Paradigm of Web3 Consumer Applications and Investment Theoretical Reflection

Recently, Alliance DAO has gained attention for successfully incubating Web3 consumer applications like Pump.fun and Moonshot. This article will summarize Alliance DAO's investment philosophy in the Web3 consumer sector, and based on personal observations, discuss the main paradigms of current Web3 consumer applications, the challenges they face, and potential opportunities, concluding with reflections on the investment theory of Web3 consumer applications.

Alliance DAO's Incubation of Web3 Consumer Track

Alliance DAO Accelerator has incubated or invested in a total of 28 Web3 consumer application projects, which can be roughly divided into 7 categories:

1. Life Style category (3 items ): such as StepN, Sleepagotchi, etc.
2. Games category ( 10 items ): such as Axie Infinity, Genopets, etc.
3. Crypto speculation types (3: such as Pump Fun, Moonshot, etc.
4. SocialFi category )6 items (: such as fantasy.top, 0xPPL, etc.
5. Creator economy types )2: such as Koop, CreatorDAO, etc.
6. Financial category (3 items ): such as Hana Network, P2P.me, etc.
7. Tool type (1 ): such as proto

From the investment trend perspective, Alliance DAO mainly focused on Games and creator economy projects in the first half of 2021-2023, and will shift towards Crypto speculation, SocialFi, and financial projects in the second half of 2023.

According to public information, Alliance DAO's investment philosophy in the Web3 consumer sector mainly includes:

1. It is believed that the ecological infrastructure tools have become完善, and more application layer projects are needed to bring real value and capability.
2. The founding team should focus on PMF and avoid introducing tokens too early to affect market validation.
3. The target users can be divided based on Web3 acceptance. On the left side, non-Web3 ordinary users mainly reduce customer acquisition costs through "advertisement tokens", while on the right side, Web3 native users focus on new assetization targets, bringing investment/speculation demand.
4. Believes that the Solana ecosystem is more suitable for the success of Consumer applications, reasons include:
   • High community activity
   • Strong support for ecological resources
   • Rapid low-cost infrastructure
   • High product competitive barriers

Web3 Consumer Application Paradigms and Their Opportunities and Challenges

Based on the analysis of Alliance DAO's investment philosophy and personal observations, there are currently three common paradigms of Web3 consumer applications:

1. Utilize the characteristics of Web3 infrastructure technology to optimize traditional consumer application issues.

Opportunities: Privacy protection and data sovereignty, globally trustworthy execution environment available 24/7. Challenge: Users have limited awareness of privacy, which may affect mainstream business models.

2. Utilize encrypted assets to design new marketing strategies, user loyalty programs, or business models.

Opportunities: Reduce customer acquisition costs, improve user retention, direct monetization Challenges: issues of user quality, sustainability, conflicts of interest, etc.

3. Fully serve Web3 native users and address their unique pain points.

Opportunities: New speculative targets and tool-based products meet specific needs Challenge: High demand for team resources and long development cycle

Thoughts on Investment Theories for Web3 Consumer Applications

1. How to go beyond the speculation cycle is the primary consideration.

2. Evaluation criteria: User data ( active users, growth rate, retention rate, etc. ) and conversion data ( AUM, User spend, etc. ), as well as team technical strength, market insight, and resources.

3. Success Definition: Focus on token prices in the short term, and on revenue data and sustainability in the long term.

4. "Applying the factory pattern" may be a more deterministic business strategy.

5. The next successful Web3 consumer applications may have the following characteristics:

   • Leverage KOL influence to achieve a cold start
   • Starting from real demand, relying on product strength to win the market
   • Innovation in business models, such as "sharing economy" thinking

6. The categories most likely to find PMF:

   • Web3 social applications
   • On-chain trading tool applications
   • Payment applications
   • DeFi applications