Why do some "infrastructure ecosystems" fail? Understanding the essence of infrastructure

Author: Crypto V, AC Capital

The principle of Occam's Razor suggests that everything operates around its first principles. In crypto, almost everyone's first principle is to make a profit, and there are basically only two means: creation and distribution (launching tokens and trading). Projects unrelated to these two will inevitably become additional leverage for them. When liquidity tightens and the market deleverages, these "additional leverages" will inevitably run into trouble. This is why we can currently only see exchange variant projects shining in the market. Similarly, an "infrastructure" that cannot "reduce the marginal cost of launching tokens and trading" (the more you use, the lower the unit cost) will also inevitably become an optional additional leverage. Therefore, developing low-cost, controllable, and replicable ecosystems that can generate revenue and volume, with trading exit paths conducive to controlling the market, using flow tactics, is the ideal type for a bear market.

This standard helps you see through the essence of infrastructure:

1. Wallets: Traffic distribution; AA is not important, what matters is whether you can generate traffic (customer acquisition cost);
2. AMM: Provides infinite liquidity (market-making cost), but cannot replace CEX (on-chain transparency cannot protect project parties from dumping, cannot reduce exit costs);
3. L2: As AC said, it is essentially a cross-chain bridge + EVM sidechain. The only moat is liquidity, which is something ETH whales do not lack in a bear market.

It also explains why many "infrastructure" projects struggle:

1. Non-EVM/RUST chains: It's not that development in these two systems is rare; without incentives, it's hard to attract established teams, more likely attracting inexperienced or solo teams, just for the sake of noise;
2. MPC wallet SDK: Projects with demand are generally highly customized, increasing development costs due to third-party risks;
3. DA layer: Almost useless for initial development costs. Assets are on the settlement layer, which cannot affect market-making exit costs.

And it helps you discover many projects that don't resemble infrastructure:

1. Quoting / Contract scanning TG bots: Dog coins discover and spread prices (customer acquisition cost);
2. Dexscreener: Provides contract information and K-line API; unsupported chains cannot be discovered by dog coins (customer acquisition + development costs);
3. Unibot: On the surface, it's a tool, but in reality, it's a potential collective market-making tool, better aligning with the intentions of the whales (market-making cost + exit cost).

What does this mean for retail investors and developers:

1. For retail investors, you must firmly believe that the world is just a makeshift stage, and there are no gods; everything is merely a hasty attribution and artificial deification after success. Understand the technology, but do not believe in the narrative of technology: what potential technology has to do what is not important; what it can be used for by the whales right now is what matters. Bet on ecosystems that are beneficial for controlling costs for the whales in trends, and engage with those who can distribute well;
2. For developers, the greatest sorrow for developers is accompanying a toxic ecosystem. Again, do not be brainwashed by technology; do not overthink what the ecosystem can be used for, think more about what this ecosystem can do for you. Do not lose yourself in the ecosystem's constant calls of "buidler." Do not fantasize that you, as a hero, can change the fate of an infrastructure ecosystem. Its fate has already been determined by the core team and narrative. Remember, the moment you deploy a contract, you are the whale.