Scoping Your Crypto Project: The Four-Part Manual

Web3 Project Economics: What Actually Matters

The most common type of email I get at Thirdwork starts with "We have this great Web3 idea..." and ends with "...how much would it cost to build?" The interesting part isn't the question - it's what people do with the answer.

When we tell them it will cost $300,000 to build a proper DeFi protocol, they often respond with something like "What if we just built a simpler version?" or "What if we skipped the audit?" What they're really asking is: how can we build this for less? This is the wrong question. The right question is: why does it cost this much in the first place?

The answer reveals something fundamental about Web3 projects that most founders don't understand: they're not software projects with financial features. They're financial products with software features. This distinction changes everything.

In traditional software, you can cut corners. You can launch with bugs. You can fix things in production. In Web3, you can't. A bug doesn't mean a crashed app - it means lost money. A security flaw doesn't mean leaked data - it means emptied wallets. The stakes are fundamentally different.

This reality creates what I call the "Web3 cost floor" - the minimum amount required to build something that won't implode. This floor is much higher than in traditional software, and it's largely incompressible. You can't optimize around it without fundamentally changing what you're building.

Here's what that floor looks like in practice:

A basic DeFi protocol needs, at minimum:

• Smart contract development: $150,000
• Security audit: $50,000
• Frontend and infrastructure: $100,000
• Legal compliance: $30,000
• Emergency fund: $70,000

That's $400,000 before you've even launched. This seems expensive until you realize what you're actually building: financial infrastructure that needs to work perfectly from day one, handle millions of dollars securely, and never have significant downtime.

But the really interesting part isn't the cost - it's what it reveals about project viability. Most Web3 projects die not because they run out of money, but because they never had a viable economic model in the first place. They're built on assumptions that don't survive contact with reality.

Consider a typical NFT marketplace. Most teams focus on the technology: minting, trading, wallet integration. But the real killer is usually transaction economics. If your marketplace takes 2.5% fees, and the average NFT sells for $100, you're making $2.50 per sale. If gas fees are $30, your users are paying a 30% premium on every transaction. This math doesn't work, and no amount of clever engineering can fix it.

This leads to what I call the "chain-market fit" problem. Your choice of blockchain isn't just a technical decision - it's a business model decision. Ethereum is great for high-value transactions but terrible for frequent small ones. Solana is great for high-frequency trading but comes with different security tradeoffs. Your choice of chain predetermines what types of products you can build profitably.

The most successful Web3 projects understand this from day one. They don't start with the technology - they start with the economics. They ask:

• What's the minimum viable transaction size?
• What's the maximum acceptable gas fee?
• What's the required transaction frequency?
• What's the target user's technical sophistication?
• What's the revenue per user needed for sustainability?

These questions seem obvious in retrospect, but they're surprisingly rare in initial project discussions. Teams often spend months building something before realizing their fundamental economics don't work.

This creates an interesting opportunity. The best Web3 projects often look obvious in retrospect - they're just built on better economic assumptions than their competitors. They understand that in Web3, you can't separate the technology from the economics. They're the same thing.

Here's a simple framework we use at Thirdwork to evaluate project viability:

1. Transaction value must be at least 10x gas cost
2. Revenue per user must exceed customer acquisition cost
3. Monthly revenue potential must exceed infrastructure costs
4. Emergency fund must cover 6 months of operation
5. Growth metrics must support future fundraising needs

If any of these conditions aren't met, the project needs fundamental rethinking. No amount of technical excellence can overcome broken economics.

This might seem harsh. It is. But it's also liberating. Once you understand these constraints, you can design within them. You can build products that work with the economics of Web3, not against them.

The future of Web3 belongs to teams that understand this reality. They don't try to force Web2 business models onto Web3 infrastructure. They design native Web3 products that embrace the constraints and economics of the blockchain they're building on.

This is why the most successful Web3 projects often look nothing like their Web2 counterparts. They're not just digitally native - they're blockchain native. They're built from the ground up to work with the unique economics of their chosen chain.

The best time to understand this is before you write any code. The second best time is now. Because in Web3, the economics aren't just part of your business model - they're part of your product. Ignore them at your peril.

Web3 Architecture: The Art of Technical Decisions

The hardest technical decisions in Web3 aren't about what to build - they're about what to leave out. Every smart contract you deploy, every feature you add, every integration you support becomes a permanent part of your attack surface. This creates an interesting tension: the more powerful your protocol becomes, the more ways it can fail.

