Exploring 14 Top Projects: How Did They Rise from Scratch?

Abstract

1. Most projects boast impressive team backgrounds, consisting of academics, serial entrepreneurs, or industry experts, with a predominant presence of Western teams. [Excellent Team]

2. Pioneering projects often introduce unique and potentially incomprehensible concepts to the market, setting them apart from others. [Forward-thinking Market Predictions]

3. Securing funding from top-tier institutions is crucial for project liftoff, although not a guarantee of success. Failure to secure such backing may limit a project’s growth potential. [Reliable Institutional Backing]

4. For infrastructure projects, the ability to transcend market cycles depends on the presence of standout projects within the public chain. An ecosystem focus is vital for long-term success. [Ecosystem is Core Competitive Advantage at the Mid-to-Late Stage]

5. Whether in products or public chains, addressing a market pain point with a unique solution, distinct from copycats, is paramount. [Innovation]

1. Avalanche: The team boasts a strong background and unique technical capabilities, contributing to robust fundraising and fostering a thriving ecosystem.

2021 was undeniably the season of altcoins, especially in the latter half. With Ethereum surpassing 4000+ and high gas fees on the mainnet, and no Layer 2 solutions available, users and funds began to overflow from Ethereum to other Layer 1 platforms. Solana emerged as one of the most aggressive projects at that time, given the bullish market sentiment and the ongoing quest for alternative options. The spotlight gradually shifted to Avax, primarily due to:

1. The impressive Avalanche team, led by CEO Emin Gǔn Sirer, a Cornell University computer science professor and co-founder of Ava Labs. Sirer developed the Avalanche consensus protocol, the underlying technology of the Avalanche blockchain platform. He is renowned for his contributions to peer-to-peer systems, operating systems, and computer networks, having previously served as an associate professor at Cornell University and co-director of the Initiative for Cryptocurrencies and Contracts (IC3).

2. Unique technical capabilities, notably the pioneering “modular” approach utilizing the XCP tri-chain model. The X-Chain facilitates asset creation and trading, the C-Chain is dedicated to smart contract deployment, and the P-Chain coordinates validators and subnets, leveraging gossip avalanche for consensus confirmation. This innovative approach garnered significant attention and was well-received within the industry.

3. Strong fundraising capabilities, evidenced by completing a $12 million private funding round and a $46 million public funding round in 2020. In September 2021, the foundation secured a $230 million funding round, followed by an $18.5 million ecosystem accelerator round in November. Strong funding, combined with market-making activities, instilled confidence in retail investors, driving strong demand.

4. Avalanche’s ecosystem featured standout projects such as Defikingdoms, a highly creative DeFi+GameFi project that effectively portrayed DeFi concepts through visually appealing gaming interfaces. Subsequently, DFK transitioned from an ecosystem project to Avalanche’s Appchain, significantly boosting Avalanche’s reputation. Additionally, notable projects like GMX and Trader Joe further contributed to Avalanche’s ecosystem vibrancy.

2. Fantom: Led by a strong member, the public chain reached its peak but also faced downturns.

The soul of Fantom is AC, a DeFi veteran and founder of Yearn Finance, Phantom, and others. YFI created a thousand-fold market value myth during the bull market, leading the community to hold high expectations for AC, often referred to as the “Father of DeFi”.

1. Regarding the team, AC is the face of Fantom, needing no further introduction.

2. Fantom raised $40 million in its 2018 ICO. During the 2021 bull market, it secured three consecutive rounds of funding, with Alameda investing $35 million, Blocktower $20 million, and Hyperchain $15 million. However, after experiencing a major downturn in May,

Fantom’s reasons for rapid growth were:

1. AC’s constant endorsements instilled confidence in the community.
2. With substantial funding, Fantom allocated 370 million tokens (approximately $200 million) to incentivize ecosystem development, leading to rapid growth in on-chain DeFi activities.

Why did Ftm experience a sharp decline starting in 2022?

1. Ftm’s listing and subsequent performance were closely tied to AC’s status as a co-founder. Consequently, AC’s departure caused a loss of confidence in the community.
2. The ecosystem lacked innovation and predominantly consisted of DeFi projects, many of which were copycats. Major projects in the crypto space are known for their uniqueness, whether aesthetically pleasing or not, whereas Fantom’s ecosystem lacked this distinctive quality.

