How Did Public Blockchains Operate in the Past?

The essence of blockchain is the “chain.” Since its inception, the early construction of infrastructure has become the industry norm. This directly led to the rise of many generic public blockchains (Generic Public Chains), where infrastructure is built first to attract dApp developers. This became the default approach. But we all know that infrastructure itself doesn’t attract users. So, what does attract users? It’s investment, ICOs, NFTs, DeFi, memes—these are the applications that people can actually engage with. However, these applications don’t emerge spontaneously. So, how did early public blockchains break through?

They relied on the charisma of founders, huge funding news, massive marketing and promotions, and the immense wealth effect of Token Generation Events (TGE). Today, the marketing strategies of these blockchains seem rudimentary compared to platforms like EOS. The genius-level BM (Block.one founder) launched the ICO with great fanfare, raised $4 billion, and then… nothing. Why did this seemingly empty path work? Because public attention is limited. When a blockchain is flying under the radar, no applications or users will naturally flock to your ecosystem. This is exactly why VCs need to continually invest in new public blockchains.

What Are the Current Issues with Public Blockchains?

The market’s valuation logic for public blockchains is currently in a state of extreme distortion.

On one hand, the market is increasingly losing faith in the “infrastructure-first” model. This is because very few Generic Public Chains have truly fostered thriving ecosystems, and this is one of the reasons investors are losing trust in VCs. Despite massive capital being poured into numerous public blockchains, most of them have failed to deliver on growth promises. The following diagram from @defi_monk directly highlights this issue.

On the other hand, public blockchains are still the highest-valued sector in the industry. To date, no dApp has proven it can outlive a public blockchain. Ethereum has evolved over 10 years, and Solana has gone through two full cycles, yet the dApps on both platforms remain active. In other words, despite market skepticism about the high valuations of public blockchains, they remain the closest to the “long-termism” high-ceiling sector.

So, people both love and hate this model. They hate that it can have such a high valuation despite lacking tangible results, but they love the potential if it succeeds—there’s a high ceiling to match. This is actually a legacy issue in our industry, one that requires transformation.

How to Transform?

A new path has emerged: App-Specific Chains. This began with the phenomenon of @AxieInfinity, which created @Ronin_Network to try and bring users from the application layer into the blockchain ecosystem. However, the problem was that the app itself stopped being popular before it could successfully direct users to the chain.

This model was further ignited by @HyperliquidX in the current cycle. And now, we can see:

• @Uniswap — Unichain
• @JupiterExchange — Jupnet
• @OndoFinance — Ondo Chain
• @ethena_labs — Ethena Chain

Take Ethena (which I am most familiar with) as an example. Their next application is Ethereal, a perpetual contract based on USDe, and they are starting to build an ecosystem around their core assets and applications. This might be somewhat akin to Hangzhou—after the rise of Alibaba, the entire e-commerce industry grew up around the city.

This paradigm shift can be seen as a result of the realization that applications are what can truly push the industry to the masses. It can also be seen as a market segmentation driven by business maturity. Everyone is using different methods to challenge the traditional valuation system of the industry.

What Are These Two Models Competing For?

In the public blockchain ecosystem, a Chain relies on large-scale infrastructure promotion and funding narratives to attract dApp developers, ultimately aiming to achieve user retention through its application ecosystem. In contrast, dApps directly acquire users through real-world applications and gradually build their own ecosystem through user migration and network effects, eventually evolving into a blockchain.

From “virtual” to “real” and from “real” to “virtual,” both paths ultimately converge. What is the essence behind this? The essence is the competition for distribution—who can more efficiently acquire users and achieve retention.

In Web2, the barriers to distribution are far higher than those for products because the marginal cost of most products tends to zero, while the competitive barriers for distribution channels are extremely high. Distribution means monopolizing traffic entry points + platform network effects + data monopolies, and together, they form the core competitiveness of Web2 companies. Take TikTok as an example:

• Monopoly of Traffic Entry: TikTok seized the short video trend and became the new generation of traffic entry point.
• Platform Network Effect: It established a two-sided market with creators, viewers, and advertisers. As content supply increased, user stickiness kept growing.
• Data Monopoly: The massive amount of user data trains recommendation algorithms, improving the accuracy of distribution and creating a powerful data barrier.

Why did we invest in Hooked? We always said this was a Web2.5 product because Tap to Earn is a proven customer acquisition model that can gain massive external traffic. However, it was ultimately proven false because: the user traffic from airdrops had low quality, and the conversion rate was insufficient. Even though traffic could be acquired efficiently, retention could not be achieved. This is also the reason why we later chose to pass on all Telegram tap-to-earn projects—the model didn’t change with the new channel, and the user quality remained low.

Returning to the Core Business Essence

The distribution logic exists in Web3 as well, but the method of user acquisition differs.

In the past, Generic Public Chains did not have mature products to support them, so they could not rely on products to acquire traffic, let alone create a monopoly effect. As a result, the way they gained awareness was mainly through:

• Technical Pioneer Appeal: Attracting early developers and tech enthusiasts.
• Founder Charisma and Cultural Uniqueness: Creating a sense of identity and building communities.
• Funding and Token Incentives: Driving short-term user growth.

However, the success or failure of this model depends entirely on the “strength of consensus”—when it’s strong, it can build an ecological moat; when weak, market sentiment can change and traffic will dissipate.

The Rise of App-Specific Chains

Now that App-Specific Chains are becoming more common, this signals that Web3 is gradually returning to Web2’s business model—using real-world applications as the driving force, leveraging market segmentation and refined operations within private traffic domains to achieve efficient conversion and long-term retention. I tend to believe that the growth logic of this model is healthier and more aligned with the real-world evolution of business.

What Does the Future Hold?

The coexistence of these two paths reflects, to some extent, that the industry is still in its early stages—no single model has achieved absolute monopoly, and a paradigmatic shift has yet to occur.

All investments, at their core, are judgments of “momentum.” Where are we at this moment in time? Generic Public Chains have not yet been disproven, but as the demand to break into mainstream adoption rises sharply, relying purely on technical narratives or funding stories can no longer generate enough consensus. Meanwhile, the paradigm shift from building super dApps to building chains remains unproven. This is not just a switch from products to infrastructure but also a leap from product-market fit (PMF)-driven thinking to the ability to shape culture and build ecosystems. Founders who can achieve such a leap are few and far between.

Both models have opportunities and challenges, but the real distinction lies in the different capabilities they require from founders. The core of venture capital is betting on market pricing based on judgments of “momentum,” “affairs,” and “people”—placing bets in a highly uncertain environment, accepting the risk of failure in exchange for the potential of exceptional returns.

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