Jiayi Li

Introduction
With the advancement of AI technology, the technical threshold for Web3 products has relatively lowered, thereby intensifying the competition for attention and liquidity in marketing. However, market capabilities have always been an important aspect that most project parties easily underestimate. Based on this, XDO attempts to launch this (Web3 Market Annual White Paper) to report market experiences: to decompose and share excellent marketing design ideas, hoping to assist entrepreneurs and industry practitioners.

In 2025, the changes in market activities are quite clear: project parties are forced to shift from previously over-pursuing 'seemingly prosperous' DAU to pragmatic goals such as transaction volume and TVL, which directly generate revenue data indicators. As a result, the number of activity templates has decreased, and the types of activities have become simpler, leading to a more pragmatic mindset among both project parties and users. Users also begin to pay more attention to the safety of their principal and the certainty of returns, while project parties focus more on obtaining real liquidity, real trading users, and sustainable business growth curves that can be seen by platforms and markets before listing.

Every time the market declines, the same scene always appears:
A group of people jumps out saying, 'See, I told you it was a scam';
Then when the market turns, it's the same group of people lining up, chasing highs, and shouting bullish.
This extreme back-and-forth of emotions has left me numb after eight years in this industry.
But the fact is:
When we talk about prices, we are actually talking about the future. Because prices are never 'now', but rather the market's discounting of the future. If we continue to focus only on prices, the future will slip away from us.
Moreover, there is a very real rule in bear markets: what everyone sees is a decline; what I see is stratification. Emotions are ebbing, the industry is filtering, and the future is being reordered.

I hope everyone is doing well recently. 👀
The market has been too unstable lately, with fast rhythms and sharp fluctuations; the more you do, the more mistakes you make.

Everyone's mindset is also visibly changing:
In the past, it was 'where there is a large gain, where there is an airdrop, just rush in',
now it has changed to — not losing is more important than anything else.

More and more people are switching their positions back to stablecoins; first, you have to ensure you stay in the game.
Because of this, I have been seriously looking at 'yield-generating stablecoins' recently.

But to be honest, there have been too many scary stories lately, and I am thinking more cautiously; I also want to share some insights with everyone.

In previous articles, I mentioned that the current cryptocurrency market is policy-driven. In fact, the surge of $OKB yesterday also indirectly confirmed this conclusion.

So, which sectors will benefit from this wave of policy dividends? Let's analyze them slowly (friendly reminder: this article contains financial insights).

My personal judgment is that stablecoins, on-chain financial infrastructure, and the ZK sector driven by compliance will be the first to reap the benefits, with different rhythms in other sectors.

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Let's first review the market hot spot $OKB from yesterday.

I firmly believe that this round of the crypto cycle is driven by U.S. government policies.

Early this morning, Trump signed an executive order regarding 401(k) retirement fund investments, allowing a portion of retirement funds to be invested in private equity, real estate, and even digital assets.

After this news, the market immediately welcomed a surge, with ETH breaking $3900 and BTC rising to over $117,000, while various altcoins experienced a wave of increases.

Looking back at the timeline: a few weeks ago, the GENIUS Act was officially passed, paving the way for stablecoin regulation; this month, the SEC also changed its stance, publicly declaring the intention to pursue 'Crypto Everything'.

⚠️⚠️⚠️ A must-read series for project parties — Learn how to market through collective mentality by following Shiyongxin.
In 1981, at 16 years old, Shiyongxin entered Shaolin Temple when there were only 9 monks, barely making a living by farming and incense offerings. In 1982, the film 'Shaolin Temple' starring Jet Li became a huge hit, bringing the once-forgotten ancient temple back into the public eye.
Shiyongxin's sensitivity allowed him to seize this once-in-a-lifetime opportunity 🌟; he did not invent Kung Fu, nor was he the strongest fighter, but he completed a historic mental binding: in the minds of global users, 'Chinese Kung Fu = Shaolin'. 🧠 From nothing to something, he began systematically organizing martial arts classics, founded a boxing research institute, promoted performances abroad, film licensing, and cultural publicity, gradually transforming Shaolin Temple from a religious site into a global cultural symbol.

