issuance but also on long-term operation and maintenance. This includes continuous iteration of technology, community building and management, market promotion and maintenance, etc. If a project lacks effective operational strategies post-token issuance, leading to a decline in user experience and inability to maintain user activity and participation, then its token value will also struggle to stabilize and increase.
Too many projects in the market have ignored these fundamentals, leading to token prices plummeting, and after issuance, projects still face enormous survival pressure. Countless cases prove that relying solely on token issuance to raise funds, without a clear business model and sustainable operations, causes token prices to soar in the short term before quickly plummeting, eroding investor confidence and putting project teams at risk of a financial crisis.
Advice from Attorney Mankun
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 the project parties. Once problems arise with the service provider, project parties often lack effective legal channels to safeguard their interests. In such cases, project parties not only bear financial losses but may also suffer reputational damage and future development opportunities due to project failure.
When faced with the temptation of one-stop services, entrepreneurs need to maintain a clear understanding and avoid falling into traps set by 'friendly competitors.' Here are some suggestions from Attorney Honglin to help entrepreneurs make wiser decisions when selecting service providers.
1. Choose reputable service providers with transparent cooperation models
Uncle Jack Ma once said something very practical: There is no business against business, only people against people in business. When out there, character is most important. When choosing a one-stop service provider, priority should be given to those 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, customer feedback, and reputation within the industry. A reputable service provider will typically focus more on the long-term development of the project rather than just short-term market effects.
Entrepreneurs should ensure the transparency of cooperation models when working with service providers. Clearly define the responsibilities and obligations of both parties, sign detailed contracts outlining the specific content and delivery standards of services. Avoid choosing those service providers who offer vague promises and high commitments to prevent disputes and trust crises during the cooperation process.
2. Dual Support of Technology and Market
The technological foundation of Web3 projects is crucial. Whether it is the security of smart contracts, the stability of the blockchain network, or the user experience of DApps, solid technical capabilities are required. A technically sound project can ensure the security of user data, the efficiency of transactions, and the stable operation of systems, thereby winning user 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 to build and maintain 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 for token development but also possess market operation and promotion capabilities. It is advisable for entrepreneurs to choose service providers that can offer independent and professional community management services, avoiding those that rely on fake users and short-term prosperity, to ensure the community's genuine activity and long-term user participation.
3. Legal and Compliance Assurance
As countries around the world tighten regulations on cryptocurrencies and blockchain technology, compliance operations have become a crucial aspect of Web3 projects. Entrepreneurs need to understand and comply with relevant laws and regulations to ensure that projects operate within a legal and compliant framework. Through legal and compliant operations, projects can not only avoid legal risks but also enhance the trust of 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 token issuance, exchange listing, and subsequent operations to avoid project failure due to legal risks.
Summary
Issuing tokens is just the starting point of a project, not the endpoint. While it is understandable for entrepreneurs to want to simplify token issuance through 'one-stop services,' they must not treat token issuance as a universal key to solve all problems. To establish a foothold in the Web3 world, the real moat is solid technical capabilities, a clear business model, and compliant operational paths, rather than simple token issuance or short-term market speculation.
Only by organically combining these three elements can one stand out in the fiercely competitive Web3 field and achieve true long-term development. I sincerely hope that entrepreneurs transitioning to Web3 maintain a clear mind, deeply understand the essence and potential of Web3, and avoid being misled by temporary market trends. Only by being grounded can one create a glorious chapter in this field full of opportunities and challenges.