# web3 ideas By [Andy Ji@Web3](https://paragraph.com/@andyji) · 2022-07-06 --- by qiao wang Below are some crypto/Web3 startup ideas we at AllianceDAO are excited about. They are updated regularly to reflect our latest thinking. This document serves two purposes: * To encourage you to [apply](https://alliance.xyz/apply) to join our founders community, if you are working on one of these ideas. * To inspire you, if you are not sure what to build. By no means you should feel that building something on this list is a requirement to be admitted to AllianceDAO. In the past we have backed many ideas that caught us by surprise and occasionally ideas we initially disagree with. After all, founders who are fully dedicated to a particular subject, rather than investors who split time between multiple subjects, are the real subject matter experts. **Table of Content** ==================== Decentralized Infrastructure ============================ Decentralizing All Layers of the Stack -------------------------------------- In recent years, this space seems to have lost interest in genuine decentralization, the very quality that made this space interesting in the first place. We see memes like “users don’t care about decentralization”. But decentralization does not matter until it does. With the recent collapse of centralized crypto institutions, as well as broader financial and social censorship across the world, decentralization matters more than ever. An application is only as decentralized as its most centralized layer. So the entire stack needs to be decentralized. Layers of the stack include * DNS (eg, Handshake) * General compute * Data storage (eg, Filecoin) * Data indexing (eg, Graph) * Oracle (eg, Chainlink) * Bridge * Node infrastructure * Fiat on-ramp and off-ramp * Wallet * ISP (eg, Helium) * CDN It may appear that many of these layers already have a dominant decentralized player. However, most existing players are at best proofs of concept. And even if there’s already a production-ready player, it’s possible to identify meaningful tradeoff vectors. See specific examples below. Make no mistake, however: these are some of the most challenging engineering and computer science problems in Web3. Decentralized Postgres ---------------------- Currently there's no way to easily write a nice client-side app, fully decentralized app with similar ease that you would in Web2. In Web2, you spin up a database on an AWS instance, and you have your client-side app call this database to read and write. There is no equivalent in Web3. You can't just write the data into Ethereum, which would be too expensive for most use cases. Storage protocols like Filecoin and Arweave are primarily designed to archive data, but provide no enterprise-grade performance guarantee for writing and reading data. A decentralized Postgres would enable a plethora of new applications. Decentralized AWS Lambda ------------------------ An event-driven decentralized compute network, which: * Runs code in response to events triggered from the frond-end or smart contracts * Automatically manages the resources required to run that code * Supports reading/writing to blockchains and storage protocols. D**ecentralized Cross-Chain Etherscan** --------------------------------------- Built as a protocol or with a monetized API, so developers can build on top of the data. * view any wallet/contract * support contract verification and contract calls * support contract and wallet tagging * track blocks as they are produced and block data **Decentralized GPU Rendering** ------------------------------- A marketplace between people who need GPU computing power and people who have idle GPUs. Potential applications include training AI models, metaverse rendering, and GPU mining. App-specific L2 as a Service ---------------------------- Projects like Axie, Bored Apes, and dYdX have launched or are considering launching their own app-chain. By doing so they sacrifice shared security, atomic composability, and engineering simplicity for throughput, sovereignty, and value accrual. An alternative to an app-chain could be an app-specific L2. The app-L2 as a service product would make it stupid simple for dapp developers to launch their own L2. It would recruit sequencers/verifiers behind the scenes. It could even spin up app-specific indexers, oracles, bridges, block explorers, etc. Oracles for Static Web2 Information ----------------------------------- Currently, oracles in Web3 are mainly used for pulling high-frequency information such as prices from centralized exchanges. This enables applications like lending and derivatives. What is also needed is oracles for relatively static information from: * Web2 social / messaging like Twitter and Discord * Gaming platforms like Steam * KYC providers * Credit bureaus * Banks These oracles could enable a plethora of new use cases such as sybil resistance. Semi-Custodial Wallet --------------------- Wallet Infrastructure still remains the largest bottleneck for mass adoption. By design, centralized custodial wallets sacrifice flexibility for security. It’s impossible to use something like a custodial Coinbase Wallet beyond trading and transfer. Decentralized self-stodial wallets are needed for unrestricted access to dapps. The wallet we would like to see is “semi-custodial”: * User keeps a piece of the key and company keeps a different piece of the key. Both are needed to sign transactions via multi-party computation (MPC). If only one party is hacked, funds are still #safu as no one has the full key at any time. * If the user loses their key, the MPC also allows for key recovery their