Layer3 in the Attention Economy: How 21.2 Million in Funding Drives the Transformation of On-Chain Identity

Author: Shijiu Jun
Recently, a financing round co-led by ParaFi and Greenfield Capital caught my attention. At first, I thought it was just a task platform, but it managed to raise $2.5 million in 2021, $3.7 million in 2022, and then jumped to $15 million in 2024, prompting speculation about where Layer3 truly stands.

1. Overview

We have witnessed explosive growth in on-chain communities, with tokens becoming the most powerful tools for these communities as they provide a shared purpose, goals, and interests.

However, when the prices of these tokens fall, the community becomes unstable.

In other words, when participants, intoxicated by soaring values, flood in, it becomes difficult to discern whether it is shared interests and values or something else. As a result, they gradually detach from the community.

At the core of Web3 projects is the challenge of capturing user attention in such a fragmented environment. Relying solely on their own strength for marketing often proves ineffective. In the context of a prevalent airdrop culture, a platform like Layer3 is needed—not referring to a specific chain like L3, but rather an application on a public chain that serves as a hub for aggregating and distributing attention resources. Through the construction of a comprehensive identity infrastructure, users and project parties can obtain the resources they need via this platform.

It not only provides new users with an engaging way to enter the Web3 ecosystem but also encourages existing users to explore new protocols and applications.

Thus, Layer3 is not just a platform; it is an experience of a new token economic model, showcasing the combination of GameFi and a new model of attention economy. It aims to unleash trillions of market value through a trinity strategy (attention economy, comprehensive identity, and token distribution protocol).

2. Current Status of Web3 Task Platform Track

The marketing demand for Web3 task platforms has driven rapid development, which can be divided into three categories: traffic-based (e.g., Galxe, SoQuest, TaskOn), educational (e.g., Layer3, RabbitHole), and vertical niche (e.g., Phi Land and Dework). More can be found in the table below.

Categorization of Projects

Traffic-based platforms attract users through tasks, educational platforms enhance users' understanding of crypto projects, while niche platforms focus on specific areas. Currently, overall market enthusiasm has waned, with second-tier platforms experiencing slowed growth, facing competition from leading platforms and challenges of homogenization. Enhancing user activity and addressing bot issues are key to the development of task platforms. The profit model is currently not well-established, and future competition will revolve around innovation and user conversion.

Platforms need to transform into long-term traffic pools, optimize user experience, and build unique profit models. How to re-consolidate the community through benefits and subsequently gather value is a key growth point that needs exploration in the future.

Most airdrops in Web3 essentially combine future incentives and community participation, enhancing value through the construction of token scarcity. However, relying on the value constructed from future consumption is insufficient to support the long-term prosperous development of any project.

Thomson pointed out a key issue with today's internet: the internet is a world of abundance, and a new power is crucial: understanding this abundance, indexing it, and fishing for needles in the well-known ocean. This power is held by Google.

The world of Web3 is also a world of abundance, but until now, no one has consolidated this abundance in the vastness of Web3. However, today's communities find it difficult to identify or incentivize the most active members, and the value of members is being wasted.

Interestingly, against the backdrop of continuous development, more people are beginning to recognize the importance of attention. Attention is like a soul binding tokens, consolidating high-quality resources in Web3 by recording user engagement, allowing anyone or any project to recognize each other through similarities.

Stepping back, how to realize a new economic model of attention and a social graph of attention resources is an exciting prospect that brings higher value to every participant.

Why is this important?

Because creators on Web3 need to know which audience groups their works can attract. Let's follow my lead to see how Layer3 envisions the future:

3. Layer3's Workflow

3.1 For C-end Users

The core value of Web3 has always been: returning data and value sovereignty to individuals.
Layer3, as a foundational infrastructure platform for comprehensive identities, is realizing this vision by maximizing the commercial benefits of data while ensuring that data originates from real individuals, allowing the generated value to return to individuals. For ordinary users, their concerns are simply:

1. How to find high-value projects suitable for themselves?
2. How to achieve continuous income from personal data?

This is also a necessary condition for the platform to sustainably generate value. Let's briefly discuss how Layer3 achieves this.

Layer3's task arrangement can be described as a progression from breadth to depth:

In terms of breadth: Layer3's task system adopts an ecological categorization approach, with different ecosystems forming a major category, each having different tasks.

In terms of depth: Similar tasks progress gradually according to a game-like challenge mode, with tasks of varying difficulties offering different experience points and rewards. Completing a task earns a user an NFT CUBE that records the challenge participant's data.