In recent years, it has become standard practice for crypto projects to distribute airdrops just before the token generation event (TGE). By enticing users with free tokens, project parties hope to build enough hype and user attention before launch. However, the reality is often that projects 'peak upon launch,' with hype and prices rapidly falling in a short time. Users often immediately sell off their tokens after receiving airdrops, leading to pressure on the token market, cooling community enthusiasm, and the user base that the project party just built collapsing.
Although the traffic brought by airdrops is considerable in the short term, it is difficult to truly solidify into community assets or product users. Due to the lack of real commercial scenarios supporting most projects, after airdrops, they often have to rely on continuing to issue tokens to maintain user activity, and this incentive mechanism essentially overdrafts future value. Ultimately, most of these tokens and user traffic flow into the arbitrage cycle of 'wool party,' and resources that truly support project development are wasted instead. What was originally designed to kickstart the ecology has instead become a burden that weakens the project's vitality.

To those feeling lost during this period of blockchain transformation:
Some call crypto a Ponzi scheme, a bubble, a speculative game bound to collapse. Others see Web3 as a revolution, a paradigm shift, a new phase of civilization built on continued technological progress.
These are two opposing viewpoints, but before choosing a side, let’s look at a simpler truth. The core logic of business has not changed.
Web2 evolved from portals to apps. Web3 is shifting from token launches and storytelling to infrastructure building. Underneath the surface, both are following the same trajectory. The difference is that this time the story lives inside the protocol, and capital is embedded in the code.
Over the past decade, the development of the Internet followed a clear path: narrative-driven fundraising, traffic acquisition through subsidies, a shift toward operational efficiency, and then consolidation into platforms. Web3 is now entering similar territory.
In the past year, projects have competed to attract users through token generation events and airdrops. No one wants to be left behind, but no one knows how long this user-acquisition war will last.
This article breaks down the seemingly chaotic narrative into clearer stages. By retracing history, we can better understand how Web3 reached this point, and where it may be heading.

Internet Evolution: From Incentive Frenzy to Industrial Coordination
Most remember this era well:
The early internet felt like a nationwide carnival of freebies. Dozens of apps battled daily to "subsidize your life" – a single phone number could net you free meals, taxi rides, haircuts, or massages. It was a bonanza fueled by venture capital, a festival of pure user acquisition.
Today's internet operates as a well-oiled, mature system. Users instinctively know where to find the best deals and which specialized app delivers peak efficiency for each task. The ecosystem has largely solidified, its major players entrenched. True innovation now lives not in flashy growth hacks, but in relentless operational refinement – squeezing out marginal gains within established structures.
This recap sets the stage. We'll briefly outline four key phases of this evolution – understanding this trajectory is crucial for recognizing the strikingly similar path Web3 is now treading.

1. Narrative-Fueled Innovation (Pre-2010): The Era of Buzzword Alchemy
This was an age where trends were defined by buzzwords, and "Internet+" functioned as a master key. Whether in healthcare, education, transportation, or local services, slapping this label onto any venture could unlock venture capital and attention.
Entrepreneurs prioritized claiming a trendy sector, crafting a grand concept, and perfecting the pitch deck over building functional products. Investors chased big, novel, easily imaginable stories – not revenue curves or traction.

Wave after wave of hyped concepts – O2O, social commerce, the sharing economy – propelled valuations skyward. Fundraising cadence danced entirely to the rhythm of the prevailing narrative. The most prized asset wasn't a user base, a working product, or data; it was a compelling pitch deck perfectly timed with the hype cycle.
It was fundamentally an era of "first-mover advantage in storytelling." Securing a spot on the hype train was step one; validating the product or proving the business model came later. Getting your narrative airborne was the essential ticket into the competitive arena.