3. Solana: A journey of highs and lows, where hackathons created miracles, resurrecting it during the bear market, with a unique ecosystem.

Solana faced significant challenges in its early fundraising efforts. Despite having a strong team background, raising funds in 2018-2019 was tough. In a market growing increasingly cautious about high-performance public chains, Solana had to compete with other projects, lacking widespread recognition at the time. However, through perseverance with its product and a pragmatic approach, Solana gradually attracted investor attention.

A critical divergence emerged during Solana’s development, involving Multicoin and Solana’s founders’ strategic choices. Multicoin, an early investor, insisted on Solana’s quick listing to establish brand and community consensus. Meanwhile, Solana’s founders aimed to first launch a stable and reliable mainnet. This decision ultimately proved correct, as it laid the groundwork for subsequent collaborations with SBF, who was seeking a high-performance public chain partner.

Key factors in Solana’s success from scratch:

1. SBF’s involvement played a decisive role in Solana’s rise. SBF not only invested in Solana but also led his team to develop the Serum project based on Solana, significantly boosting Solana’s visibility and legitimacy. Rumors even circulated that 70% of Solana’s Total Value Locked (TVL) was supported by SBF’s team alone.
2. Solana’s hackathon projects created numerous miracles. Through hackathons and various incentives, Solana nurtured an active developer community, providing momentum for ecosystem development. Top projects like Magic Eden, Stepn, and Jito emerged subsequently.
3. In SBF’s hands, Solana’s miracle-making through Pump marketing and wealth effects was exceptional.
4. Despite subsequent challenges such as FTX’s downfall and significant price fluctuations, Solana maintained its developer ecosystem and community activities. Through continuous incentive measures and hackathons, Solana continued to improve infrastructure and inspire more innovative application development, further driving ecosystem prosperity and demonstrating resilience, which is key to enduring this bear market. Additionally, Solana’s ecosystem development diverged gradually from the Ethereum community, particularly with the DePIN collective migrating to Solana.
5. Strong endorsements, wealth effects from marketing, and SBF’s presence attracted many developers and ecosystem projects. Moreover, Solana’s high performance attracted numerous unique ecosystem projects.

4. Terra: Soaring high due to its dual-token ecosystem and high yields, but crashing back to earth due to the ecosystem’s downfall.

Key factors in Terra’s success from scratch:

1. In terms of the team, Do Kwon, a Stanford graduate, led a team with a solid background. He was also highly active on Twitter and adept at generating buzz.

2. Being the national chain of South Korea fueled extreme FOMO within the country. Korean VCs like 3AC were both beneficiaries and casualties of Terra’s rise and fall. Terra also secured significant funding, raising $77 million in two rounds.

3. In terms of the ecosystem, Luna and UST relied on arbitrage mechanisms and supply-demand dynamics to stabilize prices. Luna served as the stabilizer for UST, forming the most prominent dual-token algorithmic stablecoin system at the time. Terra later launched the important DeFi project Anchor, offering a high APY of 19%-20%, touted as the “golden standard” for passive income in crypto. This attracted a large number of investors but also set the stage for future troubles. During the bull market, the popularity of UST soared, making it the third-largest stablecoin with a market cap of $18 billion, while Luna’s market cap peaked at $41 billion. Terra’s payment project Chai also received significant investment, with SoftBank injecting $45 million.

Once the market sentiment flipped, the positive spiral turned into a death spiral:

In 2022, the overall cryptocurrency market downturn led investors to shift funds from other cryptocurrencies to UST to earn high interest. This resulted in the for Anchor far exceeding the borrowing volume, leading to significant imbalances. On May 8, 2022, LFG withdrew $150 million worth of UST liquidity from the UST-3Crv pool to prepare for the creation of the 4Crv pool. Suddenly, an address sold 84 million UST, severely disrupting the balance of the 3Crv pool. Subsequently, multiple whale accounts began selling UST on Binance, causing a brief price deviation.

As reserves dwindled, confidence in UST began to wane, leading to massive UST sell-offs and further price deviations. To stabilize UST’s price, a large amount of Luna was minted, causing Luna’s price to plummet, resulting in the so-called death spiral. To prevent Luna and UST from crashing, LFG had to sell the treasury’s BTC and other tokens, leading to a market-wide crash. Luna and UST triggered a market collapse.