For users,

We can quickly subscribe to all the projects we are interested in, and by observing the project's popularity and overall task progress, we can gauge its development prospects, allowing for quick identification of quality projects.

As mentioned earlier, when we complete a task, we can mint a CUBE as our on-chain identity, providing us with a revenue stream. When other developers or project parties need to access this CUBE, they must pay a fee, part of which will be returned to the entire ecological community. The level of income depends on our activity on the platform, promoting the idea that the harder you work, the luckier you get, creating a pathway to wealth.

Finally, we can achieve multiple benefits. Relying on Layer3's own ecosystem, currently, completing tasks on the platform can earn CUBEs, which are a factor for obtaining Layer3 airdrops. Moreover, there are quality projects on Layer3 that have not yet distributed airdrops, and completing tasks for these projects in advance will also be beneficial for acquiring more shares when airdrops are eventually distributed, achieving multiple revenue streams.

3.2 For B-end Users

In Web2 projects, major advertising businesses can achieve precise targeting and user-preferred ads based on the historical behavior of user groups on the internet, leading to the emergence of personalized advertising.

To put it bluntly, this is all thanks to credential data and big data analysis, which is one of the most important application areas of data credentials.

Web3 is no exception.

Moreover, due to the traceability and immutability of blockchain, it is even more friendly for the creation and tracking of credential data. There are many on-chain data credentials, such as our credit records in lending projects where we have borrowed without being liquidated, or records of providing liquidity in a certain LP pool.
These behavioral credentials can assist project parties in their operations and promotions.

The Project Galaxy team believes: "Digital credentials are important because they have high-frequency application scenarios. Protocol developers can calculate various user credit scores, target audiences for applications, and reward community contributors based on credentials. With the development of Web3 and DAOs, the behavioral data of participants in the Web3 world will explode, and Project Galaxy will provide the necessary infrastructure to help these new participants establish crucial digital credentials."

So how does Layer3 collect on-chain credentials? How does it assist project parties? We will explore this from the following perspectives.

1. CUBE Credentials

On-chain data credentials are similar to resumes in real life, recording individual behaviors. On Layer3, users' resumes are recorded through CUBE in the form of ERC-721 tokens.

Each CUBE encompasses applications, chains, and ecosystems of different tasks. These credentials help explorers unlock new opportunities and allow protocols to identify quality users.

For users, minting CUBEs can unlock rewards in Layer3's attention economy, such as tokens and dynamic rewards for completing tasks. This incentivizes users to engage more, generating more credential data.

The full-chain data of these CUBEs is a form of attention resource.

Why is this so? Because every participant on-chain has their own focus. If project parties can effectively identify and acquire these attention resources, they can better conduct targeted promotions and reward distributions, expanding the project's market share and solidifying its position.

Layer3 has built this resource into a relevant infrastructure, allowing any organization in need to access these attention resources by creating open identities, incentives, and interface networks owned by participants.

2. More Aggregated Tools

For any project wanting to integrate with Layer3, they can seamlessly integrate Layer3's experience into their native website with just two lines of code.

Additionally, anyone can paste a link in their blog, technical guide, or internal documentation to embed tasks or Streaks without needing extra code!

This is the most cost-effective promotional action for small project parties, allowing them to attract users directly on their platforms through interoperability with Layer3's vibrant ecosystem, leveraging attractive rewards, social interactions, and partnerships.

Moreover, Layer3 integrates all the toolchains required for tasks. For example, if we need to perform official tasks on Chain A but have no assets there, while there are idle assets on Chain B, we can use the cross-chain bridge integrated on Layer3 for asset cross-chain operations. Notably, asset cross-chain operations are also primary tasks on Layer3, which allows Layer3 to nurture users from novices to experts.

What remains for project parties are users with self-insight and awareness. These users are more cautious towards projects but are also more sustainable and active.

3.3 Summary

It can be said that Layer3 has never been just ToC or ToB; rather, it serves as a bridge connecting ToC to ToB, providing both sides with a warm and efficient platform, enabling them to go from acquaintance to understanding and thus match a suitable "partner."

Layer3's protocol has a beautiful flywheel: new protocols bring new users, and new users attract more protocols, forming the cornerstone of crypto marketing solutions.

Even if plans or airdrops occur outside Layer3's infrastructure, contributors will organize and incentivize them for users to explore, providing a global access point for each ecosystem.

