DEV Community: Andrii Lazorenko

10 Reasons Why Web3 Projects Fail After Launch

Andrii Lazorenko — Mon, 04 May 2026 18:09:12 +0000

Web3 is no longer an early market — it’s a competitive environment. And the uncomfortable truth is that most projects don’t fail because of bad timing or market conditions. They fail after launch, when the hype disappears and real usage becomes the only metric that matters.
Launching used to be the hard part. Today, it’s the easiest one. Working with Web3 products, I’ve repeatedly seen the same pattern: strong teams, funding, solid technology — followed by a gradual loss of traction within months. Not because the idea was wrong, but because execution didn’t hold up under real conditions.
Being on-chain is no longer a differentiator. It’s the baseline. Real competition starts after launch — for retention, liquidity, and trust. And this is exactly where most projects break.

1) Lack of Real Product Value

The core issue behind most Web3 products is the absence of real product-market fit, often disguised as innovation. Many solutions are built around technology or trends rather than actual user problems. As a result, they may look compelling in theory but fail to answer a simple question: why would a user come back tomorrow?

In practice, we’ve seen DeFi protocols with millions in TVL and almost no real user engagement. Liquidity flows in because of yield, not because of product value — and leaves just as quickly. Hype can drive traffic, and airdrops can attract wallets, but neither creates sustainable behavior. If users only interact when incentivized, they are not real users — they are temporary participants.

Strong products integrate into a user’s workflow and solve a recurring need. Everything else is short-lived.

2) Overreliance on Tokenomics

Tokenomics is one of the most overused tools in Web3. Instead of building real value, many projects optimize for financial incentives such as APY, rewards, and emissions. While this approach can generate rapid growth, it rarely leads to long-term retention.
We’ve seen protocols increase TVL multiple times through aggressive incentives, only to lose the majority of it once rewards declined. This is not a failure of the market — it is a predictable outcome. Capital in Web3 is highly mobile and primarily driven by yield, not loyalty.

This creates a fragile system where increasing incentives leads to higher emissions, which in turn puts pressure on the token and accelerates user outflow. Many tokenomics models are fundamentally unsustainable. If a product only works when heavily subsidized, it doesn’t truly work.

3) Weak Business Model

A common issue in Web3 is the confusion between a business model and a funding strategy. Token sales and venture capital can support a launch, but they do not define how a project generates revenue in the long run.

After the initial hype fades, many projects face a simple but critical question: where does sustainable income come from? We’ve seen platforms with impressive metrics — high TVL, growing wallet numbers, strong volume — but no meaningful revenue. This is because these metrics can often be artificially boosted through incentives.

A viable product needs a clear mechanism for value capture. If revenue depends solely on token appreciation, the project is not operating as a business — it is effectively relying on market speculation.

4) Poor UX/UI

User experience remains one of the biggest barriers in Web3. Most products are still designed with a technical audience in mind, not mainstream users. Wallet connections, transaction approvals, gas fees, and network configurations introduce friction that many users are not willing to navigate.

The problem is not just complexity — it is also risk. Users are asked to make irreversible financial decisions in environments they may not fully understand. Each additional step reduces conversion and increases drop-off.

We’ve seen products with strong value propositions fail simply because onboarding required too much effort or trust too early in the process. Users are not interested in interacting with blockchain infrastructure — they want solutions to their problems. If those solutions are easier to access elsewhere, they will leave.

5) Unrealistic Expectations and Overhype

In Web3, marketing often moves faster than product development. Projects make bold claims and set high expectations that are difficult to meet in practice. When the product falls short, trust erodes quickly.

We’ve observed launches where expectations were so inflated that even a functional product was perceived as underwhelming. In a fast-moving ecosystem with low switching costs, users rarely wait for improvements — they simply move on.

Overhype also creates internal pressure. Teams begin to prioritize perception over execution, aligning development with narrative rather than real progress. In contrast, the most resilient projects focus on consistent delivery, allowing results to build credibility over time.

6) Lack of a Strong Community

Community is often described as a key asset in Web3, but in many cases, what appears to be a community is simply an audience driven by incentives. Airdrops, whitelist access, and early rewards can generate short-term engagement, but they do not build long-term commitment. We’ve seen large communities become inactive almost immediately after reward distribution. This highlights a fundamental issue: without a clear role or long-term value, users have no reason to stay.

A genuine community forms when participants are meaningfully involved in the ecosystem and benefit from continued engagement. Without that, activity fades as soon as incentives disappear. In such cases, the “community” was never an asset — it was temporary traffic.

