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Early crypto projects are often in the experimental phase, focusing on attracting users and polishing core products rather than aggressively pursuing profitability. Product-market fit is unclear, and ideally, these projects prioritize reinvestment to maximize long-term growth rather than revenue-sharing plans. Governance of these projects is often centralized, with the founding team in charge of upgrades and strategic decisions. The ecosystem is still nascent, network effects are weak, and user retention is a challenge. Many of these projects rely on token incentives, venture capital, or grants to maintain initial user onboarding rather than organic demand.
While some projects may achieve early success in a niche market, they still need to prove whether their model is sustainable. Most crypto startups fall into this category, with only a small number able to break through. These projects are still finding product-market fit, and their revenue models highlight their difficulties in maintaining sustained growth. Projects like Synthetix and Balancer have seen a sharp surge in revenue followed by a significant decline, indicating a period of speculative activity rather than steady market adoption.
Projects like Curve and Arbitrum One have relatively stable revenue streams with clear peaks and valleys, indicating fluctuations due to market cycles and incentives. OP Mainnet has shown a similar trend, with surges indicating periods of high demand followed by slowdowns. Meanwhile, Usual's revenue has grown exponentially, indicating rapid adoption but lacking historical data to confirm whether this growth is sustainable. Pendle and Layer3 have seen large spikes in activity, indicating that this is a time of high user engagement, but also revealing the challenges of maintaining momentum over the long term.