Mark Cuban says, “Business is the most competitive sport” and I agree. It’s tough out there in the arena.

As a result, I am not writing this reminisce to throw subtle jabs at the Web3 protocols that folded up. Instead, I am writing this because I want to see other founders in our ecosystem succeed.

If you are set to found a protocol in this industry, you must have had to ask yourself this question during your research face, “How come many protocols similar to what I want to build are no longer around today?”

This is a valid question and introspection; it shows you want to build something that lasts, which is commendable.

For anyone who wants to get better, you have to notice what went wrong so you won’t repeat mistakes. The world runs on principles.

This is the exact reason you have to learn from the mistakes of others, so you can do better, and that is the point of this article. 

Both as an insider and objective observer, I have noticed a couple of things wrong with how we build Web3 protocols and how we can do better.

What even triggered me to write this?

There is a [Redacted] Web3 audit contest platform that you all know, and have probably hunted there. I was simply following the protocols they have audited in the past, and discovered not all of them are actively running today.

For contexts, these protocols spend millions of dollars for security audits. And please, let’s not pretend $1 million and above is small money; it is not in any part of the world.

And for a protocol to spend this much on security, imagine what they have spent on architecture, building the MVP, then building out the full-fledged protocol. It must have been a lot.

That said, imagine you spend this much on a protocol only to go under in–sometimes–less than a year or two. It is sad, isn’t it?

Now, one thing I have noticed is not it’s not even one protocol who went under, but quite a good number, and I found this disturbing.

First of All, Security is Important, and is the Bedrock

One of the most horrible bridge attacks that’s always fresh in my mind was the Nomad Bridge Hack, which happened back in 2022. Around $156 million was stolen, and the protocol never recovered from it till date.

If I ask you, you can name up to 5 hacks that happened and was ghastly. If not anything, you should also be aware of the now-not-so-recent Bybit hack where about $1.5 billion was hijacked.

When this breaches happen, they cause uproar everywhere. Investors, teams, and users are on the edges of their seats; unsure if anything will be recovered or that might be the end. I can remember one of the SEAL team members saying, “no one who has been in a war room will ever want to be there again.”

For those who don’t know what a war room is, I will digress a bit. So, a war room is when the top security researchers are trying to salvage a security incident. Main action is often split into two.

It’s either they:

• Negotiate the amount the attacker sends back, or
• Outwit and recover the entire amount stolen

Here is my point: We, as an industry, have learned to do better than play with security.

And that is why I get it when protocols spend millions on audits; it will always be worth it. After all, they say it is always better to be safe than sorry.

Instead of jeopardizing your users’ funds and your peace of mind, it’s better to invest in ensuring your protocol is sound. At the very least, you owe your users that pristine feeling of security. It’s a great use of investors’ funds.

If I were to also launch one of my stealth protocols tomorrow, best believe I’d have had security researchers spend months on it before I tell any user to deposit their hardearned money.

Founders Leaving Post-cliff

There is a new trend in town that, I as a person, feel quite skeptical about, and is killing some of our new protocols and chains.

It’s the trend of founders quickly leaving their protocols immediately their vesting matures. Of course, there are corporate speaks they use for that.

It is often around finding new passions, exploring alternative terrains, or technically getting bored. While all that are personal reasons, which no one can judge, it leaves every genuine person doubting if this is the legacy we want to leave behind.

Here is the thing: founders, most times, understand the visions of their startups far above anyone else, including investors and teammates. Even if someone comes on board after they leave, the leadership doesn’t feel the same.

It’s more like giving your car to someone to drive, they most likely won’t understand your car as much as you do, or drive with caution as much as you would. There would just be a slack somewhere.

And one of the things we need to correct is this idolization effect many young founders have towards their investors. No, I did not digress and will explain.

You are not building for investors. And as much as you’re answerable to them, you have the autonomy to run your thing.

Why did I say that?

You can leave your company prematurely and investors might not find as issue with that because someone can come in and steward the protocol.

Really, what happened to Founder Mode?

From what I have noticed, these protocols and chains become less active the moment their main founders leave. But that is not even the danger, the main danger are the new sets of founders who will see founding as a new get-rich-quick scheme.

Found something => get funding => exit when your cliff has ended => liquidity in your account and equity in the protocol => massive cash exit

Marketing is Still an After-thought

We discussed how protocols can go under when the founder isn’t building for long-term, but there is also an aspect that should be emphasized: good intentions are not enough.

I was on Twitter recently where a musician was crossed. Why? His colleague, who is over 60 years old is running a world tour and the press is not covering it.

When I saw that, I immediately muttered, “Well, they could have arranged for PR for proper press coverage.” You see the issue there, that musician expect press coverage to just happen because they are doing something “great.”

As much as everyone would expect things to be that simple, they are not.

Something similar is the case with some protocols. Yes, you are building something technically impressive and has received great market appeal, but it does not end there.

You have done well by putting security first, and ensuring the product is superb. What next? You have to be intentional about your marketing.

My team at Blockchain Alpha carried out private marketing audit on a couple of Web3 protocols and discovered some leakage in their marketing systems – perhaps that is a topic for a separate blog.

But by and large, we further discovered that marketing is even an after-thought for many. No plans for periodic content and mindshare capture. No plans for strategic media engagement. No plans for proper internal and external communications. 

And here is why I wonder: How come you can spend millions on audit, but will think twice before spending handsomely on marketing that will keep you running?

This is simply a matter of priority, and the earlier a protocol founder gets this right, the better.

Sometimes, Doing Business Requires You Bear It Through

Like I mentioned at the start of this article, business is indeed the most competitive sports, and you can take this from a young founder who is running a couple of digital businesses.

I have noticed that other young founders in Web3 do not quite grow tough skin early. You cannot say that you have passion for what you are building until that initial dopamine fades.

As in the outer business world, many quit quite too early. I believe so much in pivoting, so far it is necessary, but quiting didn’t make it to my dictionary.

Why am I saying all these? Some protocols go under, not because of anything, but simply because they couldn’t persevere enough.

This is something we should learn from traders; they are so active during the bull, stacking all they can. But once it is bear season, their activities reduce and they move to default alive.

Concluding Thoughts

Everything I have said so far in this blog are the things I have noticed and think can be better in this industry. If we want to outwit and outcompete TradFi, then we have to come correct.

Web3 has so much to offer to our modern world, and we are all stakeholders in ensuring that we create long-lasting companies. You love Coinbase and Robinhood when you see them, what about having more of these global companies bred from our industry?

Thank you for reading thus far, you can do well to share this with other builders and also comment your thoughts below.

By the way, you can join my newsletter here.