In recent years, as Web3 technology and application scenarios have matured, a variety of Web3 projects have emerged like mushrooms after rain. Traditional fields such as DeFi, GameFi, and public chains are stable, while new entrants like RWA, DePIN, and DeSci are catching up. However, with rapid technological and ecological development, some poor projects and speculative operators have emerged, leading users to have mixed feelings about the Web3 field. What kind of Web3 projects are worth investing in?
This article will analyze in detail how to identify good WEB3 investment projects based on their survival capability, how to realize ideas, and how to bring stable returns, helping you find that promising project among many.
1. Assessing the project's survival capability from three major aspects.
Investable Web3 projects require both project teams and investors to possess long-term operational capabilities. Users assessing whether a project is robust must gain insight into whether the project's fundamentals are solid.
(1) Whether the project's foundation supports user imagination.
Compliance is the bottom line for the survival of Web3 projects. Regulatory policies on cryptocurrencies, token issuance, and other areas vary significantly across countries. Embracing regulations can mitigate legal risks and enhance user trust. For example, HKTWeb3 trading platform requires tokenized securities to meet traditional securities regulatory frameworks. HKTWeb3 achieved asset custody and compliance reporting through Hong Kong's licensed trust structure, ensuring transparency in the flow of user funds, while quickly building a compliant ecosystem through policy dividends.
The diversity and complementarity of the team's background determine whether a project can break through core barriers such as technology, operations, and resources. The team needs to cover key roles in technical development, product operations, and industry resources, and the members' backgrounds should be strongly related to the project's positioning. For example, the founding team of Magic Eden consists of experts from Web2 companies like Google and Uber, as well as Web3 companies like FTX and Coinbase. CTO Sidney Zhang led the algorithm development for Uber's food delivery platform, and the project experience was transferred to the NFT field. The team's configuration is complete, the framework is clear, ultimately pushing the platform's daily trading volume to exceed OpenSea.
At the same time, the key point in evaluating the value of Web3 projects lies in their ability to solve the inefficiencies and trust issues of traditional industries. Focus on whether there is a specific scene, providing differentiated solutions through technological innovation and changes in market demand. A typical case is AntChain's 'Copyright Protection Plan,' which achieves real-time on-chain data of each link in the supply chain and multi-party verification through blockchain technology, dynamically evaluating corporate credit, providing digital copyright preservation services for small and medium manufacturers, and shortening the financing cycle from 30 days to 72 hours, reducing financing costs by 40%. The solution directly addresses market pain points and has achieved success upon launch.
(2) Whether the landing process meets user expectations.
The completeness of the white paper directly affects the project's credibility and financing capability. It includes core modules such as technical architecture, token models, and roadmaps, providing users with multi-dimensional judgment criteria to help reduce potential risks from information asymmetry. Users can validate the project's technical credibility, sustainability of the token model, reliability of execution, etc., through the white paper, thus avoiding speculative projects and choosing technologies and ecosystems with long-term value. The more complete the white paper is, and the more detailed and publicly disclosed the content is, the more it reflects whether a project is sufficiently prepared, avoiding empty promises.
The project's official website is the first window for the project to present itself externally, aimed at conveying the professionalism and transparency of the team. Missing information can easily raise doubts; for example, an anonymous team or a vague roadmap might be deemed a scam.
Promotion is the bridge for projects to establish trust with users, and the landing results are the process of fulfilling that trust. The consistency between the two directly affects the project's survival. Timely delivery of promised functions will strengthen user confidence and attract more ecosystem participants. The realization of core functions determines whether a project can attract more early users and build a mature Web3 ecosystem, serving as an important factor in verifying its value. For example, after Uniswap promoted itself as a 'zero-fee DEX,' it immediately launched core functionalities, resulting in user growth exceeding tenfold within three months.
The failure to deliver results may lead investors to withdraw their funds. For example, Zaros faced a product development and technical iteration delay, causing the ZRS token to become worthless due to its inability to attract liquidity, leading to the project's funding exhaustion and termination of operations on May 10.
(3) Whether the project's strength can break through market competition.
