Web3 projects face significant challenges in achieving sustainable success. The crypto market lost over 50% of its value in 2022, multiple exchanges closed, and countless projects have faded into irrelevance after launching with fanfare and raising funds. The survivors share something their competitors lack: adherence to fundamental success principles.
MJ DeMarco’s CENTS (Control, Entry, Need, Time, Scale) framework from The Millionaire Fastlane identifies five commandments that separate successful ventures from failed experiments. In Web3, these principles take new forms but remain equally critical for protocol sustainability.
Here’s how the traditional CENTS commandments translate to decentralized ecosystems.
C: Control (Protocol Governance)
Traditional businesses need operational control. Web3 protocols need governance control.
What Control Means in Web3:
- Protocol governance rights and decision-making power
- Smart contract ownership and upgrade capabilities
- Community governance influence through token distribution
- Revenue stream control independent of external platforms
Control Violations:
Building on someone else’s Layer 1 without governance influence. Your protocol lives at the mercy of Ethereum’s roadmap or Solana’s technical decisions. You’re hitchhiking, not driving.
Relying entirely on centralized exchanges for token distribution. They control your token’s accessibility and trading pairs. Algorithm changes kill your liquidity overnight.
Depending on third-party infrastructure without alternatives. Your oracle provider changes pricing or your RPC provider throttles requests. Your protocol breaks while you wait for their support tickets.
Building Control:
Launch governance tokens that give your community real decision-making power over protocol evolution. Diversify infrastructure dependencies across multiple providers. Maintain upgrade capabilities for smart contracts while transitioning to community governance over time.
Successful example: Uniswap maintains control through decentralized governance while building on Ethereum. They don’t control the base layer but they control their protocol’s evolution, fee structures, and token economics through community governance.
E: Entry (Barriers to Competition)
Easy entry creates oversaturated markets. Web3 amplifies this through copy-paste smart contracts and fork-friendly codebases.
What Entry Means in Web3:
- Technical complexity required to replicate your protocol
- Network effects and community relationships that take time to build
- Regulatory compliance and legal framework navigation
- Deep domain expertise and specialized knowledge
Entry Violations:
Launching another DEX with identical mechanics to Uniswap. Anyone with basic Solidity knowledge forks your contracts. You compete purely on token incentives and burn through treasury trying to attract liquidity.
Building simple DeFi protocols without novel mechanisms. Hundreds of lending protocols exist. Your only differentiation is slightly better rates that competitors match within days.
Creating basic NFT marketplaces or DAO tools. The technical barriers are minimal. Your competitive advantage disappears as soon as bigger teams enter your space.
Building Entry Barriers:
Develop novel cryptographic mechanisms or consensus innovations that require deep research to replicate. Create complex economic models that take significant expertise to understand and implement. Build strong community relationships and specialized knowledge that take years to develop.
Example: Chainlink built entry barriers through oracle network infrastructure, specialized off-chain computation capabilities, and deep relationships with traditional data providers. Competitors need years of infrastructure development to match their capabilities.
N: Need (Market Demand)
Web3 projects often build solutions searching for problems. Real need means solving actual pain points people experience, not theoretical improvements nobody requests.
What Need Means in Web3:
- Solving real problems users face with existing financial or digital systems
- Providing utility that people actively seek and pay for
- Creating value that justifies switching costs from traditional alternatives
- Addressing pain points with measurable impact
Need Violations:
Building “decentralized Twitter” because centralization is bad. Most users don’t experience Twitter’s centralization as a daily problem. Your solution solves theoretical concerns while creating practical friction.
Creating governance tokens for communities that don’t need governance. Many online communities function fine with informal leadership. Your DAO structure adds complexity without solving actual coordination problems.
Launching bridges between chains that already have sufficient bridging options. You’re solving competition problems, not user problems.
Identifying Real Need:
People pay significant fees for DeFi services because traditional finance excludes them or charges higher fees. Ethereum’s gas costs create real pain for small transactions, driving demand for Layer 2 solutions. Cross-border remittances cost families substantial money, creating demand for crypto alternatives.
Example: MetaMask solved the real problem of Web3 wallet complexity. Users needed simple access to decentralized applications without managing private keys directly. Millions adopted MetaMask because it solved actual friction, not theoretical problems.
T: Time (Operational Independence)
Traditional businesses need systems that operate without founder presence. Web3 protocols need autonomous operation through smart contracts and community governance.
What Time Means in Web3:
- Smart contracts that execute without manual intervention
- Community-driven governance that doesn’t require founder decisions
- Automated token distribution and reward mechanisms
- Self-sustaining economic models independent of ongoing development
Time Violations:
Manual token distribution processes that require your team’s weekly intervention. Governance decisions that bottleneck through founder approval. Revenue models dependent on your team’s ongoing business development efforts.
