Article reproduced from: Mankun Blockchain
In the impressions of many non-crypto veterans, starting a Web3 business is equivalent to issuing a token.
Although this statement may sound somewhat insulting, it somewhat 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 transitioning is how to develop tokens, how to integrate with exchanges, and how to navigate the crypto market for operations. These technical and market challenges leave many entrepreneurs feeling at a loss. And like crossing a mountain when crossing industries, in the face of not knowing how to start, 'one-stop services' emerge to attempt to simplify complex problems.
As seen by Lawyer Honglin in a certain WeChat group, the one-stop service for token issuance in the cryptocurrency circle has become increasingly active recently. All-encompassing service providers handle everything from token development, DApp development, private placements to community operations and exchanges, even including subsequent legal services. For project parties without technical and market experience, this is undoubtedly a godsend—pay a fee, and the token issuance, launch, and promotion can be completed in one go. However, behind this apparent convenience lie many pitfalls.
Misunderstanding of 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 sector but also covers various aspects such as social networking, entertainment, content creation, and supply chain management.
However, the large number of projects focused primarily on token issuance in the current market has led many 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 this context, entrepreneurs often find themselves forced to focus their energy on token issuance and market speculation, neglecting the deeper technological and application development of Web3.
In order to meet the customized needs of Party A, some service providers within the industry may create false users and a false sense of prosperity through various means. On the surface, the project appears hot, the community is active, and token trading is high, 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 War God Groups'. These so-called 'War God Groups' usually create market activity by buying and manipulating tokens to attract more investors' attention.
More seriously, some service providers, in pursuit of short-term results, even adopt a pyramid selling model to recruit people, exaggerating the project's potential and prospects 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 that token prices cannot be maintained.
When service providers fail to deliver on their promises, project parties naturally face doubts and accusations from investors. Many entrepreneurs who originally hoped to simplify token issuance through 'one-stop services' ultimately find themselves trapped in pitfalls set by friendly competitors, with projects facing difficulties and even legal risks. This trust crisis has caused many aspiring entrepreneurs aiming for long-term development in the Web3 field to feel troubled.
Returning to the fundamentals of business, does issuing tokens really equal success?
Setting aside legal risks and returning to the fundamentals of business, what entrepreneurs need to think about is: can issuing tokens alone really determine the success of a project? In other words, even if you can successfully issue tokens and go live on exchanges, a good start 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 sustained operational capability.
Issuing tokens, as a financing tool, is essentially similar to traditional enterprises raising funds through issuing stocks or bonds. Token issuance can provide initial funding support for projects, but it does not directly determine the success or failure of the project. True business success depends on the value creation of the project itself, meeting genuine user needs, and sustained innovation and operational capacity.
Understanding and meeting market demands is the key to success for 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 answer key questions such as what problem the project solves, who the target users are, and how to 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 demands and relying solely on token speculation, without substantial product and service support, will significantly dampen the sustainability of long-term development. On the contrary, a project with a clear business model and practical application scenarios can maintain long-term stable development even with large fluctuations in token prices, relying on its own value support.
The success of Web3 projects relies 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 after token issuance, user experience declines, and it cannot maintain user activity and participation, then the value of its tokens will also be difficult to stabilize and enhance.
There are too many projects in the market that have ignored these fundamentals, ultimately leading to token prices plummeting after issuance, and projects still facing enormous survival pressure. Countless cases prove that relying solely on token issuance to raise funds, without a clear business model and sustained operations, results in token prices soaring in the short term only to quickly crash, investor confidence is lost, and project teams face the risk of a broken capital chain.
Mankun Lawyer'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 service providers encounter problems, 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 future development opportunities due to project failure.
When facing the temptation of one-stop services, entrepreneurs need to have a clear understanding and avoid falling into traps set by 'friendly 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
Mr. Jack Ma previously said something very practical: there are no businesses for businesses, only business people for business people. In this industry, character is the most important thing. 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. One can assess the reliability of a service provider by looking at their past project cases, client reviews, and reputation in the industry. A reputable service provider will usually pay more attention to 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, and specify the content and delivery standards of each service. Avoid choosing those service providers with vague commitments or overly high 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 is the security of smart contracts, the stability of the blockchain network, or the user experience of DApps, solid technical capabilities are needed. A technically sound project can ensure the security of user data, the efficiency of transactions, and the stable operation of the system, thereby winning 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 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 can not only provide technical support such as token development but should also have capabilities in market operations and promotion. It is recommended that entrepreneurs prioritize choosing those service providers who can offer independent and professional community management services, avoiding those that rely on fake users and short-term prosperity, ensuring the genuine activity of the community and the long-term participation of users.
3. Legal and Compliance Assurance
As countries around the world increasingly tighten regulations on cryptocurrencies and blockchain technology, compliance operation has become an aspect that Web3 projects must pay attention to. Entrepreneurs need to understand and comply with relevant laws and regulations to ensure that the project operates within a legal and compliant framework. Through legal and compliant operations, the project 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 the token issuance, exchange launch, and subsequent operational processes to avoid project failure due to legal risks.
Summary
Issuing tokens is merely the starting point of a project, not the end. Entrepreneurs may find it understandable to seek convenience through 'one-stop services' for token issuance, but they must not regard token issuance as a universal solution to all problems. To establish a foothold in the Web3 world, the real moat lies in solid technical capabilities, a clear business model, and compliant operational paths, rather than simply 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 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.