Beyond short-term token speculation, what projects should we focus on that can generate sustainable profits?

Author: Darshan Gandhi

Compiled by: Deep Tide TechFlow

Introduction

For many years, numerous Web3 startups have faced challenges in scaling and maintaining a stable user base. Despite the initial hype around decentralization, the core issue remains establishing sustainable long-term business models in competitive fields such as gaming, entertainment, social media, and decentralized finance (DeFi).

Understanding basic economics—such as the relationship between low market cap and high fully diluted value (FDV), and the importance of market capitalization—will become increasingly prominent.

Unfortunately, many projects still prioritize short-term token speculation over sustainable growth. After the peak of the 2021 cycle, many startups have failed to even approach their previous all-time highs (ATH), let alone break through them (only $BTC and $BNB among top tokens have achieved this), and only a handful of projects have survived from the 2017-2018 cycle.

A major issue in past Web3 cycles has been the lack of robust business models. While software development cycles typically take 5-7 years to mature, projects like Ethereum have only been around for 8 years, and projects like Solana for less than 5 years. This process is incredibly challenging. As a result, many projects fall into the trap of relying on token speculation, which, while it can generate short-term excitement, does not provide strong long-term value beyond governance.

The imbalance between speculation around tokens and their actual value accumulation and utility remains a significant gap in the current ecosystem.

I believe the true potential of Web3 lies in its integration with real-world industries such as energy, artificial intelligence (AI), the Internet of Things (IoT), and supply chains. By focusing on building applications in these areas, Web3 can ultimately fulfill its promises of ownership, transparency, and broader social impact—moving beyond speculation to create lasting value.

What Changes Are Happening?

There is now a clear trend towards creating tokens that are tied to real business models and actual revenue. Projects should no longer rely on hype and narrative positioning to boost token prices; instead, the focus should be on providing real value—returning value to tokens through mechanisms that promote long-term user engagement, such as voting rights, service access, and methods like burning and staking.

Investors and users are now prioritizing projects that offer sustainable benefits. Concepts like staking, token burning, and user rewards are helping these projects strengthen their positions and ensure their growth. For example, Uniswap recently decided to reward its users through trading and providing liquidity.

This shift signals a future where tokens are not just tools for secondary market trading but become integral components of projects.

Which Areas Are Performing Well?

Now, let’s take a closer look at which areas or ecosystems are performing well and generating sustainable cash flow while being actively used by users.

Although many projects are still in development or just getting started, most are shifting towards identifying and articulating key business metrics such as revenue, profit, and user base, rather than just focusing on trading volume and transaction counts.

Here are some industries that are performing well and are considered cash-rich, facing fewer speculative issues but more challenges in launching and distribution in their initial stages. Once these challenges are addressed, these industries could turn into cash cows.

DePIN

• This is one of the hottest areas recently, with attention shifting from AI and gaming towards it, as some projects in this field have shown real-world utility and metrics, with Helium being a leader.

• Projects like Helium, a decentralized wireless network, demonstrate the power of real-world utility. Helium's HNT token is earned by users who set up hotspots to provide wireless coverage, with its value derived from the usage of IoT devices rather than speculation.

• There are also projects like GEOD and Hivemapper that crowdsource physical data, such as location and dashcam videos, which can be monetized.

• All these projects are performing well in terms of revenue, generating good cash flow and translating it into token value growth.

Social Platforms

• Web3 social is full of fun and excitement for everyone. Consumer applications are one of the primary ways technology can truly reach millions of users worldwide. However, consumer-facing cryptocurrencies have faced significant challenges in getting off the ground for a long time.

• Recently, alliances and other companies have strongly pushed this idea, with blockchains like Solana and Base becoming increasingly consumer-friendly, encouraging users to develop on them.

• Applications like Farcaster, Lens Protocol, and Fantasy Top are actively working to change perceptions and attitudes towards consumer-facing cryptocurrencies. Some of these applications have already been able to generate meaningful revenue and user engagement data.

• However, since the user base is still very small compared to the broader Web2 world, it is still early days, but it is a good start.

