🕳️2.Pain Points

2.1. Pain Points of the Global E-Cigarette Industry: Serious Involution

2.1.1. Price Wars

Affected by the global epidemic and the multinational policy control, the overall sales growth rate of the global e-cigarettes industry has slowed down. The entire industry is still in the early stage of barbaric growth, so the market share and sustained profitability are particularly important for both leading enterprises and small and medium-sized enterprises. But there are brands continuing to launch low-priced e-cigarettes to expand sales through price wars to cater to the market, so there are low-priced disposable e-cigarettes with a retail price of $1 on the market, frantically squeezing the few profit margins that brand owners have.

2.1.2. Defunctionalization

To reduce the cost as much as possible, global e-cigarettes brands spared no effort to remove all unnecessary functions and innovations like appearance design, product experience, Bluetooth, smart chips, displays, LEDs and other product innovations were simplified and became history.

2.1.3. Severe Homogenization

For expanding market share, e-cigarettes brand owners are constantly improving product categories, disposable, replaceable, prefilled cartomizer, and other full-system products have become manufacturer's standard products, at the same time, mutually imitating market model products, popular appearance products, so it has been difficult to distinguish manufacturers and brands of most products without brand logo.

2.1.4. Channel Competitions

In the interests of broadening channels, brand owners also fight the franchise subsidy war, reduce the cost of stores franchise to open more offline sales channels, resulting in serious brand internal friction.

It is thus clear that the global e-cigarettes industry has entered a dilemma, seeking to survive by harming channels, partners, and the market. A market should have been with unlimited prospects and huge potential has now become a highly competitive market, which urgently needs new technologies and models to break the situation across borders.

2.2. The Challenges Facing the Web3 Industry

2.2.1. The Challenges Facing the Decentralized Infrastructures

Currently, Web3 is still in the exploratory stage. But Web3 is already a concept that everyone is familiar with. A decentralized, trustless, and tamper-proof blockchain is an integral part of the Web3 blueprint. However, most Web3 applications are still built on the current centralized infrastructures.

For example, even if many NFT projects are built on the EVM-compatible blockchain, their content is still stored in a centralized data center. This is not the true Web3 and its stated vision of decentralization, as this content may be lost due to the centralized storage facility's changes, which can be proven by the Facebook data breach.

Therefore, the development of Web3 applications is faced with the lack of truly decentralized storage and computing services, i.e., Web3 applications are still deployed on Web2 infrastructures, such as AWS and Google Cloud. It's like a 4G phone running on a 3G network, where much of the 4G performance cannot be released.

This is the most challenging difficulty to overcome in the current development stage of Web3 and Metaverse.

2.2.2.The Challenges Facing Decentralization

One challenge that Web3 projects must address is decentralization. The sale of assets within Web3 projects is not unique to GameFi. Still, the crypto Web3 industry touts its project assets as a wholly independent and uncontrollable marketplace. But this is not true because the project owners have a way of controlling the assets. In most cases, these Web3 projects are still centralized, despite the decentralized marketing of many crypto Web3 project leaders. For instance, many Axie projects have been banned from trading. This is the fundamental issue, whether these Web3 projects should or need to become as decentralized as the Web3 project developers claim to be.

In the "centralized Web3 project", accounts may easily be banned from trading, leading to assets worth millions of dollars locked in the accounts of trading robots. While many may counter that these locked assets drive up the equilibrium price by reducing the total supply, there are many reasons why the decentralized nature of blockchain assets is worth protecting. Does the current ecosystem of crypto Web3 projects enforce the idea of decentralization? How can these Web3 projects evolve to better create the ultimate decentralized Metaverse world? The existing Web3 companies have a monopoly on reducing and removing asset values, so these assets remain highly centralized, and the so-called decentralization is an illusion.

2.2.3. The Challenges Facing Governance Rights for Users

Web3 projects generally employ majoritarian governance, meaning that an on-chain vote is used to determine changes to the on-chain proposed protocols or Web3 project regulations. While Web3 projects need user feedback and data to design the best product to maximize consumer experience, on-chain mobile governance has never historically solved any problems effectively that anti-majoritarian rule-makers have ever faced.

That is because majoritarian governance rights are harmful in the long run as individuals lack the skills, knowledge, and long-term motivation to maximize the growth of the Web3 project. In terms of incentives, it seems unfeasible to give rights to those with more money to change fundamental parts of the Web3 project as their motivation is to protect their interests rather than to protect the balance and health of the whole Web3 project. This could lead to changes and votes based on preserving the higher-level assets they hold being more likely to be passed, thus resulting in an imbalance of power, and alienating the ordinary users.

There are few governance policies in place in the crypto Web3 projects because of the lack of any type of governance structure. Decentralized finance (DeFi) protocols have been striving for quality and fairness. Still, many have failed to meet the requirements due to their governance voting mechanisms: Shifting the decision-making process to the on-chain sounds like the next blockchain revolution, but its effectiveness remains legally unrecognized.

Furthermore, the token-based voting system alienates users and creates a power imbalance between the rich and the poor. Not only does it exclude those with fewer tokens, but even those with other assets, such as NFT assets created directly in the Web3 project, are forced to maintain lots of tokens to avoid policies that would be harmful to them. This is a disaster for NFT asset holders, who are most affected by the Web3 project.

Most of the tokens are in the hands of speculators who will inevitably try to defend their financial interests. Ultimately, governance requires a slow push on a case-by-case basis, and Web3 projects should not raise funds afterward, or the progress will be severely compromised.

At the same time, the current DAO framework based on Web3 projects has yet to be successfully implemented. Due to the lack of transparency and the slow progress in DAO development, few policies have been voted on. Although Web3 projects such as Axie Infinity and Star Atlas have put forward structures for the underlying governance and proposals, major decisions have yet to be voted on, and there are also no regular votes.

So, the governance right for users of the current Web3 project is challenging.