Web3 promised a future built on decentralization, transparency, and user empowerment. Yet, despite its transformative potential, many Web3 projects remain financially precarious, heavily reliant on grants and ecosystem funding. While grants have undeniably played a pivotal role in getting innovative ideas off the ground, they can’t sustain the long-term growth and maturity the ecosystem needs.
The Grant Economy: A Short-Term Lifeline
In the early stages of Web3 development, grants have functioned as a vital source of capital. Blockchain foundations, ecosystem funds, and government-backed programs have distributed millions to builders and developers, often without expecting equity or repayment. These grants are ideal for ideation and experimentation. They support open-source contributions, incentivise participation in new protocols, and allow teams to build minimum viable products (MVPs) without the pressure of immediate monetisation.
However, the proliferation of grant-dependent projects has exposed several critical limitations. Grants often encourage short-term thinking, with teams optimising for funding rounds rather than sustainable operations. Projects can become stuck in cycles of pitching and grant writing, with less focus on building a viable user base or revenue-generating product. More concerningly, some teams disappear once the grant money runs out, leading to a graveyard of half-finished dApps and inactive protocols.
The Pitfalls of a Grant-First Mentality
This dynamic is perhaps most starkly seen in the Web3 gaming sector. Despite attracting significant funding, recent research shows that 93% of Web3 gaming projects have now become defunct. Studios that raised millions through grants and token sales have folded before even shipping a finished product. These “soft rug pulls” raise pressing questions about financial accountability and the efficacy of grant-based funding models.
Part of the problem is that grants, by nature, are not tied to performance or clear revenue outcomes. This disconnect between capital inflow and product deliverables has led to inflated expectations and underwhelming results. Without revenue models, projects struggle to retain users, maintain development, or reinvest in growth.
Source: ChainPlayThe Case for Sustainable Revenue
If Web3 is to mature into a resilient economic ecosystem of sustainable and revenue-generating dApps and services, it must embrace business fundamentals. That means creating products and platforms that can generate revenue over a sustained period of time, reinvest in development, and scale responsibly. This isn’t a call to abandon the ethos of decentralization — rather, it’s an argument for aligning incentives with sustainability.
Successful dApps and protocols should prioritise finding product-market fit and monetisation paths early in their lifecycle. Whether through subscription models, transaction fees, premium features, or token utility, revenue isn’t just a measure of profitability — it’s a proxy for value creation. Teams that learn to generate recurring income gain independence from external funding cycles and build deeper, more committed communities around their products.
From Grants to Growth
The evolution from grant-funded experimentation to sustainable business is not only possible — it’s already happening. Many early-stage projects are now using grants to reach key development milestones, while simultaneously preparing to transition into market-driven models. This dual-track approach enables teams to benefit from early support without becoming reliant on it.
To make this transition, projects must invest in robust business strategies. That includes market research, defining a unique value proposition, and understanding legal and regulatory constraints. Most importantly, it requires a willingness to build products that solve real-world problems and serve paying users.
The Long Game
Web3 founders and developers must recognize that success isn’t measured solely by fundraising rounds or community hype. Long-term impact comes from building infrastructure, applications, and ecosystems that stand the test of time. Grants can be a spark, but they must not be the fuel.
A sustainable Web3 business depends on sustainable revenue. And for that, the focus must shift from short-term funding wins to long-term value creation. The future of decentralization will be built not just by idealism, but by pragmatism too.
Disclaimer: The opinions in this article are the writer’s own and do not necessarily represent the views of Cryptonews.com. This article is meant to provide a broad perspective on its topic and should not be taken as professional advice.
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