key with a third party (eg, AWS KSM). Ideally, the wallet provides a WeChat-like super-app experience, inside which a variety of apps can be directly accessed. This potentially reduces UX friction. Finally, the wallet should have some or all the following properties: * Native on/off-ramps * Easy for dapp developers to integrate with * Multichain support * Batch transactions (sign once to to perform multiple onchain transactions) Protocols Spun off of Successful Clients ---------------------------------------- Today there are multiple teams that are building social protocols for such as * Address-to-address messaging protocol * Social graphs * Identity and credentials However, it’s likely that the winning protocols are not built by a protocol-first project, but instead by extremely successful consumer-facing clients that eventually open up their “server side” for other developers to build on top of. After all, it’s easier to get developers excited to build on top of your protocol if you have a killer application. (Ethereum is obviously the anti-thesis to this. Developers did not wait for the Ethereum Foundation to build a killer app before hacking on Ethereum. The reason is that Ethereum is a highly generalized, low-level protocol, whereas social protocols are more specialized, higher-level.) Developer Experience ==================== Web3 **Vercel/Firebase** ------------------------ Makes launching a static front end, deploying to IFPS, and setting an ENS domain for resolution have similar DX to deploying a Web2 site to Vercel. **Solana Dev Tooling** ---------------------- Brings the DX closer to EVM DX. Think HardHat/Foundry for Solana. **DeFi** ======== **Market-Driven Lending Protocols** ----------------------------------- Price discovery in most incumbent lending protocols today are not entirely driven by the market, but instead by governance or a mathematical formula with few degrees of freedom. **Bridge Aggregator** --------------------- Think 1inch for bridges. Built to be composable so that wallets can use your bridge aggregator instead of manually supporting each bridge. Prediction Markets ------------------ Notably sports betting. Web2 betting platforms are plagued by the following same issues: * Users don’t truly own their assets * Users get censored by the platform * The platform cheats at the expense of users Delta One Derivative and Options DEX ------------------------------------ Trading volume on decentralized derivative protocols are currently merely a fraction of their centralized counterparts. Privacy DeFi Protocols ---------------------- A DeFi platform that allows users to transact in a way where some or all of the following information is kept private: * Sender and recipient address * Asset transacted * Amount transacted Ideally, platform-wide systemic risk metrics such as leverage remains still public. Bitcoin DeFi Protocols ---------------------- A product that gives Bitcoin, the most liquid cryptoasset, more utility than just hodling. Be it yield generation, trading, payment, etc. Even if the solution must be semi-centralized. Governance-Minimized DeFi Protocols ----------------------------------- Most governance forums today are, in fact, decentralization theaters. Governance is conducted in a decentralized way due to securities laws. Yet decision by committee is highly counter-productive. This is the key conundrum that most DeFi protocols are facing. We’d like to see DeFi protocols that minimize the number of governable parameters. In a way, [Market-Driven Lending Protocols](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1) are examples of this\*\*.\*\* Institutional-Grade Platform to Access DeFi ------------------------------------------- A platform for institutions to access various DeFi protocols for trading, borrowing, etc. Gaming ====== Fully Onchain Games ------------------- On-chain games are those where the entirety of the game state and game logic (not just in-game assets likes currencies and NFTs.) is written to the blockchain. Consider Tic-Tac-Toe. The concept of turns, a 3x3 board, players and a sequence of three must be unchangeably documented as the rules. The history of player moves must also be recorded. On the other hand, the colors of the board and pieces, the shapes of the pieces (X and O can become Y and Z for all we care), the animations, the sounds, etc. can all stay on the client-side. Putting all states and logic onchain unlocks all sorts of novel behaviors: * Smart contract-based players (as opposed to human players) that play the game according to intelligent and constantly improving rules. **Think composability between the game and players.** One of the earliest instantiations of this is actually MEV in DeFi. The MEV bots are the smart contract-based players, and MEV is the game. Notice that in this case the smart contract-based players not only compete with each other, but also compete with human players. * Trustless collaboration between players via smart contracts. **Think composability between players.** Take Dark Forest as an example. At launch, it was a multiplayer game with only informal alliances. In order to work together, you needed to trust the other players will not betray you. However, someone built a smart contract to act as a competing player. This contract allowed players to permissionlessly donate it points and eventually rank high enough to win a prize. It kept track and then when it won, those players were able to share that prize pro-rata. * Game mods built by third-party developers without fear of getting deplatformed. **Think composability between games.