Written by: Liu Honglin
In the impression of many newcomers to the crypto space, starting a Web3 venture is equivalent to issuing a token.
Although this statement might sound a bit insulting, it somewhat represents the misunderstandings of some individuals currently in the Web3 industry. For many entrepreneurs just entering the Web3 space, the biggest obstacle in transitioning is figuring out how to develop tokens, how to connect and list on exchanges, and how to navigate market operations in the crypto space. These technical and market challenges leave many entrepreneurs feeling lost. And as the saying goes, 'crossing industries is like crossing mountains,' when unsure of how to proceed, 'full-service' offerings emerge to attempt to solve complex issues in a simple and quick manner.
As lawyer Honglin observed in a certain WeChat group, the 'full-service token issuance' in the crypto space has become increasingly active recently, with omnipotent service providers handling everything from token development, DAPP development, private placements, to community operations, listings on exchanges, and even subsequent legal services. For project parties lacking technical and market experience, this is undoubtedly a windfall—just pay the fee, and the token issuance, listing, and promotion can all be handled in one go. However, behind this apparent convenience lies numerous pitfalls.
Misunderstanding Web3: It's Not Just About Token Issuance.
In fact, the connotation of Web3 is much richer than simply issuing tokens. Web3 represents the next generation of internet development, emphasizing decentralization, user autonomy, data privacy, and the widespread application of blockchain technology. It involves not only the financial sector but also encompasses various areas like social networking, entertainment, content creation, and supply chain management.
However, the current market is filled with projects primarily focused on token issuance, leading many to equate Web3 with 'issuing tokens.' 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 of Web3.
To meet the customized demands of party A, some service providers within the circle create false users and fake prosperity through various means. On the surface, the project appears to be thriving, with an active community and high trading activity of tokens, but these 'prosperities' are often the result of human manipulation. In reality, there are not many genuine users involved; the vast majority of active accounts are organized and disciplined '10U War God Teams.' These so-called 'War God Teams' usually create market activity by purchasing and manipulating tokens to attract more investors' attention.
Even more seriously, some service providers, in pursuit of short-term results, resort to multi-level marketing tactics to attract people, exaggerating the potential and prospects of projects to lure unsuspecting novice investors. These service providers induce investors to pour in significant funds through inflated market predictions and false success stories. However, once these investors enter the market, they discover that the project lacks substantial progress, and token prices cannot be maintained.
When service providers fail to deliver on their promises, project parties will naturally face skepticism and accusations from investors. Many entrepreneurs who originally hoped to simplify token issuance through 'full-service' offerings ultimately find themselves trapped in pitfalls set by competitors, leading to project sustainability issues and even legal risks. This trust crisis is causing many aspiring entrepreneurs in the Web3 field to experience headaches.
Returning to the fundamentals of business, does issuing tokens really equal success?
Setting aside legal risks, when returning to the fundamentals of business, what entrepreneurs need to consider is: does the issuance of tokens itself really determine the success of a project? In other words, even if you can successfully issue tokens and list them on exchanges, good days 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 capabilities.
Issuing tokens, as a financing tool, is essentially similar to traditional enterprises raising funds through the issuance of stocks or bonds. Token issuance can provide initial funding support for projects, but it does not directly determine the success or failure of a project. True business success relies on the value creation of the project itself, fulfilling the genuine needs of users, and continuous innovation and operational capabilities.
Understanding and meeting market demands are key to the success of any business project, and Web3 projects are no exception. A successful Web3 project must first have a clear and feasible business model. The existence of tokens is not merely to issue tokens for fundraising but to ensure that the project can realize its value in the future. The business model must address key questions such as what problem the project solves, who the target users are, and how it achieves profitability. Entrepreneurs need to conduct in-depth research on the target market, understand the genuine needs and pain points of users, to design truly attractive and competitive products. Ignoring market needs and solely relying on token speculation, while lacking substantial products and service support, will significantly undermine the long-term sustainability of development. Conversely, a project with a clear business model and practical application scenarios can maintain long-term stable development based on its inherent value, 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 iteration of technology, community building and management, market promotion and maintenance, etc. If a project lacks effective operational strategies after token issuance, leading to a decline in user experience and an inability to maintain user activity and participation, then the value of its tokens will also struggle to stabilize and enhance.
There are too many projects in the market that ignore these fundamentals, ultimately leading to token prices plummeting after issuance, with projects still facing immense survival pressure. Countless cases prove that relying solely on token issuance to raise funds, due to a lack of a clear business model and sustained operations, results in token prices soaring in the short term before plummeting, eroding investor confidence and putting project teams at risk of a financial crisis.
Lawyer Mankun's recommendations.
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 a service provider encounters issues, project parties often lack effective legal avenues to safeguard their interests. In such cases, project parties not only need to bear financial losses but may also suffer reputational damage and lost future opportunities due to project failures.
When faced with the temptation of full-service offerings, entrepreneurs need to maintain a clear awareness to avoid falling into traps set by 'competitors.' Here are some suggestions from lawyer Honglin to help entrepreneurs make wiser decisions when choosing service providers.
1. Choose reputable service providers with transparent cooperation models.
Jack Ma once said something very pragmatic, there is no business without business people. When you are out there, character is paramount. When choosing a full-service provider, preference should be given to companies with a good reputation and standing in the industry. You can evaluate their reliability by looking at past project cases, client reviews, 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 transparency in the cooperation model. Clearly define the responsibilities and obligations of both parties, sign detailed contracts, and specify the content and delivery standards of each service. Avoid choosing those service providers with vague promises and unclear terms 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 is the security of smart contracts, the stability of blockchain networks, or the user experience of DApps, solid technical capabilities are required. A project with strong technology can ensure the security of user data, the efficiency of transactions, and the stable operation of systems, thereby gaining the trust and support of users.
The community is the lifeline of Web3 projects. An active and high-quality user community can provide continuous support and impetus 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 can not only offer technical support for token development but should also possess capabilities in market operations and promotions. It is advisable for entrepreneurs to prioritize those who can provide independent and professional community management services to avoid selecting service providers that rely on fake users and short-term prosperity, ensuring the community's genuine activity and long-term user engagement.
3. Legal and compliance guarantees.
As countries around the world increasingly tighten regulations on cryptocurrencies and blockchain technology, compliant operations have become a critical aspect that Web3 projects must pay attention to. Entrepreneurs need to understand and comply with relevant laws and regulations to ensure that projects operate within a legal and compliant framework. By operating legally and compliantly, projects can not only avoid legal risks but also enhance trust among 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 projects comply with relevant laws and regulations during token issuance, listing on exchanges, and subsequent operations to avoid project failures due to legal risks.
Summary.
Issuing tokens is just the starting point of a project, not the endpoint. Entrepreneurs may find it understandable to seek convenience through 'full-service' token issuance, but they must never regard token issuance as a universal key to solve all problems. To establish a foothold in the Web3 world, the real moat is solid technological capability, a clear business model, and compliant operational pathways, not just 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 real long-term development. I sincerely hope that all 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 their own brilliant chapter in this field full of opportunities and challenges.