How Does the Process Work in Public Blockchains?

This article examines how public blockchains attract developers and users through infrastructure and analyzes the distorted valuation logic that exists in the current market. Although public blockchains are viewed as a high-ceiling sector for long-term prospects, confidence in the infrastructure-first model is weakening. The rise of application-specific chains signals that Web3 is increasingly shifting toward a business model driven by real-world applications.

The core concept underlying blockchain is the “chain.” Since the early days, infrastructure building has become the norm of the industry. This directly paved the way for the rise of many general-purpose public blockchains. In such chains, the infrastructure was primarily built to attract decentralized application (dApp) developers. This approach gradually became standard. However, we all know that infrastructure alone is not enough to attract users. So, what truly attracts users?

Investment opportunities, ICOs, NFT projects, DeFi applications, and meme projects that fuel internet culture — these are the areas where users engage. However, these applications do not emerge on their own. So, how did early public blockchains come to life?
These networks relied on factors such as the reputation of their founders, massive funding announcements, aggressive marketing campaigns, and the wealth effect created during the Token Generation Event (TGE). Looking back today, the marketing strategies of these projects seem rather modest compared to platforms like EOS. The campaign led by Brendan Blumer, founder of Block.one, impressively resulted in a $4 billion ICO, but no significant development followed. So, how did this “empty promise” work?

Because public attention is limited. If a blockchain project operates without capturing attention, applications and users will not naturally join its ecosystem. This is why venture capital firms regularly feel the need to invest in new public chains.

What Are the Current Problems of Public Blockchains?

The valuation approach toward public blockchain projects is now severely distorted.
On one hand, the market is gradually losing faith in “infrastructure-first” models.The reason is that very few public chains have managed to build a truly active and sustainable ecosystem.This has become one of the major reasons undermining investors’ confidence in venture capital funds.

Although significant capital has been invested in these projects to date, many have failed to deliver the promised growth and development. The diagram shared by the Twitter user @defi_monk clearly illustrates this situation.

On the other hand, public blockchains still remain the highest-valued sector in the industry. So far, no decentralized application (dApp) has proven to be more long-lived than a public blockchain. Ethereum has continued to evolve for 10 years, while Solana has gone through two bull/bear cycles — yet dApps on both networks remain active. In other words, despite market skepticism about the high valuations of public chains, the highest “long-term potential” is still seen in this area.

This situation causes investors to both admire and criticize this model. Some are disturbed by its ability to reach high valuations without tangible results, while others appreciate the potential impact it could create if successful. In reality, this is a legacy problem within the industry — a structure in need of transformation.

How Is It Being Transformed?

A new model is on the rise: Application-Specific Chains (Appchains). This transformation began with @AxieInfinity’s own chain, @Ronin_Network. The idea was to attract users at the application layer directly into a blockchain ecosystem. However, the issue was that once the application lost its popularity, it could no longer sustainably direct users to the chain.
This approach has regained momentum with projects currently in the cycle, such as @HyperliquidX. Today, it continues to grow with the following examples:

• @Uniswap - Unichain
• @JupiterExchange - Jupnet
• @OndoFinance - Ondo Chain
• @ethena_labs - Ethena Chain

To explain using the example of Ethena: its new application, Ethereal, is a USDe-based perpetual contract product. They are now beginning to build an ecosystem around their native assets and applications. This can be compared to how Hangzhou became the center of e-commerce in China after Alibaba’s rise — an entire industry grew around one hub.
This paradigm shift can be seen as a result of the understanding that users primarily respond to applications, and that applications can bring the industry to the masses. It can also be interpreted as a market segmentation approach based on business model maturity. Everyone is trying to challenge the industry’s traditional valuation system through alternative approaches.

What Are These Two Models Competing For?

In public blockchain models, the goal is to attract dApp developers into the ecosystem through large-scale infrastructure developments and funding narratives, and then retain users in the long term through applications. In contrast, dApps acquire users directly through real-world use cases, gradually expand their ecosystems through community effects, and eventually build their own chains.

In other words, one path goes from “virtual to real,” and the other from “real to virtual” — but both approaches ultimately converge at the same point. What’s the real issue behind this race? The answer is simple: to have the most efficient distribution channel for user acquisition and retention.

In Web2, as the marginal cost of products approaches zero, competition over distribution channels becomes far more intense. Therefore, distribution barriers are much higher than product barriers. Distribution is maintained through monopolizing traffic entry points, platform-based network effects, and data monopolies — which form the core competitive advantage of Web2 companies.
Let’s take the example of TikTok:

• Traffic Entry Monopoly: By owning the short video trend, it became the primary traffic source for the new generation.
• Platform Network Effect: It built a multi-sided market of content creators, viewers, and advertisers. As content supply increased, user loyalty strengthened.
• Data Monopoly: Massive user data fueled recommendation algorithms, enhancing distribution accuracy and creating a strong data moat.

Distribution Experiment in Web2.5: The Hooked Example

The reason we invested in Hooked was that it was a Web2.5 product with a proven user acquisition model capable of attracting massive external traffic through its “Tap-to-Earn” feature. However, this expectation did not materialize. Because:

• Users brought in through airdropped tokens turned out to be low quality
• Conversion rates were low
• Even when traffic was obtained, retaining users proved impossible

Therefore, we later decided to abandon all “Tap-to-Earn via Telegram” projects — although the channel changed, the model remained the same, and user quality did not sufficiently improve.

Return to Core Business

A similar distribution logic applies to Web3, though user acquisition methods differ.
In the previous era, general public blockchains could not attract traffic directly through products because their offerings were immature. Thus, they tried to create awareness through the following strategies:

• Call for Technical Leadership: Appealing to early developers and tech enthusiasts
• Founder Charisma and Cultural Identity: Creating a sense of identity and building a community
• Funding and Token Incentives: Triggering short-term user growth

However, the sustainability of this model depended entirely on “consensus strength.” If consensus was strong, an ecosystem could be built around the chain; if weak, market sentiment shifted rapidly and traffic dispersed.

The Rise of Application-Specific Chains (Appchains)

The rise of application-specific chains shows that Web3’s business model is gradually shifting back toward Web2 dynamics. This new model:
Uses real-world applications as its main driving force
Operates through focused strategies within segmented markets and specialized traffic zones
Offers a healthier growth logic that aligns more closely with traditional business evolution

What Will Happen in the Future?

The coexistence of these two models (public chains and application-specific chains) indicates that the industry is still in its early stages. No single model has yet monopolized the market or completely reshaped the paradigm.
Every investment decision is, at its core, an assessment of momentum. Looking at our current position:

• General public chains have not yet lost their function
• However, creating lasting consensus solely through technical narratives and funding stories is no longer sufficient
• On the other hand, the paradigm shift from super dApps to chains has not yet been fully validated

This is not merely a transition from products to infrastructure — it requires a leap from a “product-market fit (PMF)” mindset to one centered on culture-building and sustainable ecosystem creation. The number of founders capable of successfully executing such a transformation is quite limited.

Both models have their own opportunities and challenges. The real difference lies in the distinct founder competencies each model requires. The essence of venture capital is to evaluate variables such as “momentum,” “product success,” and “team quality,” taking calculated risks in high-uncertainty environments while accepting the possibility of failure in exchange for extraordinary returns.