Sam Altman, president of Y Combinator, a US startup incubator, once tweeted that the average return on investment in 2020s will be much worse than the return on investment in 2010s, but Web3 may still get a return similar to 2010s, but most venture capital companies will miss it. In this regard, Elon Musk commented, “Web3 sounds like nonsense.”
The public exchanges of major IPs on Web3.0 quickly triggered incentive discussions on Web3.0 in the industry. It has been 7 years since the concept of Web3 was put forward. From nobody cares to the crazy publicity of major CryptoVCs and then to the current polarization: opponents believe that Web3.0 has no merits and Web3.0 is a pseudo-need; supporters believe that Web3.0 will reconstruct the structure of the Internet, and Web3.0 can bring true liberalism.
So, what exactly is Web3.0 and why do we need to develop Web3.0? To what extent has Web3.0 developed?
1. The origin and definition of Web3.0, why do we need Web3.0
Dr. Gavin Wood proposed a revolutionary Web3.0 vision in 2014, and then initiated the establishment of the Web3 Foundation. His philosophy is: Web3 is a set of extensive campaigns and protocols to make the Internet more decentralized, verifiable, and secure; Web3 vision is to achieve a serverless, decentralized Internet, that is, users control their own identity and data And the Internet of Destiny; Web3 will launch a new global digital economy system, create new business models and new markets, break platform monopoly, and promote extensive, bottom-up innovation.
Web1.0: read-only Internet
The Web1.0 period was approximately from 1991 to 2004. During the Web1.0 period, users could only passively browse text, pictures, and video content. There was almost no interaction between what the website provided and what users viewed. During this period, many portal websites were born, such as Google, Yahoo, Sohu, Sina, etc., through the display of various web pages, attracting users to click and watch, in order to customize advertisements and monetize them through traffic.
During the Web1.0 era, there were few content creators, and the vast majority of users could only accept the feed of platform information.
Web2.0: Read and write Internet
From 2004 to now, it is in the period of Web2.0. The concept of Web2.0 was first invented by Darcy DiNucci in 1999, and was promoted again by Tim O’Reilly and Dale Dougherty at the O’Reilly Media Web2.0 conference at the end of 2004, and Web2.0 was gradually accepted by the world.
With the development of the Internet industry, some Internet-based business models have gradually emerged. For example, blogs, social media platforms, online communities, etc. The biggest feature of this type of website is that it allows users to generate content independently, interact and collaborate with the website and others.
But Web2’s network is proprietary, closed, and belongs to an Internet company. Although users can usually use them for free, users themselves do not really own the user data on these platforms. Web1.0 to Web2 is not actually a change. Many Internet companies have upgraded from Web1.0 to Web2.0. During the Web2.0 period, Web1.0 business was still running.
Web2.0 itself is still evolving, especially with the evolution of machine learning and algorithms, the business model of Web2.0 is also evolving. For example, a website can start learning and analysis through user behavior, and then recommend different content to different users.
Web3.0: The Internet of Value
Web3.0 is different from Web1.0 and Web2.0, and the evolution and upgrade of Web2.0 are also different. Web3.0 is not only a technological change, but also an innovation in business and user models.
The content of Web3.0 is created by users, and data belongs to users, so Web3 is called the Internet of Value. Web3.0 is an open source agreement, but collectively owned by cryptoeconomics; independent of traditional organizations, the code is implemented according to regulations; it values open source software, user ownership of data, and permissionless access; and creates a common identity and sense of collaboration.
Web3.0 was first proposed by Gavin Wood, the co-founder of Ethereum and founder of Polkadot, in 2014. Gavin believes that Web3.0 is a set of inclusive agreements that provide building blocks for application manufacturers. These building blocks replace traditional web technologies such as HTTP, AJAX, MySQL, and provide a new way to create applications.These technologies provide users with a strong and verifiable guarantee, thereby ensuring the security of the information they receive and provide, and keeping the information they pay confidential.
