IOSG: Web3 consumer application paradigm and investment theory thinking

In the past period of time, Alliance DAO has gained great influence by successfully incubating Web3 consumer applications such as Pump.fun and Moonshot. This article first summarizes Alliance DAO's investment philosophy on the Web3 consumer track, and puts forward its own observations on the track, to review the current mainstream paradigm of Web3 consumer applications, challenges and potential opportunities, and finally summarizes our thoughts on the investment theory of Web3 consumer applications.

Alliance DAO’s incubation of Web3 consumer track

Since its launch, Alliance DAO Accelerator has incubated or invested in 28 Web3 consumer applications. They can be roughly divided into 7 categories:

1. Life Style Class

• Definition: Projects aimed at fostering users' novel and healthy lifestyles through Web3;

• Number: 3;

• Specific items:

  • StepN: Web3 life application, the core innovation mechanism is Move to earn, users can purchase NFT running shoes, track user sports data, and give token rewards.

  • Sleepagotchi: Web3 sleep monitoring and Sleep-to-Earn sleep-aid game mobile application, card gacha development game, sleep acquisition token, use token to participate in gacha card drawing.

  • GM: Web3 AI Agent for Health Management, leverages AI to improve health and gain benefits

2. Games class:

• Definition: Web3 game or GameFi;

• Quantity: 10;

• Specific items:

  • Axie Infinity: Axie Infinity is a card game developed by Sky Mavis that allows players to breed, raise, fight and trade Axie creatures.

  • Genopets: Genopets is a Move-to-Earn NFT mobile game on Solana that makes a positive lifestyle fun and beneficial. Genopet is a player's digital pet whose evolution and growth are inseparable from his own. As players explore, fight and evolve, the steps they take every day provide motivation for their journey in Genoverse – earning cryptocurrencies in the game.

  • Nine Chronicles: Nine Chronicles is a decentralized card fighting RPG game.

  • Chibi Clash: Chibi Clash builds a Web3 gaming world centered on its flagship automatic fighting game. Inspired by Hearthstone gameplay and the art style of Adventure Island, Chibi Clash Auto Battler is an asynchronous PvP game where players can recruit, upgrade and dispatch troops to battle.

  • Primodium: Primodium is building a fully on-chain, open source, composable game with players aiming to gain control of the map, research technology and expand their factories.

  • Starbots: Starbots is a robot vs. NFT game where players can create fantasy robots to fight other competitors and then collect NFT items and tokens.

  • Legends of Venari: Legends of Venari is a blockchain gaming startup that creates an exploratory bioassembly role-playing game. In Legends of Venari, players can trap, tame and collect Venari creatures in player-driven sandboxes, competing for turf and rare resources.

  • Force Prime: Force Prime is a full-chain strategy Web3 game platform that provides multiplayer hero combat experience. Players can cultivate and customize their own heroes to fight against players around the world.

  • Amihan: The first game of the game studio FARM FRENS, TG Casual Farm Mini Game.

  • Wildcard: Wildcard is a Web3 card collection game for gamers, fans and collectors.

3. Crypto speculation category:

• Definition: Focus on related products that meet users' Crypto speculative needs;

• Number: 3;

• Specific items:

  • Pump Fun: Pump is a meme coin launch platform where users can launch a token that can be traded immediately without providing liquidity.

  • Moonshot: Moonshot is a platform for discovering, buying and selling Meme coins, which enables users to deposit cash with credit and debit cards, and cash out assets at any time through bank transfers.

  • Candlestick: Candlestick is a crypto opportunity radar powered by actionable trading signals and forecasts that provide a wealth of data on the tokens with the largest gains, maximum declines and highest trading volume.

4. SocialFi Class:

• Definition: Tokenize users’ influence on social media platforms to form new speculative target projects;

• Quantity: 6

• Specific items:

  • fantasy.top: Fantasy is a SocialFi Trading Card Game (TCG) where players can compete in online games using the crypto-influencers of Twitter’s platform’s trading card, using their social capital and research expertise to monetize.

  • 0xPPL: A decentralized social network for cryptocurrency native users, aggregates users' content on Lens, Farcaster, and Twitter, and encapsulates some Crypto functions.

  • time.fun: time.fun is a time tokenization platform that allows time holders to connect with fans. As time holders provide more value to their fans, their time value will naturally increase due to market demand. Time holders can earn ETH from transaction fees and redemptions whenever someone trades their time.

  • fam.: Fam is a web3 native community center for discovering, organizing and enjoying activities for web3 families. fam.Use on-chain identity so that users can easily find and collect peer holders no matter where they are.