I've seen this pattern play out repeatedly at Thirdwork. Teams come to us with ambitious architectural plans: cross-chain bridges, complex governance systems, elaborate tokenomics. These aren't bad ideas in themselves. But they often misunderstand a fundamental truth about Web3 architecture: complexity is your enemy, and simplicity is incredibly hard to achieve.

Consider a typical DeFi protocol. The minimal version might seem straightforward: accept deposits, enable lending, manage interest rates. But each of these functions introduces new edge cases. What happens when a price feed fails? How do you handle partial liquidations? What if a flash loan attack targets your interest rate mechanism? The complexity grows exponentially with each feature.

This might suggest that the solution is to build everything as simply as possible. But that's not quite right either. A system that's too simple becomes rigid, unable to adapt to changing requirements or fix critical issues. The art lies in finding the right balance - what I call "sustainable simplicity."

Here's what that looks like in practice:

The most resilient Web3 architectures I've seen share a common pattern: they're built in layers, with clear boundaries between different types of functionality. Each layer has a specific responsibility:

1. Core Logic Layer

• Handles critical state transitions
• Manages core business rules
• Maintains protocol invariants

2. Access Control Layer

• Manages permissions
• Handles authentication
• Controls upgrade paths

3. Integration Layer

• Interfaces with external protocols
• Manages oracle inputs
• Handles cross-contract communication

4. Emergency Layer

• Circuit breakers
• Pause mechanisms
• Emergency withdrawals

This layering might seem obvious, but the interesting part is what it enables. When done well, it creates what I call "selective upgradeability" - the ability to improve some parts of your system while keeping others stable and secure.

But here's where it gets tricky: these layers aren't just technical divisions. They're trust boundaries. Each time you cross a boundary, you're making assumptions about how different parts of your system will interact. And in Web3, assumptions are dangerous.

I've noticed a pattern in successful Web3 projects: they treat their architecture as a series of explicit trust assumptions. Instead of trying to eliminate all possible risks, they make their trust requirements explicit and manageable.

For example, many projects start by assuming they need:

• Fully decentralized governance from day one
• Complete cross-chain compatibility
• Support for every possible token
• Complex yield strategies
• Elaborate incentive mechanisms

But these features often conflict with basic security requirements. Each additional feature multiplies the potential attack surface. Each new integration introduces new failure modes. Each governance mechanism becomes a potential attack vector.

This leads to what might be the most counterintuitive truth about Web3 architecture: the best designs often start by explicitly choosing what they won't do. They make hard decisions about their trust boundaries and stick to them.

Here's a framework we've found helpful for making these decisions:

1. Start with Trust AssumptionsWhat must users trust your protocol to do? What shouldn't they need to trust? These answers shape your core architecture.
2. Define Security BoundariesWhere does your protocol's trust domain end? What external dependencies do you rely on? How do you validate external inputs?
3. Plan for EvolutionHow will your protocol upgrade? What parts should be fixed? What parts need to be flexible? How do you manage this without introducing new vulnerabilities?
4. Consider Failure ModesWhat happens when things go wrong? How do you detect problems? How do you respond to attacks? How do you protect user assets?

But perhaps the most important question is one that often goes unasked: what are you not sure about? The best Web3 architects I know are comfortable with uncertainty. They design systems that can evolve as our understanding improves.

This might all seem overwhelming. It often is. But there's an encouraging pattern I've noticed: the most successful Web3 projects often start small and focused, with a clear understanding of their core trust requirements. They add complexity only when it's absolutely necessary, and they do so in a way that preserves their core security properties.

In traditional software, we often talk about MVP - Minimum Viable Product. In Web3, I think we need to think in terms of MSP - Minimum Secure Product. What's the simplest version of your protocol that maintains its security properties and creates real value?

The future probably belongs to projects that can answer this question well. Not because they'll build perfect systems - no such thing exists. But because they'll build systems that are secure enough to be valuable, simple enough to be verifiable, and flexible enough to evolve.

The art of Web3 architecture isn't in building systems that can't fail - it's in building systems that fail in predictable, manageable ways. Because in the end, the most important architectural decision isn't what features you include - it's what risks you're willing to accept, and how explicitly you acknowledge them.