4. Layer3's Token Economy

4.1 Why is Token Economy So Important?

The development of any Web3 project is inseparable from a relationship—supply and demand.

Tokens are the foundation of this relationship, so the design of the token economic model is particularly important, affecting the short-term and long-term supply-demand relationship of the project. An excellent token economic model not only ensures the long-term value of the token but also creates a foundational basis for the project's sustainable value.

For a detailed discussion on the theory and role of token economics, you can read: "In-Depth Understanding of Token Economics" (see appendix).

4.2 Discussion on Layer3's Token Economic Model

As the first platform to build a comprehensive identity infrastructure based on attention economy, I would like to discuss its economic model from two aspects:

1. How does Layer3's economic model ensure the long-term sustainable development of its project?
2. How does its economic model bring tangible benefits to users?

As a foundational infrastructure platform for aggregating attention resources, ensuring that C-end users gain benefits while providing B-end project parties with quality user traffic is the core of the platform's sustainable development.

Below, I summarize the content of the entire Layer economic model as follows:

Regarding the economic model, we will look at it from three dimensions (token supply, token utility, token distribution).

The analysis framework for tokens has multiple angles; for more related content, you can read: "Token Economics: A Brief Analysis of the Token Economic Models of Mainstream Web3 Projects."

1. Token Supply

Tips: Current market value and circulation are estimated results.

It is important to clarify that Layer3's economic model adopts a deflationary approach.

As mentioned earlier, the value of tokens is influenced by supply and demand relationships. To prevent tokens from becoming worthless "air tokens," three points are particularly important, with the most crucial being the token burn mechanism: continuously reducing token supply equates to deflation; conversely, continuously expanding token supply equates to inflation.

This is also determined by the protocol design at the supply level of an economic model. Layer3's burning mechanism can be divided into two levels:

1. From the user's perspective:

   Under Layer3's economic model design, user behavior in the ecosystem is linked to the burning mechanism. Users can gain privileges in the ecosystem by burning L3 tokens. For example:

• When some project tasks are launched, users can access them first, seizing advantageous timing.

• Fees generated from completing tasks or during transactions may have discounts and preferential policies.

• Users can obtain exclusive NFTs by burning L3 tokens.

  This series of designs aims to stimulate users to burn a certain amount of tokens. In this model, users gain benefits while the platform's tokens maintain their deflationary goal.

1. From the community's perspective:

   The ecological regulation undertaken by the community is more significant than that of individual retail investors. In a financial market, the value of tokens does not solely rely on a single rarity; it also requires good liquidity, which is essentially trading. So how does the model balance liquidity and rarity?

   The mechanism for maintaining token rarity is relatively simple. Similar to the design from the user's perspective, community behavior in the ecosystem also requires burning L3 tokens, but community actions manifest in publishing tasks, deploying incentive measures, and accessing CUBE credentials. Additionally, proposals and voting initiated by the community during governance also require the corresponding burning of L3 tokens.

   What about liquidity? This is also not difficult to understand; liquidity essentially involves buying and selling. Thus, when user behavior is tied to burning, community behavior must also be tied to buying. For this, the model stipulates that some community actions require purchasing and burning L3 tokens.

   The buying behavior will inevitably be accompanied by a selling market. Notably, apart from the community, the only entities holding a large number of tokens are users, issuers, and investors. However, the tokens of issuers and investors have unlocking time restrictions, meaning that the currently circulating tokens are all in the hands of users. This leads to a significant source of sellers being the user group, which also brings a new possibility for increasing user income.

   For Layer3's two burning mechanisms, from the perspective of token circulation and holding, it maintains a deflationary model for tokens, and token tightening will positively feedback on token prices.

   A high-value ecosystem will inevitably attract users, while burning mechanisms can counter the influx of large amounts of tokens due to time-linear unlocking, which could impact the economic system. A stable economic system also aids in the long-term development of the project.

   Furthermore, deflationary burning behavior is accompanied by the transfer of benefits, representing the project party and community's concession to users, which also brings considerable benefits to users on the platform, creating a new economic value.

2. Token Utility

Token utility represents the value of the token, whether there are actual use cases, and whether it can attract more people to join, i.e., the demand side of the token.

What I am most concerned about in Layer3's economic model is the accumulation of value, which is the most telling use case in token model design, as it is directly linked to user earnings.

The core concept of L3's utility can be summarized as the value of the token aligns with network growth and user participation. To this end, Layer3 adopts an innovative staking model called tiered staking.