Launch Platforms

• In the initial stages of project launches, they often face the biggest challenges—lack of relevance and distribution channels.

• Launch platforms can truly change the game here, providing these projects with a platform and an ecosystem of users, investors, and supporters.

• Launch platforms like Pump Fun and Multiplier have been able to generate millions in revenue in a short time, thanks to the popularity and acceptance of meme coins as a category.

• While I personally believe this is not a sustainable model in the long run, as the harm it brings to the space outweighs the value created, it is still important to understand the different verticals that are performing well and draw inspiration from them to build more long-term solutions in other areas.

DeFi Products

• DeFi remains a persistent field—and is one of the only categories that can consistently generate substantial revenue in Web3, with leaders like Uniswap, Aave, Maker, and Curve contributing significant income.

• I believe these are "boring" but sustainable businesses that will endure over the long term. It will be interesting to observe whether applications can be built based on the fundamental principles of DeFi and combined with other areas (like prediction markets and gaming) to explore new markets or perspectives.

Web3 vs. Web2 Models

The core difference between Web3 and Web2 companies lies in how they generate revenue and operate. Web2 relies on centralized models such as subscriptions, advertising, and enterprise sales, while Web3 leverages decentralized models like token economics, transaction fees, staking, and DeFi yields to create value for platforms and their users.

Web2 captures value by:

• Controlling user data

• Monetizing quality content

• Providing platform services

Web3 hands control back to the community by:

• Token ownership

• Decentralized autonomous organizations (DAOs) and governance

• Voting and participation incentives

While this decentralization offers new opportunities, it also brings complex user experiences, regulatory challenges, and scalability issues, such as blockchain congestion and high transaction fees.

Web3 startups quickly launch products using smart contracts but face challenges such as:

• Lack of convenient user onboarding

• Limited user retention mechanisms

• Utility of products beyond speculative value

To achieve long-term success, the focus must shift to building sustainable revenue models and translating them into genuine token utility, rather than relying on speculation.

Here are several different types of models and their applications across various fields:

• Token-based models

• Token-driven platforms operate and typically assume governance roles.

• As the platform grows, the value of the token increases through mechanisms like burning.

• Example: MakerDAO burns MKR tokens upon debt repayment, reducing supply and increasing value over time.

• Subscription models

• Web3 platforms, like Audius, offer premium features or content through regular fees, eliminating intermediaries.

• Artists and creators profit directly from their audiences, similar to traditional Web2 subscriptions.

• Platform fees

• Platforms like Zora earn revenue by charging a small percentage on each transaction.

• User activity directly drives revenue growth.

• Marketplaces

• Platforms like Blur, OpenSea, and Rarible generate revenue by taking a percentage of each NFT/asset sale.

• As trading activity increases, the platform's revenue grows, directly linking profitability to user engagement.

• DePIN networks

• Projects in this space reward users for contributing real-world resources, such as bandwidth, wireless coverage, or location data.

• Helium allows users to earn tokens by providing wireless hotspots that support IoT devices.

• Decentralized exchanges (DeXs)

• DeFi platforms generate revenue by charging fees for services like token swaps or lending.

• For example, Uniswap shares swap fees with liquidity providers, ensuring both parties receive ongoing income.

• Social tokens

• Creators mint their tokens for fans to purchase or trade.

• Revenue primarily comes from token sales and fan engagement.

• Rally enables creators to build closer connections with their communities through token ownership.

• Web3 gaming/entertainment - Freemium model

• Revenue for Web3 games comes from in-game purchases, marketplace fees, or play-to-earn models.

• Decentralized AI

• Decentralized cloud service providers, like Akash Network, rent out computing power.

• Users pay for these resources with tokens, directly competing with traditional cloud service providers.

• Some projects are also focused on solving issues related to decentralized training, workflows, data scraping/collection, etc.

• Launch platforms

• Launch platforms like DAO Maker help projects raise funds through token sales, earning a percentage or charging fees.