2. Subsidy Wars and Traffic Competition (2010–2018)
If the previous era was about winning attention with narratives, this phase was defined by buying market share outright with capital-fueled subsidies.
The industry became locked in a singular, high-stakes playbook: trade capital for scale, price for habit, and losses for market access. From the brutal ride-hailing wars between Uber and Lyft to the frenzied scooter/bike-sharing clashes involving Bird, Lime, and others, the rule was clear: survival depended on burning more cash than rivals and securing the next massive funding round. Expansion was fueled purely by financial firepower.
User acquisition trumped all else. Product quality, operational efficiency, and sustainable unit economics were secondary. The paramount goal was becoming the user's reflexive, default choice – the first app they opened for a specific need.
Subsidies escalated into an arms race. Rides cost under $5. Scooters unlocked for pennies. Restaurant delivery fees vanished. QR codes plastered on storefronts promised free meals, haircuts, or services – all luring users with near-zero costs. While appearing as service democratization, this was fundamentally a capital-intensive battle for traffic dominance, orchestrated by investors pouring billions into user acquisition.
Victory wasn't about building a superior product or solving problems better. It was about outspending competitors to "fence in" users – land-grabbing at unprecedented speed and scale

This era, while achieving massive user adoption, planted the seeds for the inevitable reckoning to come. Users acquired primarily through subsidies proved inherently difficult to retain. Growth models driven entirely by external capital were fundamentally unsustainable and incapable of achieving self-contained profitability ("self-looping"). The colossal spending created scale, but it was scale built on shaky, non-viable foundations, setting the stage for the harsh pivot to efficiency and unit economics that defined the next phase.
3. Refined Operations and Business Efficiency (2018–2022)
Hype no longer worked on its own. The key question became: what happens after you grow?
From 2018 onward, mobile internet user growth decelerated significantly. Traffic dividends diminished, and customer acquisition costs soared relentlessly. Market saturation became evident – user bases plateaued, leaving little room for explosive expansion.
This shift triggered a widespread reckoning. Countless venture-backed, "story-driven" projects, built on shaky models lacking intrinsic user loyalty or viable monetization, collapsed. Sectors like on-demand services (O2O) and the sharing economy witnessed particularly intense consolidation, with numerous players fading away.
Yet, amidst this retreat, resilient winners emerged. Their common denominator wasn't just bigger visions, but sturdier foundations: they achieved closed-loop business models. This meant integrating real, essential user scenarios with robust system capabilities to create self-sustaining value engines.
Uber (including Uber Eats): Evolved beyond ride-hailing to build a comprehensive local services ecosystem. They mastered the end-to-end chain – from discovery and booking to fulfillment and payment – becoming essential platform infrastructure for daily urban life.Amazon: Leveraged unparalleled operational precision and supply chain mastery to dominate e-commerce. They achieved deep penetration across diverse demographics by relentlessly optimizing efficiency and value.Meta (Facebook/Instagram): Maintained an iron grip on social networking, owning the primary platforms for user connection and attention.Alphabet (Google): Cemented dominance in search and digital advertising, the core infrastructure for online discovery and commerce.Major Gaming Studios (e.g., Activision Blizzard, Epic Games): Concentrated power in the gaming sector, building massive, engaged communities.
The critical differentiator for these survivors was structural integrity: successfully transforming user growth into sustainable retention and value realization. They moved beyond hype to build self-reinforcing systems where efficiency, product excellence, and operational execution create a virtuous cycle.
This phase marked the end of narrative-driven expansion. Survival demanded self-contained business logic: the ability to retain users effectively, support a viable economic model, and maintain a structurally sound operational system.
Success was no longer about narrative. It came from building internal coherence, retention, and long-term value.