Web3 Teams: Building in New Territory

The most interesting thing about Web3 teams isn't their structure - it's how they adapt to being wrong. Because in Web3, everyone is wrong sometimes. The best smart contract developer will miss an edge case. The most careful architect will overlook a dependency. The most experienced PM will misestimate a timeline. What separates successful teams isn't their ability to avoid mistakes - it's their ability to recover from them.

This creates an interesting challenge when building Web3 teams. Traditional software development emphasizes specialization: frontend developers, backend developers, DevOps engineers. But Web3 development requires something different - what I've started calling "full-stack skepticism."

The most effective Web3 developers I've seen aren't just technically competent. They have an almost philosophical approach to their work. They question everything, especially their own assumptions. They understand that in Web3, being right isn't enough - you have to be right for the right reasons.

This mindset shapes how successful Web3 teams tend to organize themselves. Instead of strict hierarchies or rigid specializations, they often form what might be called "overlapping circles of competence." Here's what that looks like in practice:

A typical Web3 team might include:
- Smart contract developers who understand frontend constraints
- Frontend developers who understand blockchain limitations
- Security engineers who can write production code
- Project managers who can read smart contracts
- Technical writers who understand cryptographic principles

The interesting part isn't the roles themselves - it's the overlap between them. This overlap isn't just nice to have; it's essential for catching the kinds of problems that tend to sink Web3 projects.

Consider what happens when a smart contract developer designs a new feature. In a traditional team, they might write the code, have it reviewed, and throw it over the wall to the frontend team. But in Web3, this rarely works. The frontend implications of smart contract decisions are too fundamental to be an afterthought.

Instead, the best teams I've seen develop what might be called "continuous conversation" - ongoing dialogue between different specialties. The smart contract developer shares early designs. The frontend developer raises UX concerns. The security engineer points out potential attack vectors. The technical writer identifies unclear behaviors that need documentation.

But here's where it gets tricky: this kind of collaboration is hard to scale. Beyond a certain size - maybe 8-10 people per core team - the communication overhead becomes overwhelming. This creates what I call the "Web3 team scaling paradox": the very practices that make small Web3 teams effective make them difficult to grow.

Some patterns I've noticed in teams that manage this well:

1. They prioritize learning over efficiency
Most Web3 teams are building things that haven't been built before. The ability to learn quickly is more valuable than the ability to execute quickly on known problems.

2. They embrace productive conflict
The best Web3 teams I've seen have strong disagreements about technical decisions. But they disagree in a way that produces better solutions rather than personal friction.

3. They maintain technical flexibility
They avoid becoming overly committed to particular technical approaches. They understand that the Web3 landscape changes quickly, and their assumptions might need to change with it.

4. They document their thinking
Not just their code or architecture, but their decision-making process. Why did they choose certain approaches? What alternatives did they consider? What assumptions are they making?

But perhaps the most important pattern is how these teams handle uncertainty. In traditional software development, uncertainty is often seen as a problem to be eliminated. In Web3, the best teams treat uncertainty as a fundamental part of their environment.

This shows up in how they structure their development process. Instead of trying to plan everything upfront, they tend to work in what might be called "secure iterations." Each iteration needs to be secure and valuable in itself, not just a step toward a future goal.

This iterative approach extends to how they handle roles and responsibilities. Instead of fixed job descriptions, they often use what I call "dynamic specialization." Team members have core areas of expertise but are expected to contribute beyond them as needed.

The development process itself often looks quite different from traditional software development. Daily standups might include security reviews. Code reviews might involve economic analysis. Architecture discussions might cover governance implications.

But here's the most counterintuitive part: these processes often look messy from the outside. They don't fit neatly into conventional project management frameworks. They might seem inefficient or overcautious. But this apparent inefficiency is actually a form of robustness.

The future of Web3 development might not be about finding the perfect team structure or development process. It might be about building teams that can adapt as we discover what works and what doesn't. Teams that can maintain security and reliability while exploring new territory.

The best Web3 teams I've seen aren't trying to be perfect. They're trying to be antifragile - to get stronger from the challenges they face. Because in Web3, the only constant is change, and the only certainty is uncertainty. The teams that succeed will be the ones that can thrive in this environment.

This might all seem daunting. It often is. Building Web3 teams is hard. But it's hard in an interesting way - a way that pushes us to rethink how we build software and work together. And that might be exactly what we need to build the next generation of Web3 systems.

