Opinion: Prioritize Product Over Narrative in the Upcoming Bull Run

The author’s views and opinions expressed in this article are solely their own and do not reflect the views and opinions of crypto.news’ editorial team.

The blockchain industry has recognized the significant influence of narratives. In fact, narratives have become so crucial that they often take on a “chicken and egg” dynamic, where project teams aim to capture the public’s imagination with their vision before even developing the product. This phenomenon is particularly noticeable during bullish market phases, characterized by increased investor funding, euphoria, and substantial price appreciation based on preliminary valuations.

However, when narratives overshadow actual product development, it often leads to disappointment and economic downfall, as witnessed by numerous blockchain projects during the late 2021 crypto bull run. World-renowned behavioral economist Daniel Kahneman warns that a compelling narrative creates a sense of inevitability, influencing individuals to perceive events as predetermined.

The question arises: Will founders learn from their predecessors’ mistakes and avoid hyping up their narratives in the next bull run? While one would hope so, it is difficult to speculate. For instance, with the recent approval of 11 spot Bitcoin ETFs by the SEC coinciding with the next Bitcoin halving, a historical precursor to market upswings, it may be challenging to avoid a hyperactive hype cycle. It is crucial for startups to stay grounded in such circumstances.

The narrative paradox arises from the current demand for narrative-driven strategies, evident in the popularity of memecoins and the resurgence of web3 verticals like socialFi and LSDfi. However, the gap between hype generation and tangible product delivery can lead to misalignment. This misalignment can result in products that fail to meet customer expectations, lack genuine value, and ultimately damage the reputation of the project, leading to high churn rates.

While a good narrative is essential, it is not as crucial as having a great product and user experience with token utility. Attention spans are short, and switching costs are low in the crypto world. Therefore, what truly matters are fundamentally sound products and constant innovation by the team. Web3 and blockchain projects must readjust their approach to achievable product timelines and reduce their grandiose narratives to attract regular people.

Instead of overly focusing on the potential accumulation of wealth, blockchain and web3 startups should concentrate on cultivating a community that understands the utility and benefits of their product. This approach can lead to an enthusiastic community.

Many projects in the web3 frontier attempt to solve multiple problems simultaneously, which strains resources, complicates user experience, and poses execution challenges. To navigate this landscape effectively, a multi-pronged approach is necessary:

1. Returning to basics and core principles while ensuring the product is built to serve the intended target audience and their specific needs. For example, Lido implemented a rebasing mechanism for liquid staking derivatives, ensuring that one stETH is always equal to one ETH. Despite the complexity of implementation, this solution was carefully considered from the user’s long-term perspective.

2. Being laser-focused on a niche or even a hero product allows projects to deliver maximum value, establish their brand identity and expertise, and differentiate themselves in a saturated market. This focused approach becomes a powerful tool for attracting users who resonate with the specialized solutions provided.

3. Prioritizing product development aligns with the ethos of decentralization in crypto and web3. Emphasizing user-centric solutions, transparency, community engagement, tangible value, and sustainable growth enables these technologies to realize their true potential. This approach builds trust, positions projects for sustainable growth, and ensures meaningful contributions to technological advancements with a lasting societal impact, going beyond mere hype.

When a project’s “hot narrative” is in the spotlight, it is crucial to seize the opportunity by doubling down on marketing and education efforts. It is essential to ensure that everyone recognizes their role in the narrative, as this increases the chances of amplified coverage through earned media and community engagement.

In the pursuit of mass adoption, companies must strike a balance between crafting a compelling product narrative and prioritizing a value-based product. While a well-crafted narrative can generate initial interest, sustained success relies on the intrinsic value of the product. A value-based product not only meets immediate user needs but also builds trust, loyalty, and a robust user community, forming the foundation for sustainable growth.

What we know for certain is that the next blockchain bull run holds promise for a future of sustainable growth and technological integration, paving the way for a lasting societal impact.