The Development of Web3: From Conceptual Hype to Industrial Ecology

The underlying logic of business has never changed. Whether it's from portal to App in Web2, or from issuing tokens and telling stories to building infrastructure in Web3, the prosperity follows the same path—only this time, the narrative is wrapped in protocols, and the capital is hidden in code.

Looking back over the past decade, the development trajectory of the Chinese internet is clearly visible: concept-driven, financing precedes user growth; subsidies drive traffic, capital promotes growth; then layoffs improve efficiency, pursuing profitability; finally, platform transformation and technological reconstruction. Today's Web3 is also following a similar development rhythm.

In the past year, the competition among project parties has evolved into a user acquisition battle using TGE and airdrops as means. No one wants to fall behind, but no one knows how long this "exchange for users" competition can last. Therefore, it is necessary to break down those seemingly chaotic narratives into several more understandable development stages.

Let us follow the footprints of history and see how Web3 has come to today and where it might head in the future.

Review of the Development Stages of the Internet Industry: From Token Distribution Expansion to Industry Collaboration

1. Narrative-driven, stage of mass innovation ( 10 years ago )

It was an era defined by "nouns" that shaped trends. "Internet Plus" became the universal key; whether it was in healthcare, education, transportation, or local living, just by adding these three words, one could leverage hot money and attention. At that time, entrepreneurs were not in a hurry to create products; instead, they first sought out the right track, created concepts, and wrote business plans. Investors were not chasing revenue curves, but rather whether one could tell a story that was "new enough, large enough, and easy to imagine."

O2O, social e-commerce, shared economy, in a cycle of concept rotation, project valuations soar, and the financing pace is dominated by narrative rhythm. The core asset is not users, not products, and not data, but a financing PPT that can be smoothly presented and aligns with trends.

This is also an era of "whoever takes the position first has the opportunity." Validating products and running through models is the second step. Only by telling the story on the windward side do you qualify to enter the arena.

2. Cash-burning expansion, traffic competition phase (2010-2018)

If the previous stage relied on stories to gain attention, this stage relies on subsidies to aggressively capture the market.

From the ride-hailing battle between Didi and Kuaidi to the bike-sharing skirmish between Mobike and OFO, the entire industry has fallen into a highly consistent strategy: exchanging capital for scale, exchanging price for habits, and exchanging losses for entry points. Whoever can burn through another round of financing has the qualification to continue expanding; whoever can secure the next round of investment can maintain their position on the battlefield.

This is a time when "capturing users" is prioritized above all else. Experience, efficiency, and product barriers take a backseat; the key is — who can become the default choice for users first.

The subsidy war has intensified, and low prices have almost become the norm: taking a taxi for less than 5 yuan, scanning a code to ride for one cent, offline stores posting App QR codes, waiting for you to eat for free, get a haircut, or have a massage. What seems to be the popularization of services is, in fact, a battle for traffic controlled by capital.

It's not about whose product is better, but who can burn more money; it's not about who can solve problems, but who can "land grab" faster.

In the long run, this also lays the foundation for subsequent fine-tuning transformation – when users are acquired through purchase, more effort must be made to retain them; when growth is driven by external forces, it is destined to struggle with self-circulation.

3. Landing, fine operation stage (2018-2022)

When the story is told for too long, the industry will eventually return to a real question: "After growth, how to land it?"

Since 2018, as the growth of mobile internet users has slowed down, the traffic dividend has gradually faded, and the customer acquisition cost has continued to rise.

Data shows that by the end of September 2022, the number of monthly active users of mobile Internet in China approached 1.2 billion, an increase of only about 100 million compared to 2018, taking nearly four and a half years, with a significant slowdown in growth rate. At the same time, the scale of online shopping users reached 850 million in 2022, accounting for nearly 80% of the total number of Internet users, with user growth space tending to saturate.

At the same time, a large number of "story-driven" projects that relied on financing are gradually retreating. O2O and the sharing economy are the most concentrated areas of liquidation during this stage: projects like Street Power, Xiaolan Bicycle, and Wukong Travel have successively collapsed, with a whole set of growth models that are unable to be coherent and lack user loyalty being eliminated by the market.

But it is precisely in this retreat that a number of truly successful projects have emerged. They share a common characteristic: they are not driven by short-term hype stimulated by subsidies, but rather have completed the construction of a business model closed loop through real demand scenarios and system capabilities.

For example, a certain platform gradually builds a complete service chain from ordering to fulfillment, and from traffic to supply in the local lifestyle sector, becoming a platform-based infrastructure; a certain e-commerce platform rapidly penetrates user mindset in sinking markets with extreme supply chain integration and operational efficiency; social media, e-commerce, gaming, and other fields are firmly controlled by a few leading companies.

Their commonality is not in "thinking further ahead", but in running more steadily and calculating more clearly — structurally completing the closed loop from traffic to value, truly becoming a sustainable product system.

At this stage, growth is no longer the only goal; whether growth can be transformed into structural retention and value accumulation is the true dividing line that determines the life and death of the project. Extensive expansion is eliminated at this stage, and what truly remains are those systematic projects that can construct a positive feedback mechanism between efficiency, products, and operations.

This also means that the era of narrative-driven business is over, and the business logic must have the ability of "self-closure": retaining users, sustaining the model, and running the structure.

4. Basic ecological shaping, the stage of seeking opportunities through technological transformation ( From 2023 to present )

After the leading projects have emerged, survival issues have been resolved for most projects, and the real differentiation has only just begun.