7) Security Issues

Security in Web3 is not optional — it is foundational. Smart contracts are transparent and directly connected to capital, making them constant targets for exploitation. A single vulnerability can lead to catastrophic losses. We’ve seen projects lose significant funds not due to obvious bugs, but because of subtle logical flaws or complex interactions between protocols. Even when partial recovery is possible, reputational damage is often irreversible.

A common misconception is that an audit guarantees safety. In reality, security requires ongoing effort: multiple audits, bug bounty programs, controlled rollouts, and continuous monitoring. In this environment, moving fast without adequate safeguards can have severe consequences.

8) Ineffective Governance

Decentralized governance remains one of the most ambitious yet underdeveloped aspects of Web3. While many projects implement DAO structures, actual participation is often minimal, and decision-making power tends to concentrate among a small group of stakeholders.

We’ve seen governance systems where only a tiny fraction of token holders participate, while major decisions are effectively controlled by a few large wallets. In such cases, decentralization exists more in theory than in practice.

Additionally, governance processes can be too slow or inefficient for a fast-moving market, leading teams to bypass them when speed is critical. Successful projects tend to adopt hybrid approaches, gradually decentralizing while maintaining operational efficiency. The goal is not decentralization for its own sake, but effective decision-making.

9) Lack of Long-Term Strategy

Many Web3 projects focus heavily on launch dynamics while neglecting long-term direction. Token releases, exchange listings, and marketing campaigns create momentum, but they do not define a sustainable path forward. Without a clear strategy, product development becomes reactive. Teams follow trends instead of establishing a position in the market. Short-term spikes in activity replace consistent growth.
A strong strategy requires understanding where value is created, how it is maintained, and how the product will evolve over time. Without this clarity, projects gradually lose relevance.

10) Regulatory Risks

Regulation has become a defining factor in Web3. Projects operate across jurisdictions, each with its own evolving legal framework. What is acceptable in one region may be restricted in another.
We’ve seen projects forced to limit access, modify token structures, or discontinue features due to regulatory pressure. Ignoring these considerations early on can lead to significant challenges later. Forward-thinking teams incorporate regulatory awareness into their design from the beginning, making it easier to adapt as the landscape changes.

Web3 does not have a failure problem — it has an execution problem. Most projects fail in predictable ways, not random ones. This is important because it means these outcomes can be avoided. The market has matured. Launching a product, issuing a token, or leveraging new technology is no longer enough. Success now depends on the ability to deliver real value, build sustainable systems, and remain relevant beyond the initial wave of attention. In this environment, the projects that succeed are not the ones that move fastest or generate the most noise. They are the ones that continue to be useful after the hype is gone.

Andrii Lazorenko, CEO and Co-founder of IdeaSoft

How to Choose the Right Assets for Tokenization?

Andrii Lazorenko — Wed, 15 Apr 2026 14:29:37 +0000

In 2026, choosing the right assets for tokenization is the standard for modern capital management. We are seeing a fundamental shift where the question has moved from "Can we tokenize this?" to "Should we tokenize this, and how do we make it liquid?"

Market data from institutions like Boston Consulting Group and Standard Chartered suggests we are looking at a $16 trillion to $30 trillion market by the early 2030s. As of March 2026, the market for tokenized Real-World Assets (RWAs) on public blockchains has already surpassed $26 billion, a fourfold increase from early 2025.

What Happens with the Tokenization Market in 2026?

The industry has matured significantly. 2026 is what analysts at CoinShares are calling the "Year of Utility." We have moved past the era of experimental pilots and entered a phase of commercial production. The flight to quality is the defining trend of the year. Investors are moving away from speculative crypto-assets and toward tokenized RWAs that offer tangible economic value.

Legislation like the U.S. Digital Asset Market Clarity Act and the GENIUS Act has finally provided the rules of the road:

The Clarity Act has helped resolve the security vs. commodity debate by creating distinct definitions for Digital Commodities (CFTC) and Investment Contract Assets (SEC).
The GENIUS Act establishes a federal framework for payment stablecoins. It mandates 1:1 reserve backing with high-quality liquid assets (HQLA). This provides the reliable settlement layer needed for institutional RWA platforms.

One of the biggest lessons of the last few years is that tokenization does not automatically equal liquidity. While blockchain technically enables 24/7 trading, it doesn't create market depth on its own. Empirical studies indicate that without robust market-making and proper liquidity engineering, tokenized assets risk becoming zombie tokens. This is when tokens are technically functional but economically stagnant.