Its main design points are as follows:

1. Combining staking amount and staking time to calculate passive income.
2. Users actively participating in activities to increase reward multipliers, thereby enhancing community stickiness and preventing dominant users from being "administratively inactive."

Regarding the first point, under L3's design model, users can engage in liquidity staking within the system, providing LP for the entire ecosystem. Users can passively earn income from LP, and their trust in the platform will also be taken into account, forming a mutually beneficial relationship. Earnings are no longer solely based on staking amount; the duration of staking is also an important factor for earning acquisition. A user willing to stay long-term will naturally earn more than a short-term opportunist.

As for the second point, I believe it is the most interesting aspect of the entire economic model design. Previous platforms typically provided earnings standards based on staking amounts, with some considering time factors. While this can attract long-term users, it does not guarantee the acquisition of quality users and more comprehensive user behavior data.

In L3's model design, the level of user participation in activities also becomes a factor in how much they can earn. This means that a user with a large stake but who is inactive will earn less than an active user with a smaller stake.

This encourages users to actively participate in platform activities to obtain airdrops and double rewards, undoubtedly an innovative way to improve user quality and stickiness.

3. Token Distribution

Token distribution reflects the fairness of the project and the project team's confidence in the long-term success of the project. Therefore, several aspects need to be considered regarding the distribution of a project's tokens, including the holding objects and proportions of tokens and the timing of their release.

Layer3's token distribution plan balances the interests of the community, core contributors, investors, and advisors, ensuring the project's fairness and long-term development. Lock-up periods and gradual release mechanisms effectively prevent fluctuations in the token market, enhancing confidence in the project's long-term success. Overall, such a distribution system can balance the interests of all parties while ensuring the project's sustainable development.

For a detailed token distribution plan, you can read: "Distribution of Layer3 Foundation."

Notably, once the cliff is reached, it generally follows daily vesting rather than monthly or quarterly.

A large release after a long wait may trigger a prisoner's dilemma, as it could lead token holders to accelerate sales to secure optimal prices.

Daily vesting allows parties to trade to mitigate the above risks, thus avoiding panic selling.

4.3 Comprehensive Review

Let’s return to the overall process perspective to see how the entire economic model operates. In the entire L3 economic model concept, it resembles a stable triangular structure, with three core ideas:

1. Users, communities, and institutions build a buying and selling market to achieve the ecological circulation of tokens, thereby endowing tokens with certain value attributes.
2. From this purely buying and selling perspective, the economic model lacks the ability to withstand market risks, which stem from the linear unlocking of time leading to a large influx of tokens into the market, impacting token stability. Therefore, the design of the economic model introduces tasks and rewards linked to the burning mechanism, allowing ecological members to burn tokens through their activity behaviors to counteract the impact of this influx.
3. The core of the platform lies in user traffic and providing high-quality users, so a good economic model must also consider how to implement full-process incentives for the platform from customer acquisition to active users. This is achieved in the model through the concept of earnings = passive earnings + other rewards * multiplier coefficient.

Through the exploration of the entire model, we find that L3's token economic model must possess three essential elements: a reasonable staking mechanism, more application scenarios, and steadily growing passive earnings.

It is worth noting that while the token economic model is very important, a good token economic model does not solely rely on the project itself; such tokens can only be worthless "air tokens." A good token model must be self-sufficient within the ecosystem and continuously adapt to various market risks brought about by the rapid evolution of Web3 projects. The relationship between the project and the economic model is not merely parasitic but a mutually complementary and progressive relationship.

5. Conclusion

There are still many dynamics and innovations worth exploring in the field of Web3 task platforms. As cutting-edge tools driving project development, they efficiently promote the ecological prosperity of project parties through various means, while also providing users with a window to obtain information, and more importantly, bringing actual benefits and a sense of participation.

Achieving growth in Web3 has never been an overnight success; project parties can choose to grow alongside task platforms while acquiring traffic. Paying attention to the platform's growth data helps project parties make more informed decisions, laying a solid foundation for healthy growth for users.

As fragmented growth and competition for user attention intensify, major project parties' traffic acquisition methods remain relatively singular, primarily relying on joint activities between projects. These activities often offer some attractive rewards to users, some of which may even come at no cost, lacking the motivation for sustained growth. Moreover, the quality of attracted users varies, making it impossible to achieve user stratification.

Only by building a suitable bridge for the key and the lock, finding a belonging for both sides, can unprecedented growth and value creation be unlocked.