Financial Intelligence for Web3 Project Founders

5 months ago (Edited)

As I gradually muse on building legacies on web3, it has become expedient to learn intentionally the burden for the web3 founder. Thanks to the INLEO team for intentionally grafting xSpaces interaction into the Hive's Zealy campaign tasks. This has made attending XSpaces a daily phenomenon for me and I can attest to how much knowledge has been gathered and how it's reshaped my idea for building on web3 in several ways.

My recent interaction son XSpaces bothering web3 founders and what they've been doing left and right has opened my eyes to the need to think of financial intelligence as one of the core endowments that can make or mar the effort of a web3 founder. Thoughts on this became glaring as I discovered that finances are one of the major resources that are needed to build a web3 product. Though the web3 founder is left with lots of options, these options fare differently and offer different results.

Without a doubt, it is crucial that a founder in the dynamic landscape of Web3 projects, develop financial intelligence for steering his/her venture toward sustainable success. Looking at a lot of projects that started lofty on Hive fail, some after raising some substantial funds breaks me so hard., However, seeing projects like @inleo, @splinterlaands and the baby @holozing glow amid challenges and chart their path into sustainability communicates the possibility of sustainable financial success for a web3 project. Let's look at some vital cases and situations that build and inform the financial intelligence of a web3 founder.

1. Understanding the Financial Dynamics of Web3

For a web3 founder to understand the financial dynamics of a web3 ecosystem, he/she needs the right knowledge about cryptocurrency and blockchain in general as well as how tokens interact. A deep understanding of blockchain protocol is the first step to financial literacy. Founders need to stay abreast of the latest developments, emerging tokens, and trends within decentralized finance (DeFi), Social Finance, and Game Finance sectors of the web3 world among others.

Daily, cryptocurrencies (coins, tokens, and NFTs) are the most popular categories in the web3 space. A web3 founder must master tokenomics—the economics of their project's native tokens. This includes designing token models that incentivize participation and value creation within the project ecosystem. This would require studying successful projects that have been and still standing strong.

2. Strategic Financial Planning

There is a popular quote that "One who fails to plan, is planning to fail". Like every other business outfit, a web3 project should be planned out with the worst-case scenario in mind. The dynamics of blockchain technology are trending around smart contracts and NFTs. There must be an intentional plan for smart contract audits, however, the the security of your project should be prioritized.

Knowing the above will help the web3 founder understand risk management. Poor planning exposes the vulnerable aspects of the project including security. Being able to manage risk why placing caution in place in case of a failure.

The web3 founder is expected to also plan for community engagement budgeting. Where engagement is lacking, we are sure the project will get folded at any time. Engagement is the backbone of web3 projects. Developing a budget that allocates resources for community-building activities, marketing campaigns, and incentive programs to foster a vibrant and active user base. We at INLEO are excited about Hive's Zealy campaign and how it's shaping the identity of the Leoverse and Hive blockchain in general.

3. Funding Strategies

Defining the sources of funding for a web3 project is an aspect of intelligence every founder must imbibe. The options are enormous but are just fitting for a type of project. The founder should be able to explore diverse funding sources, including token sales, grants, and strategic partnerships. A financially intelligent approach involves optimizing your funding mix to ensure stability and flexibility as your project evolves. Beyond this, looking at the long-term sustainability of the selected approach is very important.

In achieving the above, the web3 founder should be able to consider mechanisms such as decentralized autonomous organization (DAO) structures to involve the community in decision-making and ensure financial resilience. An earlier mention of INLEO, SPlinterlands, and Holozing presents three different unique approaches to funding decentralized projects but all with tangible and enviable results.

Wrapping it...

In all of these, staying transparent and being accountable is the hallmark of a true web3 project. @acidyo has been making a clear financial analysis of the funds accrued to the new Holoszing project and it's commendable. INLEO had a robust detailed analysis of the DHF funding it requested from Hive and has far overspent the funded sum in its marketing initiatives. SPlinterlands on the other hand has a third party managing the proceeds from card and pack sales and only accesses the funds by voting. Moreover, communicating financial decisions to the community and stakeholders, reinforces trust and accountability.

The need for financial intelligence for a web3 project founder goes beyond conventional financial wisdom. It encompasses a nuanced understanding of cryptocurrency dynamics, tokenomics, and strategic financial planning tailored to the decentralized and dynamic nature of the Web3 space. It is believed that when these principles are embraced, founders can navigate the complexities of the ecosystem, drive sustainable growth, to position their projects for long-term success.

Are you financially Intelligent as a web3 project founder?

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This post was created via INLEO, What is INLEO?

INLEO's mission is to build a sustainable creator economy that is centered around digital ownership, tokenization, and communities. It's Built on Hive, with linkages to BSC, ETH, and Polygon blockchains. The flagship application: Inleo.io allows users and creators to engage & share micro and long-form content on the Hive blockchain while earning cryptocurrency rewards.