  • Tribe.run: Tribe is a crypto-social protocol based on Solana. SocialFi, private groups, you need tokens to enter groups, you can speculate, you can start video or voice live broadcasts, etc.

  • EarlyFans: EarlyFans is a SocialFi product on Blast L2. Creators can make public commitments through EarlyFans and auction the promise. At the same time, fans can also take the initiative to initiate bribery and auction the bribery rights. If the creator refuses or expires, all funds will be returned.

5. Creator Economics:

• Definition: A Web3 content distribution platform that provides a new economic model for content creators (text, video, art, etc.);

• Quantity: 2;

• Specific items:

  • Koop: Koop enables any creator, collector or community to organize and raise funds through NFT art or collector pass. Funds from collector passes form the treasury (or banks) of each community to support their on-chain projects and tasks. The community can then directly manage their finances, leverage the unique skills of its members, and manage their organization in a fun and social way.

  • CreatorDAO: CreatorDAO is a decentralized autonomous organization (DAO) focused on accelerating the careers of creators and giving them shared access to capital, technology and community. CreatorDAO provides creators with the professional tools they need to guide, grow their brand, and the community to invest in each other’s success.

6. Finance:

• Definition: Products designed to reduce the cost of users' use and management of Crypto, such as deposits and withdrawals;

• Number: 3;

• Specific items:

  • Hana Network: Hana Network is a hyper-leisure financial system with social network effects and has launched Hana Gateway, a fiat deposit and withdrawal solution, aimed at enabling user-driven distribution through existing open social networks.

  • P2P.me: A decentralized Indian deposit and withdrawal platform, the off-chain part improves security through reputation system and privacy through ZK.

  • Offramp: Offramp is a decentralized decentralized fiat channel protocol that allows anyone in the world to quickly enable/exit cryptocurrency, fully self-custodial funds, no KYC and low fees.

7. Tools:

• Definition: Products that solve users' actual life problems, such as Web3 maps;

• Quantity: 1;

• Specific items:

  • proto: Indian version of Google maps, Proto is a user-generated, token-incentive mapping platform designed to change the geospatial data industry. Through decentralized data collection, Proto is able to provide high-quality real-time map data at a fraction of the cost of traditional methods. Proto's unique approach allows it to easily penetrate dense, complex areas, providing businesses with accurate and up-to-date data that meets their needs.

From the perspective of investment preference development trends, Alliance DAO has started investment and incubation of Consumer projects in 2021. From 2021 to the first half of 2023, its main investment and incubation directions focus on Games and creator economic projects. From the second half of 2023 to 2024, its preferences have been switched to Crypto speculation, SocialFi and Finance.

The author tracked some articles, podcasts and other content published by Alliance DAO, and summarized its investment philosophy on the Web3 consumer track, as follows:

1. First of all, it believes that the basic ecological tools have become increasingly perfect, and more application layers need to bring real value to the ecology;

2. The founding team should focus on PMF. Generally, in the market verification process, two risks are usually faced, product-side risk and market-side risk. The market-side risk of the Consumer project is greater, so it is necessary to consider avoiding the introduction of tokens too early to cause distortion of the PMF verification results.

3. The target users of Web3 consumer applications can be divided according to the coordinates of acceptance of Web3. The left side is non-Web3 ordinary users and the right side is Web3 Native users. In the application design of users on the left, the Web3 elements mainly reduce customer acquisition costs through "advertising tokens" and seize more market share. The users on the right side need to focus on asset-based new targets, bring additional investment and speculative needs, or solve the unique needs of Web3 native users. Judging from the results, its current preference is more focused on the latter.

4. Make it clear that the user portraits of Solana ecosystem and EVM ecosystem are different. The former is more conducive to the success of Consumer application. There are four reasons:

• More dynamic communities: Solana users are enthusiastic about participating in new projects, especially for projects with speculative potential, which may be related to wealth effects;
• Stronger and efficient ecological resource support: Solana's core ecological members embrace the community more, have strong community mobilization capabilities, and respond more quickly to new projects.
• Faster and lower cost infrastructure: aimed at building on-chain Nasdaq, with low transaction costs and high confirmation speeds, and because the basic components are not distributed and more simplified in pursuit of ease of use, the learning cost for new users is relatively low.
• Higher product competition barriers: Solana DApp has higher cost of copying due to the use of non-EVM technology selection.

