Close Menu
  • News
    • Bitcoin
    • Altcoins
    • DeFi
    • Regulation
    • Market Cap
    • Web 3
    • Scam
  • Blockchain
  • NFT
  • Metaverse
  • Analysis
  • Learn
  • Blog
  • Contact
    • Tech7685@gmail.com
What's Hot

‘Altcoin season:’ Hyperliquid Whale’s prediction as Bitcoin is approaching $ 120k

2025-05-23

The graph makes safe cross-chain transfers from GRT possible with CCIP from Chainlink

2025-05-23

Alchemy acquires NFT Launchpad Heymint to speed up the development of Smart Wallet

2025-05-23
Facebook X (Twitter) Instagram
  • Contact
  • Terms & Conditions
  • Privacy Policy
  • DMCA
  • Advertise
  • BitcoinPlatform.com
Facebook X (Twitter) Instagram
Free Cryptocurrency – Bitcoin | Altcoins | Blockchain | News Stories Updated Daily
  • News
    • Bitcoin
    • Altcoins
    • DeFi
    • Regulation
    • Market Cap
    • Web 3
    • Scam
  • Blockchain

    The graph makes safe cross-chain transfers from GRT possible with CCIP from Chainlink

    2025-05-23

    Unmarshal partners with GPTverse to bring real-time blockchain data to AI-ecosystem

    2025-05-23

    Eni and Certik Partner to elevate Node Security and Decentralized Trust in Web3 Space

    2025-05-23

    FIFA starts Avalanche L1 to Power Soccer NFT Collectibles Platform

    2025-05-23

    VELO works together with Paxos to redefine the infrastructure of the Stablecoin payments

    2025-05-22
  • NFT

    Alchemy acquires NFT Launchpad Heymint to speed up the development of Smart Wallet

    2025-05-23

    Delorean launches a car marketplace on the chains with Patrick Stewart

    2025-05-23

    Beratone NFT Avatars are now live on OpenSea

    2025-05-23

    Hashrate Hackers introduces Ordinals NFT collections supported by Bitcoin Hashrate

    2025-05-22

    FIFA starts Avalanche L1 to Power Soccer NFT Collectibles Platform

    2025-05-22
  • Metaverse

    Shib: The Metaverse – Part of the expanding Shiba Inu ecosystem

    2025-01-03

    Experience to Earn: Everdome’s Metaverse Frontier

    2024-12-30

    Beyond Bots: Meta Motivo and the Dawn of Human Digital Life

    2024-12-13

    Exploring NetVRk: What’s Behind This AI-Powered Virtual Universe?

    2024-10-28

    Council of Europe emphasizes the impact of Metaverse on privacy and democracy

    2024-09-05
  • Analysis

    Kraken Taps Solana Blockchain to roll out tokenized US shares and ETFs for non-American traders

    2025-05-23

    Dogecoin (doge) gets hot: hints on his head in the event of a large outbreak forward

    2025-05-23

    Crack to launch 24/7 trade for Tokenized US shares via Solana

    2025-05-23

    The world’s largest crypto exchange by trade volume Binance adds support for Trump-linked World Liberty Financial Stablecoin

    2025-05-23

    XRP price to see 64,000% rally up to $ 1,700? Analysts reveal at the end of year forecasts

    2025-05-23
  • Learn

    What Is a DEX (Decentralized Exchange)?

    2025-05-21

    Blockchain Explained: What It Is, How It Works and Why We Need It

    2025-05-21

    Types of Blockchain Layers Explained: Layer 0, Layer 1, Layer 2 and Layer 3

    2025-05-16

    Token vs. Coin: Key Differences You Must Know as a Beginner

    2025-05-15

    Inside Changelly: 10 years of steadfast support and compliance

    2025-05-15
  • Blog
  • Contact
    • Tech7685@gmail.com
Free Cryptocurrency – Bitcoin | Altcoins | Blockchain | News Stories Updated Daily
Home»Blockchain»The risks of overbuilding the crypto infrastructure
Blockchain

The risks of overbuilding the crypto infrastructure

2024-12-19No Comments5 Mins Read
Share
Facebook Twitter LinkedIn Pinterest Email

The Web3 ecosystem is often seen as the next infrastructure of the Internet. However, almost a decade after the release of the Ethereum white paper, we still have very few mainstream applications running on that infrastructure. Meanwhile, we continue to see the emergence of new infrastructure building blocks everywhere: L1, L2 and L3 blockchains, rollups, ZK layers, DeFi protocols and many others. While we may be building the future of the Internet with Web3, there is little doubt that we are overbuilding the infrastructure layer. Currently, the relationship between infrastructure and applications in Web3 has no parallels in the history of technology markets.