The vision of Web3.0: Everyone can control their own (digital) identity, assets and data, and then control their own destiny.
Why do we need Web3.0
Thinking from the current status of Web2.0, the main reasons for the need to develop Web3.0 are as follows:
1. The centralized platform of Web2.0 follows a predictable life cycle, and the relationship between the platform and network participants has changed from a positive sum to a zero sum.
The centralized platform of Web2.0 follows a predictable life cycle. This view was first put forward by A16Z partner Chris Dixon. In the early stage of centralized platform development, in order to recruit users and institutions to settle on the platform, the platform will try its best to attract all parties to join. The purpose of this is to strengthen the network effect of the platform.
As the adoption rate of centralized platforms achieves S-curve growth, the influence of centralized platforms on users and third parties has grown steadily. When this growth curve reaches the top, the relationship between the platform and other network participants (including users, developers, creators, and settled companies) will change from a positive sum to a zero sum.
At this time, if the platform’s revenue is to continue to grow, it must extract data from users and compete with other network participants.
Examples in this regard include: Microsoft and Netscape, Google and Yelp, Facebook and Zynga, Twitter and third-party clients, and Epic and Apple.
For third parties, the transition from cooperation to competition feels like an “induced turn.” Over time, the best entrepreneurs, developers, and investors have gradually realized the drawbacks of building on a centralized platform, and many times these drawbacks will stifle innovation. And Web3.0 provides a new way to allow all participants to make contributions at different times while ensuring their own interests.
2. The oligopolistic situation that gradually emerged in the later stage of Web2.0 development has made users’ data security and privacy protection issues more acute.
The issue of data security and privacy protection is a high-frequency vocabulary that has continuously appeared in the Internet industry in recent years. In front of Internet giants and centralized power centers, we have completely transparent user portraits, which will cause certain behaviors of users to be dominated by some institutions. These issues of data security and privacy protection are essentially the issue of the Internet Web2.0 infrastructure and the issue of centralization. These problems will not disappear with the intelligent upgrade of Web 2.0, but will become more acute.
When we use some software of Web2.0, we often encounter the problem of forced authorization when we just register or log in, such as accessing the mobile phone address book. Some software can’t reach the address book, but if you don’t agree to authorize it to access Mobile phone address book, you still can’t use it, can you not use it? Sometimes I can’t…because Web2.0 has actually gradually entered the stage of oligopoly.
One of the visions of Web3.0 is that everyone can control their (digital) identity, assets, and data, and then control their own destiny. Data in many fields does not mean that it cannot be authorized for use by institutions, but that the ownership and profit rights of the data should be returned to the users themselves, and limited authorization can be provided under the condition of desensitization. For example, the patient’s medical data is limitedly authorized to medical research institutions in the case of desensitization, which helps to promote medical research and development.
3. From Web1.0 to Web2.0, users have realized the transformation of content consumers to content producers, but the production relationship has not been changed accordingly.
The business model of Web2.0 Internet companies is to use Internet technology to efficiently eliminate information asymmetry and reduce transaction costs on a large scale, thereby replacing traditional intermediaries and creating new intermediary models. The major Internet platforms have become new intermediaries, and have gained a large amount of economic value-added, forming a new monopoly. Take taxi as an example. After Didi merged with Kuaidi, it has almost all online ride-hailing drivers and passengers. Other ride-hailing platforms are difficult to develop, and it is also very difficult for drivers and passengers to leave the Didi platform. The core mission of the Didi platform is to make money for the company’s shareholders. After obtaining a monopoly through the early subsidy war, it will increase the car-hailing charges as much as possible in the later period, and reduce the driver’s share to maximize profits.
The way for Web2.0 Internet companies to monopolize the market is to master a large amount of data on service providers and service users. Does the Web3.0 protocol have this problem? At present, it does not exist. Take the recently discussed projects of OpenDAO, MetaDAO, and GasDAO as examples. They airdrop tokens to real users of OpenSea, Metamask, and Ethereum respectively, through this method of airdropping tokens to specific groups of people. Find precise target users. It has easily broken the monopoly of Web2.0.
