The Future of Web3: Shifting from Grants to Sustainable Revenue

Web3, with its promise of decentralization, transparency, and user empowerment, has the potential to revolutionize the way we interact with the internet. However, despite its transformative potential, many Web3 projects struggle to achieve financial stability, relying heavily on grants and ecosystem financing to stay afloat. While grants have played a crucial role in kickstarting innovative ideas, they are not a sustainable solution for long-term growth and maturity.

The Limitations of the Grant Economy

In the early stages of Web3 development, grants have served as a vital source of capital, enabling builders and developers to bring their ideas to life. Blockchain foundations, ecosystem funds, and government-backed programs have distributed millions of dollars to support open-source contributions, participation in new protocols, and the development of minimally viable products (MVPs). However, the grant economy has several critical limitations. Grants often promote short-term thinking, where teams focus on securing funding rather than building sustainable operations. This can lead to a cycle of writing, pitching, and granting, where less attention is paid to building a practical user base or generating sales.

The Pitfalls of a Grant-First Mentality

A striking example of the limitations of the grant economy can be seen in the Web3 gaming sector. Despite attracting significant funding, research has shown that 93% of Web3 gaming projects are no longer in existence. Studios that raised millions through grants and token sales have folded before delivering a finished product, leaving behind a trail of abandoned projects and inactive protocols. This phenomenon raises urgent questions about the financial accountability and effectiveness of grant-based financing models.

Part of the problem lies in the fact that grants are not tied to performance or clear sales metrics. This disconnect between capital inflow and product outcomes has led to inflated expectations and underwhelming results. Without sales models, projects struggle to retain users, maintain development, or invest in growth.

The Case for Sustainable Revenue

For Web3 to evolve into a resilient economic ecosystem, it must adopt the fundamentals of successful businesses. This means creating products and platforms that can generate revenue over a sustainable period, invest in development, and scale responsibly. This is not a call to abandon the ethos of decentralization but rather an argument for aligning incentives with sustainability. Successful DApps and protocols should prioritize finding product-market fit and monetization from the outset. Whether through subscription models, transaction fees, premium features, or token-based services, sales are not only a measure of profitability but also a proxy for added value.

From Grants to Growth

The transition from grant-funded experimentation to sustainable business is not only possible but already happening. Many early-stage projects are using grants to achieve critical development milestones while simultaneously transitioning to market-oriented models. This dual-track approach enables teams to benefit from early support without becoming dependent on it.

To execute this transition, projects must invest in robust business strategies, including market research, defining a unique value proposition, and understanding legal and regulatory constraints. Most importantly, it requires a willingness to build products that solve real problems and serve paying users.

The Long Game

Web3 founders and developers must recognize that success is not solely measured by fundraising rounds or community hype. Long-term impact comes from building infrastructures, applications, and ecosystems that stand the test of time. Grants can be a spark, but they must not be the fuel that sustains the fire. A sustainable Web3 business depends on sustainable revenue, and for this, the focus must shift from short-term financing gains to long-term value creation. The future of decentralization is built not only on idealism but also on pragmatism.

In conclusion, while grants have played a crucial role in the development of Web3, it is time to shift the focus towards sustainable revenue models. By prioritizing product-market fit, monetization, and robust business strategies, Web3 projects can transition from grant-funded experimentation to sustainable businesses, ultimately building a more resilient and impactful ecosystem.