Web3 is the next generation of the Internet that will redefine our lives. Using cryptography and distributed ledger technology, Web3 lays the framework for building an Internet that is owned by its users. A tsunami of Web3 has emerged, and this has opened up new opportunities for industries as diverse as financial services, gaming, e-sports, media, entertainment, and retail.

The Web3 ecosystem has already attracted a significant amount of capital, with sizeable startups in areas such as DeFi, NFT, DAO, P2E gaming, data storage, and social media. In the first quarter of 2022 alone, venture capital funds and investors have invested over $2.5 billion in blockchain gaming and related infrastructure. That's certainly a significant increase compared to the $4 billion invested in all of 2021 and the $80 million invested in 2020. And this is just one facet of the Web3 ecosystem's growth.

Another report published on GitHub suggests that there are over 18,000 active developers in the Web3 ecosystem, by "active" I mean that these developers submit code to open source blockchain projects at least once a month. The report also claims that the real number may be higher than that, as this segment of developers does not include those who are individual developers in the Web3 world.

By all metrics, Web3's growth dynamic is unprecedented. But it still has a long way to go before it reaches mainstream adoption. While investor and user interest in Web3 products and services is growing, there are several factors that need to be addressed to accelerate Web3's growth.

In order for Web3 to truly "take off," the following mindset shifts are needed from Web3 users, investors, and project developers, respectively.

Users must change their mindset to a "user-owned" model

In the current iteration of the Web2 "as a service" Internet, users have little to no say in the future direction of the products or services they use. For the most part, the user and the owner of the platform are severed from each other until after the platform goes public, when the user can in a sense gain a minuscule amount of 'ownership'.

But while it is possible to vote on some of the decisions as a shareholder, it is clear that the average investor cannot drive change in the business. Even with the purchase of a significant amount of stock, this ownership gives minority shareholders rather limited decision-making power, and they do not have the same voice at the table as institutional investors or corporate decision makers.

In contrast, the Web3 model offers true ownership. Tokens enable users to have early and decentralized ownership of the platform or service. Users who previously compromised on near-zero ownership in a private enterprise must become familiar with the responsibilities of ownership and governance. They need to recognize the power of this 'ownership' and the extent to which they can contribute and influence the direction of the product or service.

By investing in the early stages, even a layperson can become part of the project management and thus drive the product roadmap with the community. The entire decision-making process becomes more transparent, inclusive and fair, attributes that are not usually present in the Web2 ecosystem.

Investors need to shift to a "community-driven, collaborative and engaged" mentality

In the Web2 paradigm, investors are focused on competing for percentages of control and board seats to ensure value capture and governance oversight authority.

However, this approach is not as effective in Web3. Decentralization of ownership is a key principle of Web3. Network effects can be best accelerated by decentralized ownership by community members, who can play multiple roles in the ecosystem (users of services, investors, suppliers, business partners).

Project owners need to find a sustainable way to attract users

Often, projects are able to generate considerable buzz in a short period of time through token incentives. There is no doubt that such a campaign can quickly attract users and liquidity providers, thus boosting the performance of key metrics.

However, this approach also has its drawbacks. It tends to attract profit-oriented capital and speculators who have no loyalty to the purpose and long-term vision of the platform to speak of. In addition, key metrics driven by short-term incentives often obscure the accuracy of the assessment of 'product-market fit'. Inflationary and oversized initial token offerings amount to wasting market budgets on things that don't really matter in the long run, which leaves projects with far less 'ammunition' for future wars.

Instead, each project should design its token economic model thoughtfully. Only after finding a core audience that truly shares the team's values and distributing tokens precisely to that segment is a good enough idea.

Summary

Although the phrase "we are still in the early stages of Web3" has been said ad nauseam, it is actually true. The content may seem cliché but it is true, we are indeed in a rather early stage, but that is why we need to do more thinking, and I hope this article can provide some help to those who are trying to build the next generation of Internet.

