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IBM, Microsoft, and other industry pioneers of the open source computer era laid the foundation of computer hardware with their technology and influence. The World Wide Web protocol in 1990 allowed networks around the world to be interconnected, and since then people have officially entered the Internet era, and centralization has helped billions of people join the Internet and create a stable, robust infrastructure.
In the era of Web 2.0, the development of the Internet has deviated from its initial design track. As users have changed from receivers of information to participants, their digital behavior is gradually being controlled by individual companies in the form of data, and a portion of entities with absolute control are exercising monopolies, using algorithms to control the distribution of benefits and unilaterally determining or interfering with the order of the Internet.
From: Paradigm, Technology, and Ecology of Web 3.0
The Internet era is changing, power is gradually shifting from a centralized monopoly to the hands of individual users, and decentralization is becoming the signature feature of the new generation of the Internet. Although the Internet barriers of high replacement cost, strong network effect, and user experience will not be overturned shortly, users' pursuit of the right to control identity and data will eventually start a prairie fire like a star.
Web 3.0, as an all-encompassing term, represents an emerging vision of a better Internet, encompassing emerging concepts such as decentralization, blockchain technology, and token economics. For skeptics, it is an exaggerated house of cards, while for Web3 evangelists, it is a revolution, with technological innovations that will bring a wave of Internet innovation.
From: Understand Web 3 in one article
Before we can understand Web 3, we need to have a good base of knowledge about the development of the Internet. The Internet that most people living in the Internet era know is very different from how it was originally conceived, and to better understand this, it is helpful to outline the short history of the Web in several phases (Web 1.0 and Web 2.0).
From: What is Web 3.0 and why should you care?
Platform Created, Platform Owned, Platform Controlled, Platform Benefited
The early days of the Internet, starting roughly in 1989, were the Web 1.0 era. Web 1.0 was the barbaric era of the Internet, where the content was dominated by static websites owned by companies, most pages were created via HTML, and only information could be coded. In the Web 1.0 era, the Web was not available for real-time interaction and individuals rarely produced content; the public was more likely to learn about information through the Internet to gain more access, so the Internet at that stage was called the read-only Web.
User Created, Platform Owned, Platform Controlled, Platform Distributed
With the upgrading of hardware and software technologies, Web applications, social media platforms, and self-publishing channels began to emerge gradually, and the Web 2.0 era officially began in the early 21st century. The Web 2.0 network is no longer read-only; users can communicate directly through the Internet, and Internet companies provide platforms to share user-produced content and participate in interactions among users. As the threshold for Internet participation gradually decreases, more and more people begin to participate in the Internet and gradually generate social collaboration. The Internet sharing economy, creator economy, and mobile Internet become the mainstream of this era, and Internet giants begin to compete for and control the massive amount of Internet traffic, data and value.
User Created, User Owned, User Controlled, Protocol Assigned
From: Paradigm, Technology, and Ecology of Web 3.0
"User-generated content" currently encounters the status quo where user data, original content, and network logic are all controlled by a centralized Internet entity (i.e., a single Internet company), and user data security, privacy, and data value are widely threatened and ignored, while the design of the Web 3.0 system is expected to fundamentally address these issues. The core of Web 3.0 is a challenge to the underlying rules of the Internet. By building a distributed Internet, it aims to build an anti-monopoly, interoperable, user privacy-oriented, and mutually supportive Internet ecosystem, breaking the centralized constraints and checks and balances, and creating a truly user-owned decentralized Internet ecosystem.
From: What major changes of the decentralized Internet form of Web 3.0 will bring to various industries?
The concept of Web 3 was originally proposed by Tim Berners-Lee, the inventor of HTTP, during the Internet bubble, to refer broadly to an integrated communications framework where Internet data can be machine-readable across applications and systems.
In 2014, Ether co-founder and Polkadot creator Gavin Wood redefined the term coined by Tim Berner-Lee in a blog post titled "DApp: What is Web 3.0” :
[Original text: Web 3.0 is an inclusive set of protocols to provide building blocks for application makers. These building blocks take the place of traditional web technologies like HTTP, AJAX, and MySQL, but present a whole new way of creating applications.]
The core of Web 3 is not cryptographic assets, but rather protocols and technologies such as consensus engines and cryptography that enable more powerful social contracts on the Web. And the ultimate goal of Web 3 is "Less trust, more truth.
From: Core Elements for Web 3: Blockchain, Crypto Assets, Smart Contracts, and Prophecy Machines
While it is difficult to define Web 3 strictly, it was created with several core principles in mind
Decentralization: Most of the Internet is not controlled and owned by a centralized entity, but rather by builders and users who distribute ownership.
No Permissions: Anyone, including users and providers, can participate without the need for permission from a central authority.
No Trust Required: It operates through incentives and economic mechanisms, without the need for an intermediary or governing body as a third party.
Native Payments: Use cryptocurrencies for online spending and remittances, rather than relying on the outdated infrastructure of traditional banks or third-party payers.
Connected and Ubiquitous: In a decentralized environment, all content is connected and can be accessed from anywhere via devices and services. Since data storage is decentralized, there is also never a service disruption.
From: Paradigms, Technologies, and Ecologies of Web 3.0
Openness: Freedom of access for users, no third-party subject restrictions, no ecological boundaries or barriers. In addition, applications based on different infrastructures within Web 3.0 can be interconnected by "cross-chain" protocols, so that the behavior of users in multiple applications can produce a social relationship map, further enhancing the value of data. The potential of data mining.