Why does this happen? Simply because it is profitable to build infrastructure in Web3.

Web3 defies some of the conventional market adoption patterns in tech infrastructure, creating both a fast track to profitability and unique risks to its evolution. To further explore this statement, we need to understand how value is typically created in infrastructure technology trends, how Web3 deviates from this norm, and what risks result from infrastructure overbuilding.

Traditionally, value creation in technology markets fluctuates between the infrastructure and application layers, striking a dynamic balance between the two.

Take the Web1 era as an example. Companies such as Cisco, IBM and Sun Microsystems were the driving force behind the infrastructure layer of the Internet. But even in those early days, applications like Netscape and AOL emerged that could generate significant value. The Web2 era was powered by cloud infrastructure, which then spawned SaaS and social platforms, catalyzing the creation of new cloud infrastructure.

See also  South Korea tests digital vouchers, blockchain for item recovery

More recently, trends like generative AI started as an infrastructure play with modelers, but applications like ChatGPT, NotebookLM, and Perplexity quickly gained momentum. This, in turn, has led to the creation of new infrastructure to support a new generation of AI applications – a cycle that will likely continue for several more iterations.

This constant balance between application and infrastructure layers is a hallmark of technology markets, making Web3 a notable anomaly. But why is this imbalance so apparent in Web3?

The main difference between Web3 and its predecessors is the fast path to capital formation and liquidity in infrastructure projects. In Web3, infrastructure projects typically launch tokens that become tradable on exchanges, providing significant liquidity to investors, teams and communities. This contrasts with traditional markets, where investor liquidity is typically achieved through corporate acquisitions or public offerings, both of which typically take a long time to complete. Most venture capital firms operate on an investment cycle of ten years or longer. While rapid capital formation is one of the benefits of Web3, team incentives are often misaligned, discouraging long-term value creation.

This “infrastructure casino” is a risky pattern in Web3 because it encourages builders and investors to prioritize infrastructure projects over applications. After all, who needs applications when L2 tokens can reach multi-billion dollar valuations in just a few years with minimal usage? This approach poses several challenges, many of which are subtle and difficult to address.

1) Building without adoption feedback

Perhaps the biggest risk of overbuilding the infrastructure in Web3 is the lack of market feedback from applications built on top of that infrastructure. Applications represent the ultimate expression of consumer and business use cases and regularly accompany new use cases in infrastructure. Without application feedback, Web3 risks building infrastructure for “imaginary” use cases that are disconnected from market reality.

See also  How Plume is planning to scale tokenized real estate to $ 4 trillion by 2035

2) Extreme liquidity fragmentation

The launch of new Web3 infrastructure ecosystems is one of the main drivers of liquidity fragmentation in the sector. New blockchains often require billions of dollars to increase liquidity and attract Tier 1 DeFi projects to their ecosystems. In recent months, the creation of new L1 and L2 blockchains has exceeded the influx of new capital into the market. As a result, capital in Web3 is more fragmented than ever, creating significant adoption challenges.

3) Inevitable, increasing complexity

Have you tried using some wallets, dApps and bridges for newer blockchains? The user experience is generally difficult. The technical infrastructure obviously becomes more complex and advanced over time. Applications built on that infrastructure typically abstract this complexity for end users. However, in Web3 – where there is a lack of application development – ​​users are left to interact with increasingly complex blockchains, leading to friction in adoption.

4) Limited developer communities

If Web3 infrastructure has surpassed capital formation, then the challenge is even greater when it comes to developer communities. dApps are built by developers and creating new developer communities is always a challenge. Most new Web3 infrastructure projects operate with very limited developer communities because they draw talent from the same existing pool, which simply isn’t large enough to support the massive amount of infrastructure being built.

5) Widening the gap with Web2

A side effect of overbuilding the infrastructure in Web3 – without app adoption – is the widening adoption gap with Web2. Trends like generative AI are driving a new generation of Web2 apps and redefining industries like SaaS and mobile. Instead of tapping into this momentum, the dominant trend in Web3 remains building more blockchains.

See also  Crypto advocacy group criticizes UK Treasury Committee's recommendation to regulate crypto-like gambling

Launching L1 and L2 blockchains is a profitable venture for investors and development teams, but that doesn’t necessarily translate into long-term benefits for the Web3 ecosystem. Web3 is still in its early stages, and while more infrastructure building blocks are certainly needed, most of the industry is currently building infrastructure without market feedback.

