Why are products likely to face difficulties in the encryption field?

null Original text from rosie original compilation Golem

Most of the crypto founders I know are now undergoing their third transformation. This group developed NFT platforms in 2021, shifted to DeFi yields in 2022, transitioned to AI agents in 2023/24, and now they are chasing this quarter's hot trend (perhaps prediction markets).

Their transformation is not wrong; in fact, in many ways, their strategy is correct. But the problem is that this model itself makes it difficult to build any products that can develop sustainably over the long term.

18-month product cycle

New concept emerges → Capital flows in → Everyone transforms → Continuous development for 6-9 months → New concept disappears → Transformation again.

A cryptocurrency cycle used to last 3-4 years (during the ICO era), but it has since shortened to 2 years, and now, if luck permits, a cryptocurrency cycle lasts a maximum of 18 months. In the second quarter of 2025, crypto venture capital dropped by nearly 60%, leaving cryptocurrency founders with insufficient time and funds to develop before the next narrative forces them to transform again.

It is almost impossible to create anything meaningful within 18 months; real infrastructure requires at least 3-5 years, and achieving true product-market fit takes several years rather than just a few quarters of iteration.

But if cryptocurrency founders are still using last year's narrative, then they are wasting money, and investors will abandon them, leading to user loss. Some investors may even force cryptocurrency founders to cater to current trends, while their teams will begin to evaluate investments in projects that have secured funding based on this quarter's popular narratives.

Sunk cost fallacy as a survival mechanism

Traditional business advice is to avoid the sunk cost fallacy. If a project is not working, pivot immediately. However, the crypto space is completely immersed in it, using the sunk cost fallacy as a survival mechanism. Now, no one is willing to stick around long enough to validate whether what they are doing is effective; instead, they pivot when they encounter resistance, pivot when user growth is slow, and pivot when financing is difficult.

Every crypto founder has to make such a trade-off:

Continue to develop existing products; perhaps in 2-3 years it will be successful. If you're lucky, you might also secure a new round of financing.

Shift to a popular narrative: secure funding immediately, show on-paper profits, and exit before anyone realizes it won't work.

The second option wins most of the time.

The project is always about to be completed.

Very few crypto projects can truly accomplish what is outlined in their roadmap. Most projects are always in a “coming soon” state. They are always just one feature away from achieving product-market fit. They can never achieve this because halfway through, market trends shift, and suddenly, completing your DeFi protocol becomes meaningless as everyone is talking about AI agents.

The market will punish those completed projects. Because a finished product has its known limitations, while a “soon-to-be-completed” product still possesses infinite narrative potential.

Capital chases attention, not completion.

In the crypto space, if you have a new narrative, you can raise 50 million dollars even without a product; if the narrative is established and a product is available, it might be difficult to raise even 5 million dollars; if it's an old narrative with a product and real users, you may not be able to raise any funds at all.

VCs do not invest in products; they invest in attention. Attention will flow towards new narratives rather than completed old narratives. Most teams are now solely focused on pursuing “narrative maximization,” optimizing entirely for which story can attract funding, without caring about what they are actually doing. Completing a project will limit yourself, while abandoning a project can leave you with options.

Team Retention Rate

If you are a crypto founder, after the arrival of the new narrative, your best developers may be offered double salaries to join hot new projects, and your marketing director may be poached by a company that just raised $100 million. You cannot compete because you gave up on the hot narrative six months ago and decided to truly finish the project you had already started.

No one wants to participate in dull and boring stable projects. What they want is chaos, excess funds, projects that may collapse but possibly bring tenfold returns.

User attention span

Cryptocurrency users sometimes use a product simply because it is new, because everyone is talking about it, or because there might be an airdrop. Once the narrative shifts, they leave, and no one cares whether the product has improved or whether the features they requested have been added.

In fact, we cannot create sustainable products for unsustainable users. Some crypto founders have transformed so many times that they themselves have forgotten their original goals.

Decentralized social networks → NFT markets → DeFi aggregators → Gaming infrastructure → AI agents → Prediction markets… Transformation is no longer a strategic issue, but has become the core of the entire business model.

Infrastructure Paradox

In the field of cryptocurrency, most things that can exist for a long time were established before cryptocurrencies drew attention. Bitcoin was born at a time when it was largely ignored, without any VC or ICO. Ethereum was born before the ICO boom, before people could foresee the future of smart contracts.

Most things that are born during a hype cycle tend to disappear with the end of the cycle, while things that were born before the cycle are more likely to succeed. However, the fact is that very few people will start development before a narrative begins due to a lack of funding, attention, and exit liquidity.

Why is it difficult to change this situation?

The token-based incentive mechanism creates opportunities for liquidity exit. As long as the founders and investors can exit before the product matures, they will do so.

The speed of information and emotion dissemination far exceeds the speed of development. By the time a project is completed, everyone knows the outcome. The entire value proposition of the cryptocurrency industry is rapidly evolving, and asking for crypto to develop slowly is tantamount to asking it to become something it would not naturally become.

This means that if you spend three years building a product, someone else can copy your idea and launch a product in three months with worse code and better marketing strategies. Then they win.

Cryptocurrency is difficult to build any long-term products because it structurally contradicts long-term thinking.

You can be a principled founder, refusing to pivot, remaining loyal to the original vision, and developing over years instead of months. But you are likely to go bankrupt, be forgotten, and ultimately be replaced by those who pivoted three times during the launch of your first version product.

The market does not reward completion, but rather rewards continuous innovation. Perhaps the real innovation in the cryptocurrency industry lies not in the technology itself, but in how to achieve the greatest value with the least investment.

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