What is a Web3 consumer application

The so-called consumer applications, which are To C applications in the Chinese context, means that your target users are most ordinary consumers, not enterprise-level users. Open your App Store, and all the applications in it fall into this category. Web3 consumer applications refer to those consumer-oriented software applications with Web3 characteristics.

Generally speaking, according to the categories in most App Stores, we can roughly divide the entire consumer application track into the following 10 categories, and each category will have a different subdivision. Of course, as the market matures, many new products will combine multiple characteristics to a certain extent in order to find their own different selling points, but we can still simply classify them according to their own core selling points.

**Web3 consumer application paradigm and its opportunities and

challenges**

Based on the analysis of Alliance DAO's investment philosophy and its own observations, the author believes that there are three common paradigms for Web3 consumer applications:

1. Use the technical characteristics of Web3 infrastructure to optimize the problems existing in certain traditional consumer applications:

This is a relatively common paradigm. We know that a large amount of investment in the Web3 industry revolves around infrastructure construction, and application creators who adopt this paradigm hope to take advantage of the technical characteristics of Web3 infrastructure to enhance the competitive advantages of their own products, or provide new services. Usually we can classify the benefits brought by these technological innovation directions into the following two categories:

• Extreme privacy protection and data sovereignty:

  • Opportunity points: The privacy track has always been the main theme of Web3 infrastructure innovation. From the initial identity confirmation system of asymmetric encryption algorithms, many software and hardware technologies have gradually been integrated, such as ZK, FHE to TEE, etc. A number of technology experts in Web3 seem to uphold the extreme sexual misconception, aiming to create a network environment that does not rely on third-party trust and provide users with information or value interactions. The most direct benefit of this technical feature is that it brings data sovereignty to users, and personal privacy information can be directly hosted in local trusted software and hardware devices, avoiding the leakage of privacy information. There are many applications for Web3 consumers that optimize this technical feature. Any project that claims to be a decentralized XX belongs to this type of paradigm, such as decentralized social media platforms, decentralized AI models, decentralized video websites, etc.

  • Difficulty: After years of market verification, it can be said that this is the core selling point and has not been observed in market competition. There are two reasons. First, the importance of consumer users on privacy is based on large-scale privacy leakage and infringement incidents. However, in most cases, the formulation of more perfect laws and regulations can effectively alleviate this problem. Therefore, if the protection of privacy is based on more complex product experiences or more expensive usage costs, its competitiveness will be obviously insufficient. Secondly, we know that the current business model of most consumer applications is based on the value of big data extraction, such as precision marketing. Excessive emphasis on privacy protection will shake the mainstream business model because user data will be scattered among a number of data islands, which brings difficulty to designing a sustainable business model. If you can only rely on the so-called "Tokenomics", you will have to introduce unnecessary speculative attributes to the product. On the one hand, this disperses the team's resources and energy to deal with the impact of this attribute on the product. On the other hand, it is not conducive to finding PMF. This will be analyzed in detail below.

• Low-cost global and 24/7 trusted execution environment:

  • Opportunity points: The emergence of many L1 and L2 provides application developers with a new, global, and trusted program execution environment that runs 24/7. Generally speaking, traditional software service providers independently maintain their own programs, such as running on their own server clusters or clouds, which naturally brings trust costs when businesses involving multi-party collaboration, especially when the strength or scale between multiple parties is balanced, or when the data involved is particularly sensitive and critical, and this trust cost is usually converted into huge development costs and user usage costs, such as cross-border payments and other scenarios. Using the execution environment brought by Web3 can effectively reduce the costs associated with opening such services. Stablecoins are a good example of such applications.

  • Difficulty: From the perspective of cost reduction and efficiency improvement, this is indeed a competitive advantage, but it is relatively difficult to explore application scenarios. As mentioned above, only in a certain service, if multiple parties are involved in collaboration, and the relevant entities are independent, the scale is balanced, and the data involved is particularly sensitive, the use of this execution environment brings benefits, which is a relatively harsh condition. At present, it seems that most of this type of application scenarios are concentrated in the field of financial services.

2. Use crypto assets to design new marketing strategies, user loyalty programs or business models:

Similar to the first point, application developers who adopt this paradigm also hope to add competitive advantages to their products in a relatively mature and market-verified scenario by introducing Web3 attributes. However, this part of application developers prefer to design better marketing strategies, user loyalty plans, and business models by introducing crypto assets and using the extremely high financial attributes of crypto assets.

