Will Monad continue to exist?

Source: The Decentralized Finance Investor, Translation: Shaw Golden Financial

Views on Monad

After years of development, the highly anticipated L1 blockchain Monad has finally launched, along with its token MON.

Monad is currently in a rising popularity phase, with its 24-hour attention even surpassing that of Bitcoin.

But the question is, what will happen next? Because in the long run, short-term speculation is not very meaningful.

Here, I will share my views on Monad, its uniqueness, and some recent studies on other L1 issuance cases.

What is unique about Monad?

Let's start with the basics.

Monad is described as a high-performance L1 blockchain.

Yes, there are indeed over 100 projects doing the same thing.

But the Monad team claims that their blockchain stands out because it combines the speed of Solana and EVM compatibility, allowing Ethereum-based dApps to scale to Monad.

According to its documentation, this blockchain can process 10,000 TPS transactions, with a final confirmation time of 0.8 seconds, and is 100% compatible with EVM.

Unlike other recently launched L1 protocols, it has a large application ecosystem on the mainnet on the very first day of its launch.

Uniswap, Gearbox, Curve, Morpho, Folks Finance, and Euler are just a few examples.

Currently, there are also some dApps built entirely on Monad, but to be honest, their number seems relatively small.

You can visit app.monad.xyz to explore the ecosystem.

In addition, it is worth mentioning that Monad's marketing team is outstanding. I remember the first time I heard about this project was in 2023.

More than two years have passed since then, yet Monad has managed to maintain attention and build a strong community despite not launching any products.

The cryptocurrency space is a battle for attention. Therefore, Monad having a top-notch marketing team is undoubtedly a significant advantage.

Will Monad always exist?

Now, let's talk about this obvious yet difficult-to-address issue.

To answer this question, let's take a look at what issues other L1 projects faced and what commonalities the most successful blockchains have.

If we take a look at the most notable blockchain projects recently, the one that definitely tops the list is Plasma—a Layer 1 blockchain built specifically for stablecoin payments.

Its token XPL was initially issued at $0.7, equivalent to a fully diluted valuation (FDV) of $7 billion, and soared to $1.69 in just a few days. The total locked value (TVL) of Plasma also reached an FDV of $14.3 billion within a few days.

Many people on crypto social media are praising XPL, as if it represents the future.

However, today, just two months after its launch, the price of XPL has fallen by 87% from its all-time high, its TVL is also declining, and the market sentiment around Plasma has turned negative.

Earlier this year, Berachain also experienced a similar situation.

I believe that the reason for the error is the same in both cases:

Plasma and Berachain initially offered high token incentives, attracting a large number of users and TVL. However, they did not truly see any unique dApps built on them that achieved significant growth.

Therefore, once the token incentives start to decrease, users will directly transfer their funds elsewhere because they have no reason to stay.

In contrast, the most successful L1 and L2 networks today all have at least one killer dApp:

• Ethereum has many projects such as AAVE, Uniswap, Pendle, etc.
• Solana has Jupiter and Pump Fun
• Base has Virtuals, Avantis, and Footbaldotfun.

Although this may sound harsh, I believe that Monad's technology, speed, and incentive programs have nothing to do with its ability to thrive in the long term. We already have many high-performance blockchains.

But I believe that if Monad can have a killer dApp completely built on its platform and develop a very loyal community, then it can achieve success.

I believe that only in this way can it maintain relevance in the long term.

In other words, one thing is very clear: the competition in the L1 space is extremely fierce.

Personally, I am not interested in investing in other types of L1 tokens at this time. If you are good at narrative trading, trading these tokens can indeed make a lot of money, but I believe that most of them are not suitable as long-term investments.

That said, I still support Monad because I believe they have a great team.

However, successfully building a brand new L1 network by 2025 is no easy task.