Building Your Niche in the Hedera Ecosystem

This article was originally published July 23, 2024 on Rocket Bites.
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Today let’s talk about building.

In Web3 it’s very easy to get excited by the possibilities of the tech and start a project with a grand vision of the future. The excitement of creating something novel can provide enough fuel for a team to get moving, and with that you can easily crank out a proof of concept in a matter of weeks or months (or days, for particularly talented individuals).

Or sometimes, the goal isn’t to make something ‘new’, but just to make it ‘better’. Especially in a young ecosystem like Hedera today, it’s easy to get frustrated with the options that are available. I’ve heard, “I could build a better version of this in a weekend”, from the mouth of a builder more than once 😂

Our original impetus for HashPack fits into the latter scenario. We built the wallet because we weren’t happy with what was available at the time.

However, one thing that I think many projects miss is that most users don’t really care about novelty, and a harder pill to swallow is that most users don’t even care about ‘better’. Case in point, how many people use Threads today compared to just sticking with Twitter (okay, X)? There are many, many complaints about X, but is Threads ‘better’?

When users get interested in a new platform or product, they’re not looking for incremental improvements. They’re looking for value they can’t get anywhere else.

Understanding Unique Value Proposition (UVP)

When it comes to attracting people to your project, what’s really important is that your platform offers something truly valuable and unique. Understanding and developing your Unique Value Proposition (UVP) is crucial for standing out in an increasingly crowded space.

Your UVP is the core reason why customers should choose your product or service over competitors. It's the fundamental value you provide that sets you apart. Identifying this early sets the stage for success because it allows everyone in your company to stay in sync.

I’ll take some words directly out of Alex Smith’s “No Bullsh*t Strategy”:

Value in this context is the benefit that your customer gets from your product. Critically, it’s not the product or service itself - those are the means by which the business delivers value.

Unique is the value that your customer cannot get from anywhere else. This categorically rules out any comparative words such as “better”, “best”, “faster”, “cheaper”.

What you’re looking for by defining your UVP is establishing your strategic leverage.

If you’re wondering what HashPack’s UVP is, we reduce friction across Hedera and Web3. Everything from our product design, to feature list, to the way we interact with our community and partners is focused on delivering this singular unique value proposition.

Avoiding Competition and Dominating Your Niche

The concept of “Blue Ocean Strategy”, developed by W. Chan Kim and Renée Mauborgne, is particularly relevant to this discussion. Teams that choose to outcompete their competitors are shooting themselves in the foot. Instead of competing in crowded "red oceans," they should be aiming to create uncontested market space or "blue oceans."

Some ideas on how to do this:

1. Choose one thing, a north star, and do it better than anyone else.
2. Look for underserved areas in the Hedera ecosystem. Are there specific user groups or use cases that aren't being adequately addressed? This is often where you’ll find the ‘unique’ element of your UVP.
3. Innovate on value, not simply product or technology. Doing something ‘better’ isn’t enough, because once users are comfortable with a platform, there’s incredible friction to get them to change.
4. Relentlessly pursue your USP, instead of chasing trends. Constantly evaluate if a new feature is really necessary. Often times it’s far better to find a partner project to collaborate with instead of building something yourself. Trying to do too much increases bloat and will slow down your product velocity, confuse both users and your staff, and add unnecessary maintenance burdens to your development team.

In every space, there are always going to be leaders, and there are always going to be upstarts that seek to take the leader position. The only way to take out an incumbent leader is to offer something that the leader is not.

To give a potent example from the greater web3 space, look at Blur’s takeover of the #1 NFT marketplace spot from OpenSea. Before Blur launched at the end of 2022, OpenSea was the undisputed NFT marketplace on not just Ethereum, but all of Web3. But in the span of three months, it surpassed Opensea in both trading volume and user count.

Blur targeted the underserved market of professional NFT traders and disrupted OpenSea’s restrictive creator royalties practice (which ended up with OpenSea rescinding their previous policies). Today, OpenSea has recovered its position as the largest marketplace but Blur is not far behind.

See the below table from a post on Bitquery which analyzes Blur’s position a year later in 2024. The key takeaway is that Blur’s strategy was not about building a “better” OpenSea, but about creating a space that it could serve better than anyone else.

Focus on the User Experience

As a final note on this piece about building up a niche, I want to touch on user experience.

In the early days of Web3, users were highly technical and motivated to learn. Those who were in the Hedera ecosystem in early 2020 know how rough and difficult doing anything on the network was, but people were still minting NFTs and proto-tokens and jumping through hoops and thirteen-step guides to send them around. There was an air of visionary excitement that made it worth the hassle.

Today, as the ecosystem evolves and our user demographic shifts to be predominantly mainstream, the average user is becoming more casual. This shift means the potential user base is larger, but also that projects require a higher level of polish to get noticed.

Focusing on delivering a great user experience is paramount. This doesn't just mean a sleek interface; it encompasses the entire user journey, from onboarding to daily use. We used to compare the Hedera experience against the experiences on Solana, Polygon or Ethereum, but the trend I’m seeing now is users are undeniably starting to expect the familiar experiences that they find in the Web2 space.

As builders in Web3 know, the paradigms for the interactions between wallets, platforms and assets are completely different from Web2. There is a distinct shift across all of Web3 now to find innovative and seamless ways to best serve users while staying true to the ethos of Web3.

Conclusion

Building a successful project demands a deep understanding of user needs, a clear and compelling value proposition, and the ability to execute effectively. There are so many examples of successes and failures in Web3 that you can learn from. If you’re looking for inspiration other L1’s are a great place to look as many of the issues that were solved in other networks are still present in Hedera. And of course, anyone who has spent time in Hedera know there are unique opportunities that can’t be found anywhere else just looking for a spark of innovation.

I hope that I inspire builders to create something that solves real problems and adds genuine value to the Hedera ecosystem.

Do that, and users will flock to you.

May Chan
CEO and Co-founder, HashPack