Privacy: Data privacy has become a global regulatory focal point, and the current solution is to strengthen legal protection and introduce privacy computing to ensure data security through homomorphic encryption, multi-party secure computing, and trusted execution environment technologies. Web 3.0 privacy is both confidential and anonymous, and through the distributed bookkeeping model of blockchain technology, users can control and manage their own data without third-party participation. The user has absolute control and ownership of their own private data.
Co-construction: Users in the Web 2.0 era are often limited by various factors such as platform auditing or cross-platform restrictions, and are often at a disadvantage in the economic level of creators deprived by the platform. Web 3.0 is expected to break these restrictions, and the incentive mechanism combining blockchain technology and cryptographic tokens will be able to effectively bypass centralized restrictions and realize the co-construction, sharing, and governance of Web 3.0 through a new organizational ecosystem architecture, DAO.
From: Paradigms, Technologies, and Ecologies of Web 3.0
Web 3 .0 is an ensemble of blockchain-based decentralized Internet technologies with new technologies, new paradigms, new forms of organization, and corresponding over-the-top values. In Web3.0, the essence of value formation is the flow of ownership, i.e., the mutual flow of asset ownership, governance, and privacy among individuals.
Today's Internet has two key missing attributes.
It does not hold a "state" and is independent of trusted operators.
It has no local mechanism to transmit state.
While the invention of cookies allowed Web-based applications written in JavaScript to store state on each local device, cookies were created and controlled by the service provider, not the user. Today, these service providers (such as Google and Facebook) hold the state of billions of people, and therefore the value they create.
The ability to transfer value easily and efficiently is at the heart of economic development and modern finance, and any improvements that increase the efficiency of value transfer have a cascading positive impact. While the Internet itself is only a technological development, a better direction to improve the Web in the future is to facilitate: any participant's ability to participate in the creation of local economic value and transfer this native value to participants.
With the invention of blockchain, we now have the means for each participant in the network to save and transfer state in a digital native format.
Web 3.0 adds two important infrastructures, the "Wallet " and the "Blockchain Node ". Where the wallet acts as the user control layer of the Web 3.0 stack and interacts with the main client front-end in order to provide a smoother user experience. Blockchain nodes (miners and nodes) replace the traditional third-party role and are involved in overseeing and maintaining the blockchain's operations. Nodes are responsible for monitoring transactions and committing them to the blockchain.
The innovative Web 3.0 architecture allows applications to place some or all of their content and logic on a public blockchain. Unlike standard Web 2.0, this content and logic can be made public and accessible to anyone. At the same time, it allows users to control this content and logic directly, without the need for an account or privileged API key to interact with the content on the blockchain.
From: Emre Tekisalp.Understanding Web 3 — A User-Controlled Internet
Blockchain technology is leading a paradigm shift in the economy. Looking back at the development of the information technology market over the past decades, we can see that every major market cycle has followed the same pattern of continuous development, namely: the cyclical cycle of decentralization, expansion, and consolidation. After the mobile Internet era, the next era is called the Crypto Era - the era of "data oligarchy", which is also an era of open source data and information democratization.
In the Web 2.0 era, user data was fragmented and stored in centralized companies. Product-centric Internet services do not pay much attention to the importance of user data experience in Web 2.0. These platforms are building their own moats and competitive services. For example, Google and Facebook provide free services to users on the surface, but in fact, they increase commercial traffic by analyzing users' data and behavioral habits and pushing ads, which disguisedly violates users' privacy.
However, in the era of Web 3.0, the traditional product-centered pattern of the Internet will no longer exist. After being transformed by the blockchain platform, the right of use and management of user data will belong to the users themselves. This means that users can really decide how to use their data, for example, they can authorize an organization or company to use their data, but at the same time, the value created by the authorized party relying on the data must be allocated to a significant portion of the data owner.
Validating the advent of the crypto era through the theory of techno-economic paradigm shift.
After studying all the technological revolutions since the Industrial Revolution, Venezuelan economic theorist Carlota Perez proposed the concept of techno-economic paradigm shift and the theory of the Great Surge: each technological revolution leads to a techno-economic paradigm shift that follows a cycle of Irruption, Frenzy, Synergy, and Consolidation.
From the chart, we can see that the crypto industry reached an irrational frenzy in 2017 and 2018 after the emergence of BTC in 2009, and the whole market development has reached an irrational frenzy, and finally the market bubble experienced a bubble burst after reaching the highest point in 2018. After the crypto market regains its rationality in 2019, there will be new industry restructuring and industry synergy, which will eventually lead to a solid period of benign development.
From: Embracing Web 3.0: Paradigm Shift and Investment Outlook under the Technology Stack (IOSG VC)
There are always different classes in modern business organizations, entrepreneurs, executives, and wage earners. The former two always maximize their interests in the form of equity, which is fundamentally different from wage earners. Despite the improvement to the system such as employee shareholding, it is still difficult to gather people's hearts and minds, and the motivation of members in the organization is difficult to be motivated in the long run. Team corruption always plagues managers, especially when companies enter maturity.
DAOs are the key embodiment of Web3 decentralized organizations, which are composed of groups with a common mission/goal, keeping well-functioning through a set of governance processes and tools. Thus, instead of keeping rules in a centralized system, DAOs fix them in chains, a better way than traditional corporate structures, and by aligning incentives among members and stakeholders, decentralized DAO organizations can maximize social capital and utility value.
DAOs are essentially decentralized communities where members are motivated to collaborate with each other to drive value. In a way, DAOs are egalitarian companies, social groups, guilds, and mission-driven communities. It is an experiment in building organizations focused on the Web3 values of openness, decentralization, and without permission.