** Using Dark Forest again as an example. Someone created a singleplayer spin-off of the multiplayer game. The same logic from the main contract was used, thanks to Ethereum’s rarely used Diamond Standard. All that was changed was the map, the UX and scoring. Instead of players trying to dominate each other synchronously on the same terrain, each was instead trying to solve the same puzzle, but faster than the rest. **Game Publishers** ------------------- Web3 game developers have unique challenges, such as * Massive friction to onboard users (eg, install a wallet) * Compliance The Web3-native game publisher makes it as easy for players to start playing and for developers to publish like Steam does for Web2 gaming. Game Engines ------------ While most game engines currently building in the space are looking to add web3 features to a web2 product, we are actually excited about natively web3 game creation tools. What if we could create standards of interaction or physics for games on chain. Imagine even the laws of Dungeons and Dragons on-chain, available for anyone to reuse and remix. Games as Web3-Native Social Network / Messaging ----------------------------------------------- The Web3 community is obsessed with decentralized social / messaging. However, the first truly successful Web3-native social network / messaging app will not look anything like Twitter / WhatsApp, because simply decentralizing the whole stack is likely not compelling enough for users to switch. Gaming could be the wedge. A Web3-native game that is fun and interactive enough to reel in a critical mass of users could turn itself into a popular decentralized social network / messaging app, ie, simply a place for people to hang out. (The second mostly category of apps that could win Web3 social/messaging is DeFi. Arguably, DeFi is gamified finance.) In-Game NFT Marketplaces ------------------------ See [In-App NFT Marketplaces](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1). Guilds ------ See [DAOs as a Risk-Pooling Vehicles](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1). Tooling for Web3-Native Communities =================================== **Launchpad for Web3-Native Communities** ----------------------------------------- “Web3-Native Communities” go by several names likes DAOs and NFT communities. But basically, it’s a group of people that have shared incentives. The no-code launchpad will first and foremost let them launch relevant smart contracts and crowdfund. These are the most immediate and scalable pain points. Once having onboarded a critical mass of users, the launchpad will be able to identify other user needs such as member engagement, access control, and governance. Eventually this type of products will get unbundled across different types of communities. Back Office ----------- Web3 communities have unique software needs for * accounting * tax * payroll * B2B payment * bounty management as their financial transactions tend to be on-chain. User-Owned Productivity/Publishing/Communication Tools ------------------------------------------------------ “User-owned” means one or both of the following two things: * Uncensorable * Privacy-preserving Any individual or organization who uses mainstream tools like Notion knows that it is an existential risk for them. So much mission-critical information and workflow are ultimately controlled by one tech company, and therefore prone to censorship or privacy-infringement by the tech company itself or by the government. The first go-to-market would be Web3-native communities as they happen to be a concentrated group of people who care about censorship and privacy, but of course eventually the product could be useful for non-Web3 individuals and entities. “Investment Bank” for Web3 Communities -------------------------------------- Similar to traditional corporations, DAOs need advisory for equity financing, debt financing, M&A, treasury management, etc. **DAOs as Risk-Pooling Vehicles** ================================= There are certain professions with high risk high reward: * Pro gamers * White hat hackers * Youtube/TikTok creators * Musicians * Story writers * Drug developers * Real asset investors/developers A DAO of gamers/hackers/creators/musicians/etc could be a perfect vehicle for these professionals to share risks while maintaining the same expected reward. It’s no coincidence that the first generation of DAOs are investment DAOs. Entrepreneurship and investments are high risk high reward activities. These DAOs would serve three primary functions: * Curation: they scout for and admit high potential members. * Risk sharing: they invest in new members in exchange for future financial upside. Members optionally share each other’s upside. * Support: they provide support to each other, such as marketing and distribution. Why DAOs vs. traditional legal entities? Fundamentally, DAOs could reduce frictions associated with the traditional legal framework. DAOs could be a better alternative than traditional legal entities if * Members change frequently: imagine the amount of paperwork involved! * Members are global: multiple jurisdictions mean leading with more legal and banking complexities. * Members want to stay pseudonymous: KYC/AML are required to set up traditional legal entities. NFTs ==== NFTs as Digitally Native Intellectual Properties ------------------------------------------------ Consider intellectual properties as an asset class. To get a sense of how important this asset class is, over the past 5 decades, intangible assets have increased from ~1/5 to ~4/5 of S&P500 market value. NFTs representing individual IPs could help unlock liquidity across a variety of assets such as: * Music, video, writing, and art * Proprietary technologies and scientific discoveries * Brands The idea then is build a primary and secondary marketplace focusing on a particular type of assets. Today, several such NFT marketplaces exist, but **what makes NFTs truly interesting is not the speculative nature of these assets, but the ability to create derivative works off of these assets, ie, they become productive assets.