Web3 is the next generation of the Internet that will redefine our lives. Using cryptography and distributed ledger technology, Web3 lays the framework for building an Internet that is owned by its users. A tsunami of Web3 has emerged, and this has opened up new opportunities for industries as diverse as financial services, gaming, e-sports, media, entertainment, and retail.

The Web3 ecosystem has already attracted a significant amount of capital, with sizeable startups in areas such as DeFi, NFT, DAO, P2E gaming, data storage, and social media. In the first quarter of 2022 alone, venture capital funds and investors have invested over $2.5 billion in blockchain gaming and related infrastructure. That's certainly a significant increase compared to the $4 billion invested in all of 2021 and the $80 million invested in 2020. And this is just one facet of the Web3 ecosystem's growth.

Another report published on GitHub suggests that there are over 18,000 active developers in the Web3 ecosystem, by "active" I mean that these developers submit code to open source blockchain projects at least once a month. The report also claims that the real number may be higher than that, as this segment of developers does not include those who are individual developers in the Web3 world.

By all metrics, Web3's growth dynamic is unprecedented. But it still has a long way to go before it reaches mainstream adoption. While investor and user interest in Web3 products and services is growing, there are several factors that need to be addressed to accelerate Web3's growth.

In order for Web3 to truly "take off," the following mindset shifts are needed from Web3 users, investors, and project developers, respectively.

Users must change their mindset to a "user-owned" model

In the current iteration of the Web2 "as a service" Internet, users have little to no say in the future direction of the products or services they use. For the most part, the user and the owner of the platform are severed from each other until after the platform goes public, when the user can in a sense gain a minuscule amount of 'ownership'.

But while it is possible to vote on some of the decisions as a shareholder, it is clear that the average investor cannot drive change in the business. Even with the purchase of a significant amount of stock, this ownership gives minority shareholders rather limited decision-making power, and they do not have the same voice at the table as institutional investors or corporate decision makers.

In contrast, the Web3 model offers true ownership. Tokens enable users to have early and decentralized ownership of the platform or service. Users who previously compromised on near-zero ownership in a private enterprise must become familiar with the responsibilities of ownership and governance. They need to recognize the power of this 'ownership' and the extent to which they can contribute and influence the direction of the product or service.

By investing in the early stages, even a layperson can become part of the project management and thus drive the product roadmap with the community. The entire decision-making process becomes more transparent, inclusive and fair, attributes that are not usually present in the Web2 ecosystem.

Investors need to shift to a "community-driven, collaborative and engaged" mentality

In the Web2 paradigm, investors are focused on competing for percentages of control and board seats to ensure value capture and governance oversight authority.

However, this approach is not as effective in Web3. Decentralization of ownership is a key principle of Web3. Network effects can be best accelerated by decentralized ownership by community members, who can play multiple roles in the ecosystem (users of services, investors, suppliers, business partners).

Project owners need to find a sustainable way to attract users

Often, projects are able to generate considerable buzz in a short period of time through token incentives. There is no doubt that such a campaign can quickly attract users and liquidity providers, thus boosting the performance of key metrics.

However, this approach also has its drawbacks. It tends to attract profit-oriented capital and speculators who have no loyalty to the purpose and long-term vision of the platform to speak of. In addition, key metrics driven by short-term incentives often obscure the accuracy of the assessment of 'product-market fit'. Inflationary and oversized initial token offerings amount to wasting market budgets on things that don't really matter in the long run, which leaves projects with far less 'ammunition' for future wars.

Instead, each project should design its token economic model thoughtfully. Only after finding a core audience that truly shares the team's values and distributing tokens precisely to that segment is a good enough idea.

Summary

Although the phrase "we are still in the early stages of Web3" has been said ad nauseam, it is actually true. The content may seem cliché but it is true, we are indeed in a rather early stage, but that is why we need to do more thinking, and I hope this article can provide some help to those who are trying to build the next generation of Internet.