The Evolution of Economic Models in Web3 Applications: From Ponzi to Sustainability

Recently, I participated in a discussion about on-chain game assets, where a guest raised the issue that the current GameFi lifecycle is too short. This prompted me to think about the economic models of Web3 applications, and why most projects initially exhibit Ponzi characteristics?

To understand this issue, we need to review the evolution of the business model:

Three Stages of Business Model

Phase 1: Product Party vs User

Before the rise of the internet, product providers sold products directly to users, and users paid for the basic functions of the products. This was a simple one-way relationship.

Phase 2: Product Party vs Platform Party vs Users

In the internet age, the role of the platform provider has emerged. The platform provider utilizes technological advantages to gather users, charges fees from product providers, and monetizes user traffic through advertising and other methods. To acquire customers, platform providers often attract early users through subsidies and other means.

This stage shows bilateral growth, but users are ultimately still the objects of consumption. Even with the emergence of new models like influencer marketing, it is essentially still about finding more effective ways to get users to spend money.

Phase Three: Product Party vs Decentralized System vs Users

The ideal state of the Web3 era is to replace centralized platforms with a decentralized system. This system consists of various protocols and embodies characteristics such as decentralization, privacy protection, and consensus verification.

For users, it is mainly reflected in the following points:

1. You can have complete control over your digital assets.
2. Personal information is decided by oneself whether to be used for business cooperation.
3. Have voting rights and can participate in decision-making.

The Predicament of Current Web3 Applications

Despite the beautiful concept of Web3, most projects currently still exhibit Ponzi-like characteristics and have a short lifecycle. The fundamental reason is the lack of genuine product providers at this stage.

The ideal "product party vs decentralized system vs users" model actually only exists as "decentralized system vs users". Without a final paying product party, each team can only game with users, competing in their ability to deceive and their speed of escape.

Currently, the appeal of Web3 applications to ordinary users is still insufficient. Whether it's DeFi, SocialFi, or GameFi, it is difficult to convince Web2 users of the necessity to try them. The core issue is that these applications have not yet truly addressed the pain points of the Web2 world.

The Future Development of Web3

Web3 is not a false proposition; it is just in the early stages, and both the infrastructure and product forms need improvement. Looking back at the development over the past few years, we can see that Web3 is continuously evolving:

• DeFi has established a decentralized financial ecosystem.
• NFTs are beginning to show characteristics of value accumulation.
• Chain games are trying to break through the limitations of pure Ponzi schemes.

This process may take a long time. Referring to the development of AI, it also took more than a decade from the proposal of deep learning theory to widespread application.

In the foreseeable future, the "decentralized system vs users" model lacking real product parties will continue, and the characteristics of a Ponzi scheme will be difficult to completely eliminate. However, there is no right or wrong in the Ponzi model itself; the key lies in how to design it to be more elegant and sustainable.

Conditions to Escape the Pure Ponzi Model

To attract real product parties to enter the Web3 field, the following conditions must be met:

1. Regulations are clear worldwide
2. The infrastructure is complete, and security is guaranteed.
3. The decentralized concept has gained widespread recognition.
4. Pain points that are difficult to solve with Web2

As these conditions are gradually met, the economic model of Web3 applications is expected to transition from a purely Ponzi scheme to sustainable development. This process may take quite a long time, but it is worth looking forward to.