Redefining Web3: Core Financial Nature and Strategic Missteps

Jack Yi, founder of Liquid Capital, recently offered a pointed critique of the Web3 sector's development trajectory on social media. He identified a fundamental strategic error behind the widespread failure of projects and investment firms in previous cycles.

The Capital Burn Fallacy: Building Non-Essential Products

Yi argued that a significant portion of raised capital was misallocated towards building large teams to develop products of questionable utility within the Web3 ecosystem. A primary pitfall was the direct transplantation of Web2 product paradigms into the new domain.

"This stems from a fundamental misconception," he suggested, implying that Web3 is not merely a functional upgrade of the existing internet.

The Blueprint for Success: Finance as the Foundation

Yi stressed that it is crucial to recognize that Web3 is, at its core, a financial industry. Examining the brief history of crypto, the most resoundingly successful and sustainable businesses have been predominantly financial in nature.

  • Stable Value Instruments: Like stablecoins, providing a medium of exchange and hedge in volatile markets.
  • Trading Hubs : Exchanges serving as central venues for price discovery and liquidity.
  • Payment & Settlement Networks: Reimagining how value is transferred.

These successes highlight a clear path: replicating Web2-era social, content, or utility applications is not a viable strategy for Web3 and can drain critical startup resources.

The AI Era Paradigm: Elite Teams and Financial Innovation

Looking ahead at the AI revolution, Yi outlined a new paradigm. He believes the model for building companies is shifting:

  • Massive funding rounds to support large teams are becoming less necessary.
  • The intersection of "AI+Finance" is ripe with groundbreaking opportunities.

He is convinced that small, elite teams leveraging AI capabilities can build category-defining companies. "This likely represents the most significant opportunity in venture capital today," Yi concluded, charting a course for innovation at the nexus of Web3's financial core and cutting-edge technology.