Web3.0 tearing the capital circle

Web3.0 dominates the screen, another concept is on fire.

Similar to the situation when the Metaverse concept emerged, this concept was proposed more than 10 years ago, and it became popular in the era of mobile Internet when it was stuck in a growth bottleneck. Well-known institutions voted for it, investors paid attention to it, and social media discussed it. . For ordinary people, just as netizens lamented, “Every time I read this article, I read it word by word, and I am still confused.”

Recently, Web3.0 directly drives the enthusiasm of capital, and it is the actions of internationally renowned investment institutions. In February, Sequoia Capital, one of the world’s largest venture capitalists, announced the launch of a fund focused on investing in Web3.0-related technology startups, with a capital scale of between $500 million and $600 million.Bain Capital, a well-known private equity investment firm in the United States, has also established a $580 million cryptocurrency-specific fund.

According to incomplete statistics from the media, from January 1, 2022 to April 26, 2022, Sequoia Capital invested a total of 17 Web 3.0 companies at the rate of one investment per week. The investment agency Coinbase Ventures invested in 71 companies in the first quarter of 2022, almost every day except for holidays.

But compared to the eloquent talk about the Metaverse, more investors are more secretive about it. People’s attitudes to it are also quite different. Some people think that this is the door to a new world, and we must seize the opportunity before the next wave. Some people think that this is an overly ideal concept, and it is difficult to be implemented in the current environment. space.

So, what is Web3.0? What are investors investing in now? Why are the views of the capital circle so different? What is its development prospect?

What is Web3.0?

In fact, both the Metaverse and Web 3.0 are all for the convenience of depicting the concept of the birth of new forms in the future.

The Web in Web 3.0, the World Wide Web, is one of the main services provided by the Internet. According to the explanation on Wikipedia, it can be simply understood as an information system accessed through the Internet, including documents, pictures, multimedia and other information resources that we use on the Internet every day.

As for 1.0, 2.0, and 3.0, they were created by people in the industry to facilitate understanding of the different stages of the development of the World Wide Web. The concept of Web 3.0 discussed in this article is mainly based on the recent mainstream interpretation, which comes from an article by a researcher of Messari, an American blockchain database company.

To clarify the concept of Web3.0, we cannot bypass Web1.0 and Web2.0.

In this version of the explanation, in the Web 1.0 era, web pages are “read-only”, users can only search for information, browse information, and cannot participate in creation. For example, in the early days, people browsed information on Sina and Sohu websites on the Internet, and only left messages, comments, and interactions under the information. In the era of Web 2.0, websites are “writable and readable”, that is, users are not only recipients of content, but can also participate in creating content, such as sending short videos, posting Weibo, and writing public comments. Now, people are in the Web 2.0 stage.

These two eras are in the form of centralization. All digital assets related to users belong to a certain giant company. The content produced by users on the platform does not belong to users; the data of users on different platforms cannot be Use cross-platform. For example, the behavior data of users on Taobao cannot be obtained and used by WeChat, and the video content on Douyin cannot be directly transferred to WeChat.

In the recently circulated concept of the Web3.0 era, all content is “readable, writable and possessable” . This is a decentralized model, where each user can control their own digital assets and data, and the dominance is not in the hands of Internet giants, but in the hands of users.

Wang Sheng, a partner of Inno Angel Fund, further explained to Shen Ran, “Now, when users go shopping on Taobao, it can recommend products that users may be interested in based on the user’s past behavior data. In the future, if the platform wants to recommend products, it must obtain the user’s information. Authorization, that is, the right to use data is in the hands of users, which is the basic logic of Web 3.0.”

In understanding “possible to hold”, Guosheng Securities made a metaphor for game applications. In the era of Web2.0, users who play King of Glory cannot put their favorite Monkey King into World of Warcraft. This is not because the technology is difficult to implement, but because the control is not in the hands of the user. In the world of Web 3.0, users can enter a game world without being restricted by third parties, freely implant their favorite images into the game, and allow characters to act across platforms.

Here, users can swim in the Web3.0 world without being restricted by the ecological isolation of giants. User data privacy will be protected through technical means such as encryption algorithms and distributed storage; users lead the birth of content, and can directly obtain the value that data and content bring to them.