From: What is the spiritual core of Web3?
We deserve a better Internet that helps us stay ahead in an increasingly competitive world, unlocks opportunities for millions of people on the edge of the innovation economy, and empowers people to take control of their digital lives.
The design of the Web 3.0 system holds the promise of being able to address these issues from the ground up. Through a set of technologies encompassing digital assets, decentralized finance, blockchain, tokens, and DAO, it helps disrupt the Web 2.0 era where user data, original content, and web logic were all controlled by a single entity on the Internet.
With the advent of cryptocurrencies and NFT, users can take the assets they own and the value they hold from one digital space to another. Decentraland allows users to trade in-game assets such as skins, accessories, and avatars using MANA and allows creators to build legitimate businesses around virtual platforms that link real-world economies. This is the first time that digital spaces can tap into an economy outside their own walls.
We are completely optimistic about the potential of web3 to restore trust in institutions and expand access. After iterations and updates over the past decade, the current Web 3.0 concept is a more mature value: a truly decentralized Internet by building a trust-free, decentralized, distributed Internet designed to build an anti-monopoly, interoperable, user-private, and mutually supportive Internet ecosystem.
If we compare Web 2.0 with Web 3.0, we can visually find that Web 3.0 represents a huge leap forward
A legal dispute between a well-known gaming company and a player that occurred in 2021 left users thinking. All data and assets in Web 2.0 are owned by the platform, and users can only have access to their accounts and not really own their assets.
Web 3.0 gives you ownership of your digital assets in an unprecedented way. web 3.0 allows for direct and true ownership by users through non-fungible tokens (NFT) that cannot be taken away by anyone or even the game creator, the value follows the asset in perpetuity, and users are free to dispose of their assets without any constraints.
The power relationship between the platform and content creators is severely imbalanced. outrage was sparked by the OnlyFans incident in August 2021, where they were stripped of their income after helping to create the platform. While the decision was quickly reversed after strong opposition, it highlighted a dilemma for Web 2.0 creators: if you leave a platform, you lose the reputation and attention you've built up on it.
In Web 3.0, your data sits on a blockchain. When you decide to leave a platform, you can take your reputation with you and bring it to another platform that better aligns with your values. web 2.0 requires content creators to trust that the platform won't change the rules, but resistance to censorship is a native feature of the web 3 platforms.
Despite the many advantages of Web3 in its current form, there are many limitations that this ecosystem must overcome in order to thrive.
Accessibility: Today, everyone can use important Web3 features, such as logging in using Ether, at no cost. However, the relatively high transaction costs still deter many people. Because of high transaction costs, Web3 is less likely to be used in less affluent developing countries. On Ether, these challenges are being addressed with the Layer 2 scaling solution. The technology is readily available, but we need to increase the level of adoption of the technology at Layer 2 in order to make Web3 available to everyone.
User Experience: Currently the technical barrier to using Web3 is high. Users must understand security issues, navigate complex technical documentation and navigate obscure user interfaces. Wallet providers are trying to focus on this issue, but there is still a long way to go before Web3 is adopted on a large scale.
Education Costs: Web3 introduces new paradigms that require learning different mental models than those used on Web 2.0. As Web 1.0 emerged in the late 1990s, similar educational activities emerged. Proponents of the World Wide Web used a range of educational technologies to educate the public, from simple metaphors (information superhighways, browsers, web surfing) to television broadcasts, and so on. Web3 is not difficult, but it is different. Educating Web2 users about these Web3 paradigm education programs is critical to their success.
Infrastructure: The Web3 ecosystem is young and is rapidly evolving. As such, it currently relies heavily on centralized infrastructure (GitHub, Twitter, Discord, etc.). Many Web3 companies are scrambling to fill these gaps, but building a high-quality, reliable infrastructure will take time.
From: What is Web3 and why is it important? - Ethereum.org
The development of Web 3.0 is still in the early wild growth stage, and any technological development brings opportunities as well as risks. In summary, the main risks of Web 3.0 development are as follows:
Monetary policy tightening brings market volatility risk: Inflation brought by loose monetary policy makes investors look outward for other assets, and crypto assets may be one of the assets considered by these investors. However, as the U.S. enters a new interest rate hike cycle, the capital market for crypto assets may shrink, which in turn will lead to greater volatility in the price of crypto assets.
Anonymity mechanism brings risks such as money laundering and tax evasion: Although attributes such as decentralized trading and anonymous trading reduce transaction costs to a certain extent, they also bring potential risks such as money laundering and tax evasion. Thus, real names for traders and increased traceability of transactions are one of the necessary conditions for the development of the industry.
The token mechanism may harm investors and other risks: Token mechanism permeates all aspects of Web3, and the incentive tokens behind it for the ecological parties and the financial value (such as securities properties) brought with it are bound to bring market volatility and speculation, and such activities may bring potential harm to ordinary users (investors), similar to crowdfunding or capital-raising.
Risks such as technical and mechanism setting vulnerabilities: In the early stage of industry development, there may be inadequate technical reserves and unsound mechanism design, and the economic value behind it is bound to bring the possibility of attack, which may bring potential losses. In addition, the Defi financial system continues to prosper, which may give rise to an increasingly complex financial market, and the risk of any one link may involve the whole market. Therefore for different attribute cryptocurrencies, certain industry regulations should exist.
From: Web 3.0 in Metaverse Series: A New Paradigm Opens a New Phase of the Internet - Wall Street Insight
Blockchain is derived from the Bitcoin system, which is essentially a shared database in which data or information is stored with characteristics such as "unforgeable", "open and transparent", and "collectively maintained". "Based on these features, blockchain provides a solid foundation of "trust" and creates a reliable "cooperation" mechanism.