That market feedback typically comes from applications that use the infrastructure, but such applications are largely absent from Web3. Most of the Web3 infrastructure usage comes from other Web3 infrastructure projects. We continue to build infrastructure, launch tokens and raise capital, but we are essentially flying blind.

Source link

Crypto infrastructure overbuilding risks
Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Posts

The graph makes safe cross-chain transfers from GRT possible with CCIP from Chainlink

2025-05-23

Bitcoin’s Wall Street-driven Rally Dissect: From ETF inflow to macro risks

2025-05-23

Unmarshal partners with GPTverse to bring real-time blockchain data to AI-ecosystem

2025-05-23

Eni and Certik Partner to elevate Node Security and Decentralized Trust in Web3 Space

2025-05-23
Add A Comment

Comments are closed.

Top Posts

DOJ Arrests CFO of Media Outlet Epoch Times Over Alleged $67,000,000 Money Laundering Scheme Involving Crypto

2024-06-05

Bitcoin: Why Uncle Sam’s latest move could spell trouble for BTC miners

2023-05-06

Ethereum price resumes downtrend as Bears aim for $1,500

2023-06-15
Editors Picks

Did BNB Chain overcome security challenges in the third quarter?

2023-11-06

XRP price may gain strength if this resistance is lifted

2023-06-20

Trader Known for Calling Bottoms Says Bitcoin (BTC) and Ethereum (ETH) Are Ready to Go Lower – Here’s His Goal

2023-05-25

Here are the biggest institutional buyers of Bitcoin this week

2024-02-02
About
About

Our mission is to develop a community of people who try to make financially sound decisions. The website strives to educate individuals in making wise choices about Cryptocurrencies, Defi, NFT, Metaverse and more.

We're social. Connect with us:

Facebook X (Twitter) Instagram Pinterest YouTube
Top Insights

‘Altcoin season:’ Hyperliquid Whale’s prediction as Bitcoin is approaching $ 120k

The graph makes safe cross-chain transfers from GRT possible with CCIP from Chainlink

Alchemy acquires NFT Launchpad Heymint to speed up the development of Smart Wallet

Get Informed

Subscribe to Updates

Get the latest news and Update from Free.cc about Crypto, Metaverse, NFT and more.

  • Contact
  • Terms & Conditions
  • Privacy Policy
  • DMCA
  • Advertise
  • BitcoinPlatform.com
© 2025 Free.cc - All rights reserved. Contact: info@free.cc

Type above and press Enter to search. Press Esc to cancel.