Currently, in the Web3 field, technological iteration and compliance thresholds determine survival space. By 2025, DeFi, NFT, and other tracks will enter a technical deep-water zone, with compliance becoming the 'lifeline' for projects. Users' sensitivity to 'real needs' will increase. For instance, Walmart uses blockchain and IoT to achieve food traceability, reducing loss rates by 18%. Meanwhile, reports from Layer2 Research indicate that the CNN NFT market will close in 2024 due to content homogenization, validating that Web3 projects lacking 'value anchoring' struggle to sustain.
Differentiated positioning and the ability to break ecological barriers are the core competitive advantages of a project. The competition in Web3 has shifted from a 'single technical level' to 'ecological synergy ability.' Only projects that meet 'technical irreplaceability + user essential needs' can stand firm in market competition. Otherwise, they may end up like Bananagun (a trading robot), which suffered from feature homogenization and lack of unique advantages, leading to a user churn rate exceeding 80%.
The ability to accurately reach users and build long-term trust with them is the key engine for breaking through the market. Effective marketing strategies need to consider both brand narrative and user co-governance. Design differentiated content for product users and investor users; for instance, Base attracts developers through hackathons rather than blindly deploying KOLs; the SUI team compensated users fully for hack events, converting user trust into long-term holding motivation, etc. While reducing the cost of building user trust, it also avoids the pitfalls of 'empty promises.'
The long-term survival capability of Web3 projects depends on the synergy of the three factors mentioned above. A lack of compliance genes can easily lead to policy elimination, neglecting transparency in progress can undermine community consensus, and inadequate market strategy will inevitably result in poor reputations for landing scenarios. Only through the collaboration of all three can a positive survival loop be built throughout the project's development cycle, resisting speculative bubbles and the impact of technological iterations to achieve long-term survival.
2. Four dimensions to assess whether the project idea can be realized.
If a project can continuously provide users with a sense of participation and exploration, it often enables them to capture profit opportunities more keenly. A complete project ecosystem typically needs to consider the following aspects.
(1) Business model.
Projects need to clarify the logic of value creation and ensure that this logic is realized to form a closed-loop profit model, avoiding reliance on short-term speculation for profit, which leads to an inability to sustain in the long run. Using StepN as an example, its 'Move-to-Earn' model initially attracted users by promoting exercise data on-chain but later collapsed due to an imbalance in the token economic model (out-of-control GST inflation). Good business models require a long-lasting and sustainable value system.
In addition, triggering interactive branching experiences through different methods (such as the breeding mutations in Axie Infinity) allows users to generate new experiences with each interaction, which is a significant plus for enriching business models. According to data provided by BeepCrypto, Web3 projects with storyline branches have a user retention rate 47% higher than other projects.
Good UGC incentives can continually spark user participation experiences. For example, Decentraland allows users to design virtual fashion and trade them, with the platform continuously incentivizing creation through a royalty-sharing mechanism. Top designers' individual pieces have auction prices exceeding $100,000, significantly enhancing users' sense of participation and novelty, thus retaining users through their ever-growing desire to explore.
(2) User ecosystem.
Good projects will increase users' voice through DAO-driven decision-making paths, solidifying the concept of decentralization in users' minds. For example, Yield Guild Games (YGG) injects 10% of guild income into the governance pool, motivating community members to become the 'living water' of the project.
Mature social viral marketing strategies are also indispensable. Taking StepN as an example, its initial highlight was the 'exercise invitation rewards' mechanism. Users could earn double token rewards for every three friends invited to run and meet the standards. According to publicly released data from the official, the community size increased by 2100% within six months. Users gain sufficient value recognition from the project, thus voluntarily expanding promotional channels for the project, forming a positive trend of mutual ecological development.
(3) Economic model.
Pay attention to whether the token value anchoring strategy and ecosystem incentives are balanced to avoid falling into a Ponzi scheme. Users need to clarify the specific uses of tokens (such as payment, governance) and try to avoid participating in projects without actual landing scenarios. For instance, WkeyDAO constructed a Ponzi cycle through 'hardware sales + token staking,' promoting an 'annual return of 600 times,' but collapsed dramatically after just 97 days, with 12,000 so-called 'blockchain phones' piled up in a bonded warehouse in Zhejiang.