Revenue-generating Projects

Projects with real-world utility consistently outperform those relying on speculative token economics over the long term. Revenue-driven models are gradually becoming the foundation of the most successful Web3 enterprises, demonstrating their value to users and investors through sustainable business models. This chart provides a comprehensive view of top revenue-generating crypto projects.

It is encouraging to see projects like Tether, Tron, and ETH dominating this space, all of which are independent blockchains/tokens that form the foundational layer of Web3.

When we observe applications that reached $100 million in revenue the fastest, we find a strong correlation between real utility and the financial performance of the projects.

• Projects focused on real-world applications, such as decentralized exchanges and DeFi platforms, tend to grow faster.

• Their ability to generate stable income through transaction fees, staking rewards, and a percentage of reward pools are some of the ways that have helped them rapidly grow to nearly $100 million in revenue in such a short time.

Let’s take a look at some of the most interesting projects currently.

1. Helium

Helium is one of the best-performing projects of 2024, focusing on mobile operator services as an alternative to traditional service providers. It emphasizes consumer scale and user onboarding, utilizing Solana for settlement. The value of its token is related to network usage rather than speculation.

Since June, the network has attracted 756,000 users and transmitted over 19.1 TB of data. Most impressively, the majority of users are unaware that they are interacting with a blockchain. The surge in registrations over the past year reflects Helium's solid push to get more people using and accepting it.

According to statistics from depin.ninja, Helium ranks first in recent revenue generation. They have done some amazing work, and it will be interesting to observe how revenue rises as the 2025 halving approaches.

2. Decentralized Exchanges (DeX) (like Uniswap and Jupiter)

Uniswap remains the largest decentralized exchange, consistently generating strong trading volume. However, with the recent surge in popularity of Solana, Solana-native decentralized exchanges like Jupiter are beginning to capture significant market share from Uniswap.

Overall, the market outlook for decentralized exchanges looks optimistic, as each platform generates fees per transaction and handles substantial trading volumes. Just among the top five decentralized exchanges, trading volume is close to $45 billion, a figure that is impressive compared to almost all other industries.

3. Farcaster

Farcaster may be the largest crypto social media platform, focusing on user-owned content and interactive experiences. Users do not rely on token speculation but pay for permanent storage fees for their accounts, which helps the platform generate considerable revenue.

It has also benefited from support from the meme coin community and the involvement of high-risk investors ("degens"), gaining attention and backing. Although its revenue is lower compared to other industries, Farcaster remains a leading protocol in the crypto social space. It will be interesting to see how they expand to achieve their goal of 10 million users in the coming years.

4. GEOD

GEODNET is the world's largest Web3-based real-time kinematic (RTK) positioning network, providing high-precision location services for AI, IoT, and autonomous systems. By using RTK, GEODNET aims to achieve location accuracy 100 times better than traditional GPS. This enhanced accuracy is crucial for applications that rely on device sensors, such as cameras, LiDAR, and inertial measurement units (IMUs), making it a key player in driving AI-powered autonomous systems.

• The network is rapidly expanding, currently deploying over 9,000 miners globally, with monthly revenue consistently growing by 10-15% since the beginning of the year.

• GEODNET is expected to achieve an annual recurring revenue (ARR) of $2-3 million by the end of the year, making it one of the largest high-margin decentralized physical infrastructure network (DePIN) projects with strong potential for further growth.

• Their technology is not only more accurate but also 90% cheaper than competitors, providing broader global coverage.

• Collaborating with partners like the USDA, GEODNET is proving that long-term stable growth can yield significant results, having shown a 20-fold revenue increase from $5,000 per month to over $100,000.

5. Across Protocol

Across Protocol is a cross-chain bridge that enables seamless asset transfers between different blockchains. It earns revenue by charging fees for these transfers, making its success directly related to the demand for fast and secure cross-chain liquidity. As more assets flow between chains, especially with the growing popularity of multi-chain ecosystems, Across has secured a critical position in this space.