Why Businesses are Turning to Asset Tokenization

The move toward tokenization is driven by several economic imperatives that traditional financial systems simply cannot address.

Unlocking the "Liquidity Discount" Traditional assets like commercial real estate, private equity, and fine art are notoriously illiquid. Selling a $50 million office building involves a labyrinth of brokers, lawyers, and months of due diligence. This friction creates a liquidity discount, where the asset's value is suppressed because it's hard to sell.

Tokenization allows for fractionalization. You can take that same $50 million building and break it into millions of tokens. This lowers the entry barrier from $5 million to maybe $50. By expanding the buyer pool from a few institutional funds to millions of global investors, you drastically increase the velocity of capital.

2. The Institutionalization of DeFi
The entry of giants like BlackRock and JPMorgan has bridged the gap between Traditional Finance (TradFi) and Decentralized Finance (DeFi). In 2026, on-chain cash is a reality:

BlackRock’s BUIDL fund, managing approximately $2.3 billion in assets, is the largest tokenized money market fund globally.
Investors use these yield-bearing tokens as collateral in DeFi lending protocols, effectively borrowing against their risk-free assets without having to liquidate them.

This utility transforms tokenized real-world assets from static digital certificates into dynamic, composable financial instruments.

3. Operational Efficiency
The old "T+2" settlement cycle (trade date plus two days) is a relic. Tokenization enables atomic settlement. The asset and the payment swap simultaneously in a single transaction block. This eliminates counterparty risk and frees up capital that would otherwise be trapped in settlement limbo.

What Assets Can Be Tokenized Today?

The market has bifurcated into clear categories based on suitability and technical complexity.

Financial Assets

Tokenized Sovereign Debt. Firms like BlackRock and Franklin Templeton have transitioned to primary issuance models in which the token serves as the native representation of the bond.
Private credit. Lending to businesses is the fastest-growing sub-sector. Tokenization brings transparency to an opaque asset class, letting investors see real-time payment history and covenant compliance directly on the ledger.
Insurance products. Catastrophe bonds and reinsurance contracts are being tokenized to let capital markets fund insurance risks directly.

Physical Assets

Real estate. Both commercial and residential. Developers use tokenization to crowd-source equity or refinance stabilized assets.
Commodities. The tokenized gold market cap surpassed $6 billion in February 2026. Tether Gold (XAUT) and Paxos Gold (PAXG) together account for 96% of the segment, with over 1.2 million ounces of vaulted bullion backing on-chain supply.
Art and collectibles. High-value art is the classic vanity asset that benefits from democratization, allowing retail investors to own a 0.01% share of a Picasso.

Intangible Assets

Intellectual Property (IP). Artists and pharmaceutical companies are tokenizing future royalty streams or patent revenues to get R&D funding upfront.
Carbon credits. Tokenization solves the double-counting problem in ESG reporting by ensuring that once a credit is retired, it is burned on-chain and cannot be resold.

What are the Key Criteria for Choosing the Right Assets for Tokenization?

Before you write any code, you have to validate your asset against these dimensions. A failure in any one of these can kill a project.

1. Legal and Regulatory Feasibility

The legal wrapper is everything. If the link between the digital token and the physical asset is weak, the token is worthless.

First, SPV structure. You are rarely tokenizing a deed or a physical painting directly. Usually, you move the asset into a Special Purpose Vehicle (SPV) and tokenize the shares of that company.

As for the jurisdictional strategy, there are nuances:

United States. Under the Clarity Act, most RWA tokens are “Investment Contract Assets” regulated by the SEC.
European Union. The MiCA (Markets in Crypto-Assets) regulation provides a unified licensing regime.
Singapore. Through Project Guardian, the MAS has created highly efficient structures for tokenized funds, particularly using the VCC (Variable Capital Company) model.
China. A strict “No-Go” zone.

A token complaint in Singapore might be illegal in the US. You need dynamic KYC/AML systems that adapt to the investor's location.

2. Market Demand and Real Liquidity
Tokenization is a force multiplier, not a magic wand. So:

The liquidity illusion. Don't use tokenization to try and offload distressed assets. If people didn't want the building when it was a physical deed, they won't want it as a digital token.
Secondary venues. You must have a plan for where the token will trade. Are you partnering with an Alternative Trading System (ATS)?

The ultimate goal is to make the RWA token usable as collateral in DeFi (e.g., borrowing USDC against a tokenized building). This requires the token to be fungible and widely trusted.

