Web3 is hailed as the future of the internet, yet it is mired in various chaos. This article summarizes eight major issues currently facing the Web3 industry, including the failure of value investment, rampant speculation on Meme coins, lack of large-scale applications, unclear regulations, capital manipulation, frequent security incidents, widespread scam projects, and insufficient user awareness. The aim is to remind investors to remain cautious and emphasize the importance of "DYOR" (Do Your Own Research).
It seems that there has been a lot of talk about the positive aspects of Web3, which is actually misleading. Today, we will address this by summarizing the eight major chaotic phenomena in Web3 and sharing them with everyone.
First, the failure of value investment
I believe that those involved have a deep understanding of this, especially those who identify as part of the blockchain community, like myself. Initially, the crypto space was divided into the blockchain community and the coin community, with the former pursuing ideals, believing in value, and having a fondness for technology. When evaluating projects, one would look at fundamentals, data, the technology used, the team's background, funding status, and so on. However, the reality has been a harsh slap in the face, especially in the past two years. Why? Because people have been chasing memes.
Second, memes are everywhere
If you look at on-chain trading data, you'll find a deeply ironic fact—most of the funds and trading volume have not flowed into "valuable" Web3 projects but have instead surged into memes and celebrity tokens. In the past six months, the meme sector has outperformed all other tracks, including DeFi, NFT, and Layer 2. On the Solana chain, thousands of new meme coins are created daily, 99% of which are short-term speculative plays that ultimately go to zero, yet people continue to rush in. Celebrity tokens have become a new way to exploit retail investors, such as those from the Trump family and Argentina's President Milei. The rise of memes indicates that the market is fundamentally uninterested in "technology" or "ecosystems"; what matters more is "who can bring about short-term wealth effects." Speculation outweighs everything, and true value is abandoned by the market. But are there truly valuable things in the market? For example, are there large-scale applications?
Third, lack of large-scale applications
Although technology continues to advance, a fundamental question remains—are there any truly successful large-scale applications? DeFi growth is slow, TVL is shrinking, and new models have yet to break through. The NFT market is in a downturn, with most NFT prices plummeting by over 90%. The promise of "changing the art industry" has ultimately devolved into a game of capital speculation. Most GameFi projects have gone to zero, and many P2E (Play to Earn) games cannot attract long-term players; after Axie Infinity, there have been no phenomenal projects. Concepts like on-chain social, decentralized identity, and data sovereignty are widely discussed, but currently, no project has been able to achieve large-scale implementation. Web3 has been touted for so many years, but aside from exchanges, wallets, and DEXs, there are no truly phenomenal applications, such as a Web3 version of Facebook, Google, or Amazon. This means that ordinary users have no motivation to enter the Web3 world. Why not? Is it because the technology is lacking? No.
Fourth, unclear industry regulations
The biggest reason is still regulation. As long as a token has actual utility and a real application scenario, it is considered a security under current U.S. SEC regulations. Most current Web3 projects face the risk of being classified as "securities." This creates a Damocles sword hanging over many projects, making them hesitant to scale up for fear that a single ban could wipe out the entire industry. Some say that the ETFs for BTC and ETH have already been approved, which indicates that the authorities have recognized cryptocurrencies. However, they only acknowledge the highway, not the cars; what use is a highway without cars? It then becomes a game of capital.
Fifth, capital games
If tokens have no actual utility, meaning that the token and the project itself are two separate entities, then essentially 99.99% of tokens are memes, which turns it into a capital game. Large VCs take the stage, run away after TGE, leaving retail investors with nothing. Exchanges engage in opaque internal trading, harvesting retail investors through IEOs and using bots to inflate trading volumes, misleading retail investors into thinking the market is thriving and manipulating market fluctuations. Most exchanges have massive funds and can raise or crash prices at will, using futures contracts to liquidate retail positions and earn more fees. There are leaks of listing information: many exchanges will disclose coin listing information in advance to insiders or VIP clients, allowing them to position themselves early, while ordinary retail investors can only buy at high prices. There are also market-making games involving wash trading, price manipulation, and collusion between project teams and KOLs, leading to pump-and-dump schemes. These are all planned actions by capital, along with unexpected events like security incidents.
Sixth, frequent security incidents
From exchange collapses to hacker attacks and smart contract vulnerabilities, each major security incident causes enormous losses and even affects the overall trust in the industry. There have been early exchange collapses—like the Mt. Gox incident—and the "Lehman moment" of the crypto market—FTX's collapse. More recently, there was the largest theft in crypto history—Bybit was hacked for $1.46 billion. It truly feels like trouble comes from nowhere. Besides natural disasters, there are also man-made disasters, with scam projects everywhere.
Seventh, scam projects are rampant
Some people promote the benefits of Web3 due to technology or ideals, like myself, but of course, there are those who exploit this so-called goodness to do bad things. They package a fake project, issue worthless tokens, and tout how great it is, what encryption technology is used, and what industry problems it solves, ultimately using market frenzy to raise funds, disappearing after scamming money in a short time, leaving investors with no recourse. Why do so many people participate in such garbage projects? Because retail investors lack awareness.
Eighth, insufficient user awareness
Terms like crypto, blockchain, and Web3 sound daunting, let alone delving deeper into them. But more and more people around me are saying good things about them; what should I do? Follow the trend and invest, quickly buying when I see a KOL on social media tweeting, or immediately joining when someone recommends a project. I feel this strongly, as many people consult me, but very few genuinely want to learn about Web3 knowledge.
I've said quite a bit today, and I wonder how everyone feels after hearing this. The purpose of mentioning these issues is not to say that Web3 is currently terrible; I believe these chaotic phenomena are a process that any emerging product must inevitably go through. I have never doubted the future of Web3. I just want to remind everyone that there are still many shortcomings in Web3. You may choose not to participate, but if you do, be cautious, prioritize learning, and remember that DYOR is always the most important.
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