What does it actually take to build a blockchain?

Author: Azeem Khan, CoinDesk; Translator: Baishui, Golden Finance

It seems like every month there is a new blockchain release. They come in all forms - L1, L2, L3, parallel EVM, etc. But at their core they all create new infrastructure tracks for developers to build applications that will ultimately drive real adoption. Each release is usually accompanied by a funding boom, and people's excitement about this latest technological advancement is the key to the future.

But the fact is that no one knows which of these ecosystems will ultimately succeed. So what exactly does it take to build a successful ecosystem? If you reverse engineer an ecosystem, you'll find that the concept is fairly simple, but it may not be so easy to achieve, as evidenced by the fact that some large blockchains have only 20 active users per day despite valuations and funding of billions of dollars.

If you find yourself needing to build an ecosystem from scratch, it's crucial to understand the basic components. The first necessary condition is users and liquidity of the chain itself. Without these, software developers or builders have no motivation to create products on the infrastructure you provide. When a chain with too little liquidity remains online but lacks builders, it becomes what people call a “ghost chain.” Often, the tokens on these chains are used purely for speculation, or sit in a kind of purgatory with no transaction volume, and eventually fade away. If you haven’t realized this yet, you’re in trouble.

Attracting these initial users and liquidity is often the biggest challenge for new chains. Typically, we see a large number of initial incentive systems designed to lock in liquidity on the chain when it goes to mainnet. The problem with these approaches is that they are unsustainable and often lead to the “Ponzi economics” we see in many projects. The most effective strategy to overcome this obstacle is to partner with a centralized exchange (as Base did), or work with a decentralized wallet (similar to Linea’s approach) to attract initial users. While not completely foolproof, having distribution built in at launch is one of the most important factors in generating initial activity. I never said it was easy, but if you think about it, it makes sense.

Given that many of these blockchains take quite a while to get to mainnet, we assume there will be a testnet phase. This phase can be a great way to build initial hype if done right — the key word being “right”. This is also the time when the blockchain needs to build out the necessary infrastructure, such as RPCs, oracles, indexers, block explorers, multisig, account abstraction, and so on. You shouldn’t lose sight of the irony that infrastructure needs infrastructure. During this phase, the developer relations team can start talking to builders about all the reasons they should build on their newfangled blockchain.

One of the most reliable ways to create hype for your blockchain is to build anticipation for an “airdrop,” where free tokens are sent to a wallet after completing certain tasks. In the past, this was random, with users unsure which actions would yield tokens. Today, a points system is often used, with users accumulating points by performing tasks, ultimately receiving a larger share of an airdrop after the chain’s token launches. While this approach may evolve — as web3 iterates at the speed of light — it is currently the norm that every chain must adopt in some way. During token economics design, a portion of the token supply is allocated to the community for this purpose.

Most commonly, a blockchain does an excellent job of creating hype through an airdrop, essentially giving away free money. We often see real-time price predictions after the airdrop is over. Prices typically rise for a while, then a large portion of holders rush to sell, causing the token value to plummet. Blockchains that were initially excited about activity on their platform realize that they were simply attracting on-chain speculators looking for free money. This is usually when these chains start building their ecosystem more seriously — often too late. We may see many of these chains become ghost chains over the next few years.

Assume that everything has gone well so far. The chain has successfully generated hype, attracted initial users, and locked up liquidity on the chain. What next to attract builders? The reality is that builders, especially the best ones, have hundreds of options today. In the past, having grant programs was enough to attract them, but even that only created speculators. This is where most chains are today. But what if there was another way? What if we actually took the time to empower builders?

By far, the least used strategy in the ecosystem is to take builders more seriously. At the end of the day, these builders are new startups seeking the resources that any startup founder needs. Yet, blockchains tend to think of themselves as the stars and treat builders as disposable until it’s too late.

It doesn’t have to be this way, though. If blockchains start to consolidate resources and let builders focus on what they do best — while also providing support for building the platform, pitching to investors, creating token economics, listing on exchanges, etc. — we’ll likely see that chain become a true superstar.

A chain is nothing without its builders, so why aren’t more blockchains vying to make stars out of builders who believe in them? Just a few success stories can attract builders from other blockchains, seeking the same support to create successful startups. If these blockchains don’t take this approach, they’ll soon realize that just because you built it doesn’t mean they will come.