In the previous two articles Preparation and Business Requirements Analysis, we evaluated and analyzed the issues that need to be considered before building a product from a relatively global perspective. In addition to a thorough understanding of the current market and technology, the choice of ecosystem is very important for the project, and the ecosystem and its participants have various impacts on the project's launch and long-term development.
Introduction#
Simply put, an ecosystem is a collaborative network formed by different roles with a public chain ledger as the core.
Specifically, an ecosystem refers to a system composed of blockchain technology, applications, participants, and markets. This ecosystem includes various roles such as developers, users, miners, nodes, exchanges, and investors.
Different ecosystems have many differences, from technical implementation, infrastructure, user groups, cultural backgrounds, consensus mechanisms, to foundation preferences, community values, and so on.
As developers, we generally consider how to choose a suitable ecosystem after deciding on the form and direction of the product. However, sometimes the ecosystem and the application can also influence and shape each other. The decision-making process of choosing the ecosystem before deciding on the product positioning is not excluded. The core lies in whether it can improve the success rate of the developer itself. Just like the clone products mentioned in the previous article, migrating existing mature patterns to a new ecosystem to gain a competitive advantage.
Core Metrics of an Ecosystem#
As developers, we need to constantly pay attention to the cost and probability of the project. Based on this, we will use this thinking mode to evaluate several metrics of the ecosystem.
Technology#
Technology metrics are the most important metrics for developers and entrepreneurs to consider. Nowadays, the Web3 ecosystem is relatively rich and diverse, and its technical implementation is also diverse. In addition to using the analysis mode of technology selection to select different technology ecosystems, we also need to analyze the scalability of adopting this technology for future products more rigorously.
If we choose an EVM-compatible blockchain, the product and project will have strong portability. If it is a DApp that relies more on cross-chain scenarios, it should prioritize ecosystems compatible with the EVM standard, so that low-cost migration can also be carried out in other ecosystems in the future.
In addition, for example, public chains like Solana or Aptos use different technical features and architectures to handle high-concurrency transaction scenarios, which can attract businesses and DApps with specific needs in certain scenarios.
In addition to technical features, it is also necessary to consider whether the consensus mechanism of the ecosystem is suitable for the development of DApps. Although most smart contract public chains now adopt PoS-like consensus, there are also many public chains that use different consensus mechanisms such as PoW, PoH, DAG, etc., which will more or less affect the development of DApps at the technical level. For developers, the consensus mechanism is actually a trade-off between efficiency and security. DApp developers should pay more attention to efficiency and security metrics.
Another long-term impact is the learning cost of technology, including the learning of new technologies and the iteration of old technologies. This determines the maintenance and expansion of developers for the project, the cost of recruiting new employees, and even the cost of using some implicit tools and infrastructure. We should try to choose an ecosystem that is rich, complete, and has a large number of active developers. In this way, the learning and investment of early-stage technology can serve project development for a long time, and new developers can be recruited to the team at relatively low cost. If the DApp attaches importance to the scalability of its own project, the presence of an active developer community in the ecosystem is very important.
In summary, technology should serve business needs and long-term product planning, and because technology will evolve dynamically, the cost of project maintenance and expansion should also be considered.
Liquidity#
Liquidity metrics depend on the richness of assets in the ecosystem and the scale of fund accumulation. It refers to whether tokens can be exchanged quickly and efficiently through contracts without relying on third-party services. This metric is particularly important for DeFi projects.
After several years of development, liquidity protocols have gradually become infrastructure that helps developers of DApps provide token exchange services and meet the needs of users for token transactions and investments. If a DApp is focused on trading or asset management, it heavily relies on liquidity protocols in the ecosystem, such as trading and lending protocols.
Due to the small size of the industry, liquidity itself is limited and naturally tends to form a Matthew effect, and DeFi projects also have a gathering effect.
The scale of assets in the ecosystem also determines the upper limit of assets that DApps can serve. If a DApp has a strong dependence on the ecosystem, the correlation between its token and the native token of the ecosystem will also increase, and changes in the valuation of the entire ecosystem will also affect the valuation of projects within the ecosystem.
The most critical point is the liquidity across ecosystems and access to centralized exchanges (CEX), which also determines the upper limit of liquidity for DApp projects. Imagine the same token issued on EOS and ETH. How different will the liquidity expansion and the cost of accessing other trading scenarios be? It directly affects the developer's income and the sustainability of the project.
In summary, sufficient liquidity and asset diversity are the foundation for DeFi projects to build composability products, which not only affect the developer's income but also the valuation of the project and the scalability of future project tokens.
Applications#
Applications in the ecosystem cover application standards, infrastructure, developer tools, and potential competitors, etc. These types of applications are highly likely to depend on and influence each other. Taking ERC20 and ERC721 as examples, without these standards, it would be impossible to have a rich ecosystem and scenarios for assets and transactions. DeFi and NFT markets would not have developed to such a scale, and business logic such as blockchain browsers and data analysis platforms would not be established.
Some new ecosystems have not yet established mature application standards due to different technology choices and architectures, or they may refer to existing Ethereum standards. Infrastructure and developer tools need time to accumulate and develop.
If the form and technical design of the developer's product depend on the applications in the ecosystem, it is necessary to conduct research and analysis on the existing applications in the ecosystem. For example, if we want to build an NFT project, we need to evaluate which NFT markets in the ecosystem are more mature and have good support for infrastructure and developer tools, which can help us achieve more with less effort.
In addition, the user base of potential competitors in the ecosystem can also help us better evaluate the market for future products, which to some extent also determines the development space of the product.
In summary, rich applications not only help reduce R&D and operational costs but also improve the success rate of products.
Community#
Here, the community is defined as a collection of developers/users, ecosystem foundations, nodes/validators, and investment institutions. The development and growth of the ecosystem rely on their contributions and efforts, and the absence of any role will lead to an imbalance in the development of the ecosystem.
These groups do not have very clear role divisions but are integrated with each other.
If the underlying layer of the blockchain ecosystem relies on algorithm consensus, the application layer relies on community consensus.
The community is crucial to the blockchain ecosystem, and without the support and participation of the community, the blockchain ecosystem cannot continue to develop and grow.
The standard for judging whether the community in the ecosystem is active and has consensus is whether there are multiple influential individuals or institutions among these four types of roles who are willing to promote innovation and development in the ecosystem.
The community is a very broad and magical group. It takes a lot of time and opportunities to form its growth. Various roles influence and integrate with each other, and developers need to integrate with the strong ones to help the development of their own projects.
Conclusion#
The above metrics are interrelated and mutually influential, determining the characteristics and advantages of the ecosystem. Based on our own preferences and product strategies, choosing a suitable ecosystem for launch can help us smoothly pass the cold start phase and enter a stable development period.