Terra’s success was built on strong tokenomics (effectively a Ponzi scheme in a bull market) and a unique ecosystem. However, these same tokenomics also contributed to Terra’s collapse. If the ecosystem could keep up, would Terra have avoided collapse?

5. Arbitrum: The team that pioneered OPL2 and amassed significant funding during the bull market, leading to an outstanding ecosystem.

Key factors in Arbitrum’s success from scratch:

1. The team, offchainlabs, started working on L2 solutions as early as 2018 and completed their angel round in 2019, making them one of the earliest L2 teams. Their first-mover advantage in technology was highly apparent. Subsequently, in April and August of 2021, they raised a total of $140 million in funding, showcasing their significant lead in technical expertise.

2. Being among the earliest to launch the OPL2 mainnet during the bull market of September 2021 made it relatively easy to accumulate users and ecosystem growth, establishing an early advantage in ecosystem development.

3. With substantial funding, Arbitrum had the financial resources to invest in ecosystem development, attracting developers.

4. A well-executed airdrop in March 2022 created a significant wealth effect during the early stages of the bear market. Unlike StarkWare, whose airdrop led to a rapid 90% decline in DAU, Arbitrum experienced much less loss in DAU after the airdrop.

5. The ecosystem boasted a flagship project, GMX, which saw remarkable success during the bear market, defying the trend with a 100% increase in value. GMX’s innovative idea of using a spot DEX for a perpetual DEX contributed significantly to Arbitrum’s user base and trading volume.

With a strong team background leading the narrative, easy access to funding, strategic timing for mainnet launch, ample resources for developer incentives, and the emergence of a flagship project, Arbitrum was well-positioned to thrive.

6. Celestia: Clear Positioning but Weak Ecosystem

Key factors in Celestia’s success from scratch:

1. Celestia’s narrative is well-crafted. As the first project to propose a modular blockchain network, Celestia adopts a modular design that separates consensus from execution, providing data availability services. At its inception, there were few projects focusing on modular blockchain and DA solutions, giving Celestia virtually no direct competitors. This provided Celestia with a unique market positioning.

2. Celestia’s establishment coincided with a period when the market was clearly moving towards higher scalability and efficiency. By offering a solution focused on data availability, Celestia met the market’s demand for higher-performance Layer 2 solutions. Celestia is particularly suitable as a data availability layer for Rollups. It allows Rollups to push state execution off-chain, relying on Celestia for consensus and data availability, thereby enhancing overall scalability.

3. The team is strong, with Mustafa being a UCL Ph.D. and co-founder of Chainspace, which was later acquired by Facebook.

4. Celestia’s ecosystem development is relatively weak. However, it chose to join the Cosmos ecosystem, and the subsequent staking rewards for Tia were very generous, providing some value support.

7. Berachain: Luna 2.0 - Can the Tri-token Model Reshape Luna’s Bull Market Miracle?

Berachain is currently attracting high attention (after all, it hasn’t taken off yet), so let’s briefly discuss:

1. Although the team is anonymous, they are veterans in the crypto space since 2015. In 2021, they released an NFT featuring a smoking bear. After experiencing the DeFi summer, they deeply realized the importance of liquidity for public chains, leading to the launch of Berachain.

2. It’s likely due to the strong team background that they were able to secure a $42 million financing round from Polychain and HackVC during the deep bear market in April 2023.

3. While the entire chain narrative still serves DeFi (using the old concept to restrict/deal with today’s things), the token design is clever. The tri-token design - bera/honey/bgt - echoes Luna/Terra’s approach, providing a sense of innovation. Luna/UST’s interest design is inherently fragile, relying on the interest rate differential of Anchor’s borrowing. Learning from Luna/UST’s failure, Berachain’s tri-token model may effectively mitigate (not avoid) the death spiral of dual tokens. Considering Luna’s fervent surge during the bull market, it’s natural for the market to have high expectations for Berachain.

8. Axie: A Unique Product of the Pandemic Era, a Survival Tool for Southeast Asian Users

Axie’s success from scratch was propelled by several key factors:

1. During the pandemic, Southeast Asian users faced low daily incomes. Axie’s creation of the Play-to-Earn (P2E) model changed players’ expectations of games, transforming them from leisure activities into potential sources of income. Importantly, this income was not insignificant, especially against the backdrop of the bull market. More and more players joined the game as its popularity surged, driving up the token price. At its peak, weekly earnings could reach $300-400 USD. In regions affected by economic instability or the COVID-19 pandemic, this model provided a new opportunity for income. The game not only provided entertainment but also empowered players by involving them in economic activities, giving them control over productive tools. This aspect was particularly attractive to players in developing countries.

