by pointman
Web3 is supposed to be the new internet. We are going from: Web1 (read only) to Web2 (read/write) to Web3 (read/write/own). But, do the economics make sense? Let’s find out.
Red flags:
1) Investment capital is not spent on new or improved services. It is locked away (“staked”) by a smart contract and used to claim a share of finite rewards. More investment doesn’t improve the service or attract more customers, it just claims a bigger share of the same rewards. This is not how investment is supposed to work, this is a wasteful way to allocate capital.
2) The “bonding curve” mechanism Curators use to signal that a subgraph API should be selected by an Indexer looks like a Pyramid scheme.
3) If you use Google’s cloud to offer the same services as Google, for less money. Is that sustainable?
Bottom line:
Most schemes have an actual legitimate business on the side, it just represents a tiny fraction of their revenue. Most of the incoming funds come from new participants in the scheme, not selling products and services.
In this project, rewards are paid mostly from inflation, not customer fees. Inflation takes purchasing power away from existing holders of a currency, so the only way $GRT can work in the long run is by bringing in new investors. It’s a tiny bit better than traditional crypto because at least there is a potentially useful service here, but the math doesn’t add up.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.