In Wang Sheng’s view, Web 3.0 is a new Internet application form of decentralization built on the basis of blockchain, and behind it is the innovation of production relations. Among them, there are two essential sectors, one is blockchain technology, and the other is Crypto, which is a cryptocurrency based on blockchain technology.

He introduced that the blockchain is the basis for building Web3.0, and it is also the technical support for realizing “holdability”. We can simply understand the blockchain as a shared ledger that can store data, exchange value, record transaction activities, and is not controlled by any centralized entity. In short, it provides a secure execution layer for Web 3.0, where users can create, issue, and trade encrypted assets.

Cryptocurrency, which can be understood as the native currency in Web3.0, is different from fiat currency and is only used to pay for Web3.0 services and participate in Web3.0 governance.

It must be mentioned that due to the involvement of cryptocurrencies, people have put a question mark on the development of Web3.0, and there are also media interpretations. Only in China can the “non-currency” of Web3.0 be implemented in China. An industry insider explained, like “As long as the blockchain technology, but not the Crypto behind”.

A technical person who is engaged in blockchain project entrepreneurship in Silicon Valley of the United States introduced to Shen Ran that in the United States, the development logic of blockchain projects is bottom-up, and there is often a start-up company. If you create your own chain, you can cash out through ICO (to raise funds), and then use the cashed out cash to pay developers to make some products on this chain to jointly form an ecosystem.

In China, it is more like a top-down logic, led by the government, and has been maturely applied to government projects such as lane fines and information registration. It is an industrial layout, not a consumption layout, and the main areas involved are There are agriculture, industry, carbon trading, government affairs, etc. Some projects are also cooperating with big companies such as Tencent and Alibaba.

Regardless of the model, on the whole, in the era of Web 3.0, users’ time, content creation and labor input will form digital assets through blockchain technology and deliver them to users.

What projects are investors investing in?

Although Web 3.0 seems far away, and there are still many technical problems to be solved, the picture it paints can solve the problems of data asset ownership, data security, privacy leakage, and giant monopoly in the current Internet, which makes many investors Consider it an inevitable trend and direction.

Some data representing the market reaction are also becoming corroborative.

According to statistics from Soochow Securities, according to data from the cryptocurrency data company dappradar, the average daily number of independent active wallets (UAW, which can be simply understood as the number of users on cryptocurrency platforms) reached 2.35 million in February 2022. According to the statistics of the encrypted asset price tracking website CoinMarketCap, as of April 4, 2022, the total asset size of NFT (non-fungible tokens, which can be simply understood as a kind of “digital property rights”) mainstream projects reached about 10.161 billion US dollars. Currently, the NFT project with the highest market value, Bored Ape Yacht Club, is close to $4.183 billion.

Among the well-known investment institutions, Sequoia Capital and a16z, which have invested in many star companies in the mobile Internet era, are actively deploying Web3.0.

According to IT Juzi’s records, in May, Web3.0 development platforms, community platforms, lifestyle applications, NFT startups, etc. received financing, and most of the financing amounts were between US$10 million and US$50 million.

If Web3.0 is regarded as a new system, the investment layout can be divided into several categories such as infrastructure technology, upper-layer applications, and management tools.

For example, Huaying Capital recently stated that it is planning to deploy Web3.0. Its senior investment director, Zhu Tong, revealed to Shen Ran that Web3.0 is in the early stage, and the infrastructure from the underlying infrastructure to the upper-level applications is not perfect, and they prefer to focus on Web3. 0 Ecology for investment layout, focusing on subdivisions involving infrastructure, tools, Defi, NFT, gamefi, etc.

He mentioned that in the field of Web 3.0, most of the projects at this stage tend to be “model innovation”, the head project has obvious Matthew effect, and the team’s ability in product iteration and operation is very important. When investing, because the Web3.0 industry is currently changing very fast, it is difficult to judge whether a project can be done from the end-of-life thinking, and the industry is at war. Just like the early days of the Three Kingdoms, the more important thing for investors is to “invest in people” . That is to find a team that can fight like Cao Cao and Liu Bei.