4. Ecosystem Stabilization and Technical Breakouts (2023–Present)
Dominant platforms emerged, shifting competition from user grabs to ecosystem strength and internal synergy. The landscape stabilized, with closed-loop efficiency becoming the key moat.
New entrants face hardened barriers. Growth now requires embedding into systemic capabilities, not just speed or funding. Platforms evolved:
Meta (Facebook) integrates Facebook Messenger, mini-apps, and ads. Amazon restructures its commerce and logistics operations into tighter loops.
Breaking in demands finding structural gaps or technical edges. TikTok (ByteDance) succeeded not by fighting within existing systems, but by redefining content distribution through algorithms, creating a new user paradigm and monetization loop.
This proves innovation is possible even in rigid structures, but it requires faster, sharper, system-level disruption – like what Web3 now attempts.

Web3: A Parallel Mirror of Internet Evolution
The rise of Web2 reshaped industries through mobile internet and centralized platforms. In parallel, Web3 initiates its own systemic rebuild, founded on decentralized finance (DeFi), smart contracts, and on-chain infrastructure.
The core difference lies in structure: Web2 forged strong links between platforms and users. Web3, conversely, fragments and redistributes ownership, aiming to reorganize incentives and structures directly on-chain.
Yet the underlying evolutionary rhythm mirrors Web2 precisely: A story-driven launch phase ignites interest, followed by capital-fueled expansion (though fueled by tokens, not just VC dollars), and ultimately a focus on systemic strength and self-sustaining ecosystem flywheels.
It's not just similar – it's a structural replay. The tools differ: token incentives replace cash subsidies; modular protocols build instead of monolithic apps; competition shifts to metrics like TVL, active wallets, and airdrop farming. But the core journey from hype, to scaling, to systemic efficiency remains a distinct parallel.
We can map Web3's ongoing development into roughly four analogous phases

Stage 1: Concept-Driven Stage – Token-Powered Launch: Narrative First, Capital Floods In
Much like Web2's start relied on templates of "Internet-enabled disruption," Web3's genesis was written in Ethereum's smart contracts.
The 2015 launch of Ethereum and its ERC-20 standard democratized token creation, providing a standardized toolbox for asset issuance. While not altering fundraising's core logic, it drastically lowered the technical barriers to launch, distribute, and incentivize. This birthed the early Web3 blueprint: technical narrative + smart contract deployment + token incentives.
This explosion was fundamentally tech-layer driven – blockchain, for the first time in a standardized form, empowered entrepreneurs, shifting asset issuance from permissioned to permissionless.
The bar was remarkably low: No mature product or user base was needed. A compelling whitepaper outlining a blockchain-driven vision, an enticing token model, and functional smart code were enough to rapidly close the loop from idea to funding. Early innovation stemmed less from project brilliance and more from the unlocking of foundational blockchain possibilities.
Capital swiftly adapted its "betting mechanism": First-movers in new narratives and token launches captured outsized, exponential returns.
This fueled unprecedented capital efficiency. The 2017-2018 ICO boom became one of blockchain's most iconic and contentious phases. Valuations skyrocketed on promises alone, far outpacing product development. Projects like Telegram ($1.7B raise) and EOS ($4.1B raise) shattered records. During this "blockchain-everything" window, attaching the right label and narrative could pre-fund massive future valuations (DeFi, NFT, Layer1, GameFi...) long before tokens traded or products existed.
It created a low-barrier entry to capital markets and a clear exit playbook: secure early private positions, hype the narrative for public liquidity, and exit during peak frenzy. Pricing hinged not on progress, but on first-mover advantage, narrative hype, and timing liquidity releases.
This was the defining characteristic of a new paradigm's infancy: infrastructure just functional, cognitive maps empty – price discovery raced far ahead of product reality.
Thus emerged Web3's "Narrative Dividend Era": value defined by story, exits driven by sentiment. Projects and capital operated within a liquidity-driven structure, locked in a cycle of mutual reinforcement seeking certainty in a fundamentally speculative space.

