When a new Layer-1 blockchain comes on the scene with a promising new architecture that either improves scalability, security, decentralization or simply provides newer features for a specific segment of the Web3 industry, the result is almost always the same. The price of his own cryptocurrency token is skyrocketing as interest in the new project spreads like wildfire.
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But just as inevitable as this explosion of optimism in any new blockchain with a fundamentally sound architecture is its subsequent decline once that interest begins to wane.
In this way, blockchain is no different from any other industry, in which periods of growth are followed by decline. To survive the inevitable downturn, blockchain projects must not only deliver on their original promises, but also, to some extent, play them by ear and evolve in line with the demands and trends of the broader Web3 industry.
Renewed growth
The blockchain project lifecycle can be broken down into four phases, starting with the introductory phase that begins after the initial announcement and followed by a ‘growth phase’ that accelerates with the launch of the testnet, mainnet and token airdrop. Inevitably, projects reach a stage of ‘maturity’, usually around the time their tokens are listed on CEX platforms, and that is when interest begins to wane, giving way to a stage of ‘decline’ .
There are plenty of practical examples of how this works out. An example of this is Chromia, whose path to ‘regrowth’ was highlighted in a recent report from Tiger Research. When Chromia first launched its testnet in early 2021, interest in the project soared and the price of its CHR token skyrocketed. By mid-2022, however, interest in her efforts had seriously cooled.
Image via Tiger Research
But rather than fade into obscurity, the Chromia team has successfully navigated what Tiger Research calls the “cool-down phase” by doubling down on its key differentiator, its integrated relational database capabilities, making it an ideal blockchain for AI use cases. In addition to strengthening the technical capabilities around its proprietary Rell programming language, it has also been working hard to expand the underlying ecosystem while tackling new stories such as the intersection of blockchain and AI.
The main advantage of Chromia is that while most traditional blockchains use a simple key-value store system for basic transactions, the Rell programming language includes the traditional Structured Query Language, allowing developers to use familiar programming expressions to manipulate on-chain data and to question. This makes Chromia a more useful blockchain platform for implementing DeFi and gaming applications that require more complex transactions. It also makes its blockchain more suitable for storing data that can be used to train AI.
Perhaps the most interesting example of a project that has recovered from its initial downturn is TON, which was abandoned by its founders, who originally built the popular Telegam app. However, the TON community took the reins and ramped up their integration plans with Telegram, taking advantage of its millions of user base. TON has since grown into one of the top blockchain gaming chains with an ecosystem of over 200 mobile games, and its native token is one of the best performing cryptocurrencies of the year so far.
Bounce back
The story of these projects underlines that while each blockchain follows the same path, their fortunes will diverge very quickly. As surely as night follows day, a decline is inevitable once the initial hype fades.
However, the projects that take the courage and start delivering on their initial promises and adapting to the realities of the sector as it evolves can find a way to restart themselves and achieve much more sustainable growth . By focusing on technology development and meeting the needs of both their developers and users, blockchains can quickly regain that lost market share and establish themselves as an essential infrastructure layer for Web3’s long-term future.