From Narrative to Implementation: Web3 is Retracing the Old Path of the Internet

Some people believe that cryptocurrencies are a Ponzi scheme, a speculative game destined to go to zero. Others see Web3 as a revolution, a new stage of civilization built on the continuation of technology. These two completely different voices reflect the current narrative disconnection within the industry.

However, setting aside these controversies, we can draw a more straightforward conclusion: the underlying logic of business has not actually changed. Whether it is from the Web2 era of portal websites to mobile applications, or from token financing to infrastructure competition in the Web3 era, the prosperity follows a similar development path. It's just that this time, the narrative is wrapped in protocols, and capital is hidden in the code.

Looking back at the development of the Chinese internet over the past decade, we can see a clear trajectory: concept-driven, financing first; subsidies to attract new users, capital driving growth; followed by layoffs, efficiency improvements, and the pursuit of profitability; and then platform transformation and technological restructuring. The current Web3 industry also seems to be repeating a similar development rhythm.

Over the past year, competition among Web3 projects has evolved into a user acquisition battle utilizing methods such as token issuance (TGE) and airdrops (Airdrop). While no one wants to fall behind, no one knows how long this "user swapping" contest can last. Therefore, I try to break down those seemingly chaotic narratives into several more traceable development stages.

Let us follow the footsteps of history to see how Web3 has come to today and where it might head in the future.

I. Review of the Development Stages of the Internet Industry: From Subsidy Expansion to Industrial Ecology

Most people are familiar with this history of the development of the Internet:

Once upon a time, the internet was like a nationwide carnival. Every day, dozens of applications competed to offer users free services, and with just one phone number, you could enjoy various discounts on meals, taxis, haircuts, massages, and more, as if it were the New Year.

Today’s internet resembles a system engineering project that has been running for a long time: users are well aware of which platform offers the cheapest products and which application is the most efficient to use in various scenarios. The ecological structure has long been established, and innovation is more reflected in the improvement of efficiency.

Here we briefly divide the development of the internet into four stages. By reviewing these development logics, we may better understand the path that Web3 is currently replicating.

1. Narrative-driven, stage of mass innovation ( 10 years ago )

It was an era defined by the trend of "concepts."

"Internet+" has become a universal key. Whether you are in healthcare, education, travel, or local lifestyle services, simply adding these three words can attract hot money and attention. At that time, entrepreneurs were not in a hurry to create products; instead, they first looked for the right track, built concepts, and wrote business plans. Investors were also not focused on the revenue curve, but rather on whether a "sufficiently novel, large-scale, and expansive" story could be told.

O2O, social e-commerce, shared economy, under a cycle of concept rotation, project valuations soar, and the pace of financing is completely dominated by the narrative rhythm. The core asset is not the users, not the products, and not the data, but a financing PPT that can tell a good story and aligns with popular trends.

This is also an era of "whoever takes the position first has the opportunity." Validating products and running through the model is the second step; first, you need to tell the story to ride the wave before you qualify to enter the arena.

2. Cash-burning expansion, traffic competition phase (2010-2018)

If the previous stage relied on stories to gain attention, this stage relies on subsidies to aggressively capture the market.

From the ride-hailing war between Didi and Kuaidi to the bike-sharing battle between Mobike and OFO, the entire industry has fallen into a highly consistent strategy: using capital to exchange for scale, using price to change habits, and using losses to gain entry. Whoever can burn through another round of financing has the qualification to continue expanding; whoever can secure the next round of investment can maintain their position on the battlefield.

This is a time when "capturing users" is placed above all else. User experience, operational efficiency, and product barriers take a backseat; the key is - who can become the default choice for users first.

The subsidy war has intensified, and low prices have almost become the norm: taking a taxi costs less than 5 yuan, scanning a code for a bike ride only costs 1 cent, and offline stores are plastered with various application QR codes, waiting for users to enjoy free meals, haircuts, and massages. On the surface, it appears to be the popularization of services, but in reality, it is a traffic competition controlled by capital.

This is not a competition of whose product is better, but rather a contest of who can burn more money; it’s not about who can solve problems, but who can "land grab" faster.

In the long run, this also lays the groundwork for the subsequent refined transformation - when users are "bought," more effort must be spent to retain them; when growth is driven by external forces, it is difficult to achieve a self-sustaining cycle.

3. Landing, fine operation stage (2018-2022)

When stories are told for too long, the industry will inevitably return to a practical issue: "After growth, how to land?"

Starting in 2018, as the growth rate of mobile internet users slowed down, the traffic dividend gradually vanished, and the cost of customer acquisition continued to rise. Data shows that the number of monthly active users of mobile internet in China approached 1.2 billion by the end of September 2022, an increase of only about 100 million compared to 2018, taking nearly four and a half years, with the growth rate significantly slowing down. At the same time, the scale of online shopping users reached 850 million in 2022, accounting for nearly 80% of the total number of internet users, with user growth space tending to saturation.

At the same time, a large number of "story-type" projects that rely heavily on financing are gradually withdrawing. O2O and the sharing economy have become the most concentrated areas of liquidation in this stage: projects like Street Power, Xiaolan Bicycle, and Wukong Travel have successively collapsed, with behind them a set of growth models that cannot be self-consistent and lack user loyalty being eliminated by the market.

