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3 things that have to happen for Web3 to (really) remove

Moving Forward to Metaverse, New Technology, Web3.0, Blockchain and the Next Layer of the Internet Concepts. Man Steps into Future Door. Futuristic Tone

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Web3 may be the next generation of the web which will redefine our daily digital experiences. Leveraging cryptography and distributed-ledger technology, Web3 is laying the framework for a user-owned and controlled internet. A tsunami of Web3 projects has emerged, unlocking new opportunities for various industries like financial services, gaming, esports, media, entertainment, retail, and much more.

The Web3 ecosystem happens to be undergoing significant growth with regards to funding from capital raising. There’s an ever-expanding set of Web3 startups, be it DeFi protocols, NFTs, decentralized autonomous organizations (DAOs), play-to-earn (P2E) games, data storage and social media marketing services.

In accordance with a written report by DappRadar, capital raising funds and investors have previously invested a lot more than $2.5 billion into blockchain gaming and related infrastructure through the first quarter of 2022 alone. Thats a massive increase in accordance with the $4 billion total committed to 2021 and the $80 million in 2020. Which is just taking care of of the expansive Web3 ecosystem.

Another report, published on GitHub, shows that there are a lot more than 18,000 active developers in the Web3 ecosystem who commit their code to open-source blockchain projects at least one time on a monthly basis. The report further clarifies that the true number is probable higher since it doesnt think about the development work done on proprietary Web3 projects.

By all metrics, the growth of Web3 has been unprecedented. Nonetheless it still includes a good way to go before entering the mainstream-adoption phase. Although investor and user fascination with Web3 services and products is increasing, several factors have to be addressed to accelerate the ongoing transition.

For Web3 to seriously thrive, you can find three critical areas that Web3 investors, developers and users have to address.

1. Users have to shift their mindset to a user-owned model

In today’s Web2, as-a-service iteration of the web, users essentially dont have a say later on direction of the services or products they utilize. Generally, users and owners of the platform or service are generally separate until said platform or service lists in a public currency markets, that allows for greater ownership accessibility amongst users.

Sure, shareholders are invited to vote on specific initiatives, but ordinary investors are definately not being the driving force of corporate change. Even with purchasing shares, the quantity of decision-making power granted to smaller shareholders via ownership is relatively minimal, preventing them from going for a seat at the table with institutional investors or funds which have more capacity to influence corporate decisions.

The Web3 model, on the other hand, offers true ownership. Tokens enable early and decentralized ownership of the platform or service users enjoy. Existing users who previously compromised on near-zero ownership in private companies must become familiar with the responsibilities of ownership and governance. They have to realize the energy of the ownership and the extent to that they can contribute and influence the development direction of something or service.

By investing at an early on stage, even the average individual may become area of the projects governing body, thereby driving the merchandise roadmap with the community. The decision-making process becomes transparent, inclusive and fair attributes that dont ordinarily exist in the Web2 ecosystem.

2. Investors have to change to a community-driven, collaborative and participatory mentality

In the Web2 paradigm, investors vie for percentage of control and board seats to be able to ensure value capture and governance oversight.

However, this process is less effective in Web3. Decentralized ownership is really a key founding principle of Web3. Network effect could be best accelerated via decentralized ownership among community members who is able to have multiple roles (user of service, investor, supplier, business partner) within the ecosystem.

3. Projects have to think about a sustainable solution to attract users

Usually, projects generate immense hype inside a short time of time with token incentives. There is absolutely no doubt that such campaigns quickly attract users and liquidity providers, which ramps up the main element metrics that everyone evaluates.

However, this practice has its drawbacks. It will attract mercenary capital and token hunters who’ve no appreciation or loyalty for the platforms purpose and long-term vision. Second, artificially pumped key metrics driven by short-term incentives have a tendency to obscure a precise evaluation of product-market fit. Third, over-expensing token reserve is the same as wasting market budgeting on items that dont truly matter over time, leaving the projects with significantly less ammunition within their war chests later on.

Instead, every project should design the tokenomics thoughtfully. This is a good idea to start out allocating tokens only after projects have discovered the proper audience that share similar interests and goals.

Conclusion

We have been still in the initial inning of Web3. Even though phrase Were still early has been overused, it isn’t a trope. It sounds cliche because its true we have been still very early. I am hoping that I’ve provided some food for thought for all those of us that are hard at the job building another generation of the web.

Emma Cui is CEO and founding partner of LongHash Ventures.

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