As for investment projects, it can be divided into two sections: US dollar funds and RMB funds.

Wang Sheng introduced that regardless of the domestic and foreign environment, from the perspective of the investment layout of US dollar funds, the layout of Web 3.0 can be divided into three categories.

The first category is mining circles. Mining refers to the process of obtaining cryptocurrency through a similar computer deduction algorithm. “Mining” comes from the metaphor of mining. The mining circle is the circle of miners that focuses on mining. Most of the investment is in mining machines, mining pools, mining organize. “Miners are the most primitive, and also the most influential and wealthy camp. Some people will invest, but they are not the main part of mainstream VCs,” Wang Sheng said.

The second category is the chain ring. The chain circle can be understood as a circle focusing on the research and development and application of blockchain technology. The investment project is to provide technical support for Web3.0, such as cross-chain bridge, smart contract development, etc. “This is the area that mainstream investors are paying attention to,” he said.

The third category is the currency circle , namely Defi, decentralized finance , which refers to investing in cryptocurrency projects developed based on blockchain technology. In his view, the assets anchored by decentralized finance are still mainly in Web3.0, but according to the current development, there is an opportunity to anchor more physical assets gradually. However, this is very easy to be linked to speculation, and some projects that cut leeks need to be excluded.

Due to the different investment environments at home and abroad, at present, “the US dollar fund is open to investment, and many projects are being looked at.” Wang Sheng revealed that the RMB fund, only the field of digital collections is an investment field that is likely to be compliant . Shareholders, there are already some investment institutions in it.”

This type of project, many big factories are also deploying, such as Alipay launched the Ant Chain fan particle, Tencent launched the magic core APP and so on.

It needs to be emphasized that due to the fire of the concept of Web 3.0, many entrepreneurial projects have been born, but they are also mixed.

Some entrepreneurs are working on Web3.0 projects, trying to migrate mobile Internet products to Web3.0, just like the migration from PC Internet to mobile Internet. For example, some entrepreneurs mentioned that they are “moving” Internet products such as Weibo or Tencent documents to Web3.0.

Investor Chen Xixi said that some of these entrepreneurs are doing tricky projects. That is, in the Web3.0 world, do the mapping and connection of Web2.0. At present, Web 3.0 has not yet arrived, and many products are between Web 2.0 and 3.0, and even become a bridge between 2.0 and 3.0. For example, when a user enters the Web3.0 system, he needs to authenticate who he is in Web2.0 and what assets he has. These products are moving their digital assets in Web2.0 to the Web3.0 world.

At present, there are also many investors who are cautious, expressing that they are only analyzing and paying attention to Web 3.0, trying to understand, and have not really made a move.

Web3.0, is it a false fire?

For Web3.0, some people are in pursuit, and some people are questioning it.

Tesla CEO Musk has publicly questioned Web3.0, “I don’t think Web3.0 really exists, it’s more like a marketing buzzword now.” Former Twitter CEO Dorsey also said, “Users don’t The actual owner of the Web3.0 product is the venture capital institution behind the project and its limited partners.”

Some well-known projects that were once considered Web 3.0 collapsed . In May, the cryptocurrency Luna crashed, and in just a few days, the price fell from nearly $90 a piece to less than $0.00015 a piece. Axie Infinity, the former “king of P2E chain games”, also saw its game token SLP drop below $0.005 overnight, down 99% from its highest point.

In the relatively mature NFT field, there has also been a big oolong incident recently. After Twitter founder Jack Dorsey’s first tweet was made into NFT in 2006, it sold for $2.9 million last year. The latest NFT offer of tweets fell back to $280, a drop of more than ten thousand times.

The above-mentioned technical people who are engaged in blockchain project entrepreneurship in Silicon Valley of the United States introduced that there are two major difficulties in building Web3.0 on the basis of blockchain. The first is that technically, single-point MVP (minimum executable product) has been basically realized, but there is no infrastructure, that is, there is no main chain. “Any main chain will bring great changes to the world. Political and Economic Barriers”.

The second is the technical bottleneck, and the industry still needs a lot of exploration and accumulation. For example, the current transaction speed of Bitcoin is about 7 transactions per second, while the peak value of products such as Alipay can reach 90,000 transactions per second. “There is no guarantee of efficiency, and there are big problems,” he said.