But it is also during this retreat that a batch of truly viable projects has emerged. They share a common characteristic: they are not driven by short-term heat stimulated by subsidies, but have completed the construction of a closed commercial model through real demand scenarios and system capabilities.

For example, Meituan has gradually built a complete service chain from ordering to fulfillment and from traffic to supply in the local lifestyle sector, becoming a platform-based infrastructure; Pinduoduo has quickly penetrated user mindset in the sinking e-commerce market with extreme supply chain integration and operational efficiency; the social field is firmly controlled by Tencent, e-commerce is fully occupied by Alibaba, and gaming is concentrated in the hands of Tencent and NetEase.

Their commonality is not about "thinking further", but about running more steadily and calculating more accurately — structurally completing the closed loop from traffic to value, truly growing into a sustainable product system.

At this stage, growth is no longer the only goal; whether growth can be transformed into structural retention and value accumulation is the real watershed that determines the life and death of a project. Extensive expansion is eliminated at this stage; what truly remains are those systematic projects that can build a positive feedback mechanism among efficiency, products, and operations.

This also means that the era of narrative-driven approaches is over, and business logic must possess the ability of "self-looping": it must retain users, support the model, and sustain the structure.

4. The ecological basic shaping, technological transformation seeking opportunity stage ( from 2023 to present )

After the leading projects emerge, the survival issues have been resolved by most projects, and the real differentiation has just begun.

The competition between platforms is no longer a battle for users, but a contest of ecological capabilities. As leading platforms gradually close off growth paths, the industry enters a period characterized by structural stability, resource concentration, and the dominance of collaborative capabilities. A true moat is not necessarily about leading in a specific function, but rather about whether the internal circulation of the system is efficient, stable, and self-consistent.

This is a stage for systematic players. The pattern is basically set, and if new variables want to break through, they can only find gaps at the structural edges and technical breaking points.

At this stage, almost all high-frequency essential tracks have been delineated by giants. In the past, one could still compete for positions by "going online early and burning money quickly," but now, growth must be embedded within system capabilities. The platform logic has also upgraded: shifting from multi-product stacking to ecological flywheels, and from single-point user expansion to organizational-level collaboration.

As user pathways, traffic entry points, and supply chain nodes are gradually controlled by a few leading platforms, the industrial structure is beginning to become closed, leaving increasingly limited space for new entrants.

But it is precisely in this environment of structural contraction that ByteDance has become an outlier. It did not try to compete for resource positions within the existing ecosystem, but rather took a shortcut, starting from underlying technology, and reconstructed the content distribution logic using recommendation algorithms. Against the backdrop of mainstream platforms still relying on social relationship chains for traffic scheduling, ByteDance built a distribution system based on user behavior, thus establishing its own user system and commercial closed loop.

This is not an improvement of the existing pattern, but a technological breakthrough that bypasses existing paths and rebuilds the growth structure.

The emergence of bytes reminds us that even if the industrial landscape tends to solidify, as long as there are structural fractures or technical gaps, new players may still emerge. However, this time, the path is narrower, the pace is faster, and the requirements are higher.

Web3 today is at a similar critical juncture.

2. Current Stage of Web3: The "Parallel Mirror" of Internet Evolution Logic

If the rise of Web2 was an industrial reorganization driven by the mobile internet and platform models, then the starting point of Web3 is a system reconstruction based on decentralized finance, smart contracts, and on-chain infrastructure.

The difference is that Web2 constructs a strong connection between platforms and users; whereas Web3 attempts to shatter and distribute "ownership," and reorganize new organizational structures and incentive mechanisms on the chain.

But the underlying driving force has not changed: from story-driven to capital-driven; from user competition to ecological flywheel, the path that Web3 has gone through is almost identical to that of Web2.

This is not a simple comparison, but a parallel reproduction of a path structure.

This time, what is being burned is the token incentives; what is being built is the modular protocol; what is being competed for is TVL, active addresses, and airdrop points.

The development of Web3 to date can be roughly divided into four stages:

1. Concept-driven stage - Coin-driven: Story first, capital influx

If the early days of Web2 relied on the "Internet +" story template, then the opening line of Web3 is written in the smart contracts of Ethereum.

In 2015, Ethereum went live, and the ERC-20 standard provided a unified interface for asset issuance, making "token issuance" a fundamental capability that all developers can utilize. It did not change the essential logic of financing but greatly lowered the technical barriers for issuance, circulation, and incentives, thereby making "technical narrative + contract deployment + token incentives" the standard template for early Web3 entrepreneurship.

The outbreak at this stage is more driven by technology - for the first time, blockchain empowers entrepreneurs in a standardized form, allowing asset issuance to transition from a permission-based system to an open-source model.

No need for a complete product, no need for mature users; as long as there is a white paper that clearly explains the logic driven by blockchain technology, an attractive token model, and a runnable smart contract, the project can quickly complete the closed loop from "idea" to "financing."

The early innovations of Web3 were not due to the intelligence of the projects, but rather because the proliferation of blockchain technology brought about imagination.

Capital has also quickly formed a "betting mechanism": whoever first positions themselves in the new track, whoever starts first, and whoever gets the narrative out first, may achieve exponential returns.

This has spawned an "unprecedented capital efficiency": between 2017 and 2018, the ICO market experienced an unprecedented explosive growth, becoming a part of blockchain history.