This was likely in part inspired by (1) the flops of many recent new Layer-1 blockchains in comparison to (2) the outstanding success of Hyperliquid and the HyperEVM. For any non-crypto readers, Hyperliquid is a decentralized perpetual + spot exchange that has quickly dominated market share, even amongst centralized incumbents. They launched their own high-speed EVM blockchain bootstrapped off the exchanges success. At current time of writing this, Hyperliquid has a market cap of around $11B and a fully diluted valuation of $33B.

Hyperliquid was one of the first standout successes of a new L1 that was bootstrapped off their primary revenue generating application. I agree with Jason’s take, mostly. But most L1s were not in the position HL was when it started; Jeff (the founder) had run one of the best HFT shops in crypto previously + had a sizable bankroll that prevented the need to raise outside funding.

So I gave some alternative thoughts on how I think about strategy/GTM for a new L1 and building applications on top, especially when taking the more traditional path of venture funding + building net-new infrastructure (if your L1 doesn’t have meaningful feature differentiation and is a copycat, then this won’t help you). I largely based this on my in-the-field learnings from doing exactly this at Ritual + paying close attention to the strategies and execution of other L1s w/ robust ecosystems. I’m still learning as I go so maybe I’ll come back and revise this.

Anyways, here are my thoughts:

Actively Seeding vs. “Build and They’ll Come”

“Build and they’ll come” was a strategy mentality endemic to crypto pre-2021 when there was far less infrastructure. The idea was basically that if you built a new chain or L2, builders would come and try and capture new users and beta to your chains token. This worked for a bit because there were so few investable chains with good tech, and there were sustained premiums for infra. Those premiums have deteriorated over the years, especially with so many new chains w/ little usage and compelling applications (most chain apps are copycats/forks).

This clearly doesn’t work anymore, at least not if your chain is new. One of the few ecosystems that executed this well recently was HyperEVM- but not even exactly that. HyperEVM works because of Hyperliquid Core (the exchange) creating a valuable primary application that flowed back to $HYPE holders and the Hype ecosystem (and it made a lot of people wealth for being active users ahead of TGE).

In comparison we’re now seeing a vast grave of L1s/L2s that operated on this paradigm from the onset/thought that they could offset this but giving out grants and pushing pure mindshare.

That being said, building “anything” is hard. Building infra is hard. Building apps are hard. Especially in crypto, because building isn’t just about deploying code- there’s a ton of greasework/execution that goes into GTM, operations, legal, etc that generally goes underappreciated.

When you’re building an L1 (if what you’re building is truly novel architecture, and not forkware like I said), its a gargantuan technical and GTM task alike. No one knows what the killer application is for sure going to be, so your job is to build the product + work with builders to enable has many high-quality applications to maximize that shot on goal for both the L1 the builders that trust you.

What this means for infra teams you either:

1. Hire more competent people to work on building everything in-house, including the top apps, which can work. But:
   1. (a) good talent is hard to find
   2. (b) in-housing good talent, means raising more capital from investors, which folks don’t really like seeing these days. (I know Hyperliquid did it w/ 10 people, but most founders were not in the position Jeff was when he started building it. Still they are insane)
   3. You can’t just hire engineers, you need to hire dedicated GTM, operations, marketing, counsel etc. There’s likely an opportunity at scale to cross platform here, but it takes a long time to hit that, especially since each app can be so different.
2. Run the”build and they’ll come” playbook + aggressively give out grants for people to come build anything. Usually falls prey to grant farmers with unimpressive teams/undifferentiated apps and doesn’t work in the long run.
3. Actively seed your ecosystem. What I mean by this is having an aggressive approach to company building on your infrastructure by building prototypes/some light apps on your infrastructure yourself that you can work with other builders/partners to take all the way.

Builders want to see that you’re putting in work and your time where your mouth is, and ultimately no one’s going to understand what’s truly possible on your own infra, at the beginning, better than the people who built it. This way you can:(a) showcase compelling net-new applications, (b) showcase what can be built on your infra and (c) have some influence over the direction you want to see the eco involve beside giving out money.

Now (3) still requires in-house talent capable of building applications, but it becomes more of an active exercise around helping build real protocols from the ground up without large resource spend/detracting from improving core infra. Functionally, it’s almost like platforming/incubating these companies.

Is this approach possible the harder, slower path? Yes. But I also think it’s a more longer-term oriented approach for infrastructure projects that are still working on their core infra/early. It’s certainly the approach that we’re taking Ritual, with programs like Ritual Shrine where we build applications that we’d want to see on Ritual + we think can be killer applications across crypto and AI.

But it’s not just us- Solana had a lot of active building going on in conjunction w/ FTX + Jump and a few other folks in the early days. Several new projects popular on CT like Plasma, MegaETH, Monad etc. have taken active approaches to creating a core set of protocols native to their ecosystems on top of existing protocols deploying.

I expect this to become a dominant strategy (+ add to the difficulty of actually standing out as new infra on top of technical work).

In some world, I’d love if we built many of the Ritual Shrine prototypes fully in-house and ran them ourselves. But I recognize that they deserve dedicated teams that can kill it both on product and execution of GTM (many of which are probably better team-market fits than us, even if we have what I think is one of the strongest cross-functional teams in the space).

If we can work to build them alongside those teams while also giving strong economic upside to external builders, that’s still a win. This let’s us “own” it in a metaphorical sense, but also introduce new perspective and new talent.

Anyways, tl;dr: Yes, if you can own the top first party app on your new infra, that’s great. But if you are resource constrained, then make a strong, aggressive effort to actually seed your ecosystem w/ prototypes/build alongside them vs getting lazy with it.

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