3. Asset Valuation Stability
How is the asset valued? While stocks have real-time pricing, a private building might only be appraised once a year. High-quality RWA platforms use Oracles (such as Chainlink) to feed frequent data points into the valuation model, preventing large arbitrage gaps.

4. Technical Floor and Gas Costs
There is a limit to how small you can fractionalize. If you sell tokens for $10 but the transaction fee (gas) on the network is $15, the economics fail. This is why most 2026 projects are built on Layer 2 blockchains like Polygon, Base, or Optimism, where fees are negligible (<$0.01).

What is the Role of a Technology Partner in Asset Tokenization?

Building a tokenization platform is roughly 20% blockchain code and 80% legal and financial workflow automation.

Specialized Experience
Building a DEX for meme coins is completely different from building a platform for regulated securities. A partner can bring experience from projects like Securitize, an SEC-registered transfer agent and the platform that helped launch BlackRock's BUIDL fund. This partner can ensure that regulatory constraints (such as transfer restrictions and investor whitelisting) are encoded directly into the token using standards like ERC-3643.

Integration with Custodians and Oracles
Institutional investors won't accept self-custody on a thumb drive. They need qualified custodians like Fireblocks or BitGo. Your tech partner needs to be able to integrate these through robust APIs, allowing for programmatic custody and multi-signature governance.

Automated Compliance
Compliance is the killer feature. You need a system that handles:

Document uploads and facial recognition.
AML screening against global databases.
Automatic wallet whitelisting.
Real-time dividend distribution logic.

This reduces investor drop-off while ensuring strict compliance.

What are the Common Mistakes to Avoid when Tokenizing Assets?

We see 4 common mistakes in 2026:

Ignoring legal realities. Some founders still think "code is law" protects them from the SEC. It doesn't. Compliance must come before code.
Underestimating operational costs. Tokenization is expensive. Between legal filings, smart contract audits, and ongoing oracle fees, projects generally need to aim for a raise of at least $10 million to make the math work.
Choosing the wrong chain. Launching a high-frequency asset on a slow, expensive network like Ethereum Mainnet is a recipe for a walled garden where no one can actually trade.
Poor due diligence. If investors can't verify the asset's value in real time through transparent reports, they will apply a trust discount, destroying the token's value proposition.

You must definitely remember them when tokenizing real-world assets. If you are building an RWA tokenization platform, consider user-centered design statistics to reduce bounce rates and improve overall success rates.

The tokenization of real-world assets is the biggest opportunity in capital markets this decade. The convergence of regulatory clarity through the Clarity and GENIUS Acts, institutional interest from giants like BlackRock, and mature tech has set the stage.

But success in 2026 rewards precision. The winners will be those who choose assets where the value is real, but the access is currently broken. They will build on robust legal foundations and use technical architectures that can handle billions in value.

From Silicon Valley to Dubai: Why the Middle East Is the Next Step for US Founders — Insights from the CEO of IdeaSoft

Andrii Lazorenko — Wed, 18 Mar 2026 20:52:32 +0000

The Middle East market — and especially the United Arab Emirates — is transforming from a region once associated primarily with energy into one of the most dynamic technology centers globally, driven by rapid innovation, strong capital concentration, and ambitious plans to become a global platform for cutting-edge solutions. For US startups and IT companies, this is not just another expansion direction, but a strategic growth opportunity that could shape their global positioning over the next decade.

The United States has long been the world’s leading technology ecosystem, with unmatched access to venture capital, top-tier talent, and a culture of innovation that continuously produces globally dominant companies. However, within the US and other mature markets, competition is extremely intense, customer acquisition costs are among the highest in the world, and entering new verticals often requires significant financial and operational resources. In this context, the Middle East offers a different economic model: strong demand for innovation, direct access to large-scale capital, fewer barriers to rapid scaling, and active government support for technology initiatives.

This is especially visible in the UAE. Dubai and Abu Dhabi position themselves not only as global financial centers comparable to New York or London, but also as proactive builders of digital ecosystems. The country is investing heavily in blockchain, AI, smart city infrastructure, and GovTech — sectors where even advanced Western markets often move more cautiously. As a result, the Middle East offers not just purchasing power, but an environment where innovative companies can secure early clients, strategic partnerships, or funding faster than in many traditional markets.

1. One of the most dynamic markets in the world

The MENA region — particularly the UAE — operates on a model of accelerated transformation. Governments are actively investing in digitalization, artificial intelligence, fintech, and urban innovation as part of national strategies. This creates consistent, systemic demand for technology rather than sporadic interest.

