Will Monad continue to exist?

Source: The DeFi Investor, Translated by: Shaw Jinse Finance

Thoughts on Monad

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

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

However, the question remains: what will happen next? Because in the long run, short-term hype is not very meaningful.

Here, I will share my thoughts on Monad, its unique features, and a study of some recent L1 launches.

What makes Monad unique?

Let's start with the basics.

Monad is described as a high-performance L1 blockchain. Indeed, over 100 projects are already doing the same thing. But the Monad team claims their blockchain stands out because it combines Solana's speed with EVM compatibility, allowing Ethereum-based dApps to scale to Monad. According to its documentation, the blockchain can handle 10,000 TPS of transactions with a final confirmation time of 0.8 seconds and is 100% EVM compatible. Unlike other recently launched L1 protocols, it boasted a large ecosystem of applications on its mainnet on day one. Uniswap, Gearbox, Curve, Morpho, Folks Finance, and Euler are just a few examples. There are currently some dApps built entirely on Monad, but frankly, their numbers seem rather small. You can visit app.monad.xyz to explore the ecosystem. In addition, it's worth mentioning that Monad's marketing team is excellent. I remember first hearing about this project in 2023. More than two years have passed since then, yet Monad, despite not launching any products, has managed to maintain its visibility and build a strong community. The cryptocurrency space is a battle for attention. Therefore, Monad's top-notch marketing team is undoubtedly a major advantage. Will Monad continue to exist? Now, let's talk about this obvious yet difficult-to-discuss question. To answer this question, let's look at what went wrong with other L1 projects and what the most successful blockchains have in common. If we review the most talked-about blockchain projects recently, Plasma undoubtedly tops the list—an L1 blockchain built specifically for stablecoin payments. Its token, XPL, initially launched at $0.70, equivalent to a fully diluted FDV of $7 billion, and surged to $1.69 in just a few days. Plasma's total value locked (TVL) also reached a FDV of $14.3 billion within days. Many on crypto social media are touting XPL as if it represents the future.

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

Earlier this year, Berachain experienced a similar situation.

I believe the reason for the failure in both cases is the same:

Both Plasma and Berachain initially offered high token incentives, attracting a large number of users and TVL.

However, none of them have truly produced any unique dApps that have achieved significant growth based on them. Therefore, once token incentives begin to diminish, users simply move their funds elsewhere because they have no reason to stay. In contrast, today's most successful L1 and L2 networks all have at least one killer dApp: Ethereum has AAVE, Uniswap, Pendle, and many other projects. Solana has Jupiter and Pump Fun. Base has Virtuals, Avantis, and Footbaldotfun. While this may sound harsh, I believe Monad's technology, speed, and incentive program are irrelevant to its long-term success. We already have many high-performance blockchains. However, I believe that if Monad can have a killer dApp built entirely on its platform and develop a very loyal community, then it can succeed. I think only then can it remain relevant in the long run. That said, one thing is clear: the L1 space is extremely competitive. Personally, I'm not interested in investing in other L1 tokens right now. You can certainly make a lot of money trading these tokens if you're good at narrative trading, but I don't think most of them are suitable as long-term investments. That being said, I still support Monad because I think they have a great team. However, successfully building a completely new L1 network by 2025 will be no easy feat.