Web3's infrastructure is based on blockchain technology, and the Web 3.0 Foundation defines Web3's technology stack as a 5-layer architecture system consisting of L0~L4.
From: https://web3.foundation/about/
Infrastructure and Network Layer
Responsible for the basic data transfer and building consensus to reach efficiency. This is the foundation of the Web3 technology stack, including how nodes communicate and how they are programmed at the lowest level.
Layer0 can also be seen as the core concept of the entire blockchain system, an extension of the concepts of "decentralization", "security", and "scalability".
Zero/low trust interaction platforms (shared security): A platform that implements zero/low trust interaction protocols, allowing all participating members to share security with each other. Polkadot is an example of this.
Peer-to-peer (p2p) internet overlay protocols: A network suite that allows nodes to communicate in a decentralized manner.
Platform-neutral computation description language: A method for executing the same program on different physical platforms (architectures, operating systems, etc.). Examples include EVM (Ethereum), UTXO (Bitcoin), and Wasm (Polkadot), among others.
From：https://web3.foundation/about/
The protocol layer provides the ability to distribute and interact with data
Layer 1 protocols are able to process and complete transactions on their own blockchain, and come with their own native tokens for paying transaction fees. layer 1 addresses trust, and layer 1's tokens exist to make this underlying public chain resistant to 51% attacks.
Zero/low trust interaction protocols: A protocol that describes how different nodes interact with each other and trust computation and information coming from each node. Most cryptocurrencies, such as Bitcoin and ZCash, fit the definition of zero/low trust interaction protocols: they describe the rules a node needs to follow to participate in the protocol.
Data distribution protocols: Protocols that describe how data is distributed and exchanged among the various nodes of a decentralized system. Examples include IPFS and BigchainDB.
Transient data pub/sub messaging: Protocols describing how data that is not intended to be kept permanently (e.g., state updates) is communicated and how nodes are made aware of its existence. Examples include Whisper and Matrix.
From：https://web3.foundation/about/
Middleware layer, which enhances the capability of Layer 1: for improving scalability, encrypted messaging, distributed computing, and other functions.
Layer2 pursues the ultimate performance, and as a "Layer 2 network", it can take up most of the computation work for Layer1, such as separating Ethernet transactions from the main chain, reducing the burden of the layer 1 network, improving business processing efficiency, and thus achieving scaling capacity. Layer2 can only achieve local consensus, but it can meet the needs of various scenarios.
Layer2 has several solutions, including State channels, Sidechains, Plasma, Rollup (ZK Rollup, and Optimistic Rollup), Validium, Hybrid solutions, etc.
State channels: A way for blockchains to increase scalability by allowing nodes to communicate with each other off-chain, by "turning on" and "turning off" channels on the main chain, and by writing only the initial and final results, rather than recording each state transition on the chain. Examples include Bitcoin's Lightning Network and Ethereum's Raiden Network.
Plasma protocols: Plasma is another way to improve scalability by creating a "tree" of blockchains, where the master chain is the root of the tree and the sub-blockchains interact with higher-level chains as little as possible. Examples include Loom's PlasmaChain and OmigeGO Plasma.
Encrypted storage: Mathematical encryption and decryption of data using cryptography, both static (i.e., stored on a specific computer) and dynamic (i.e., transferred from one computer to another).
Heavy computation: Provides a way to allow computation to be spread across many computers and to prove the correctness of the computation. Examples of this include Golem and Ether's TrueBit.
Distributed secret management: Allows messages to be accessed only by authorized parties, including complex cases such as "decrypting this message requires all 6 signers to use their keys" or "any 5 of 7 signers must agree ". Examples include parity secret storage.
Oracles: A way of injecting off-chain data (such as weather results or stock prices) into the blockchain, typically for the use of smart contracts.
From：https://web3.foundation/about/
Human-readable languages and libraries allow developers to create programs at the appropriate level of abstraction.
At this level, developers and programmers can abstract appropriately and develop programs. This layer includes APIs and languages for extensible protocols.
Various languages can be used to develop applications, such as Solidity and Vyper (Ethereum), Plutus (Cardano), and Rust (Substrate). In addition, there are various frameworks.
Making it easier to program applications that interact with the blockchain, such as ethers.js, web3.js, and oo7.js.
From：https://web3.foundation/about/
The top layer of the stack includes the ability for ordinary users (not developers) to interact with one or more blockchains.
The protocol provides extensible user interfaces (like a browser), and users use programs to interact directly with blockchains without needing to know implementation details. Examples include Status, MetaMask, Parity, EtherWallet, or MyCrypto.
From：https://web3.foundation/about/
Product-centric Internet services in Web 2.0 do not pay much attention to the importance of user data experience, while in the era of Web 3.0, the traditional product-centric pattern of the Internet will no longer exist.
The core stack supports the operation of the entire blockchain ecology and carries the underlying infrastructure of Web 3.0, and is also an indispensable technical component for decentralized application development.
The main components of the core stack are Dapp Browser, Application Hosting, Query Layer, State Transition Machine, Consensus, and P2P Layer).
From: Embracing Web 3.0: Paradigm Shift and Investment Outlook under the Technology Stack (IOSG VC)
Through some of the most influential and essential projects and technology components, here is a brief analysis of the state of Web 3.0 development, and the extent of decentralization.
Decentralized Application Browser (Dapp Browser)
Mist: an Ethereum web interface for non-technical users who want to create Dapp and use crypto wallets.