  • bitcoinBitcoin(BTC)$110,422.60-0.12%
  • ethereumEthereum(ETH)$2,651.881.61%
  • tetherTether USDt(USDT)$1.00-0.02%
  • rippleXRP(XRP)$2.420.78%
  • binancecoinBNB(BNB)$683.320.50%
  • solanaSolana(SOL)$180.372.50%
  • usd-coinUSDC(USDC)$1.00-0.01%
  • dogecoinDogecoin(DOGE)$0.2425701.84%
  • cardanoCardano(ADA)$0.812.40%
  • tronTRON(TRX)$0.2731790.29%
  • suiSui(SUI)$3.82-5.40%
  • hyperliquidHyperliquid(HYPE)$35.0515.09%
  • chainlinkChainlink(LINK)$16.591.94%
  • avalanche-2Avalanche(AVAX)$24.963.88%
  • stellarStellar(XLM)$0.3003471.03%
  • shiba-inuShiba Inu(SHIB)$0.0000152.04%
  • bitcoin-cashBitcoin Cash(BCH)$437.635.60%
  • hedera-hashgraphHedera(HBAR)$0.2025991.17%
  • unus-sed-leoUNUS SED LEO(LEO)$8.86-0.04%
  • the-open-networkToncoin(TON)$3.130.01%
  • polkadotPolkadot(DOT)$4.912.42%
  • litecoinLitecoin(LTC)$99.771.73%
  • moneroMonero(XMR)$392.06-0.86%
  • bitget-tokenBitget Token(BGB)$5.789.96%
  • pepePepe(PEPE)$0.00001510.83%
  • piPi(PI)$0.79-4.78%
  • daiDai(DAI)$1.00-0.01%
  • ethena-usdeEthena USDe(USDE)$1.00-0.06%
  • uniswapUniswap(UNI)$6.421.77%
  • bittensorBittensor(TAO)$458.95-2.84%
  • aaveAave(AAVE)$254.341.11%
  • nearNEAR Protocol(NEAR)$3.033.54%
  • aptosAptos(APT)$5.818.34%
  • ondo-financeOndo(ONDO)$1.011.19%
  • okbOKB(OKB)$52.83-0.29%
  • kaspaKaspa(KAS)$0.114524-0.41%
  • internet-computerInternet Computer(ICP)$5.612.68%
  • ethereum-classicEthereum Classic(ETC)$19.450.44%
  • official-trumpOFFICIAL TRUMP(TRUMP)$13.54-6.39%
  • gatechain-tokenGateToken(GT)$21.930.56%
  • render-tokenRender(RENDER)$5.164.81%
  • crypto-com-chainCronos(CRO)$0.0989160.05%
  • polygon-ecosystem-tokenPOL (prev. MATIC)(POL)$0.2494370.54%
  • vechainVeChain(VET)$0.0302161.31%
  • mantleMantle(MNT)$0.761.52%
  • ethenaEthena(ENA)$0.4169882.88%
  • worldcoin-wldWorldcoin(WLD)$1.5321.60%
  • usd1World Liberty Financial USD(USD1)$1.00-0.13%
  • artificial-superintelligence-allianceArtificial Superintelligence Alliance(FET)$0.9010.09%
  • arbitrumArbitrum(ARB)$0.4241670.99%
  • bitcoinBitcoin(BTC)$110,422.60-0.12%
  • ethereumEthereum(ETH)$2,651.881.61%
  • tetherTether USDt(USDT)$1.00-0.02%
  • rippleXRP(XRP)$2.420.78%
  • binancecoinBNB(BNB)$683.320.50%
  • solanaSolana(SOL)$180.372.50%
  • usd-coinUSDC(USDC)$1.00-0.01%
  • dogecoinDogecoin(DOGE)$0.2425701.84%
  • cardanoCardano(ADA)$0.812.40%
  • tronTRON(TRX)$0.2731790.29%
  • suiSui(SUI)$3.82-5.40%
  • hyperliquidHyperliquid(HYPE)$35.0515.09%
  • chainlinkChainlink(LINK)$16.591.94%
  • avalanche-2Avalanche(AVAX)$24.963.88%
  • stellarStellar(XLM)$0.3003471.03%
  • shiba-inuShiba Inu(SHIB)$0.0000152.04%
  • bitcoin-cashBitcoin Cash(BCH)$437.635.60%
  • hedera-hashgraphHedera(HBAR)$0.2025991.17%
  • unus-sed-leoUNUS SED LEO(LEO)$8.86-0.04%
  • the-open-networkToncoin(TON)$3.130.01%
  • polkadotPolkadot(DOT)$4.912.42%
  • litecoinLitecoin(LTC)$99.771.73%
  • moneroMonero(XMR)$392.06-0.86%
  • bitget-tokenBitget Token(BGB)$5.789.96%
  • pepePepe(PEPE)$0.00001510.83%
  • piPi(PI)$0.79-4.78%
  • daiDai(DAI)$1.00-0.01%
  • ethena-usdeEthena USDe(USDE)$1.00-0.06%
  • uniswapUniswap(UNI)$6.421.77%
  • bittensorBittensor(TAO)$458.95-2.84%
  • aaveAave(AAVE)$254.341.11%
  • nearNEAR Protocol(NEAR)$3.033.54%
  • aptosAptos(APT)$5.818.34%
  • ondo-financeOndo(ONDO)$1.011.19%
  • okbOKB(OKB)$52.83-0.29%
  • kaspaKaspa(KAS)$0.114524-0.41%
  • internet-computerInternet Computer(ICP)$5.612.68%
  • ethereum-classicEthereum Classic(ETC)$19.450.44%
  • official-trumpOFFICIAL TRUMP(TRUMP)$13.54-6.39%
  • gatechain-tokenGateToken(GT)$21.930.56%
  • render-tokenRender(RENDER)$5.164.81%
  • crypto-com-chainCronos(CRO)$0.0989160.05%
  • polygon-ecosystem-tokenPOL (prev. MATIC)(POL)$0.2494370.54%
  • vechainVeChain(VET)$0.0302161.31%
  • mantleMantle(MNT)$0.761.52%
  • ethenaEthena(ENA)$0.4169882.88%
  • worldcoin-wldWorldcoin(WLD)$1.5321.60%
  • usd1World Liberty Financial USD(USD1)$1.00-0.13%
  • artificial-superintelligence-allianceArtificial Superintelligence Alliance(FET)$0.9010.09%
  • arbitrumArbitrum(ARB)$0.4241670.99%