2. As the leading blockchain game at the time, Axie Infinity reached its peak in 2021 with strong support from various community guilds and investment institutions. Its daily revenue and active user count soared, capturing nearly two-thirds of the market share of blockchain games. During this phase, game revenue and token value reached historic highs, with AXS reaching a peak market capitalization of $10 billion USD.

However, returning to zero was straightforward, as Ponzi games lack positive externalities, ultimately resulting in a collapse.

9. Eigenlayer: Aligning with the Trend of Leveraging User Funds and Well-Integrated with Restaking

Eigenlayer’s success from scratch can be understood as follows:

1. The story is quite authentic. In early 2022, when the overall ETH staking ratio was less than 5%, Eigenlayer dared to explore a niche within a niche.

2. Kannan, as a PR-focused CEO, has the ability to attract the attention of venture capitalists.

3. The Ethereum staking ratio is visibly increasing, with the ratio growing from 0 to the current 30% over three years.

4. Eigenlayer’s star ecosystem project is EigenDA. The story of Restaking later integrates well with DA, making modular blockchain DA one of the best use cases for restaking.

5. Because of points 1, 2, 3, and 4, venture capitalists are willing to invest. Moreover, this aligns with the needs of Ethholders who continually leverage their assets to increase liquidity.

10. Merlin: Core Figures and Wealth Effect Foster Community Unity, Clever TVL Growth Follows

Merlin is now popular, and the factors behind it can be briefly summarized as follows:

1. The background of the founder is excellent. Through multiple offline communications, one can perceive a decade-long entrepreneurial reflection. Having secured significant funding in the past, their self-awareness is high, and they have a deep understanding of the community. In a rising market, they would be an exceptional team. Additionally, the founder has a charismatic personality. They submerged into the ordinals ecosystem in March 2023 and were bullish early on.

2. Community unity. The BRC420/Merlin community is indeed very united, with a shared belief, largely due to making money in the blue box. The unity of the community is also due to the consensus created by the miracle pump in the blue box. The subsequent blue crystals and the wealth effect of the music box have also been very effective. The wealth effect facilitated a rapid cold start and built a user base.

3. Ecosystem support. Centered around a building in Singapore, with several subway stations within a radius, a circle of ecosystem projects has been gathered, all supporting each other. Consequently, the ecosystem’s TVL grew rapidly.

4. The method of choosing TVL growth is very clever. In addition to BTC Staking, top inscriptions + 420NFTs can be staked to boost TVL, resulting in a substantial TVL book value.

5. Because of points 1, 2, and 3, financing was rapid. Moreover, the founder understands marketing and branding well, so they launched at the right time, creating the largest BTC L2 in the current market.

1. Blur: Understanding the Core of the NFT Market Lies in MM and Whales and Driven by Continuous Token Incentives

Understanding why Blur rose from scratch requires grasping that the core competitiveness of an NFT Marketplace or exchange revolves around attracting Makers. With Makers in place, there can be Taker users, which is essential for discussing product experience.

So, what did Blur do?

1. It attracted different Makers through Order Placement (Maker) and Bidding (Maker) and rewarded them with Tokens. Moreover, only blue-chip NFTs can be incentivized with tokens. This is easily understood as the majority of NFT trading volume consists of blue-chip NFTs, and non-blue-chip NFTs ultimately end up worthless. The bulk of blue-chip NFTs is controlled by whales and MM, with retail traders having very little. Therefore, the core of the core is to serve MM and whales who hold blue-chip NFTs; retail traders are simply not that important.

2. The token incentive model is different from X2Y2 and Looksrare. The direct blood-sucking airdrop approach of X2Y2 and Looksrare is one-off and not very meaningful. Continuously using token incentives to attract whales and MM to provide liquidity is one of the core factors for Blur’s success.