In the past month, Across Protocol has dominated Ethereum chain transactions, handling over 60% of all Ethereum bridges through JumperExchange. This strong performance demonstrates its increasingly influential role in cross-chain operations. Thanks to "intents," a new method of cross-chain interoperability, Across is setting the standard for providing a smooth and efficient user experience when transferring assets between blockchains. Compared to other bridges, it typically offers extremely low wait times measured in seconds, while other providers require minutes.

It is gradually rising in the competition among cross-chain transfer service providers.

6. Kamino

Kamino focuses on optimizing liquidity management and provides users with a range of tools, including lending and leverage strategies. The platform has experienced significant growth, with annual recurring revenue (ARR) approaching $14 million.

In the past year, Kamino has generated approximately $30 million in cumulative interest for users, highlighting its ability to provide stable returns through decentralized finance (DeFi) products.

7. Stablecoins (Tether & Circle)

Stablecoins have become indispensable in the Web3 space, with Tether (USDT) and Circle (USDC) leading the way. These two giants dominate the market, becoming the preferred stablecoins for traders, developers, and users. Their widespread adoption and liquidity make them the backbone of many decentralized finance (DeFi) platforms.

Particularly, Tether is often compared to major Web2 financial companies like JPMorgan, Visa, and Mastercard due to its rapid rise and dominance in the financial ecosystem. In a short time, it has successfully surpassed many traditional giants, leading in market coverage and integration with the crypto market.

Tether and Circle consistently outperform other stablecoin providers and blockchain protocols, holding the largest market share in Web3. Their stability, liquidity, and integration across multiple chains and decentralized applications (dApps) set them apart, making them essential components of the space.

Summary:

• These projects demonstrate that real-world utility is becoming increasingly important in driving crypto revenue.

• Whether through infrastructure, social, gaming, or DeFi, the future of Web3 will be shaped by projects that successfully combine their token economics with real-world utility and sustainable revenue models.

What Has Not Succeeded?

Friend.tech is a great case study showing how a project can quickly generate hype and revenue but fails to establish long-term sustainability. It serves as a good example of "why not all profitable startups can succeed."

The rise of this application stemmed from users purchasing "keys" (shares) of others, hoping that as the popularity of users increased, the value of these "keys" would rise as well, with more users joining over time. However, due to a lack of real utility beyond speculative trading, users quickly lost interest once the initial excitement faded. Additionally, the initial hype can also be attributed to the team's announcement of an airdrop for early participants—but since the airdrop, the platform has had almost no utility or user engagement.

Speculative-driven economies are inherently fragile—users seek quick returns but will leave when no substantive value is provided. In contrast, platforms like Uniswap and Helium maintain long-term engagement by providing real-world utility, proving that sustainable success comes from creating lasting value rather than speculation. Friend.tech lacks this foundation, and once the speculative hype fades, there are almost no factors to attract users to continue participating.

The conclusion is clear: for Web3 platforms to thrive, they need to provide substantive content that goes beyond speculation.

Why Do Projects Overly Dependent on Tokens Face Long-Term Challenges?

Projects that overly rely on token speculation may achieve rapid success but struggle to maintain that momentum. The token prices in these ecosystems are often influenced by hype and speculation, but without a solid utility foundation, users quickly lose interest. Once the excitement fades and users realize there is no deeper value, token prices collapse, leading to user exits and creating a vicious cycle.

This issue is particularly evident in Axie Infinity, which relied on a dual-token system to support its growing player base. As the number of users continued to rise, the economy became overly inflated, and token rewards could no longer sustain user growth. Ultimately, the entire system collapsed as the token economy could not keep pace with the rapid growth of players.

Axie Infinity Chart

Similar issues arose with STEPN, a fitness app that initially attracted users by offering token rewards for physical activity. However, as token supply increased and prices fell, user engagement declined, exposing the fundamental flaw of relying solely on token incentives to drive long-term participation. While Axie generated substantial revenue through marketplace fees and in-game purchases, its dependence on token growth and user expansion ultimately led to failure when growth rates slowed.