For US startups, this means entering a market where decision-making is faster, budgets are often centralized, and implementation can happen at scale — sometimes at the level of cities or entire countries. Compared to the US, where enterprise sales cycles can be lengthy and fragmented, the UAE offers a more direct path from first contact to pilot launch.

2. The UAE as a global hub, not just a regional market

The United States, with a population of over 330 million and a GDP exceeding $25 trillion, is itself a massive domestic market and a global innovation engine. Most US startups initially scale within the country before expanding internationally.

The UAE, by contrast, has a population of under 10 million and a GDP of over $500 billion, yet it functions primarily as a global business hub rather than a domestic consumption market. Dubai and Abu Dhabi serve as gateways to international capital, regional headquarters, and cross-border operations.

For US companies, this means that entering the UAE is not about replacing their home market, but about adding a strategic platform that enables access to clients and investors across the Gulf, Africa, South Asia, and beyond. A presence in the Emirates can effectively unlock multiple regions simultaneously — something that would otherwise require step-by-step expansion.

Additionally, the UAE hosts some of the world’s largest sovereign wealth funds, such as ADIA and Mubadala, with assets in the hundreds of billions of dollars. This scale of capital is difficult to access even within the highly developed US investment ecosystem without significant traction.

3. A strong focus on innovation and early adoption

While the US is a global leader in innovation, it is also a mature and highly competitive market. Enterprises and public institutions often require proven, fully developed solutions before adoption, especially in regulated sectors.

In the UAE, innovation is embedded in national strategy. Governments actively seek new technologies and are often willing to act as early adopters. AI initiatives, digital government platforms, autonomous transport, and sustainability projects are implemented at scale, frequently with direct state involvement.

For US startups, this creates a unique opportunity: instead of competing in saturated markets, they can collaborate with governments and large entities to co-develop and deploy solutions. The UAE market is more open to experimentation, allowing companies to refine their products during implementation — a level of flexibility that is harder to achieve in more risk-averse environments.

4. Premium positioning and willingness to pay

The US market offers both high-end and cost-sensitive segments, but even enterprise clients often focus heavily on ROI optimization and competitive pricing, especially in crowded categories.

In the UAE, the mindset is often different. Companies and government entities prioritize efficiency, speed, and strategic advantage over cost minimization. If a solution delivers clear value or enhances status and competitiveness, clients are willing to pay a premium.

For US startups, this opens the door to higher-margin positioning. Instead of competing on price, they can position themselves as strategic partners delivering innovation at scale — provided their product is well-defined, scalable, and adaptable.

5. Speed as a competitive advantage

In the US, B2B sales cycles can extend from several months to over a year, especially when dealing with large enterprises or public institutions. Procurement processes, compliance requirements, and multiple approval layers can slow down execution.

In the UAE, decision-making is often significantly faster. Senior leadership or government bodies can approve projects without excessive bureaucracy. A pilot project can begin within weeks, and full-scale implementation can follow within months.

For US companies, this translates into faster revenue generation, improved cash flow, and quicker validation of their solutions. However, it also requires operational readiness — teams must be able to move at the pace of the market.

6. Business-friendly regulation and global access

The US provides a stable and well-regulated environment, but it also involves complex legal frameworks, high operational costs, and significant tax burdens depending on the state.

The UAE takes a more competitive approach to attracting businesses. Free zones offer 100% foreign ownership, simplified company setup, and favorable tax conditions. Corporate tax rates remain among the lowest globally, and regulatory bodies often collaborate with companies rather than acting solely as oversight institutions.

For US startups, this means faster market entry, simplified international structuring, and easier access to global capital through a neutral and stable jurisdiction.

7. The importance of local strategy

Unlike the US, which operates as a unified national market, the MENA region consists of multiple countries with distinct regulations, business cultures, and entry requirements. Even within the UAE, Dubai and Abu Dhabi differ in priorities and market dynamics.

For US founders, this means that a broad, region-wide strategy is less effective than a focused, localized approach. Success requires understanding local business practices, building relationships, and adapting product positioning to specific markets.

In a region where trust and personal connections play a critical role, having the right local partner and market insight can be more important than aggressive scaling strategies.

Entering the UAE and the broader Middle East is not simply geographic expansion — it is a strategic move that requires clarity, adaptability, and preparation. Success depends not only on product quality, but also on speed, positioning, and the ability to operate within a different business culture.

For US startups, the Middle East offers a powerful complement to their domestic market — a platform for faster growth, access to global capital, and large-scale implementation opportunities. Companies that approach the region with a clear strategy, strong local focus, and readiness to move quickly will find an environment that rewards ambition and execution.