Network Effects in Web3: What Everyone Gets Wrong (and How to Build Them Right)

Why most crypto projects fail to build real network effects — and what Web3 builders can learn from Ethereum, Uniswap, Farcaster, and the infra layer powering the next 100M users.

1. Why Network Effects Matter More Than Ever in Web3

Network effects are the cheat code behind every dominant tech platform.

Uber. Facebook. Airbnb. They didn’t just grow — they compounding-looped their way into inevitability. More users → more value → more users. The kind of feedback loop you can’t pay for, only design into existence.

Andrew Chen calls it The Cold Start Problem. Every network starts at zero — zero users, zero trust, zero activity. The winners aren’t the ones who shout the loudest or raise the most. They’re the ones who nail the early loop and ride it to escape velocity.

So here’s the wild part:
Web3 should be the perfect playground for network effects.
It’s decentralized. Permissionless. Composable. Interoperable. All the buzzwords that scream viral by design.