MetaMask: a software cryptocurrency wallet for interacting with the Ether blockchain. It allows users to access their Ethereum wallet through a browser extension or mobile app, which can then be used to interact with decentralized applications.
Coinbase Wallet: A self-hosted wallet that allows users to have full control of their cryptocurrency. This means that the wallet's private key belongs to the user, not to the Coinbase.com centralized exchange.
Trust Wallet: Coinbase's official mobile wallet. It provides a safe and convenient option for users to store funds outside of the Coinbase platform and integrates a variety of built-in features to further enrich the experience of using crypto assets.
imToken: A decentralized digital wallet for hosting assets, identities, and data in the crypto-digital world.
Application Hosting
IPFS: A content-addressable, versioned, peer-to-peer hypermedia distributed storage, transport protocol with the goal of complementing or even replacing the Hypertext Media Transfer Protocol (HTTP) used for the past 20 years in hopes of building a faster, more secure, and freer era of the Internet.
Arweave: A complete set of decentralized storage protocols, with the core service of providing distributed and permanent storage for data.
Query Layer
Chainlink: A network of decentralized blockchain prophecy machines built on Ethereum. The network is designed to facilitate the transfer of tamper-proof data from off-chain sources to on-chain smart contracts.
Band Protocol: A cross-chain data prophecy machine platform designed to build a high-quality suite of web3 development products.
State Transition
Ethernet Virtual Machine (EVM): A runtime environment for Ethernet smart contracts where nodes in the ecosystem can run their own DAPPs with the help of an EVM. examples include Ethermint, Hashgraph, WANchain, etc.
Web Assembly Virtual Machine (WASM): A portable, small, fast-loading, and Web-compatible new format that writes code in non-Java programming languages and runs on browsers, and is the first native alternative to Java since the birth of the Web. Examples include Ether 2.0, Polkadot, Dfinity, Cardano, Solana, etc.
Consensus Layer
PoW (Proof of Work): A node is selected through a contest of arithmetic power, and that node decides the content of the next consensus round of blocks (bookkeeping rights).
PoS (Proof-of-Stake): Nodes compete for bookkeeping rights not by arithmetic power but by equity (tokens.) PoS also requires calculating hash values, but unlike PoW, it does not require continuous violent calculations to find nonce values.
DPoS(Delegate-Proof-of-Work): evolved from PoS. Coin-holding users obtain votes by pledging tokens to vote for a number of nodes as block producers to fulfill the obligation to generate blocks on behalf of the coin-holding users.
Peer-to-peer Network Layer (P2P Layer)
Devp2p: A secure network suite that provides support for Ether, it also defines a set of networks and peer-to-peer protocols. devp2p uses RLPx for authentication, stream multiplexing, network formation, and protocol multiplexing.
Libp2p: A modular IPFS-enabled secure network suite for handling authentication, transport, stream multiplexing, peer discovery, peer routing, content routing, NAT traversal, and relaying. It defines a set of interfaces for common networking and peering protocols. libp2p uses multiple formats for self-description, avoiding algorithm locking and cryptographic agility.
These technical components, while not part of the underlying chain or essential to the development of DApps, will likely be core components of future development stacks, meaning they are areas well worth the attention of investment houses.
Sidechains: The most notable use cases in the BTC network are Drivechains and Liquid, while in the Ethereum system, the most important are SKALE within the Plasma framework and the recently launched Roll proofs from the Ether Foundation, as well as Cosmos Ethermint.
Payment Channel and State Channel Network (PSCN): Blockstream launched the Lightning Network in 2015, while in the Ethernet ecosystem there are Raiden, Loom, and Celer.
Interledger Protocol ( ILP): Ripple Labs uses Interledger Protocol to connect banking systems across borders in its products. And Kava uses Interledger Protocol technology to build a Defi platform on top of Cosmos that supports assets such as XRP, BNB, ATOM, etc.
Immutable Structured Databases: Many teams such as BigchainDB, OrbitDB, and Bluezelle are building immutable structured databases as Permissionless, Free Standing Chains. Given the performance gains from using structured databases, developers may choose to use these systems natively, and teams like SKALE may use these open source systems as Plasma chains.
Zero-knowledge Proof: The two most representative technologies for zero-knowledge proof are ZK-SNARK and ZK-STARK, represented by the projects Coda and Starkware.
From: Web 3.0 Paradigm, Technology, and Ecology
This section is basically adapted from The Web3 Landscape / a16z
The iterations of the blockchain technology wave in the past few years have given birth to a number of emerging Web 3.0 business models. Some of them are brand new business models based on the underlying technology of blockchain architecture (blockchain underlying infrastructure, protocols), while others are innovations based on some traditional business models of Web 2.0 combined with blockchain cryptography.
From: Embracing Web 3.0: Paradigm Shift and Investment Outlook under the Technology Stack (IOSG VC)
Decentralized Autonomous Organizations (DAOS) are online member-owned communities governed by the consensus of their members rather than centralized leadership.DAOs represent exactly what they are called because they are.
Decentralized: rules cannot be changed by a single figure or centralized party.
Autonomized: automatic vote counting and decision execution based on logic written into smart contracts, without human intervention.
Organizational characteristics: DAO's organization can coordinate activities among distributed community stakeholders.
DAOs represent the use of "on-chain governance". For example, in traditional corporate governance, a company sets the charter for certain policies and how to elect a board of directors. a DAO can write similar policies and charters in code as a smart contract, extending this concept further into the digital world. A smart contract is a stable computer program that runs on a blockchain network, it is like a legal contract. smart contracts are promises, only they are written into computer code and can be executed automatically and autonomously.
