In the field of cryptocurrency, the speed of infrastructure construction far exceeds the development of applications, which has raised concerns among many industry experts. As the Web3 ecosystem continues to expand, the risk of overbuilding is gradually emerging, which may have a negative impact on future application development and market feedback.
Key Points
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There is a significant imbalance between the speed of Web3 infrastructure construction and application development.
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Overbuilding may lead to insufficient market feedback, affecting the practical application of infrastructure.
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The introduction of new blockchains and protocols exacerbates the problem of liquidity fragmentation.
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The complexity of user experience increases, which may hinder the adoption by new users.
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The limited developer community poses challenges to the development of new applications.
Current Status of Web3 Infrastructure
Web3 is regarded as the next generation of internet infrastructure, but nearly a decade after the release of the Ethereum white paper, there are still very few mainstream applications. Meanwhile, various infrastructure components such as L1, L2, and L3 blockchains, Rollups, ZK layers, and DeFi protocols are emerging one after another. Currently, the ratio of infrastructure to applications in Web3 is unprecedented in the history of the technology market.
Reasons for Overbuilding
The rapid construction of Web3 infrastructure is mainly due to the attractiveness of its profit model. Compared to traditional markets, Web3 infrastructure projects usually quickly gain liquidity through token issuance. Although this model has led to the rapid formation of capital, it has also resulted in an imbalance of team incentives, inhibiting the creation of long-term value.
Challenges of Overbuilding
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Lack of Market Feedback
The biggest risk of overbuilding is the lack of market feedback from applications. Applications are the ultimate embodiment of consumer and business use cases, and the lack of feedback may lead to a disconnect between infrastructure construction and market reality. -
Liquidity Fragmentation
The introduction of new Web3 infrastructure ecosystems exacerbates the problem of liquidity fragmentation. The creation of new blockchains requires huge funds to attract top DeFi projects, leading to more dispersed capital in Web3. -
Increased Complexity
As infrastructure continues to expand, user experience becomes increasingly complex. The lack of application development forces users to face increasingly complex blockchains, increasing the friction of adoption. -
Limited Developer Community
New Web3 infrastructure projects often face limitations in the developer community, making it difficult to attract enough talent to support application development. -
Widening Gap with Web2
Overbuilding infrastructure without application adoption leads to a widening gap between Web3 and Web2. New trends in Web2, such as generative AI, are driving new application development, while Web3 continues to build new blockchains.
Conclusion
Although Web3 is still in its early stages and infrastructure construction is necessary, the current overbuilding model may lead to a lack of market feedback. To achieve sustainable development, Web3 needs more applications to utilize this infrastructure and avoid blind construction without clear market demand.