Web3 Founders: The Key Mistakes That Kill Startups - And How to Avoid Them

We sat down with Ariel Asafov, Incubation Director of ChainGPT Labs, who has guided multiple Web3 projects from idea to success. With years of experience advising founders and leading incubations, he’s seen what works - and what doesn’t.

We asked him:

“What are some of the biggest mistakes you’ve seen Web3 founders make?”

Here’s what he had to share.

1. Weak Go-To-Market (GTM) Strategy

One of the biggest misconceptions in Web3 is that a great product will naturally attract users. That couldn’t be further from the truth. The reality? Without a rock-solid go-to-market strategy, even the most innovative technologies struggle to gain traction.

How to Fix This:

• Develop a GTM roadmap from day one. Who are your early adopters? What pain point are you solving? How will you get in front of the right users?
• Leverage partnerships and integrations. Aligning with established projects gives you instant credibility and distribution.
• Engage Key Opinion Leaders (KOLs). Thought leaders in the space can amplify your reach, but only if your product is actually useful.
• Prioritize community-driven growth. Airdrops and giveaways generate short-term hype but don’t build loyal users. Focus on sustained engagement.

‍

2. Misunderstanding Tokenomics (It’s Not Just a Fundraising Tool)

Many founders launch a token without understanding how it fits into their ecosystem. They see it as a fundraising tool rather than a core mechanism that powers their product. This leads to:

• Overinflated Fully Diluted Valuations (FDV), creating sell pressure post-launch.
• Unsustainable token emissions, devaluing the token.
• A lack of real use cases, reducing long-term demand.

What Founders Need to Do Instead:

• Start with real utility. If your token exists just for speculation, your project will collapse once the hype fades.
• Be realistic about FDV. The market won’t support an inflated valuation without real demand.
• Align incentives across users, investors, and contributors. Everyone should have a reason to hold and use the token long-term.
• Model long-term sustainability. How does your token economy survive beyond the initial launch phase?

3. Lack of Product-Market Fit (PMF)

Building on-chain doesn’t guarantee adoption. Too many founders assume decentralization alone is a selling point - but Web3 users expect real utility.

How to Ensure Your Product Has Demand:

• Validate before you build. Conduct surveys, run beta tests, and engage potential users.
• Launch a lean MVP (Minimum Viable Product). Stop over-engineering. Get your product into users’ hands and iterate based on feedback.
• Understand your competition. If a similar Web2 solution exists and works better, why would users switch?

4. Overlooking Security & Compliance

Security and compliance are critical for the success of any Web3 project. Founders often overlook smart contract audits, treasury management, and risk assessments during the development phase, which can lead to costly vulnerabilities. Additionally, with the evolving nature of digital asset regulations worldwide, neglecting compliance can create significant long-term risks.

Tip: Prioritize security audits and legal guidance to ensure your project is both secure and compliant with global regulations.

5. Misaligned Incentives in Community Building

Many Web3 founders view their community as short-term hype generators, often using airdrops and other incentives to build initial momentum. While this can create temporary interest, it rarely leads to sustained engagement. The most successful projects build a long-term, engaged community where incentives are aligned with long-term goals, not just quick rewards.

Tip: Focus on building a community that values the product’s long-term vision and incentivize meaningful participation.

‍

Final Advice: Build for the Long Run, Not Just the Next Bull Market

Ariel’s advice is clear: Web3 founders must prioritize real-world use cases, sustainable growth, and strong community alignment. Hype fades, but execution wins.

If you’re building in this space, ask yourself:

• Does my product solve a real problem?
• Do my tokenomics make sense beyond speculation?
• Do I have a clear strategy for user acquisition?
• Am I prioritizing security, compliance, and long-term incentives?

Avoid these mistakes, and you won’t just survive in Web3 - you’ll thrive!

‍