DAOs are not a new concept, the idea of DAOs and governance mechanisms has been around for a long time, and in recent years, various mainstream Defi protocols have gradually increased user engagement, and since 2019 to date, DAOs with different functions have started to gradually emerge: Operating Systems, Investment DAOs, Funding DAOs, Collection DAOs, ** Protocol DAO**, Service DAO, Social DAO, and Media DAO, etc. DAOs have also entered the current exploration period to explore the utility and value of DAOs for different purposes, application scenarios, and ecologies.
DAO is an emerging model of organizational governance: It is a new type of organization for building around transparency and inclusiveness. These principles can be applied to all kinds of organizations, including nonprofits, collectives, cooperatives, and investment funds. **
Governance structures determine how an organization makes decisions in the interests of its participants, and the challenges of the current form of organization are opaque decision-making + high barriers to participation by ordinary participants in governance.
Decentralized Finance (DeFi) refers to the decentralized application of finance, such as savings, lending, and exchange.
All DeFi protocols are essentially providing a financial service, that is, a financial service robot to provide financial services, analogous to the traditional world, that is, a bank to provide you with lending services, or a financial company to help you manage your money, or a fund company to help you make investments, etc. These financial robots are actually similar to the traditional world. These financial robots are actually the same as the traditional world of financial services companies, the difference is that these robots are automatically executed, automatically operated, and are completely decentralized operations, consisting of code.
Decentralized applications in the financial sector (savings, loans, and foreign currency exchange)
Decentralized applications (dApps) are smart contracts whose code writing is built on the relevant domain. dApps exist as long as the blockchain hosting the relevant protocol exists and cannot be maliciously changed OR manipulated. dApps are open and any computer can participate
Blockchain payments enable peer-to-peer digital transactions, where previously digital payments had to rely on a centralized record keeper.
Cryptocurrency is the unit of account, the medium of exchange, and the means of storing value in the system, without a centralized third party, and also enables actual value transfer in a digital manner.
Cryptocurrencies are low-cost, real-time, borderless, peer-to-peer value transfers that are not restricted by the hours of operation of mainstream financial institutions. Low barriers to entry provide opportunities in regions of the world where financial services are inadequate.
The world's 2 billion unbanked people can access financial services, and multinational workers can send income back to their families in their home countries at low cost and convenience.
A safer means of storing value for countries experiencing hyperinflation.
Current mobile payments have changed the front end of consumer finance and DeFi has changed the back end: laying down new pipes, and trajectories, and making participation in the financial system cheaper and easier.
Giving consumers power and control over the consumer finance products they use
Embrace the core values of the Internet: open to anyone, commitment to open source, third-party developers can adapt without permission, low cost, security and privacy protection with encryption technology, and transparent management.
NFT (Non-fungible Token) is a digital commodity built on top of blockchain standards, marking the ownership of the commodity with a code and supporting free trading in the open market.NFT gives users ownership and management rights to digital commodities, instead of being limited to usage rights only. In the long run, the traceability and transferability of property rights will not only provide more incentives for creators but will also increase purchasers' willingness to consume digital goods.
Commonalities and differences between NFT and cryptocurrency pioneers:
NFT is a depository, not a security. NFT does not involve possible future cash flows, is only a depository of existing digital goods, and does not have securities properties per se.
NFT is a non-fungible token, but it is not completely "indivisible". A complete NFT can be split into several fragmented tokens with the help of a smart contract escrow, thus achieving the same high liquidity as a homogeneous token. As of August 31, 2021, the floor price of the NFT avatar top stream Cryptopunk is close to $400,000, and some collectors are fragmenting their punk as a way to lower the financial barrier to buying and investing in NFT.
The social value of NFT is greater than the practical value. In the traditional physical world, people wear luxury goods or collect niche art to show their status and gain social recognition to enter the corresponding circle. When people spend more time immersed in the online world, they also have the same need to show their social status or gain circle recognition. As a result, NFT avatars, which support real-time display on social platforms, have been a huge success, and top luxury brands LV, Burberry, and Gucci are keenly aware of the new trend and have entered the NFT space.
Asset Allocation: Early virtual currency practitioners have witnessed and even shaped the digital currency industry, and have some knowledge of the future direction, volume, and scale of the industry, which will inevitably give birth to billion and tens of billions of billionaires in the future. Virtual currency assets are different from gold, silver, stocks, etc. Realization is relatively difficult. Faced with the problem of future asset allocation, art assets are a good category for asset allocation.
Artwork identity value: Crypto artwork has strong social attributes. In addition to single works, many crypto artworks are multi-edition limited edition, artwork can be divided into multiple copies and numbered, if hold a certain artist's work, others also hold, both sides form a common social relationship association on this collection, forming a potential collection social network.
Important art history status: The digital migration of traditional art is changing in a subtle way, the mainstream and elite artists do not recognize digital design, film, games, etc. as art, these digital art may exist, but it is difficult to trade and auction them, and there is no price. the emergence of NFT allows the original neglected digital art to have a medium, so to make up for the past 20 years of the past 20 years and has only been able to be rapidly recognized by the market.
Some of the content is taken from - Value or Bubble? Demystifying NFT: The New Myth of Unreadable Art Collection and Investment
A stablecoin is a privately issued cryptocurrency that maintains a stable value over time relative to another asset (such as the U.S. dollar or the euro). Fiat currency- collateralized stablecoins - as with those pegged to the U.S. dollar - maintain a reserve of fiat assets to match the value of each token issued. Other projects are secured by digital assets or are algorithmically stabilized through the automatic execution of smart contracts.