(4) Technological breakthroughs.
Diverse and novel technical presentation methods are a plus for the project, such as 3D interactive scenes or AI-generated content, which are technological advantages that distinguish it from other projects and are a significant means of attracting users' attention. According to a research report from AI Smart Chain Future, Bittensor's AI agent network allows users to train personalized models, and high-quality models can be packaged as NFTs for trading, with developers averaging returns of 23 times their initial investment.
Overall, when a project possesses a closed-loop ecosystem across these four dimensions, it can be determined that the project has healthy development potential, allowing for deeper value capture.
3. Two major factors to assess whether a project is a valuable target.
According to data from multiple organizations such as (Hack3D: 2024 Web3 Security Report) and (Hong Kong Securities and Futures Commission (SFC) 2024 Report), the global Web3 project failure rate reached 63% in 2024, with 82% of failure cases occurring in projects that operated for less than 18 months. The risk of Web3 project teams running away or harvesting users always exists.
First, users need to understand what the key indicators are for determining whether a Web3 project is a valuable target. For example, DeFi projects need to assess key data like staking, locked assets, and active wallets, while key data in other areas may differ. How to find these key data and what to do once found are critical areas for exploration.
(1) Identify key data from multiple dimensions.
Users can leverage the on-chain transparency of Web3 data to make targeted selections. Various on-chain analysis tools can be used for dynamic data queries of projects. For instance, Dune Analytics can query protocol trading volumes, user behaviors, and data such as Uniswap's fee distribution contracts. DeFiLlama can check real-time TVL rankings and compare protocol revenues, while Nansen can analyze NFT whale projects' holdings and trading patterns, such as the behavior of Bored Ape holders.
The information disclosed by the project team is also crucial. The white paper and financial reports can verify whether the token distribution model is reasonable, such as the public report on MakerDAO's stable fee income structure. Users can also observe the transparency of community decision-making through the progress of governance proposals, such as voting records on Aave's liquidity mining adjustments.
Additionally, monitoring project analysis reports published by third-party data platforms can yield unexpected insights. For example, before the collapse of StepN, DappRadar issued a user loss warning by tracking daily active users and trading volumes of chain games. Footprint Analytics predicted imminent project collapse through cross-chain analysis of user retention rates and income models.
(2) Forming a closed-loop thinking from data to decision-making.
Data is merely a tool to assist users in making judgments; the key lies in using it for subsequent action strategies. Observing trends in key data changes can help users determine whether a project's development trajectory is healthy. For instance, if a DeFi project's TVL drops 20% for three consecutive months, it may indicate that users are withdrawing, thus signaling a risk of collapse. If an NFT project's floor price drops by 50% within a week, it may mean a market sell-off, necessitating timely exit to mitigate losses.
Comparing similar projects can also reveal clues. For projects in the same field, if the data is significantly lagging or anomalous, or if historical data has shown abnormal fluctuations, caution should be exercised. For instance, in the Layer2 field, if a project's TVL growth rate is significantly lower than that of leading industry projects, it may indicate a lack of competitiveness, prompting users to remain vigilant.
Additionally, observing community atmosphere and team dynamics can help gauge a project's development trend through common sense. For instance, if a project has Discord or Telegram groups and the message volume suddenly drops or arguments increase within a period, along with data crashes, community panic, and unresponsive teams, it could be a sign that the project is in trouble.
Frequent changes in CTOs, sudden issuance of new tokens, and other behaviors also require vigilance. For example, a project's white paper promised 'no new issuance forever,' but secretly issued more than 300% of the tokens six months later, leading to a trust crisis, with the token's value dropping to zero in a short period. There are many such unfinished projects.
A project that can truly enable long-term profits for users must form a positive cycle in technology, economics, and community. When project teams start painting a picture with PowerPoint instead of proving with code, it often signals users to withdraw. Maintaining rationality, focusing on data, and using tools to combat information asymmetry is essential for steady progress in the Web3 wave.