The Web3 industry enters an era of oversupply in the block space

With the completion of large-scale infrastructure construction and the rise of application chains, the Web3 industry has entered a new stage of oversupply in the block space. The supply-oriented economic model long advocated by the Ethereum community seems somewhat outdated in the current environment.

The previous approach of purely focusing on the supply side and incentivizing developers without distinguishing between the merits of different projects has already been questioned in terms of its effectiveness. Some well-known Layer 2 project funding programs have even been seen as representatives of DAO governance corruption, becoming a breeding ground for zombie applications.

As the industry matures, Web3 is expected to usher in a new era of large-scale applications. Against this backdrop, the focus of the industry is shifting from developers and technical leaders to end users and consumers. Projects and developers who can recognize this change early will gain a first-mover advantage in the new era.

The Cosmos ecosystem has always been ahead of the Ethereum community. Following the wave of modularization, the rise of the concept of chain abstraction once again confirms this. The Stakeholder Incentive Program (VIP) proposed by a certain emerging project embodies this new idea, aiming to rebalance the incentive mechanisms of ecological roles such as application chains, validator nodes, and users, encouraging them to responsibly participate in Layer 1's consensus security and governance, and to make reasonable use of block space resources.

The plan is designed by drawing on the well-known token economic models in the industry, innovatively integrating the Ve(3,3) mechanism and the native token custody concept. It breaks the traditional token economics model of PoS chains, providing rewards not only to validating nodes but also directly distributing incentives to application chains and end users.

It is particularly worth mentioning that the program has designed a unique token unlocking mechanism. Users need to maintain a certain level of activity to fully unlock the rewards, or they can choose to stake the rewards into the Layer 1 liquidity pool to enhance the overall liquidity, interoperability, and security of the ecosystem.

This innovative design aims to give its native token a status similar to that of ETH in the Ethereum ecosystem, while also attempting to redistribute benefits and responsibilities among validating nodes, application chains, and end users. At the same time, it is committed to avoiding the issues of fragmentation in the Cosmos ecosystem and misaligned incentives in the Ethereum ecosystem.