Web3.0 will create a new global digital economy, spawn new business models and market economy, and generate a lot of bottom-up innovation. The emergence of Web3.0 will lead us to one step closer to the “efficient, fair, credible, and valuable” Internet world.
2. Web3.0 technology stack
Many leading organizations in the blockchain industry, including A16Z, Coinbase, and Multicoin Capital, are exploring: What will Web3.0 look like? At present, for the future of Web3.0, the initial consensus in the industry is the technology stack of Web3.0.
According to the development status of Web3.0 and our understanding of Web3.0, CreditEase Blockchain Research Institute has also sorted out a panorama of the core technology stack of Web3.0:
From bottom to top, the technology stack of Web3.0 is mainly divided into: Storage Layer, State Layer, Computation Layer, Component Layer, Component Layer, Scalable Transfer Layer, User Control Layer, User Control Layer, Decentralized application Layer.
Distributed storage of blockchain-related information. There are currently three major star projects-IPFS, Arweare and Swarm.
The storage cost on the blockchain is very high, so Web3’s storage solution is generally distributed storage outside the chain. IPFS is a distributed peer-to-peer hypermedia protocol, and its incentive layer is Filecoin. This data can be stored and retrieved through Filecoin nodes around the world. Swarm is also a similar decentralized storage network. The difference from Filecoin is that Swarm’s incentive system is built-in and executed through smart contracts on the Ethereum blockchain for storing and retrieving data. Arweave has taken a different path: what it promises is permanent storage. That is, one-time payment, permanent access.
The state layer retains all the states that have occurred, and also needs to provide data distribution and interaction capabilities. The state layer is mainly a collection of public chains, such as Bitcoin, Ethereum, Solana, etc. Of course, in fact, the state layer can also be subdivided into state conversion layer, consensus layer, sharding layer, P2P layer, etc., but the difference between these modules is essentially the performance trade-off of the underlying public chain in terms of technology selection, so this article This part will not be further subdivided.
At present, the best public chain ecosystem development in the state layer is Ethereum, but other public chains are still catching up. Ethereum’s prosperous and powerful developer ecosystem is a strong barrier to other public chains. Whether it is the infrastructure protocol of Web3.0, or application layer protocols such as DeFi and NFT, it usually breaks out in Ethereum first, and then others. Follow up and imitate the ecological projects of the public chain.
The computing layer allows humans to instruct the state layer to do what they want. Specifically refers to the state transition machine, such as EVM, WASM, etc.
Ethereum Virtual Machine (Ethereum Virtual Machine) is abbreviated as EVM. A virtual machine is an emulator of a computer system that can provide the functions of a real computer in a completely isolated system. Through the Ethereum virtual machine, the logic defined in the smart contract can be executed, and the state changes that occur on the Ethereum state machine can be processed.
Components are usually not an indispensable technology stack for Web3, but they are usually optional components that are very important for the wide application of Web3. The components are built on the computing layer, and standardized smart contract templates are reused.
Optional components mainly include: query layer (The Graph, dfuse), oracles (Chainlink, Band Protocol), DID, DDNS, Digital Assets (BTC, ETH, etc.), Crypto Currencies (ERC20, ERC721, etc.), Stablecoin (USDC, DAI) etc.
Scalable transport layer
The extensible transport layer can be collectively referred to as the Layer 2 protocol at present. Mainly include 6 categories: side chain, state channel, Plasma, Optimisitc Rollup, ZK Rollup, Volition, etc.
This layer enhances the capabilities of Layer 1 and realizes the functions of improving scalability, encrypted message transmission, and distributed computing. It is of great significance for promoting large-scale commercial applications of Web3.0. For details about this part, you can read “Ethereum Layer 2 Expansion, the General Trend”, so I won’t repeat it here.