We know that any investment target has two values, commodity attributes and financial attributes. The former is related to the use value of the target in a certain actual scenario, such as the habitable attributes of real estate assets, while the latter is related to its transaction value in the financial market. This transaction value in the crypto asset field usually comes from the investment airport scenario brought by circulating and high volatility. Crypto assets are an asset class whose financial attributes are much higher than commodity attributes.

In the eyes of most such application developers, introducing crypto assets can usually bring three benefits:

• Reduce customer acquisition costs through Token-based marketing activities such as Airdrop:

  • Opportunity points: For most consumer applications, low-cost customer acquisition is a key issue in the early stages of the project. With its extremely high financial attributes and assets created out of thin air, tokens can significantly reduce the risks of early projects. After all, compared to directly using real money to buy traffic, expose, and using tokens created at zero cost to capture users is indeed a cost-effective choice. From a certain perspective, this type of token is similar to an advertising token. There are many projects that adopt this paradigm, such as most TON ecological projects and mini-games belong to this category.

  • Difficulty: This method of customer acquisition mainly faces two problems. One is the cost of conversion of seed users through this. We know that most of the users attracted by this plan are cryptocurrency speculators, so these users are not so concerned about the project itself. They are more concerned about the potential financial attributes. Moreover, there are currently a large number of professional airdrop hunters or hair-pulling studios, which brings great difficulties to convert them into real product users in the later stage. It may also cause the project to misjudgment of PMF, thereby causing excessive investment in the wrong direction. Secondly, with the large number of applications of such models, the marginal benefits of acquiring customers with Airdrop are reduced, which means that if you want to establish sufficient attractiveness among the cryptocurrency speculator group, the cost will gradually increase.

• User loyalty program based on X to Earn:

  • Opportunity points: Retention and promotion of activation are another concern for consumer applications. How to ensure that users continue to use your products requires a lot of energy and cost. Similar to marketing, using the financial attributes of Tokens to reduce the cost of retention and activation has also become the choice of most such projects. A more representative model is X to Earn, which is based on the token rewards for pre-set key user behaviors, and establishes a user loyalty program based on this.

  • Difficulty: Relying on users' motivation to earn profits will drive users' attention to the product from the product function itself to the rate of return. Therefore, if the potential rate of return decreases, users' attention will also be quickly lost, which is a great harm to consumer applications, especially some products that rely on a large amount of UGC. If the yield is based on the price of the token issued by oneself, it will put pressure on the project party to manage the market value, especially in the bear market stage, and have to bear high maintenance costs.

• Use the financial attributes of Token to directly monetize:

  • Opportunity points: For traditional consumer applications, there are two most common business models. One is free use, using large-scale adoption of platform traffic value, and the other is paid. If you want to use some Pro services in the product, you need to pay a certain fee. However, the former has a longer period, while the latter is more difficult. Therefore, Token has brought a new business model, that is, to use the financial attributes of Token to directly cash out, that is, to directly sell coins to cash out the project.

  • Difficulty: It can be clearly stated that this is an unsustainable business model. The reason is that when the project development passes through the early high growth stage, due to the lack of incremental capital inflows, this zero-sum game model will inevitably allow the interests of the project party to stand opposite to the user's interests and accelerate user loss. If it is not actively cashed out, due to the lack of robust cash flow revenue, the project party can only rely on financing to obtain funds to maintain the team or business expansion, and this will fall into the dilemma of relying on the market environment in his eyes.

3. Fully serves Web3 native users and solves the unique pain points of this part of users:

The last paradigm refers to consumer applications that fully serve Web3 native users. According to the direction of innovation, it can be roughly divided into two categories:

• Construct a new narrative, monetize the design around certain unmined value elements of Web3 native users, and create new asset classes:

  • Opportunity points: By providing new speculative targets (such as SocialFi track) for native Web3 users, the advantage is that they have the right to pricing a certain asset in the initial stage of the project, thereby obtaining monopoly profits. This can only be achieved through fierce market competition in traditional industries.

  • Difficulty: Frankly speaking, this paradigm relies more on team resources, that is, whether it can be recognized and supported by people or institutions with strong appeal among native Web3 users, or with the "pricing rights" of crypto assets. This brings two difficulties: First, with the development of the market, the pricing power of crypto assets is dynamically transferred between different groups, such as from the initial Crypto OG, it was transferred to crypto VCs, then to CEXs, then to crypto KOLs, and finally to traditional politicians, entrepreneurs or celebrities. In this process, whether it is possible to identify trends every time the power transition and establish cooperation with upstarts has great demands on team resources and market sensitivity. Secondly, in order to establish a partnership with "pricemakers", it usually costs a lot and cost, because in this market, you are not competing with other competitors for a larger market share in a certain application track, but competing with all other crypto asset creators to "pricemakers" preferences, and this is a very competitive game.