3. Other aspects are minor, such as product features like batch trading and aggregation, but these are not crucial.

12. BAYC: The Earliest NFT Membership Club, Established Consensus Through Celebrity Effect

BAYC’s success from scratch in the previous cycle can be understood as follows:

1. People who own BAYC NFTs automatically become members of an exclusive club, offering a new form of social interaction and creating a strong sense of belonging. The project’s strong business development attracted a large number of investors and collectors, including many celebrities, further increasing the project’s exposure and appeal. Against the backdrop of the NFT bull market, BAYC introduced a unique business model, decentralizing IP rights for NFT owners, allowing them to use their apes to create and sell merchandise, further promoting BAYC. With its unique art style and strong community utility, BAYC quickly gained iconic status in the NFT market at that time.

2. BAYC was launched during the peak of the NFT craze, capitalizing on the high market interest in emerging digital collectibles. Subsequently, through social media and the celebrity effect, BAYC quickly established strong brand awareness and community. YugaLabs continued to expand the BAYC universe, introducing new NFT projects and games such as Mutant Ape Yacht Club and Bored Ape Kennel Club, further increasing revenue and continuously adding value to membership and community engagement. Collaborations such as AdidasxBAYC NFT were also launched. However, some believe that BAYC’s model requires constant new additions and inflow of funds to maintain its value, leading some to label it as a metaverse scam. This was also part of the dilemma faced by the crypto market gradually entering a bearish phase, with NFTs struggling to break through.

BAYC’s gradual decline in this cycle can be understood as follows:

1. The fundamental question of what NFTs are actually useful for remains unresolved. Moreover, during the bear market, YugaLabs did not provide too many airdrop benefits to the community.

13. Little Penguin: Revival Through a Combination of On-Chain and Off-Chain Marketing Strategies + Pumping

The resurrection of Little Penguin in this cycle can be understood as follows:

1. The project had already hit rock bottom once in 2022, but due to its genuinely cute images, Lukaz decided to acquire it.

2. At the time, the narrative around NFTs focused on onboarding web2 users to web3, with hopes of replicating the success of BAYC. Investors believed that Little Penguin could attract some mainstream users by combining off-chain toy retailing with on-chain NFT marketing through airdrops.

3. Due to Lukaz’s acquisition of Little Penguin, there was a substantial amount of chips in hand. Partnering with market makers, they easily pumped the project to establish consensus.

4. Users outside the crypto circle learned about crypto and Little Penguin through off-chain toys, while those within the circle rediscovered Little Penguin through pumps and airdrops. Consequently, Little Penguin experienced a revival in the latter half of 2023, briefly flipping BAYC.

14. Friend.Tech: Use tokens to quantify personal social value, an amazing idea

Friend.Tech: Leveraging Tokenization to Quantify Personal Social Value, a Mind-Blowing Idea

The growth of Friend.Tech from scratch can be summarized as follows:

1. Friend.Tech achieved what no one else could—quantifying personal social value. In the world of Web2, limitations imposed by payment channels and compliance issues (such as running an illegal gambling operation) made it impossible to launch or extensively use similar products. However, in the crypto world, the best way to profit is by issuing new assets. Hence, Friend.Tech brilliantly addressed this issue. Everyone can issue their key, and using an Ethereum-based quantification curve, one’s social value can be quantified. It’s the simplest form of ICO, where the number of people buying and selling keys depends entirely on personal branding. The product’s concept is truly mind-blowing.

2. Despite poor user experience and frequent website crashes, with account creation requiring gas fees, all contributing to internal exploitation within the community, it’s undeniable that Friend.Tech became a phenomenal product.

3. However, based on the interaction metrics shown in the graph, Friend.Tech essentially faded into obscurity. The reasons are:

1. The model is not sustainable; it’s entirely based on internal exploitation within the community, where a significant portion of the gains from everyone’s gaming goes to the Friend.Tech project team, resulting in excessive fees. While Stepn can at least tell a story of positive externalities, Friend.Tech fails even to do that.
2. There haven’t been any new features developed later on; once the money was made, it seemed to be the end. If the team could introduce some new gameplay, such as advertising or implementing positive externalities measures in Web2 advertising, there might be a different kind of explosion.
3. The token mechanism was introduced too late. Without token incentives, internal exploitation is difficult to sustain.

If we consider the continuous token incentive approach employed by Blur, could Friend.Tech sustain itself?

Statement:

1. This article originally titled “14个顶级项目，0-1时他们到底做对了什么？” is reproduced from [SevenUp DAO]. All copyrights belong to the original author [Zixi.eth]. If you have any objection to the reprint, please contact Gate Learn team ([email protected]), the team will handle it as soon as possible.

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