In other words, it is not technically ready, and it is difficult to achieve under the influence of political and economic factors.

For example, three years ago, Facebook wanted to launch its own cryptocurrency Libra, but it was urgently stopped. At that time, U.S. congressmen pointed out the “four deadly sins” of Facebook’s currency issuance. To put it simply, one is that Facebook has influence on a quarter of the world’s population. If a crisis occurs, it will cause huge damage to the stability of the U.S. and even the global financial system. influences. The second is the lack of supervision and protection, and investors and consumers may be exposed to various threats. Third, I don’t know whether Facebook can protect the security of user information. Fourth, it may become an unregulated money laundering tool.

This also shows the political and economic situation of this model.

Chen Xixi said that now we define the Web3.0 by explaining the improvement space for the unsatisfactory part of Web2.0 . In her opinion, there is no “black and white” difference between the two, but more of a technological advancement. What makes her reservation is, “Is this kind of advancement really necessary in the short term? Andwhether it is necessary to achieve such extreme idealism to maintain the normal operation of the Internet ecosystem .”

Take the example of users getting benefits through data. Web 3.0 can indeed protect users’ data privacy, but in order to open up data and realize rights confirmation, users first need to disclose their data, set a price for it, and let it generate revenue, “This itself is related to data privacy, there are some contradictory”. At the same time, she mentioned, “A very important premise is that how to define the value of these things also requires a lot of consensus.”

In her opinion, Web 3.0 makes sense logically, but it is difficult to implement, and it is bound to impact the current financial and political system. “It’s the same problem with the Metaverse. No one imagined a scenario that couldn’t be done in Web 2.0, but must be done in Web 3.0.” Chen Xixi said.

An investor who previously focused on the TMT field told Shen Ran that after studying Web3.0, he still did not understand and chose not to invest. In his opinion, some projects that focus on investing in technology are valuable, but now they are more focused on cutting leeks. The popular Web3.0 online game STEPN is like a typical Ponzi scheme. The principle of this game is that “users can make money by walking”, but this has no value in itself. The money that people make is the money that new entrants pay, which is similar to the “Qubu” APP model that was suspected of pyramid selling.

He said that it is valuable to invest in projects related to Web3.0 technology at present, but one cannot blindly follow well-known institutions and investors to invest in projects . Do a lot of things that go against common sense and make everyone suspicious, but at this time, you must trust your common sense and your own judgment.

Zhu Tong said that traditional investors are more inclined to value investment, but in Web3.0, many projects lack actual use value, and the overall life cycle of the project is short, “If you make judgments from the perspective of long-term value investment, many projects are difficult to However, the investment withdrawal cycle in the Web 3.0 field is relatively short, and if you exit at the right time, the overall investment return is generally good, so it depends on the investor’s mentality and what they are pursuing.”

In his opinion, everyone’s judgment of value is different, just like some people think that playing games every day is of little value, but some people think that it is valuable, “Web 3.0 is the same, it depends on what participants want to get. Many people are not optimistic because it is still immature at this stage, and many token economic models look very ‘Ponzi’.”

However, he believes that whether to identify as a “Ponzi” also depends on whether the project can continue to expand consensus, adjust products and operation strategies with changes in demand, enrich the product ecology and stabilize the economic system. But in the process, many people have already failed.

Regarding the prospect of Web 3.0, Chen Xixi said, “In the domestic environment, it is unlikely that there will be progress in the short term.” In her opinion, only some large manufacturers or companies that can obtain the support and approval of government regulators can guide , Web3.0 projects have room for operation .

Regardless, Web 3.0 is still the hottest and most controversial concept this year. An investor concluded that the current world has been divided into the new world and the old world, and the supporters of the two worlds have been clearly distinguished, ” the two worlds are now completely parallel.

“The mobile Internet has no new stories. This is the most real reason. Now everyone needs a new story,” said Chen Xixi.

The title picture and the accompanying pictures in the text are all from Visual China. At the request of the interviewee, Chen Xixi is a pseudonym in the text.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/web3-0-tearing-the-capital-circle/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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