From "burning money" to industrial ecology, Web3 is repeating the development path of the internet.

The underlying logic of business remains the same. Whether it's Web2 or Web3, the path to prosperity is actually the same - it's just that this time, the narrative is wrapped in protocols, and capital is hidden in the code.

Looking back over the past decade, the development path of the Chinese internet is clearly visible: concept-driven, financing sprint; subsidies to attract traffic, capital-driven growth; layoffs to improve efficiency, pursuit of profitability; platform transformation, technological reconstruction. Today's Web3 is also following a similar development rhythm.

In the past year, the competition among project teams has evolved into a battleground using TGE and airdrops to acquire users. No one wants to fall behind, but no one knows how long this "user swapping" competition will last. Let's follow the footsteps of history to 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 Crazy Expansion to Industrial Collaboration

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

This is an era defined by "nouns" that determine trends. "Internet+" has become the universal key; just by attaching these three words, one can pry open hot money and attention. Entrepreneurs are not in a hurry to make products, but first look for tracks, create concepts, and write business plans. What investors pursue is not the revenue curve, but whether they can tell a story that is "new enough, big enough, and easy to imagine."

O2O, social e-commerce, sharing economy, under the rotation of these terms, project valuations soar, and the pace of financing is driven by narratives. The core asset is not users, products, or data, but a financing PPT that matches the trend.

This is an era of "whoever stands first has the opportunity." Validating products and running models is the second step; first, you need to tell the story on the windward side to qualify for the competition.

2. Money-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 taxi war between Didi and Kuaidi to the bike battle between Mobike and Ofo, the entire industry has fallen into a highly unified strategy: exchanging capital for scale, exchanging price for habits, and exchanging losses for entry. Whoever can burn through another round of financing is qualified to continue expanding; whoever can secure the next round of investment can maintain a position on the battlefield.

This is a time when "capturing users" is placed above everything else. Experience, efficiency, and product barriers take a back seat; the key is - who can become the user's default choice first.

Thus, the subsidy war has intensified, with low prices almost becoming the standard: rides for less than 5 yuan, scanning a code for a bike ride costing just one cent, offline stores displaying App QR codes, waiting for you to eat for free, get haircuts, and have massages. It seems like a proliferation of services, but in reality, it is a traffic competition controlled by capital.

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

In the long run, this also lays the foundation for subsequent refined transformation – when users are bought, more effort must be spent to retain them; when growth is driven by external forces, it is destined to be difficult to achieve a self-sustaining loop.

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

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

Since 2018, as the growth rate of mobile internet users has slowed down, the traffic dividend has gradually diminished, and the customer acquisition cost has continued to rise. The user growth space tends to be saturated, and many "story-based" projects driven by financing are gradually withdrawing from the market. O2O and the sharing economy are the areas where the reckoning is most concentrated during this phase, with a whole set of incoherent growth models lacking user loyalty being eliminated by the market.

But it is precisely in this tide retreat that a batch of genuinely emerging projects has come to light. They share a common characteristic: they are not driven by short-term enthusiasm stimulated by subsidies, but have completed the closed-loop construction of their business models through real demand scenarios and system capabilities.

Their commonality is not "thinking further", but rather 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. The real watershed that determines the life and death of a project is whether growth can be transformed into structural retention and value accumulation. Extensive expansion is eliminated at this stage, and what truly remains are systematic projects that can build a positive feedback mechanism between efficiency, products, and operations.

4. Ecological basic shaping, technological transformation seeking opportunities phase ( from 2023 to now )

After the leading projects have emerged, the survival issues have been resolved by most projects, and the real differentiation is just beginning.

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

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

At this stage, almost all high-frequency essential tracks have been delineated by giants. In the past, one could rely on "going online early and spending money quickly" to secure a position, but now, growth must be embedded in the system's capabilities. The platform logic has also been upgraded: shifting from multi-product stacking to ecological flywheel, and from single-point user expansion to organization-level collaboration.

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

But it is precisely in this environment of structural contraction that ByteDance has become an anomaly. It did not attempt to compete for resource positions within the existing ecology, but instead took a shortcut, starting from underlying technology, and restructured the content distribution logic with recommendation algorithms. Against the backdrop of mainstream platforms still relying on social relationship chains for traffic scheduling, ByteDance has built a distribution system based on user behavior, thereby establishing its own user system and business closed loop.

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

The emergence of Byte reminds us that even if the industry landscape becomes solidified, as long as there are structural gaps or technological voids, new players may still emerge. However, this time, the path is narrower, the pace is faster, and the requirements are higher.

Today, Web3 is at a similar critical juncture.

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

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

The difference is that Web2 constructs a strong connection between the platform and users; while Web3 attempts to break 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 the token incentives that are burning; the modular protocols that are being built; and the TVL, active addresses, and airdrop score sheets that are being rolled up.

The development of Web3 so far can be roughly divided into four stages:

1. Concept-driven stage - Token issuance driven: Story comes first, capital flows in

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

In 2015, Ethereum went live, and the ERC-20 standard provided a unified interface for asset issuance, making "token issuance" a fundamental capability that all developers could access. It did not change the essential logic of financing, but greatly reduced the technical barriers for issuance, circulation, and incentives, allowing "technical narrative + contract deployment + token incentives" to become the standard template for early Web3 entrepreneurship.

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

No need for a complete product, no need for mature users, as long as there is a white paper that clearly explains the logic 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 because the widespread adoption of blockchain technology brought new imagination.

Capital has quickly formed a "betting mechanism": those who first position themselves in the new track, 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": between 2017 and 2018, the ICO market experienced an unprecedented explosive growth, becoming one of the most controversial and iconic stages of financing in blockchain history.

During the window period of "Everything Can Be Blockchain" - as long as you attach a label and build a narrative, even if the implementation path is not yet clear, you can advance the imagined future valuation. DeFi, NFT, Layer1, GameFi... each buzzword is a "window". The project valuation skyrockets to hundreds of millions of dollars, or even tens of billions, before the tokens are even in circulation.

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

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

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

The "conceptual dividend period" of Web3 arises from this: value is defined by narrative, and exits are driven by emotion. Projects and capital seek certainty from each other within a liquidity-driven structure.

2. Cash Burning Expansion Phase - Project Clustering, Full-scale User Competition Begins

All changes begin with the "most expensive thank-you letter in history."

In 2020, a certain DEX airdropped a large number of tokens to early users, with each airdrop valued at about $1,200 at the time. The project team called it a "reward", but what the industry understood was another term: the optimal solution for cold start.

At first, it was merely a gesture of "giving back to the community," but it inadvertently opened the Pandora's box of the industry: project parties discovered that issuing tokens could exchange loyalty, exchange traffic, and even create a community illusion.

Airdrops have become a standard feature.

Since then, project teams have had a breakthrough and almost all new projects have made "airdrop expectations" the default module for cold starts. To showcase their prosperous ecosystem to the market, they use tokens to purchase user behaviors, and the combination of point systems, interactive tasks, and snapshots has become essential.

Many projects have fallen into a growth illusion driven by "incentives rather than value."

On-chain data has skyrocketed, and the founder is immersed in the illusion of "success": before the TGE, there were casually millions of users and hundreds of thousands of daily active users; once the TGE was over, the scene instantly cooled down.

In 2024, the DAU of a certain game on the blockchain once exceeded 40,000, but almost immediately after the coin announcement was published on the trading platform, on-chain activity nearly dropped to zero.

The essence of airdrops is to purchase user behavior, it is cold.