Protocol upgrades that require your specific technical knowledge. Community management that collapses without your daily involvement. Partnership deals that need your personal relationships to maintain.
Building Time Independence:
Design smart contracts with automated execution for core functions. Create governance frameworks that enable community decision-making without founder involvement. Build economic models that generate value through user participation rather than your ongoing effort.
Distribute specialized knowledge across your community so protocol operation doesn’t depend on specific individuals. Document everything and create educational resources that enable community self-sufficiency.
Example: Bitcoin operates without Satoshi Nakamoto’s involvement. The protocol executes automatically, miners secure the network independently, and no central authority manages daily operations. Community governance handles rare upgrade decisions through consensus mechanisms.
S: Scale (Network Effects and Growth Potential)
Web3 scale works differently than traditional business scale. Network effects and tokenomics create exponential value capture as communities grow.
What Scale Means in Web3:
- Network effects that increase value as more users join
- Token mechanisms that capture and distribute increasing protocol value
- Technical infrastructure that handles exponential transaction growth
- Community governance that functions at any participation level
Scale Violations:
Building protocols with linear value capture that don’t improve as user base grows. Creating token models where early users gain nothing from network expansion. Designing governance systems that break down as community size increases.
Limited technical scalability that creates bottlenecks as adoption grows. Revenue models that don’t benefit from network effects or community-driven value creation.
Achieving Scale:
Design tokens that benefit from network effects through value accrual mechanisms. Create governance frameworks that become more robust as participation increases. Build technical infrastructure that supports exponential transaction growth.
Structure economic models where protocol revenue increases faster than operational costs as user base expands. Enable community-driven value creation that compounds as more participants contribute.
Example: Ethereum achieves scale through network effects where each new application increases the network’s utility for all participants. Token value accrues through transaction fees and staking, while developer community growth creates compounding innovation.
Web3-Specific Considerations
Community as Competitive Advantage: Unlike traditional businesses, Web3 protocols compete on community strength and governance quality, not just product features. Strong communities create switching costs through social relationships and shared governance participation.
Token Economics vs Traditional Economics: Revenue in Web3 often flows through token mechanisms rather than traditional payment models. This creates new possibilities for value capture and distribution but requires different economic modeling.
Regulatory Uncertainty: Web3 projects operate in evolving regulatory environments. Successful protocols build adaptability into their governance structures to navigate changing compliance requirements without losing core functionality.
Fork Risk: Open-source code means competitors can copy your technical implementation. Sustainable advantage comes from community relationships, governance structure, and economic model design rather than proprietary technology.
Implementation for Operators
Apply CENTS analysis before major protocol decisions:
Before Partnership Decisions: Does this partnership strengthen or weaken your control? Does it create dependencies that violate your operational independence? Does it address real user needs or just theoretical improvements?
Before Feature Development: Will this feature create meaningful entry barriers through technical complexity or novel utility? Does it solve problems users actively experience? Does it contribute to network effects and scalability?
Before Token Model Changes: Do proposed changes maintain community governance control? Do they create sustainable value accrual mechanisms? Do they enable automated operation without ongoing intervention?
This framework connects to concepts we’ve explored about taking ownership and building feedback loops. CENTS provides strategic filters for ownership decisions and feedback integration priorities.
The Operator’s Reality Check
Most Web3 projects violate multiple commandments simultaneously. They launch governance tokens without real governance utility (Need). They build on single chains without diversification (Control). They require constant founder intervention for basic operations (Time). They create linear value capture without network effects (Scale). They offer minimal technical or economic barriers to replication (Entry).
CENTS framework forces honest assessment: Are you building a sustainable protocol or an elaborate experiment?
The Web3 space rewards projects that solve real problems through scalable, autonomous, community-controlled mechanisms. Everything else becomes expensive learning experiences funded by speculative token sales.
Your protocol’s survival depends on passing this test. The market decides which projects violate too many commandments to sustain long-term operation.
Philosophical Foundations:
Systems Theory (von Bertalanffy): Sustainable systems require autonomous operation, feedback mechanisms, and environmental adaptation without constant external intervention.
Economic Theory (Hayek, Mises): Market mechanisms work best when they operate through decentralized information processing rather than central planning or control.
Network Theory (Metcalfe, Reed): Value in networked systems grows exponentially with user participation when proper incentive mechanisms align individual and collective benefits.
Game Theory (Nash, Schelling): Sustainable competitive advantage requires creating coordination mechanisms that benefit all participants while preventing defection or free-riding behaviors.