A decentralized internet ecosystem based on distributed blockchain protocols and cryptography, Web3 is intended to be egalitarian, beneficial, and valuable to its participants: developers, users, and creators. The evolving Web3 expansion is making great strides, funded by billions of venture dollars. Web3 has potential applications in multiple industries, seeking to solve ownership issues related to privacy, empowerment, and economics on the Internet. Leveraging tokens, cryptography and decentralized technology, Web3 aims to disrupt the centralized, intermediary, rent-seeking monopolistic business structures. A current gardener
Web2: read-write; platform economy; Centralized control through intermediaries
The incumbent web2 internet monopoly giants have built their platforms on a zero price model and in return locked in invaluable user data by allocating all ownership to their platforms and stakeholders. These giants exercise restrictive usage rights and block access to user data, hampering the export of social graphs and other content, making it impossible for participants to leave the established platforms. This business dynamic has immensely benefited the established Web2 platforms by allowing them to become monopolies while pocketing superlative monies without compensating the users whose content and posts make these platforms highly profitable.
Web3: Read-Write-Own; property economics; Trustless, permissionless, ubiquitous
A fundamental tenet of the Web3 ecosystem is to share ownership via tokens and tokenomics with users to create value. Tokens are transformative features in the Web3 business models. They represent programmable assets on the blockchain that grant users ownership, incentives, and participation in the growth and management of Web3 platform networks.
Web3 buildout: infrastructure, metaversecollectibles, DeFi, DAOs
Programmable blockchains with multi-layered smart contracts are critical to Web3 infrastructure. Currently, the Ethereum blockchain network is the primary decentralized data storage and transaction validation platform of choice. Innovative smart contracts and Ethereum Virtual Machine (EVM) on the network provide a robust computing environment for developers. Smart contracts execute transactions automatically without intermediaries, hence permissive and trustworthy. Ethereum’s vast decentralized finance (DeFi) ecosystem and myriad decentralized use cases (dApps) i.e. NFTs, metaverses, games and more have created a thriving ecosystem. Ethereum handles trillions of dollars in transactions annually and is the second largest cryptocurrency in the world by market cap.
However, Ethereum’s decentralized design has scalability issues, limiting transaction throughput to just 15 transactions/second (TPS). With millions of users joining the Ethereum network and developers creating new dApps at the same time, the platform’s low transaction throughput has led to severe congestion, which has significantly increased transmission costs, thereby making it prohibitive to use the Ethereum network.
Sophisticated Ethereum scaling solutions are deployed to support Web3’s ambitious goal of serving billions of users. Innovative Layer 2 blockchains run alongside Ethereum to optimize and scale the network. These Layer 2 solutions bypass the Ethereum highway and offload traffic, keeping the Ethereum network running smoothly and cost-effectively. These sidechains reduce transaction pressure from the mainchain while maintaining Ethereum’s robust security and decentralized architecture. Polygon, the leading Ethereum scaling platform, delivers much faster transactions (up to 7,000 TPS) while lowering user costs, expanding the scope and utility of dApps, and improving the network and user experience. Mikhail Bjelicthe co-founder of Polygon, said: “We see Polygon as Web3’s Amazon Web Services (AWS) providing the critical platform for blockchain scaling and infrastructure development. What drives me as the founder of Polygon is access for all, a borderless, open economy.”
Native scalable blockchain solutions that compete with Ethereum, such as Solana, Binance, Avalanche, and the Cosmos and Polkadot ecosystems, also offer higher transaction throughput as well as lower transaction costs.
On September 15, 2022, the Ethereum protocol switched from proof-of-work to proof-of-stake. A major software upgrade called Merge/Fusion aims to reduce the colossal power consumption of the Ethereum network by over 90%. The merge/fusion upgrade, along with existing and novel scaling solutions in the pipeline, is expected to unlock innovation, unlock new applications and accelerate Web3’s goals of delivering services to the masses.
metaverse, an immersive 3D Internet, is revolutionizing and disrupting many industries, e.g. Such as entertainment, social media, e-commerce, gaming/sports, home digital spaces/virtual real estate, education, healthcare, medical, manufacturing and more. Established Web2 players like Meta, Unity, Roblox, Epic Games, Microsoft
Web3 technologies, on the other hand, will allow participants to tangibly own the Web3 assets held in depot wallets in the form of Non-Fungible Tokens (NFTs) or Fungible Tokens. Therefore, users can move purchased or created digital objects/content across different platforms. Web3 companies like Decentraland, Sandbox, LandVault, Gala Games, Star Atlas, Axie Infinity and many more are developing innovative products for the burgeoning metaverse. LandVault, the best-known real estate developer, builds experiences on Metaversum platforms and also provides technologies to monetize these virtual experiences through product placement, NFT sales and more. Sam HuberLandVault CEO, says, “We believe the Metaverse is the next generation of the Internet. LandVault offers a one-stop-shop solution to help businesses of all sizes enter this new phase and stay relevant to the next generation of the internet.”
collectibles: Art, music, videos, online collectibles, and other unique virtual digital assets are represented by NFTs. Businesses and brands are using NFTs, digital wallets and crypto tokens in their incentive programs and branding strategies. A branded NFT can create a much deeper customer connection while adding a canonical motif to the company story. In addition to creating a digital proof of ownership for digital collectibles, NFTs can also provide additional consumer benefits such as exclusive rewards, free products, and premium memberships to commemorate notable events in brand history or sponsorship moments. The main NFT marketplaces are OpenSea, Rarible, NBA Top Shot, Binance, Nifty Gateway and SuperRare.
DeFi is a global peer-to-peer ecosystem of smart contract-based dApps that enable algorithmic lending, savings, yield farming, flash loans, trading and more in the form of crypto assets. DeFi transactions are open source, peer-to-peer, transparent, permissionless, and borderless. The full approval process that oversees the financial transactions is performed via smart contract algorithms, eliminating human intermediaries such as brokers, bank teller/clerks, merchants and institutions such as banks or payment processors. Some leading players are MakerDAO for stablecoins, Curve for stablecoins liquidity, Uniswap, PancakeSwap, SushiSwapfor general liquidity and Mean DAO for providing payment infrastructure.
Decentralized Autonomous Organizations: DAOs are automated, decentralized online communities that distribute decision-making, governance, and ownership. The DAO principles enable community governance while avoiding external influences and are applicable to a wide range of assets and organizations i.e. platforms for proposal execution, creation of dApps, financing of investments and crowdfunding. AAVE, MAKERDAO AND CURVE DAO are examples of successful DAOs.
Investing in the growth of Web3 and the ongoing efforts by established companies around the world to leverage and implement Web3 applications have created significant demand for Web3 professional talent. Next-generation talent platform companies like Bondex and Braintrust are seeking to fill the talent gaps created by various macro and micro factors, while implementing innovative business models that enable co-ownership with users for participation and value creation.
Web3 is evolving into a more immersive and valuable Internet for everyone. Venture funds invested $33 billion in Web3 projects in 2021 and are on track to nearly double that in 2022. Many predict that the broader Web3 sector will grow at a compound annual growth rate (CAGR) of about 50 percent to become a multi-trillion company. dollar industry in the next decade. Web3 could go from buzzword to mainstream, disrupting existing businesses while creating huge new markets.