User control layer
Without a user control layer, it is difficult for ordinary users to participate. The user control layer includes: Exchange, Wallet, DAO, Broswers, etc.
The industry generally thinks that Wallet is the entrance to Web3.0. The most widely used Wallets include Metamask, imToken, TokenPocket, etc.
The application layer of Web3.0 is usually a decentralized application protocol, and there are many types. Currently, the main ones that have been developed include: DEFI, GameFi, Social Messaging, Media, Ecomerce, and Security.
The best development so far is undoubtedly DeFi and GameFi. For the subsequent development of the application layer of Web3.0, we will keep a close eye on the creator economy. In addition, star application protocols such as Helium, music streaming media Audius, video transcoding and streaming media Livepeer, and decentralized writing platform Mirror that provide open wireless networks are expected to become the head applications in their respective fields in the Web3.0 era.
In addition to the above-mentioned core stack, Web3.0 also has some infrastructures far away from end users, such as: Trusted Execution Environment (TEE), Internet Protocol (IP), hybrid network packet routing, etc. It is usually listed as the core stack of Web3.0 in the industry. Although these technology stacks are far from end users, they actually have some progress. For example, the block distribution network includes dRoute, BloxRoute, etc., and the mixed routing of network data packets includes NYM.
Some of these stacks are not part of the underlying chain and have not yet been considered essential for the development of DApps, such as: Layer 2 layer, query layer, application layer, user control layer, etc. Since these stacks will become the core stacks of development in the future, and there have been more mature developments, they are also included.
Third, the development status of Web3
In addition to the aforementioned Web3.0 technology stack, the industry is also exploring tortuously the Web3.0 business model. The exploration of the Web3.0 business model in the industry mainly includes three aspects:
1. Upgrade Web2.0 Apps to Web3.0 DApps.
As early as 2017, the exploration of Web3.0 DApps has already begun. In the beginning, entrepreneurs in the industry started their business in the Web3.0 field with the goal of benchmarking Web2.0 Apps, and correspondingly developing a Web3.0 DApps. These DApps formed the original Web3.0 product matrix.
Although this development idea may not be the final development posture of Web3.0, it also reflects the exploration process in the early stage of Web3.0 development.
2. Restructure the infrastructure and application protocols of the Web3.0 network, and initially form the core stack of Web3.0.
Web2.0 to Web3.0 is not an ordinary upgrade, but a complete and fundamental innovation, an all-round transformation of technology, business and user models, so Web3.0 has been reconstructed from the inside out Infrastructure and application agreements.
The industry generally agrees that Web3.0 follows the “fat protocol” and “thin application” theories, and the underlying infrastructure protocol can capture value well. The “Fat Protocol” theory believes that blockchain and Internet value capture models are different. The value of the Internet era is mostly captured by the application layer, such as Google, Facebook, Amazon, Alibaba, Tencent, etc., the Internet’s underlying infrastructure protocol TCP/ IP, HTTP, etc. cannot capture value.
The Web3.0 era is different. The value will be concentrated in the underlying protocol, and a small part of the value will be distributed in the application layer, thus forming the form of “fat protocol” and “thin application”. At present, Ethereum is the most classic “fat protocol” case.
Therefore, since the development of Web3.0, although the application layer has produced many star projects in the fields of DeFi, GameFi, and Metaverse, there are indeed no application giants such as Tencent with Web2.0. For example, Axie Infinity, this chain game has more than 25 million gamers, and its community vault has assets worth more than 2 billion US dollars (52,000 ETH + 21 million AXS). However, its market value is still a far cry from the “fat protocol” of the underlying public chain.
3. Innovation in the customer acquisition model for new Web3.0 projects: targeted rewards for precise users
Recently, in terms of the customer acquisition model for new Web3.0 projects, there has been a strategy of achieving a cold start of the project through airdrops to precise crowds. OpenDAO, Galss.xyz, MetaDAO, GasDAO and other high-traffic projects have adopted this model.