Similarly, STEPN, which initially attracted users through token rewards, failed to maintain user engagement after token prices dropped due to oversupply. Although Axie earned revenue through purchases and marketplace fees, its business model was too reliant on user growth and token rewards, leading to failure when growth slowed.

Web3 Gaming vs. Web2 Gaming

The challenges faced by projects like Friend.tech and Axie Infinity highlight a larger issue within the Web3 gaming space. Compared to traditional Web2 games, Web3 games face challenges in revenue generation. For instance, a recently released Web2 game earned $600 million in its first week—while Web3 games have yet to come close to such figures. This is not because Web3 gaming is a bad concept; rather, it is due to technology not being fully utilized, resulting in many missed opportunities.

One major issue is that many Web3 games still focus too heavily on token-based systems, where players are incentivized through financial rewards rather than actual gaming experiences. This over-reliance on token economics creates unrealistic expectations, and when the gaming experience fails to meet the advertised expectations, players feel disappointed. To truly compete with Web2 games, Web3 projects need to shift their focus to making the games themselves fun and engaging. Technology should be used to enhance the gaming experience, not become the center of the game.

To succeed, Web3 games must pivot to gameplay-centric models. Blockchain technology has the potential to provide innovative experiences, but it should serve as a tool to enhance immersion rather than drive the entire economy. Only when the focus shifts from token economics to creating genuinely fun and engaging player experiences can Web3 games realize their potential.

So, what changes should be made?

Successful Financial Metrics

• Web3 projects must go beyond merely focusing on token prices. Traditional tech companies track key metrics such as revenue, profit margins, and active users, and Web3 projects should achieve this by measuring actual user activity and value creation.

• The focus should be on identifying and defining a set of key metrics suitable for specific industries and businesses—this can only be achieved through more specific benchmarking against Web2 counterparts and actively communicating with customers.

User-Centric Design

• Another important shift is to focus on user experience (UX)—easy-to-use interfaces and interactions with technology.

• Web3 platforms need intuitive, user-friendly designs to ensure their long-term growth. Currently, most experiences are complex, involving complicated wallet management and steep learning curves, making it easy for new users to drop off midway.

• Simplifying onboarding processes and improving wallet usability are key steps. Excellent projects like Privy, Dynamic, and Turnkey are working to address these issues.

• Long-term user engagement is equally crucial. Platforms must provide real value to ensure users keep coming back, not just speculative rewards. For example, Audius enables artists to connect with fans meaningfully, adding value beyond token incentives. Combined with appropriate technological solutions, this is exactly what is needed.

Challenges in Implementing Utility

• One of the biggest challenges is scalability. Blockchains often struggle to handle large volumes of transactions at low costs. For instance, Ethereum's high gas fees have hindered broader adoption, leading developers to turn to other chains like Sui and Solana.

• Interoperability is also a persistent issue, as many platforms operate in isolation. Cross-chain solutions like Polkadot and Cosmos are making progress, but they have yet to truly become market leaders.

• Finally, regulation remains a significant challenge. While the situation has eased somewhat with ETF approvals, there are still concerns and ambiguous legal boundaries that need to be addressed.

Conclusion

Web3 has enormous potential, but to achieve lasting success, it must move beyond token speculation. Projects like Friend.tech and Axie Infinity demonstrate that while hype can generate quick returns, it does not equate to sustainable long-term growth.

To thrive, Web3 platforms must focus on creating genuine value—this includes:

• Building truly useful products

• Tracking meaningful metrics such as active users and transaction volumes, not just token prices

• Designing for users

• Creating seamless and engaging experiences for users

• Prioritizing product utility over speculative hype.

Simplifying user experiences and addressing real needs will foster long-term user engagement. Overcoming technical challenges such as scalability, interoperability, and regulation is crucial for broader adoption. The future of Web3 lies in projects that combine innovative technology with practical, user-centric solutions, creating lasting impacts that go beyond token economics.

Disclaimer

The editor of this post holds investments in HNT (Helium) and GEOD (GEODNET) but is not the author of this post. The Blockcrunch podcast ("Blockcrunch") is an educational resource aimed at providing information for reference purposes only.