Stage 2: Subsidy Wars Redux – Token Incentives & The Battle for Users
The landscape shifted with Uniswap's landmark 2020 airdrop – gifting early users 400 UNI (then ~$1,200). Marketed as gratitude, the industry saw its true power: the ultimate cold-start catalyst.
This act opened Pandora's box. Projects realized tokens could buy perceived loyalty, inflate traffic, and fabricate community hype. Airdrops morphed from gesture to mandatory playbook.
A formula emerged: promise a future airdrop, deploy points systems and interaction quests ("do X for Y points"), track via Snapshot – all designed to artificially pump metrics pre-Token Generation Event (TGE). Nearly every new project adopted this "incentive-first launch" module.
The result was an epidemic of incentive-driven illusions, not value-driven growth. On-chain data skyrocketed pre-TGE – millions of claimed users, hundreds of thousands of daily active wallets. Founders basked in the mirage of success. Post-TGE, the facade crumbled. Activity plummeted as abruptly as it surged. (Recall Fusionist in 2024: DAU soared to 40k pre-Binance listing, then plummeted to near zero immediately after).

Let's be clear: Airdrops aren't inherently flawed. Their core function – bribing user behavior – is an effective, capital-efficient tactic for bootstrapping initial traction. But their marginal utility is rapidly diminishing as the formula becomes saturated.
The critical failure lies beyond the airdrop: Can your core product utility and commercial logic retain users after the free tokens stop flowing? This is the true test of value – the only sustainable path to survival (projects surviving purely via secondary market manipulation are excluded here).
Ultimately, bribing users is not sustainable growth. Without a solid product foundation and a closed-loop business model, airdrops merely extract value from the project or its eventual token holders. When the token itself becomes the sole reason for user action, departure is inevitable the moment the TGE rewards end. Users simply walk away.
Stage 3: Commercial Validation Stage – Proving Real Utility
The relentless airdrop frenzy forced a reckoning: "What problem are we solving? For whom? Why stay after the tokens run out?" Many founders, when pressed with "Then what?" after touting token-fueled growth, fell silent – their models lacking answers beyond the incentive drip.
Simply bribing interaction is unsustainable. If that's the goal, launching a meme coin is clearer – it sets honest expectations as a pure sentiment play, demanding no long-term commitment.
The critical shift arrived: focusing on concrete use cases, genuine user needs, and robust product architectures. Survival now demanded anchoring growth in tangible utility and closed-loop systems, not just speculation.
Take Kaito. Frankly, I find its core logic problematic – it represents the pinnacle of a "bribery culture," heavily exploiting token incentives to repackage content exposure. KOLs essentially get paid (in tokens) to shill projects on the platform. It's a cycle where exposure is subsidized by token emissions, yet crucially, key actors (KOLs/projects) remain engaged on Kaito post-TGE for the access it provides. Many KOLs likely see the long-term unsustainability, but in a structurally opportunistic market, "strategic compliance" becomes the rational choice. Despite ethical concerns, Kaito works commercially: its pre-TGE hype became a market-capture accelerator, and activity persists.