• By providing new tool-based products, we serve the unmet needs of Web3 native users in the process of participating in the market. Or provide better and more convenient products for these users from the perspective of user experience:

  • Opportunity points: With the gradual popularity of cryptocurrencies, the overall base of this part of the user group will gradually expand, which brings possibilities to user segmentation. Moreover, because it focuses on the real needs of a certain user group, such products are often easier to achieve PMF, thereby establishing a more robust business model, such as some transaction-related data analysis platforms, Trading Bots, information platforms, etc.

  • Difficulty: Due to the return to real user needs, although the development path of the product is more robust, the construction cycle is longer than other paradigm projects. Since such projects are not narratively driven, but are driven by specific demands, the PMF of the product is easier to verify, and large amounts of financing are usually not available in the early stages of the project. Therefore, it is difficult to stay patient and stick to the original intention in the complex wealth myths brought by the complex "coin issuance" or high-valuation financing.

Thoughts on the investment theory of Web3 consumer application

Next, let’s introduce our thoughts on the investment theory of Web3 consumer application track, which can be roughly divided into five core views:

**1. How to surpass the speculative cycle is the primary consideration

for Web3 consumer applications**

As one of the most successful Web3 consumer applications in the previous cycle, Friend.Tech's development path can give us great inspiration. According to Dune's data, Friend.Tech currently has a cumulative Protocol Fee of $24,313,188. The total number of users (Traders) has reached 918,888. For a Web3 application, this data performance is very impressive.

However, the development of this project has encountered relatively great challenges at present, and the reasons are many. First of all, in product design, Friend.Tech introduced the design of Bonding Curve, which introduced speculative attributes to social applications, and relied on the wealth effect to attract a large number of users in the short term. However, in the medium and long term, this approach also raises the barriers for users to enter the community, which is contrary to the current practice of most Web3 projects or KOLs relying on public domain traffic to build influence. In addition, Friend.Tech has over-bundled the practicality of tokens and products, resulting in too many speculative users of Web3 in its products, allowing users to get out of their focus on the practicality of products, and ultimately leading to the current situation.

Therefore, for most Web3 consumer applications, after accumulating a large number of users, they need to carefully consider how to find PMF, maintain user participation, help projects go beyond speculation cycles, and build a sustainable business model. If these problems can be effectively solved, Web3 consumer applications can obtain real Mass Adoption.

**2. How to evaluate Web3 consumer applications during the investment

process?**

In general, the investment evaluation of Web3 consumer applications mainly starts from two aspects. The first aspect is to analyze its market potential from product operation data. It can be roughly divided into two dimensions:

• User data: For most consumer applications, user data is always the most important, because a sufficient user group is the prerequisite for consumer applications to explore business models. Therefore, similar to most traditional Web2 consumer application evaluations, we can judge whether they find PMF based on traditional evaluation indicators such as the number of active users, user growth rate, and user retention rate. In addition, the focus will be different for Web3 consumer applications in different categories and stages. Taking Web3 Social-like applications as an example, user retention rate will be more important. Investors generally start with niche market. When they find that an application has a strong retention rate within the range of users with unique characteristics, it means that it has investment value. Of course, during the evaluation process, it is also necessary to carefully identify the moisture in the data to avoid misjudgment of PMF by bot users.
• Conversion data: In addition to user data, it is also necessary to judge its potential commercial value through conversion data, such as AUM and User spend. If the project has many users, but the AUM is smaller, or the average cost of a single user is smaller, it means that the commercial value is relatively limited. Of course, not all revenue data are the same, and the quality of revenue will vary greatly. If the revenue structure is based on real revenue, it means that the users here are paying for the products they provide, rather than mining their tokens, such a business model will be more sustainable.

The second aspect is the judgment of the team, which mainly focuses on three aspects. The first is the technical strength of the team, which is the core of their ability to establish a product moat and thus form a competitive advantage. Secondly, the team needs to have a strong sense of market smell and strong openness, be able to identify market opportunities in a timely manner, which users’ needs are not met, and adjust their business direction in a timely manner. Finally, team resources are also more important, such as partnerships with other applications, partnerships with KOLs, etc., which determine the success rate of the issuance process.

