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Amidst this growth, however, is a critical question for Web3 innovators: to deeply focus on a specific use case, like only offering a Web3 gaming platform, or go wide by building a full, vertically integrated ecosystem with a portfolio of linked tools? The truth is that any of the approaches can fail or succeed depending on the strategic intent, among other fundamental factors.
This article aims to highlight both ends of the spectrum, with an emphasis on why building with purpose is the ultimate differentiator. This is evident in niche-specific Web3 projects that have been successful such as Uniswap, as well as integrated Web3 solutions like the ICB Labs ecosystem.
Examples Where Niche-Specific Use Cases Are Winning
Focusing on one area in Web3 services or products can be a very strategic path if the innovators do it exceptionally well and find a perfect product-market-fit. But what exactly does this approach mean? To better understand the dynamics, let’s take the example of several Web3 projects that have been successful as a result of sticking to one area of service:
- One good example of a Web3 innovation that has managed to capitalize on a single, yet critical solution is Chainlink: This leading data provider supports over 2400 crypto projects that leverage its decentralized oracles to integrate off-chain data into their smart contracts. What particularly stands out about Chainlink’s success is the identification of a much-needed solution for smart contract operations, and later doubling down on the infrastructure to adequately support any smart contract project with data that doesn’t exist on-chain.
- Uniswap’s success is also worth studying: This pioneer DEX has established itself as a leading DApp and currently accounts for a total locked value (TVL) of $5.19 billion. More importantly, over 72 chains now support Uniswap within their ecosystems. So, what did this DEX get right? Apart from a first-mover advantage, Uniswap has consistently focused on improving its core service – token swapping. No unnecessary features, just providing the most efficient and user-friendly trading experience.
At the same time, there’s also a huge risk in focusing on one area. Case in point is the downfall of top NFT games, including Cryptokitties and Axie Infinity (despite initial success). At its peak, the game had over 2.7 million daily active users, with NFT sales eclipsing $1.3 billion. Each of these Web3 gaming innovations failed to evolve or adapt when the market crashed in late 2021, given that they had already limited themselves within a specific product-market-fit.
 
Building Big, With Purpose
Now let’s look at the other side of the coin. How can a Web3 project build a wider ecosystem and still deliver value to potential users? The answer is simple; only grow the portfolio suite when it adds a synergistic value. Most of the integrated Web3 ecosystems that are currently successful started with a single area of focus and later diversified when the purpose arose to develop more tools.
Binance, for instance, started as a simple crypto exchange but has evolved to offer much more. While the exchange is still the core business, processing over $65 billion in daily volumes, the Web3 giant now offers an array of features, including Binance wallet, Launchpad, P2P markets and an Academy designed to equip newbies and veterans with the necessary knowledge to advance their quests within the larger digital asset market.
Most importantly, Binance’s expansion has been purpose-driven and tailored to serve a pressing business need. The company’s P2P market was introduced to serve crypto users in emerging economies while a feature like the Launchpad is suited for Web3 startups that were previously struggling to secure funding within or outside the crypto ecosystem.
As mentioned in the introduction, ICB Labs is another excellent example of an integrated Web3 ecosystem built with purpose. The core infrastructure is a POS-based Layer-1 network that offers a robust, efficient, and scalable blockchain solution for all industries. It is complemented by other important features, including the ICB Verse—a metaverse city whose aim is to revolutionize education through immersive learning experiences, an NFT talent marketplace, and a KYC solution powered by the NFT KYC token.
With such features integrated in a single ecosystem, the likes of Binance and ICB Labs stand out when it comes to comprehensive Web3 solutions. That said, there are still some caveats, including the risk of systemic failure. Take Luna, for example, one of the most ‘valuable’ Web3 projects during its era; however, the collapse of the UST algorithmic stablecoin triggered the downfall of the whole Luna ecosystem. A challenge that could have been avoided if the UST stablecoin had been designed as a niche-specific project.
Conclusion
There’s no single approach that has been proven as the only path to building in Web3. The contrasting picture highlighted in this article is the reality that Web3 innovators and stakeholders must contend with. What matters is whether their products are purpose-driven and have a value proposition that keeps them going even when there’s no hype in the market. Above all, it is all about striking a balance and knowing when to evolve given crypto’s dynamic nature.
Source: https://zycrypto.com/is-bigger-better-when-it-comes-to-building-web3-products-that-depends/