Web3 Operations: The Long Game

The most deceptive moment in any Web3 project is the launch. It feels like a finish line, but it's closer to a starting line. This is when you begin the real work: running a live protocol that people trust with their money. The stakes aren't theoretical anymore. Every decision has immediate consequences, and there's no such thing as a small mistake.

I've noticed an interesting pattern at Thirdwork: teams often spend months planning their launch but only days planning what comes after. This is backwards. Launch day might get the headlines, but it's what happens in the months and years that follow that determines success or failure.

This creates what I call the "maintainer's dilemma." Every change to a live protocol could fix a problem or create one. Every upgrade could add value or introduce vulnerability. Every new feature could attract users or increase risk. The interesting question isn't how to avoid these tradeoffs - it's how to manage them.

Some patterns I've noticed in protocols that handle this well:

First, they tend to approach maintenance as a design problem, not just an operational one. They build their protocols with certain assumptions about how they'll evolve. These assumptions might be wrong - they often are - but having them explicit makes them easier to revise.

Consider a typical DeFi protocol. At launch, you might need to handle:
- Regular parameter adjustments
- Minor bug fixes
- Performance optimizations
- New token integrations
- User support

But six months in, you're usually dealing with:
- Complex governance proposals
- Cross-chain integrations
- Novel attack vectors
- Market manipulation attempts
- Emergency responses

The protocols that survive this transition usually have what I call "deliberate flexibility" - they're designed to change in certain ways while remaining rigid in others. The art isn't in building perfect systems; it's in building systems that can be fixed when we discover how imperfect they are.

This leads to an interesting observation about Web3 maintenance: the technical challenges often aren't the hardest part. The really difficult questions are about trust and coordination. How do you upgrade a protocol without breaking user trust? How do you coordinate responses to emergencies? How do you manage competing stakeholder interests?

The best teams I've seen develop what might be called "maintenance primitives" - basic building blocks for managing live protocols:

1. Monitoring Systems
Not just for technical metrics, but for economic patterns and user behavior. The goal isn't just to detect problems - it's to understand how the protocol is actually being used, which is often different from how we thought it would be used.

2. Response Frameworks
Ways of categorizing and responding to different types of issues. Not everything is an emergency, but it's important to know what is and what isn't before you're in the middle of one.

3. Communication Patterns
Methods for keeping users informed without causing panic. The art is in being transparent about problems while maintaining confidence in the solution.

4. Governance Processes
Ways of making and implementing decisions that stakeholders will accept as legitimate. This is often more about process than technical mechanism.

But here's where it gets interesting: these primitives aren't independent. They form what I call the "maintenance mesh" - a web of interconnected processes that together create protocol resilience. The strength of this mesh often determines a protocol's long-term survival.

Some counterintuitive truths I've noticed about successful protocol maintenance:

1. Speed is often overrated
The pressure to move quickly in response to problems is usually high. But the best maintainers I know are those who can resist this pressure when necessary. Sometimes the right answer is "we need to think about this more."

2. Perfect solutions are rare
Most maintenance decisions involve tradeoffs between competing goods: security vs usability, flexibility vs reliability, growth vs stability. The art is in making these tradeoffs explicitly and thoughtfully.

3. Community matters more than code
The health of a protocol's community - its users, developers, and stakeholders - often matters more than its technical sophistication. Good maintenance builds trust over time.

But perhaps the most important pattern is how successful protocols handle uncertainty. They don't try to eliminate it - they build systems that can function despite it. They develop what I call "uncertainty tolerance" - the ability to maintain stability even when facing unknown challenges.

This might all sound defensive, focused on preventing problems rather than creating value. But that's not quite right. Good maintenance enables innovation by creating a stable foundation for experimentation. It's what allows protocols to evolve without breaking.

The future of Web3 might depend less on breakthrough innovations and more on the unglamorous work of maintaining what we've built. The protocols that succeed long-term will likely be those that can balance stability and evolution, security and innovation, technical excellence and community trust.

This creates an interesting opportunity. While most attention in Web3 focuses on new protocols and features, there's growing value in understanding how to maintain these systems over time. The skills of careful maintenance, thoughtful upgrade management, and community coordination might be just as important as smart contract development or tokenomics design.

Building in Web3 is hard. Maintaining what you've built might be even harder. But it's hard in an interesting way - a way that pushes us to think deeply about what makes systems resilient over time. And that might be exactly the kind of thinking we need to build lasting value in this space.

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