Web3 business models are reshaping the digital economy, but not all are created equal. This article presents key considerations and potential red flags to watch for when evaluating these innovative ventures. Drawing from expert insights, readers will learn how to assess utility, operational integrity, team credibility, and other crucial factors in the evolving Web3 landscape.
- Focus on Utility and User Value
- Combine Clear Mission with Operational Integrity
- Evaluate Team, Traction, Technology, and Market
- Solve Real Problems with Transparent Governance
- Plan for Regulatory and Infrastructure Challenges
- Verify Value Proposition and Team Credibility
Focus on Utility and User Value
After years in this space, I’ve learned to ignore the buzzwords and focus entirely on utility. My first question is always, “Does the blockchain part of this actually create value for the end-user, or is it just there to justify a token?” If the answer isn’t immediately obvious, it’s a huge red flag.
Legitimacy looks like a normal business: it has a product, it has customers, and it has a clear purpose. Be wary of projects where the governance is completely dominated by a few venture capital firms — that’s just centralization with extra steps. Real potential lies in projects that empower their users, not just their early investors.
Yuri Berg
Cbdo, FinchTrade
Combine Clear Mission with Operational Integrity
Evaluating a Web3 business requires a strategic, high-level perspective. We see the most successful ventures combine a clear mission with strong leadership and operational integrity.
Focus on Problem-Solving: Look for companies addressing meaningful, complex challenges in areas like finance, digital identity, or supply chains. Ventures with a clear problem-solution fit naturally attract top executives seeking impact.
Tokenomics and Incentives: Examine the token economy. Sustainable, well-aligned incentives and long-term planning signal maturity and strategic foresight.
Leadership and Governance: Founders and senior teams with proven experience in fintech, blockchain, or cybersecurity, supported by transparent governance, create environments where senior talent thrives.
Regulatory Engagement: Proactive compliance is a competitive advantage. Companies that engage with regulations demonstrate operational sophistication and reduce risk for strategic decisions.
Traction and Operations: Strong operational processes, measurable results, and strategic partnerships indicate both viability and execution capability.
Red Flags: Watch for unclear strategy, misaligned incentives, or over-reliance on speculative tokens which can distract leaders from meaningful impact.
Web3 ventures most likely to succeed combine visionary leadership, disciplined tokenomics, transparent governance, regulatory foresight, and operational rigor. They create magnetic environments for elite senior talent. We help these companies build executive teams capable of driving sustainable growth and lasting innovation.
Paul Owen
Fca, CEO & Founder, RecruitBlock
Evaluate Team, Traction, Technology, and Market
When evaluating the legitimacy and potential of a Web3 business model, consider “The four T’s of investing”: Team, Traction, Technology, and TAM (Total Addressable Market).
The team behind the project is often considered one of the most critical factors in the Web3 space. A major red flag is an anonymous team or a team with no verifiable track record, as this can be a strong indicator that the project is not legitimate.
Erez Ben Kiki
Co-Founder, ChainPort
Solve Real Problems with Transparent Governance
When I evaluate a Web3 business model, I start with the same test I use in AI: does it solve a real problem for real people, or is it just chasing hype? Technology without a clear, valuable use case will fail no matter how flashy the pitch.
The second thing I look for is transparency. Can the team explain how the model works? How it’s governed? And how value flows through the system? If the answers are vague, that’s a red flag.
Other red flags include overpromising fixed returns, closed ecosystems in a space built for openness, and no visible plan for security or auditability.
The strongest models are clear on purpose. They are open in design and realistic about the path to adoption. If a project can’t articulate those, I walk away.
Alexander De Ridder
Co-Founder & CTO, SmythOS.com
Plan for Regulatory and Infrastructure Challenges
Testing the validity of a Web3 model is an uncommon practice, and one way to do it is to determine how it manages regulatory and infrastructure friction during its scale-up. In 2018, I was involved in a project that seemed like a great idea on paper, but it failed entirely because it was built entirely on exchanges listing its token. The team did not factor in compliance costs in other regions such as the EU, where legal reviews can last up to half a year and incur more than a quarter of a million dollars in legal and licensing fees. A serious project already plans and announces how it will manage audits, smart contract security reviews, and jurisdictional obstacles before a public sale.
When the team is unable to provide reasons for which laws it has to deal with or what technical audits have been carried out, chances are that it is mostly building on hype. Good teams publish auditable reports, disclose the legal entities they enroll in, and provide a timeline of what they are going to do by which dates rather than making vague promises.
Suvrangsou Das
Global PR Strategist & CEO, EasyPR LLC
Verify Value Proposition and Team Credibility
What to look for:
- A clear value proposition that solves a real problem, not just using blockchain because it’s trendy
- A transparent team with verifiable experience and a visible track record in delivering products
- An active community that focuses on utility, adoption, and real use cases instead of hype and speculation
- Solid tokenomics that encourage long-term growth, not just quick wins for insiders
- A working product or MVP that proves the concept in action
Red flags to watch out for:
- Vague whitepapers filled with buzzwords but no clear roadmap
- Unrealistic ROI claims or guaranteed returns
- Anonymous teams you cannot verify
- No real-world application or adoption strategy
- Overly complex token structures that mainly benefit founders
We once worked with a client exploring a Web3 loyalty platform. Before launch, we validated their model through market research, ensured their whitepaper explained the utility in plain language, built transparency into their team’s public profiles, and created a roadmap tied to real user milestones. This approach helped them attract credible investors and avoid the pitfalls that sink many projects.
We help businesses cut through the hype so their Web3 ideas are credible, trusted, and positioned for growth.
Taylor Humphries
CEO, Ranked