All About Web3

All About Web3

Web3 Introduction

The term web3 refers to the putative next generation of the web’s technical, legal, and payments infrastructure – including blockchain, smart contracts and cryptocurrencies. For its advocates, the peer-to-peer character of web3 means it represents a more equitable vision for the web than its current iteration, Web 2.0, which is dominated by powerful intermediary platforms (Facebook, Amazon, Apple, Google and other big tech companies).

Web3 projects categories:

Most existing web3 projects fit into one of three categories:

• Decentralised Finance or DeFi – peer-to-peer, blockchainbased financial services including savings, borrowing, payments, and credit-scoring. Many (although not all) DeFi apps run on Ethereum.

• Digital Services – decentralised internet service provision, cloud storage, web infrastructure, data analytics, and identity management

• Collectibles – digital artwork, sports memorabilia, and virtual goods Current examples of web3 unicorns (companies valued at > $1bn) include:

  • Ripple, an international payments provider
  • Aave, a protocol for borrowing and lending crypto assets that runs on Ethereum
  • Chainalysis, a data analytics platform for compliance, risk management, and cybercrime investigations
  • Forte, a gaming infrastructure platform
  • OpenSea, a digital collectibles marketplace
  • Sorare, an Ethereum-based fantasy football game in which virtual player cards can be bought and traded

The web3 community is to be found in group chats (known as servers) on the messaging platform Discord, and on Twitter, where members can often be recognised by one or more of:

• Hexagonal profile pictures

• Profile names with “.eth” extensions (referring to the Ethereum equivalent of domain names)

Ethereum
Ethereum

• Use of web3 slang

Capital for new web3 projects is typically raised not by selling equity, but by selling tokens to prospective users of the product or service, and/or to financial investors who believe the value of the tokens will rise in future.

metaverse communities
Metaverse communities

The process is known as an initial coin offering, token-generating event, or simply token sale. A proportion of the tokens is usually reserved by the founding team so they continue to have a stake in the project, and can incentivise staff and contributors (similar to share options in conventional startups).

Several different types of Web3 token:

There are several different types of token, including:

  1. Utility tokens, which grant rights of access to a product or service
  2. Governance tokens, which grant voting rights on decisions
  3. Non-fungible tokens (NFTs), which grant ownership rights over unique items of digital property, such as imagery, videos, and audio files

    Web3 nft token image
    Web3 nft token image

All such tokens are financial assets which can be traded in secondary markets. They are therefore more liquid and more volatile than startup equity or options, and can be used for the same forms of financial speculation as cryptocurrencies. Some consumer brands have financialised their loyalty programmes through token sales, notably a number of Premier League football clubs (in partnership with the web3 company Socios).

Author: Devesh Verma

Python Developer || Crypto || NFT || BLOCKCHAIN || IT Engineer __________ Twitter: tpfdevesh