More encouragingly, a wave of projects is building around authentic scenarios: refining trading experiences, deepening DeFi utility, or establishing foundational identity systems. These teams identified the right verticals at the right time. By obsessing over real product-market fit, they're forging sustainable industrial pathways – creating virtuous cycles from usage to retention, and retention to value capture.
Leading exchanges epitomize this structural evolution. They've mastered turning high-frequency demand into structural traffic, then closing the loop through integrated assets, wallets, and ecosystems. They represent the clearest "structural maturity line" in Web3 today.
Stage 4: Structural Consolidation – Platforms Solidify, Variables Narrow
Achieving a self-sustaining commercial loop is now the entry ticket for lasting industry influence. Projects must demonstrate a viable, closed system linking users, utility, and value capture.
Binance exemplifies this evolution: starting with core trading, it orchestrated a comprehensive flow integrating liquidity, asset issuance, on-chain expansion, and user onboarding – becoming a cross-chain, on/off-ramp ecosystem.Solana solidified its position by coupling raw performance with developer tooling and community engagement, forging a resilient feedback loop between tech, builders, and users.
This marks the industry's shift from experimental chaos to structural sedimentation. Competition is no longer about raw speed, but systemic integrity and completeness.
Yet consolidation doesn't mean innovation dies. True breakout opportunities exist not for the loudest narratives, but for projects that can either strategically "fill a gap" within the existing structure or fundamentally "reconfigure the model" itself.
Recall ByteDance (TikTok) in the mobile internet era? It didn't challenge giants head-on; it redefined content distribution through algorithms, exploiting a structural weakness.
We stand at a similar inflection point driven by AI. I believe the next defining Web3 project will emerge at the intersection of blockchain and AI, leveraging this convergence to rapidly validate a novel structure and achieve true industrial breakthrough and self-containment.
Just as the Web2 platform era birthed giants and disruptive edge players like ByteDance, Web3's structural phase will inevitably incubate its own "edge disruptors." These winners will exploit structural gaps or technological shifts with precisely engineered systems.
Envision the possibilities:
Infrastructure: Next-gen base layers purpose-built for the AI-native era, accelerating AI-driven tech and products – echoing Ethereum's foundational role in blockchain 1.0.Applications: DApps leveraging AI to shatter Web3's notorious user barriers and disrupt entrenched commercial models, making blockchain truly accessible and useful.
If asked about Web3's future path, I'd answer:
Like the internet before it, its transformative potential lies not just in blockchain itself, but in the next phase – when blockchain recedes into essential infrastructure. Then, new systems will emerge, fundamentally reshaping usage patterns, collapsing coordination costs, and finally birthing products and systems that truly work for the masses.

To those who are confused during the blockchain transformation period
Some say Crypto is a Ponzi scheme, a bubble, a speculative game destined to return to zero.
Some say Web3 is a revolution, a paradigm shift, a new stage of civilization on top of technological continuation.
Two voices, a scene of narrative tearing.
Don't rush to take sides, let's talk about a more simple conclusion:
The underlying logic of business has not changed.
Whether it is Web2 from portals to Apps, or Web3 from issuing coins and telling stories to focusing on infrastructure, behind the prosperity, it is actually taking the same old road - only this time, the narrative is set on the protocol, and the capital is hidden in the code.

As a primary market investor with a market background,

It has always been a fund I respect, and its research and investment level is still on point. Seeing

the boss's tweet announcing a pause button, to be honest, I felt reasonable after being surprised for less than a second.
At this moment, I want to share my view of the primary market:
🪫“Evil Dragon” VC :

Is VC really the 'evil dragon' that users say is harvesting retail investors together with project parties?

The core reason for the dilemma faced by primary market VCs today still lies in unlocking this issue. A report on VC tokens from BN indicates that users are generally silent towards VCs, making VCs seem to be the culprits behind users losing money and poor price performance in the secondary market of projects. 'It must be that VCs and project parties are jointly harvesting retail investors,' is what users think.

Solana's top narrative for 2025, a comprehensive interpretation of Solayer, SOON, and Sonic SVM.
Written by: JiaYi
What would the crypto world look like if Ethereum achieved 10,000 TPS or more in another parallel universe?
As the most anticipated new narrative for the Solana ecosystem in 2025, the Solana Virtual Machine (SVM) seems to be gradually bringing this hypothesis to reality through three breakthrough players—Sonic, SOON, and Solayer.
Especially against the backdrop of Solana's new narrative needing a transition in 2025, these three leading players in the SVM ecosystem are attempting to address the industry's ultimate proposition of 'high concurrency, low latency, and cross-chain compatibility' through differentiated technical paths. This article will also dissect the deeper logic of this SVM arms race from three dimensions: underlying architecture, ecological strategy, and market positioning.