Central bank digital currencies (CDBCs) are digital currencies issued by governments to represent sovereign debt.
Stablecoins offer the advantages of cryptocurrencies, but without the volatility. While cryptocurrencies like Bitcoin and Ether can experience huge price fluctuations in a single day, stablecoins are designed to keep prices constant. This helps stablecoins to be an effective medium of exchange. As low-volatility assets, stablecoins help to enable on-chain transactions, including modernizing global payment systems and opening up broader access to financial services for the unbanked. They are a fundamental building block for a range of important innovations.
CBDCs offer many of the benefits of stablecoins, although they pose certain privacy and security concerns. Stablecoins and CBDCs are not necessarily mutually exclusive. Giving people a choice between stablecoins and CBDC creates competition drives innovation and brings new and improved features.
What are privacy and digital infrastructure?
One of the limitations of many existing blockchain networks is that they are, by design, completely transparent. However, cutting-edge research in new areas of cryptography has made it possible to mathematically prove the validity of certain information without providing the information itself. For example, users can prove to a website that they know their passwords without the website having to store the user's passwords in a vulnerable database. Thus, this set of solutions can address both privacy and scalability issues.
It protects users’ personal data and, moreover, it fundamentally expands the design space for applications. The layout of the privacy infrastructure will enable a range of applications with more protective features.
It helps users allay privacy concerns by disclosing information to specific subjects but preventing it from being made public.
The privacy computing infrastructure is a fundamental platform that facilitates the full flow and effective integration of data elements. Since it has a certain technical threshold and requires social data resource coordination, it should be laid out in the form of infrastructure.
The construction of privacy computing infrastructure can solve the problem of technical support for the efficient integration of massive data in the social scope, promote the orderly circulation of social data, gradually promote the open collaboration of industrial data, and form a synergy for industrial development by establishing governance norms and application templates for the whole life cycle activities of data elements.
The creator economy refers to the emerging community of creators - artists, musicians, and game developers - who connect directly with their supporters and collaborate without intermediaries, enabling them to develop independent revenue streams.
Web3's creator ecosystem is already taking shape, whether it relies on blockchain, NFT's underlying economic system, or its own cryptocurrency system within the platform. Creators can use ecological tools to complete content production and realize revenue through the platform, trading market, community, and other channels.
As business models continue to innovate, the creator economy will see a boom, with thousands of talented people building on what came before them and continually disrupting old traditions. But in summary, creators will receive an increasing share of incentives. Because only those who respect innovation will continue to produce more and more innovative works
The relationship between creators and audiences will take on a whole new pattern in the future, with interaction models around new technologies or interconnections between audiences within communities becoming the trend. The creator economy is still in its infancy, and early adopters will certainly benefit from it.
Many platforms are still relying on creators to make money, but as more and more creator economy infrastructure platforms are built, creators will have more autonomy without being restricted by platforms and brands. Creators will not sell on any platform that takes a percentage of their sales.
Creators will transition from being solopreneurs to collaborating in groups. There will also be communities of creators who can complement each other's strengths to collaborate. The solo scene is coming to an end, with more co-branded and collaborative product offerings in the future. Creators will choose a super platform to manage and run everything, including website building, product sales, email subscriptions, and community building. Many platforms, including Podia, are working to integrate all the tools creators need to attract and keep creations.
GameFi is a game built on blockchain technology. A key difference from popular games like Fortnite, Roblox, or My World is that: games can be truly economic, where players can actually own the items they work to acquire, giving players the ability to buy or sell those items, or bring them into another game altogether.
This is just the beginning: we expect blockchain-based games to lead the way to a whole new digital world and economy.
GameFi is an example of decentralized technology creating new ways for creators to monetize. In-game props such as tools, skins, upgrades, avatars, and experience values are player-owned NFTs that can be sold in the real world, traded on secondary markets, and transferred between games. Blockchain games have also facilitated the development of the "play to earn" model. Through games like Axie Infinity, people can earn real-world money by playing video games. During the 2019 coronavirus pandemic, many people in the Philippines relied on games like Axie Infinity to make money to ease the economic hardship of the blockade.
While we are still a long way from experiencing the infinite digital world originally described by science fiction writers as a metaverse, the epidemic did accelerate familiarity with immersive virtual experiences. For example, parties or conferences attended by avatars, or meetings held in virtual conference halls, offer clues to what a metaverse might be like. Or for those familiar with Fortnite, know about the in-app purchases of avatars and may have even attended Travis Scott's concert at Fortnite, when over 12 million users attended. These games and platforms are still centralized platforms controlled from the top down by developers, but they are beginning to outline a future meta-universe that is borderless and where everyone can contribute to its development.
From: **Web 3.0: Challenging the Law and the Legal Challenges, the** Legal Challenges brought by Web 3.0
In his book "Code," Professor Lessig argues that the Web order will be governed by laws, norms, markets, and code all at the same time. Web 3.0 is already pointing to changes in the architecture of the Web, which will inevitably bring a huge wave of change to the Web order. Even if Bitcoin is only a glimpse, it has already created a wave that has not yet subsided for the online financial order.
In the era of the Internet of value, we cannot ignore the human demand for "order". Blockchain, as the underlying technology of Web3.0, is posing a new challenge to traditional centralized currency and minting rights with its technical features of de-trusting and anonymizing. A simple understanding is that if virtual currencies or other crypto assets issued by Web 3.0 create an economic architecture that no longer requires a centralized presence to endorse the general equivalence of the grant, then traditional centralized nodes will lose their relevance. This is the most direct threat and challenge of Web 3.0 to the right to mint money. The minting of money generally requires the endorsement of a strong central entity, and this act can and should only be exercised by the state.