3. How to define a successful Web3 consumer application

From the perspective of investors, how to define a successful Web3 consumer application is also an interesting question, or is the success of Web3 consumer application revenue-driven or token price-driven? In general, the two are interconnected. Assuming that a project cannot continuously generate revenue, then in the end, the tokens issued will not have much future. But this evaluation standard also mainly depends on your investment period. If the overall investment period is short, the judgment of token price is more important, and the judgment of token economics at this time. If it is a long-term value investment, the revenue data performance and the sustainability of the revenue structure are more important.

**4. The "application factory model" may be a more definite business

strategy for Web3 consumer applications.**

Referring to the development of China's Web2 industry, ByteDance has developed many successful consumer applications. Their business strategy is to constantly trial and error, develop a large number of different types of products, select several successful directions from the market, and continue to invest resources to expand its business. For them, the key to the success of this strategy is that they have accumulated a large amount of user resources, reducing their trial and error costs. And this experience can be applied to the Web3 industry.

Therefore, from this perspective, similar projects such as Friend.Tech still have opportunities in this cycle. At least it has shown attractiveness in the short term, attracting a large number of users, and having good revenue capabilities. These will help them become Web3 application factories, so their subsequent development is also worth paying attention to.

**5. What are the characteristics of the next successful Web3 consumer

application?**

We believe that in the next cycle, successful Web3 consumer applications will appear in the following three paradigms. First, the first paradigm is to first attract some encrypted KOLs based on the fun of the product, and then use the KOL's own influence to bring its fans to the platform to help the project complete the cold start. The representative paradigm is Kaito. Through its strong technical capabilities and innovative incentive mechanisms, the team has controlled a large number of mindshares in the crypto community, helping them to have good penetration in different communities. At the same time, it hits the pain points of how Web3 projects can effectively obtain users in the marketing process. It has accumulated a large number of C-end users and established an accurate user portrait for each user through mindshare, helping Web3 companies conduct precise marketing through Kaito platform, which will make their business model more sustainable and get rid of short-term speculation cycles.

The second paradigm is to directly win the market based on the real needs of Web3 users. Since the token is not introduced too early, it will be able to get rid of speculative users' interference in the PMF process and establish a higher user retention rate, such as Polymarket, Chomp, etc.

The third paradigm is innovation in business models. Grass gives us a lot of inspiration at this point, using users’ idle computing resources to help them find sources of value capture in fields such as artificial intelligence and monetize them with tokens. Although Grass is more inclined toward the 2B model in terms of business model, this "sharing economy" thinking can also be used in the design of Web3 consumer applications.

**6. Which categories of projects are more likely to be the first Web3

consumer applications in the crypto industry to find PMF**

Currently, based on market trends and investor preferences, the next Web3 consumer application that is easiest to find PMF may appear from the following categories:

First of all, Web3 social applications are still favored by the market. We know that most Web3 projects attach great importance to and rely on social media for marketing. Compared with traditional investors, cryptocurrency investors also prefer to use social media to obtain information and form a value network. Therefore, the importance of Web3 social applications is self-evident. Through the discovery of assetization or niche market demand and learning from friend.tech's experience and lessons learned, introducing a more sustainable business model and stronger user retention will help Web3 social applications get rid of the doubts of excessive speculation and find PMF.

Secondly, on-chain trading tools applications also have good potential. With the continuous development of MEME, investors are paying more and more attention to on-chain trading. The popularity of on-chain trading tools such as OKX Wallet and GMGN proves the strong demand for this market. With the large-scale adoption of mainstream trading tools, the yield of homogeneous trading strategies will tend to decline, so the demand for customized users will continue to increase. If differentiated on-chain trading tools or investment strategies can be provided to this group of users, the market potential of related products will be good.

Payment applications are also one of the categories worth looking forward to in the future. With the passage of bills related to payment stablecoins some time ago. The regulatory pressures that payment applications have previously carried were released. So we have reason to believe. In the future, Web3 payment applications will rely on the advantages of low cost and high settlement efficiency brought by blockchain technology to build competitive barriers in cross-border payments, idle capital management and other scenarios.

Finally, the development of DeFi is also worthy of attention. First of all, as one of the few scenarios to find PMF, DeFi has become an indispensable category in the Web3 industry. From the success of Hyperliquid, we can see that users still have demands for decentralized attributes. With the increasing improvement of infrastructure, the performance limitations of decentralized applications in the past will be broken. In financial application scenarios such as high-frequency trading that have high requirements for execution efficiency, DeFi will bring the same performance as CeFi products, so we have the opportunity to see more Hyperliquid-like products that will impact the original CeFi system.