There is an economic concept called reflexivity, which simply means that market prices can in turn influence the fundamentals they are supposed to reflect. In the crypto network, this effect is amplified particularly strongly.

Take projects like KITE as an example. The token price is not only a barometer of ecological value but also directly rewrites the development trajectory of the ecosystem in a powerful and even distorted way. This is why some projects can develop continuously while others fall into a spiral of decline.

**A good cycle looks like this:**

Token price rises → Node rewards increase (becoming more valuable in fiat) → Hardware vendors rush to deploy nodes → Network computing power and security upgrade → User confidence boosts → Ecosystem becomes more vibrant → Token price continues to rise. Like a snowball rolling downhill.

At the same time, rising token prices also motivate developers. Their token rewards or grants suddenly become more valuable, making fundraising easier. Outstanding developers are attracted, new applications emerge endlessly, and both the quality and quantity of ecosystem applications grow, which in turn attracts more users and capital.

Community sentiment is also very magical. When token prices go up, media start positive coverage, outsiders and capital follow suit, injecting new blood and possibilities into the entire ecosystem. At this point, the growth of ecological value is genuine, not just emotional.

**But negative cycles come faster and more fiercely:**

Token price drops → Node rewards shrink significantly, many become unprofitable → Wave of nodes shutting down → Network computing power drops, security declines → Users start to worry → Demand shrinks → Ecological value erodes → Token price crashes further.

Developers also suffer greatly. Token rewards depreciate, fundraising becomes difficult, capable people look for the next opportunity, and projects may be shelved long-term. Talent leaves → Development stalls → Users leave → A vicious cycle reinforces itself.

The key is that both cycles have self-fulfilling properties. Reflexivity is not just a theory; it exists in every step of the ecosystem. Understanding this is essential to see why projects are the way they are now.