The competition between platforms is no longer a battle for users, but a contest of ecological capabilities. As leading platforms gradually close off growth paths, the industry enters a period characterized by structural stabilization, resource concentration, and dominance of collaborative capabilities. A true moat does not necessarily mean being ahead in a particular function, but rather whether the internal circulation of the system is efficient, stable, and self-consistent.

This is a stage belonging to systematic players. The pattern is basically set; if new variables want to break through, they can only find gaps at the structural edges and technical breakpoints.

At this stage, almost all high-frequency essential tracks have been defined by the giants. In the past, one could compete for position by "launching early and spending quickly," but now, growth must be embedded within system capabilities. The platform logic has also been upgraded: shifting from multi-product stacking to ecological flywheels, and from single-point user expansion to organizational-level collaboration.

A certain tech giant has integrated multiple products under its umbrella to create an internal circulation closed loop; a certain e-commerce company has restructured its business to horizontally connect commercial links, attempting to regain efficiency leverage. Growth is no longer reliant on acquiring new users, but rather on the structural compounding brought about by the system's self-operation.

As the user pathways, traffic entry points, and supply chain nodes are gradually controlled by a few leading platforms, the industry structure is beginning to become closed, leaving less and less room for new entrants.

But it is precisely in this environment of structural contraction that a certain company has become an outlier.

It did not attempt to compete for resource positions within the existing ecosystem, but instead took a shortcut by starting from the underlying technology and reconstructing the content distribution logic using recommendation algorithms. Against the backdrop of mainstream platforms still relying on social relationship chains for traffic scheduling, the company built a distribution system based on user behavior, thereby establishing its own user system and business closed loop.

This is not an improvement on the existing patterns, but a technological breakthrough that bypasses existing paths and reconstructs the growth structure.

This case reminds us that even if the industry landscape tends to solidify, as long as there are structural fractures or technological gaps, new players may still emerge. However, this time, the path is narrower, the pace is faster, and the requirements are higher.

Today, Web3 is in a similar critical zone.

Current Stage of Web3: "Parallel Mirror" of the Evolution Logic of the Internet

If the rise of Web2 represents an industrial reorganization driven by the mobile internet and platform model, then the starting point of Web3 is a systematic reconstruction built on decentralized finance, smart contracts, and on-chain infrastructure.

The difference is that Web2 constructs a strong connection between platforms and users; while Web3 attempts to break down and distribute "ownership," and reorganize new organizational structures and incentive mechanisms on the chain.

But the underlying driving force has not changed: from story-driven to capital-driven; from user competition to ecological flywheel, the path that Web3 has experienced is almost identical to that of Web2.

This is not a simple comparison, but a parallel reproduction of a path structure.

This time, it's just that the incentives are tokens; the protocol is modular; and the focus is on TVL, active addresses, and airdrop points.

The development of Web3 to date can be roughly divided into four stages:

1. Concept-Driven Phase - Token-Driven: Story First, Capital Inflow

If the early days of Web2 relied on the story template of "Internet +", then the opening line of Web3 is written in the smart contracts of Ethereum.

In 2015, Ethereum was launched, and the ERC-20 standard provided a unified interface for asset issuance, making "token issuance" a fundamental capability that all developers could leverage. It did not change the essential logic of financing but greatly lowered the technical barriers for issuance, circulation, and incentives, thereby making "technical narrative + contract deployment + token incentives" the standard template for early-stage Web3 entrepreneurship.

The outbreak at this stage is more driven by technical factors—blockchain has empowered entrepreneurs for the first time in a standardized manner, transitioning asset issuance from a permission-based system to an open-source model.

There is no need for a complete product, no need for mature users; as long as there is a white paper that can clearly explain the logic of the new era driven by blockchain technology, an attractive token model, and a runnable smart contract, the project can quickly complete the closed loop from "idea" to "financing."

The early innovations of Web3 were not due to how smart the projects were, but rather because the proliferation of blockchain technology brought about a new era of imagination.

Capital has quickly formed a "betting mechanism": those who position themselves in new tracks first, those who start first, and those who get the narrative out first are likely to achieve exponential returns.

This gave rise to an "unprecedented capital efficiency": from 2017 to 2018, the ICO market experienced an unprecedented explosive growth, becoming one of the most controversial and iconic financing stages in blockchain history.

According to data from a certain data platform, in the first quarter of 2018, the total amount raised through ICOs reached 6.3 billion USD, exceeding the total amount raised in 2017 by 118%. Among them, a well-known project's ICO raised 1.7 billion USD, while another project raised as much as 4.1 billion USD within a year, setting a historical record.

During the window period of "everything can be blockchain"—as long as a label is affixed and a narrative is constructed, even if the landing path is not yet clear, one can advance expectations of future valuation. DeFi, NFT, Layer1, GameFi... each buzzword is a "window". Project valuations soar to hundreds of millions of dollars, even billions, before the tokens are even circulated.

This is an opportunity to enter the capital market with a low threshold, and it has gradually formed a relatively clear exit path: positioning in the primary market in advance, stimulating emotions in the secondary market through narratives and liquidity, and then completing the exit during the window period.

Under this mechanism, the core of pricing is not how much the project has done, but who has positioned themselves earlier, who is better at creating emotions, and who has mastered the window for releasing liquidity.

It is essentially a typical characteristic of the early new paradigm of blockchain - the infrastructure has just landed, the cognitive space has not yet been filled, and the price often forms ahead of the product itself.

The "conceptual dividend period" of Web3 comes from this: value is defined by narratives, and exits are driven by emotions. Projects and capital are in a...