How To Solve Ethereum’s Distribution Problem

The life of a Web3 builder is a challenging one. They’re developing complex products on infrastructure that isn’t ready to support a large user base. On top of that, they’re building for users who don’t even exist yet. In many ways, it’s up to builders to create the applications that will onboard the masses. The pressure is significant, as the infrastructure alone won’t bring users. Unlike the iPhone’s App Store, where the audience is already there, Web3 relies on new, complicated technology that many still associate with scams. Even if builders succeed in overcoming these obstacles, the distribution needed to launch and scale their projects is virtually non-existent. To bring Web3 products into the mainstream, developing a robust distribution layer is crucial for their success. But this isn’t the kind of distribution you’re used to hearing about.

The Product-Distribution Dilemma in Web3

Every successful business relies on two core components: product and distribution. Success starts with creating a product and ends with effectively distributing it. Without a solid distribution mechanism, success is unlikely. In Web3, while product development is progressing—evidenced by Polygon Agg Layer, multichain advancements, and zero-knowledge technology—distribution channels are still missing. Discussions around Web3 focus heavily on the product layer, but what about distribution? This gap remains a significant obstacle for builders. So, what does distribution even mean in Web3?

Redefining Distribution for Web3

Keep in mind, the distribution layer I’m discussing isn’t the traditional idea of social media promotion. It encompasses the entire pipeline that builders must navigate—from ideation to liquidity—which remains fragmented and difficult to access. These pathways haven’t been streamlined, and builders face challenges at every step.

Beyond Funding: The Multifaceted Needs of Web3 Builders

A report released by researchers Eugene Leventhal and Mashal Waqar analyzed over $1 billion in Web3 grants by 11 organizations and their impact. One of the key findings was that grantees were seeking more than just funding—they needed additional support in areas like community building and marketing. Many builders emphasized that these aspects were crucial for their success, yet they often struggled to access the necessary resources to build momentum for their projects.

Defining a distribution layer for Web3 involves many moving parts. That feeling builders have of something missing is a critical aspect of the problem. While the individual components exist, they haven’t been integrated into a streamlined funnel that builders can easily access to make their projects successful. In most cases, success in this area happens by chance or through the right connections. But relying on luck or connections to build the foundation for the next iteration of the global financial system is simply unsustainable. To create a successful Web3 product, several key pieces need to come together—and that’s where distribution becomes essential.

The Components of Web3 Distribution

An effective distribution strategy in Web3 starts with influential voices—primarily on Crypto Twitter—talking about your project. These macro and micro influencers cater to large audiences or specific niches, acting as centralized hubs of marketing in a decentralized space. In a fragmented Web3 environment, Key Opinion Leaders play an outsized role, even if relying on them may seem counter to Web3’s ethos. Similarly, media companies direct attention to projects, but access to both influencers and media remains difficult for many builders.

Once visibility is gained, the next critical step is leveraging that attention to secure capital. However, this has proven more difficult than many had anticipated when imagining decentralized utopias. The reality is that venture capitalists, who can fund these projects, can’t be everywhere at once. While Web3 promotes the idea that anyone, anywhere can participate, the process of securing capital still often relies on warm introductions. Without a centralized hub for innovation, a significant gap exists between those seeking funding and those with the capital to provide it—largely due to geographic barriers.

Finally, after securing attention and funding, the next critical step in Web3 is a successful token launch, as it’s the primary way for builders and venture capitalists to realize liquidity. While it’s possible to launch a token without centralized exchanges, the reality is that most users and liquidity in Web3 are on these platforms. Centralized exchanges are where tokens are bought and sold, and where exchanges earn fees from trading activity. Data shows that over 90% of digital assets traded monthly pass through centralized exchanges. Without access to these platforms, you’re missing a major component necessary for your token’s success.”

Navigating these exchanges, scattered across the globe with different listing requirements, is a complex task—one that many in the industry struggle to manage effectively. Once your token is launched, it enables people to speculate on its value. If the price appreciates, the tokens held in your treasury effectively act as capital to further grow your company. For venture capitalists, this is also the most efficient way to realize profits on their investments.

Navigating the Complexities of Web3 Success

This isn’t to say that achieving all of the above is impossible. However, when you consider the challenges—working in an underdeveloped market with few users, struggling to connect with influencers, lacking access to venture capital, and navigating the complexities of centralized exchanges—all while trying to build groundbreaking tech for mass Web3 adoption, it becomes clear that builders face significant disadvantages. Achieving successful distribution in the current landscape is simply not feasible. But for Web3 to truly thrive, it must become feasible.

The Fragmented State of Web3 Distribution

If the concept of a distribution layer seems hard to define, that’s because it isn’t yet widely understood. Disparate aspects of the Web3 ecosystem—community-building, influencer marketing, press coverage, venture capital, token launches—coexist, but often operate in isolation. The challenge is that these elements haven’t been fully integrated. As a result, the lack of connection between them is an issue the Web3 industry has been slow to recognize and address..

In Web2, similar challenges existed, but they were addressed by accelerators like Y Combinator and Techstars. These programs have proven over the years that it’s possible to consistently produce companies like Reddit, Airbnb, Dropbox, and many others. These success stories become case studies, and the alumni networks build a foundation of shared knowledge on what it takes to create successful companies. That kind of system doesn’t exist yet in Web3, but efforts are being made by organizations like OrangeDAO, AllianceDAO, Outlier Ventures, and Octant’s new accelerator. These groups aim to help builders focus on what they do best while providing the tools necessary to navigate the path to success.

Learning from Web2: The Need for Web3 Accelerators

For years, the focus in Web3 has been on perfecting the product—and understandably so. The technology must work for people to use it. However, this intense focus on product, at the expense of distribution, may be putting even the best builders at a disadvantage. The solution likely lies in simplifying access to essential resources—integrating connections with influencers, venture capital, and liquidity into a more cohesive system. Decentralized hubs could be the solution, allowing builders to easily access key components and foster a more connected ecosystem.

The Path Forward: Integrating Product and Distribution in Web3

If this distribution gap isn’t addressed, innovation will slow, and Web3’s potential to disrupt industries and empower individuals could remain unrealized. Builders, investors, and other stakeholders must collaborate to address this critical distribution challenge. Only by treating product and distribution as equally important can Web3 reach its full potential—and avoid missing the window for mass adoption.