** At first, we could leverage the traditional legal system to attach IP rights to a particular NFT. Think tokenization of IPs. Eventually, however, NFTs could become digitally native IPs. We have seen with many popular PFP projects that “right-click-save” does not only _not_ destroy the value of the original work but is actually free marketing for it. With a little bit of social consensus, the help of [NFT fraud detection products](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1), and programmability (eg, program royalties into the smart contract), we could see value accruing naturally to the original work. In-App NFT Marketplace ---------------------- Game developers prefer to use in-app marketplaces for their NFTs, because * Having to go from a game app to an external marketplace creates a lot of friction for their end user. * They want trading fees to accrue back to themselves or their community instead of third-party NFT marketplaces. The idea is to build a API/protocol for game developers to launch in-app NFT marketplaces. The idea can be extended to other consumer products like music/video/brand NFT platforms. Token as a Tool to Coordinate Human Activities ============================================== Tokens may be more effective than the most competent centralized entities such as government and big corporations at coordinating large-scale human activities. Contribute Data to Earn ----------------------- For “x-to-earn” to work sustainably, participants who earn tokens must provide something valuable to the rest of the network. Data contribution is an obvious candidate for “x”. Today, what impedes humanity from making meaningful progress in various domains is not our inability to process, to understand, and to derive value from the data, but our lack of data in the first place. Tokens can be used to incentivize a large number of humans to bootstrap valuable datasets such as: * Visual data required to train self-driving models * Health data required for studies and drug discovery * 3D rendering of our planet: think decentralized Google Earth. * Internet consumer behavior: think decentralized Nielsen which is a $3B/year business. * Real-time crime data Token holders ultimately capture some of the value that is ultimately produced by datasets they’ve helped create. Solving Tragedies of the Commons -------------------------------- We don’t know how this will look like exactly, but we suspect it’s possible to use token economics to align incentives between the individual and the commons, thereby inducing mass behavioral changes in how we interact with the environment surrounding us. Unbundling of Major Consumer Products ===================================== Categories of Web3 products that can be unbundled include but aren’t limited to * NFT marketplaces * Wallets * DeFi aggregator/dashboard They can be unbundled across * Geographic regions * User segments (eg, amateurs vs. pro) * Verticals (eg, game, art, music, etc.) * Chains * Device (eg, desktop vs. mobile) Take NFT marketplaces for example. There could be an Opensea for each of: * East Asia, Latin America, US/Western Europe, and so on * Amateur traders, pro traders, and so on * In-game items, art, land, music, and so on * Ethereum, Solana, and so on * Desktop and mobile Will leave it to the reader to do the same exercise for Metamask and Zapper. Fundamentally, consumers across these various segments have different needs and preferences. As such, it’s simply not possible for one marketplace to serve all of them. Intersection between AI and Web3 ================================ AI naturally intersects with Web3 because the latter is at its core is an open ledger of highly valuable data. Specific applications of AI to on-chain data include but are not limited to: * Credit scoring * NFT plagiarism detection * Cheating detection in games and retroactive airdrops * [AI in on-chain games](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1) * Analytics for investors and traders * Personalized recommendations based on wallet activities (think Web3-native ads) * [Contribute data to earn](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1) Intersection between Health Science and Web3 ============================================ Two problems plague the health science: * Lack of funding * Lack of data (which arguably stems from lack of funding) Which could be alleviated by crypto (known by many as DeSci): * [DAOs as a Risk-Pooling Vehicles](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1) * [Contribute Data to Earn](https://www.notion.so/Crypto-Web3-Startup-Ideas-48d40ccadeeb42a48056659fcce109b1) Intersection between Pseudonymous Economy and Web3 ================================================== The pseudonymous economy is one where your coworkers, partners, counterparties, and competitors don’t know your name, location, gender, ethnicity, nationality, height, and accent. Crypto is one of the key enablers of the pseudonymous economy. With public key cryptography, users are able to separate their financial and social activities from their real names. --- *Originally published on [Andy Ji@Web3](https://paragraph.com/@andyji/web3-ideas)*