To a certain extent, this model is a milestone model innovation from Web2.0 to Web3.0. During the Web2 era, user data is in the hands of a centralized platform. The huge amount of byte-beating engine packs and classifies all kinds of users, and all kinds of data packages such as financial management, travel, and two-dimensional data are clearly marked with prices. You want to promote your products or content to Accurate users, then you have to spend money to buy, through the huge number of engines to push products or content to accurate potential customers. The user data in the Web2.0 period has fattened the major platforms, but the value of the data has not been given back to the users. This status quo may no longer exist in the Web3.0 period.
The airdrop mechanism of OpenDAO, MetaDAO, and GasDAO for specific groups of people has already demonstrated the B-side customer acquisition and C-side user data realization of Web3.0. During the Web3.0 era, all kinds of new protocols and new applications have to be cold-started. To find accurate potential users, then airdrop the community benefits to the accurate crowd. There is no longer a need for middlemen, no more platforms, and the project can directly attract precise target user groups.
Fourth, the future outlook of Web3.0
I want to imagine the future of Web3.0 by describing the daily life and work of an ordinary aborigines during the Web3.0 period.
Time comes to January 6, 2030. You just woke up at 8 o’clock in the morning and took out your phone while lying in bed, and found that there were already several unread notifications.
Article 1 Notice: The net income of the virtual casino you built in Decentraland was 1,000 Token yesterday, which has been automatically transferred to your Metamask wallet.
Article 2 Notice: The 3D model you rendered last night has been completed, 100 Tokens have been deducted from your quick payment channel, and 2,333 nodes have shared computing resources with you to help you complete this rendering.
Article 3 Notice: Song Ting, a well-known encryption artist you like, has released a new NFT painting “The Mirror of Computing Power”, which will be available for purchase at 12 noon today.
Put down your phone, you get up to wash, and then you start to prepare breakfast, so that you can start a new day’s work in time.
You mainly work in 3 DAO organizations. One of them is BitDAO, in which you are responsible for product development. Recently, you are mainly taking the lead in building a DeFi3.0 product. Although the DeFi products are already very close to the people at this time, the DeFi products in various Metaverse scenarios need to be more personalized .
Outside of work, you decide to manage your own assets. You authorize your personal data to a reputable agent, and a professional investment institution sent you an asset analysis report. The warning item mentioned: Your X Token may fluctuate as high as 4% in the next week. So you open the DEX and immediately change it to a stablecoin. Due to the breakthrough of the new consensus algorithm, this process only takes a few milliseconds.
In order to participate in a DAO investment, you need to perform an in-depth authentication of the digital ID to prove that you have sufficient funds and risk tolerance. You open your own DID management wallet, package the payment flow data of the last two years, and authorize it to that distributed review agency together with the investment KYC obtained elsewhere. After a while, you get a multi-node signed certification statement. After verifying your identity with DID, you subscribed for 100,000 tokens and delegated your director voting rights to a professional legal DAO organization.
After doing all this, you decide to rest for a while. You open Audius and plan to listen to the new albums of your favorite singers. You check the charts to see if there are any new favorites. If so, you can also buy NFTs to get them. While listening to the music, you clicked on Livepeer again, but unfortunately the anime you were following was still not updated. When you were bored, you clicked on an article in the Brave browser. Unexpectedly, this article had a soft advertisement, and you stepped on the easter egg buried in it, and unexpectedly received a soft advertisement.
All the interaction, payment and communication required for the above behavior are realized through the distributed virtual world computer of Web3.0. This program runs on the smart contracts and computers of all nodes, and there is no longer a centralized server. But for ordinary users, whether it is a wallet or a browser, these Web3.0 entrances are different from the front-end experience of Internet products that used Web2.0 ten years ago, but they are not perceptible.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/read-the-current-situation-and-future-of-web3-0-in-one-article/
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