At present, Web3.0's R&D and investment subjects are basically large Internet enterprises, which themselves are still in fierce competition. The virtual currencies issued by them have natural defects such as high uncertainty and weak risk resistance and are often used for financing terrorist activities, cross-border gambling, tax evasion, money laundering, and other criminal acts, and the profit-seeking nature of capital also greatly increases the cost and risk of governance. At the same time, the lack of legal compensation makes it difficult to reach a collective consensus about the currency and to maintain the stability of the value of the currency. Therefore, Web3.0 cannot create a completely open and shared economic system with an unhindered circulation of wealth at the current stage.
We also need to see a positive side to this threat: the traditional consensus on modern money is in crisis, and the emergence of Web 3.0 and virtual currencies could provide a new way of thinking about future currency design, of which China's digital renminbi is one of the more successful examples. The crypto-asset community is convinced that the state's monopoly of minting power and its inevitable provision of the excess money supply is the root cause of inflation and that severe inflation will eventually cause social unrest. web3.0, as an effective tool to change the way wealth is distributed, can effectively solve the problem of monetary excess.
In addition, although Web3.0 poses a new challenge to the traditional national minting power, it also makes a significant contribution to the prosperity of the capital market. It is true that the meta-universe and Web3.0 cannot be realized by simply changing the name from Facebook to Meta, but the gap between the ideal and the reality should not prevent us from seeing the world with a clear mind. The inherent profit-seeking nature of capital is greatly promoting the prosperity of the Web3.0 industry, and it seems that the Web3.0 economy is becoming a new growth point at a time when the growth of the real economy is sluggish. In this way, the correct guidance of regulation is not only crucial to Web3 itself but also has a subtle impact on the social economy.
We must see that Web3.0 has the potential not only as part of the virtual economy to empower the real economy but even has the ability to build a whole new economic system, which requires regulators to take smarter and more scientific regulatory measures to guide instead of a one-size-fits-all approach, to ease the problem rather than blocking the technology and the problem together.
Before the advent of Web 3.0, most of the network security management obligations needed to be "manually fulfilled" by the corresponding directly responsible personnel. However, with the emergence of Web 3.0 and smart contracts, the main information network security management obligations can be written in the form of smart contracts, which originally required the "manual performance" of obligations to the computer network to be completely autonomous implemented.
The so-called "Smart Contract" is simply defined by Nick Szabo as "a set of digitally defined promises", and we can simply use vending machines as an analogy to smart contracts. In the case of vending machines, we only need to set up a series of pre-processes (e.g., set the amount of money for each item), and then when the process is satisfied (the user puts in the money), the vending machine will spit out the item. Similarly, network security authorities can pre-set a set of standardized intelligent contracts to fulfill information network security management obligations, network service providers only need to apply this set of contracts, and the computer network will faithfully implement information network security management obligations.
Thus, except for the case of refusal to apply the contract, there seems to be no possibility for the information network service provider to violate the information network security management obligations. Thus, Web 3.0 and the application of smart contracts not only greatly improve the degree of fulfillment of network security management obligations, but also greatly reduce the possibility of network service providers constituting the crime of refusing to fulfill information network security management obligations.
As Lessig says, "In the future, code is both the greatest hope and the greatest threat to the realization of freedom and libertarian ideals. We can either design, program, and build cyberspace to protect the core values we believe in, or we can let those values disappear into thin air in that cyberspace. We have neither a middle way nor an all-purpose solution. Code is not discovered; it is invented and created by humans."
The term Web3 actually refers to a new type of Internet experience based on decentralized technology. And Web3 is already beginning to disrupt the way we interact in all areas of investing, trading, gaming, and the arts. A growing number of users and organizations around the world have begun to realize how important trustless interactions and cryptographically secured protocols are. While Web3 is still in its early stages of development, it has the potential to restore the Internet to the way its designers intended: completely transparent, reliable, and easy to use.
In terms of applications, it needs the acceptance of cryptocurrencies to increase to a certain amount before the applications will explode massively; it also needs some early applications with explosive points to come out of the fixed circle. Social is worthy of attention as a track to the mainstream, and we are more optimistic about projects that can change the existing social play, have real user needs, and improve the existing social experience. In addition to social, the creator economy is also a very promising track in Web3. Music projects have relatively low infrastructure requirements and will likely explode in the early stages. In addition, the fan economy is an important direction for getting out of the fixed circle, and NFT can play an important role in it.
Regardless of the track, Web3 also needs to address commercialization and the existence of financial revenue based on real claims for the token economy model to be sustainable. In Web2, the main commercialization model of social media was advertising revenue, which was the marketing input of many corporate clients based on business needs. Then in the Web3 era, revenue needs to be generated through a suitable business model as well. Although there is no final answer yet, as Web3 evolves, the commercialization problem will be solved, just as no one could imagine so many commercialization models today even in the early days of the Internet. In the wave of Web3, let's stay optimistic and open-minded to learn and build.
[1], Gavin Wood. Why We Need Web 3.0
[2], What is Web3 and why is it important? - Ethereum.org
[3], Embracing Web3.0: Paradigm Shift and Investment Outlook under the Technology Stack (IOSG VC)
[4], Paradigm, Technology, and Ecology of Web 3.0
[5], The Web3 Landscape / a16z
[6], What is Web 3.0 and why should you care?
[8]，Web 2.0 vs. Web 3.0: What's the difference?
[9], Legal Challenges brought by Web 3.0
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