Given the open-source nature of the industry, anyone building a web3 product can leverage existing code in order to deliver use cases within their application, as long as they comply with the licensing terms.

This newsletter aims to cover the most relevant web3 product releases so that entrepreneurs and builders are aware that, in many cases, they don't necessarily need to build every single feature from the scratch, potentially saving valuable development budget.

Additionally, some of the products & tools I cover are built by top notch teams, with a proven track-record and in most cases are already audited, which means another potential saving opportunity as audits don't come cheap!

Let's get into it.

From the Genesis Block on the Bitcoin network, where Satoshi Nakamoto forever inscribed "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks", messaging on public blockchains has been possible via transactions containing the hexadecimal version of a message, which could then be readable for humans via ASCII or UTF-8 encoding methods into characters.

Similarly, messages can be directly included in Ethereum's (and other blockchains') transactions, but the issue is that messages delivered this way are public.

During the 2020-21 crypto bull market, wallet-to-wallet messaging (via tools like Blockscan Chat) became very popular between users negotiating NFT over-the-counter deals or hackers negotiating bounties.

Now, with the rise of Web3 Social, web3 messaging capabilities are quickly becoming a must-have feature not only for wallets but also for applications looking to connect users, execute marketing or support, e-commerce and more.

Let me introduce you to the XMTP Network.

XMTP (Extensible Message Transport Protocol) is an open protocol, network, and standards for secure, private web3 messaging with end-to-end encryption.

Teams looking to provide messaging between blockchain accounts in their apps should consider leveraging the XMTP SDKs (available for JavaScript, React, React Native, Kotlin, Swift and Dart).

The XMTP messaging API client takes care of:

• Authentication using an XMTP identity that the user owns and controls

• End-to-end encryption of messages that the user owns and controls

• Providing an interoperable inbox accessible across apps built with XMTP

Messaging between participants that opt-in is free, while unsolicited messages will often incur fees or see token staking requirements.

There are no messaging-related fees incurred by developers for building with the XMTP SDK.

Web3 Social pioneer Lens Protocol has adopted XMTP to provide a secure and private direct messaging layer for the entire Lens ecosystem, if you are a user of Hey, Orb or Phaver then you are already messaging via XMTP.

Snapshot, the leading voting platform integrated XMTP to solve the biggest challenge with decentralized governance: voter apathy. Now DAOs can reach blockchain addresses directly to notify and engage voters, hold delegates accountable, and verify authenticity while preserving privacy.

Coinbase's mobile wallet, launched in September 2023, and extremely successful given it's friendly UX also supports messaging via XMTP.

Besides the wallet-to-wallet messaging (which also includes support for notifications, attachments, reactions and read receipts, user consent & spam filters), there's also some other notable use cases I'd like to quickly mention:

• Marketing - whether be newsletters, promotional offers, and marketing messages, apps can design delivery with a targeted reach (NFT owners, token holders, depositors, and lenders, etc) and leveraging analytics and insights around customer interaction with marketing messages, allowing for more data-driven decision-making and refinement of marketing strategies.

• Automation - Autonomous interactions play a vital role in streamlining processes, responding to triggers, and communicating efficiently. XMTP allows implementing customer service or support bots that can provide instant responses to queries, process transactions, or even assist in complex tasks.

• AI and ChatGPT integration: Leverage the capabilities of AI and models like ChatGPT in conjunction with XMTP for enhanced natural language processing. This can create more human-like interactions in automated chats, enhancing user experience.

• E-commerce - XMTP enables payments and tipping features within the chat, order confirmations, escrow and instant check-out that can vastly improve UX, trust, and security of existing e-commerce applications.

• Frames - similar to Farcaster's, which I covered in the previous Web3 Watch issue.

• Group Chat - coming soon!

There are more exciting use cases and I totally encourage you go through XMTps docs if you want to learn more about the tech behind XMTP Network.

The quickest way to try out XMTP is via the Web3 Inbox client and:

• Connect your wallet

• Sign a message to enable XMTP

• Start messaging other wallets (with or without a .eth domain)!

More often than not, web3 users have more than one wallet and in many cases multiple wallets. You might have your personal public address and then an address where you engage in DeFi activities only, and another one that is linked to your hardware wallet. EVM addresses remain the same for all EVM chains, but you might have multiple EVM addresses. And then you might have your Bitcoin wallet, Solana wallet, etc.

ENS Domains became the standard when it comes to human-readable addresses and if you are lucky or pay enough, you might be able to mint your <yourname>.eth address.

Still, ENS does not solve the issue I mentioned above of managing multiple addresses plus there is the squatters issue..

Developed by Delegate & powered by LayerZero, Clusters it's one universal name that encompasses all the blockchains.

A sample cluster containing two wallets: an EVM wallet and a solana wallet

Users can group multiple wallets under one universal name in a very intuitive format:

• yourname/defi

• yourname/nfts

• yourname/solana

• yourname/ordinals

This combination of rivalrous onchain top-level namespace combined with flexible offchain secondary namespace makes a cluster both a unique digital asset and a highly useful universal profile.

It's different than ENS' .eth, SNS' .sol, Avvy's .avax, SpaceID's .bnb and .matic, or Unstoppable Domains using arbitrary conflicting TLDs.  Currently supports most EVM networks, Solana’s Phantom wallet, with Bitcoin wallets coming soon.

The other problem that Clusters solves is that of squatters, but what are they?

Squatters are switched-on traders that buy highly sought-after domains, usually in bulk, hoping to sell them later at a higher price.

Ecosystems launching name services which do not properly price the most valuable assets will end up with high inefficiency, captured by squatters who do nothing to further social awareness and usage of the protocol. This short-term hype is outweighed by long-term frustration of potential future users that struggle to buy the domain they wanted.

In order to solve this issue, Clusters introduces demand-based capped recurring pricing where:

• 99% of users with an uncontested name like ebarbieri/ will pay a cheap minimum price (similar to ENS)

• Competitive names like defi/, users can bid on names owned by others which will increase their recurring fee

• Bridging EVM to non-EVM chains - With Clusters, a bridge app could integrate Clusters in order to autopopulate which SOL address is in the same cluster as the EVM address they're bridging from.

• Cross-chain airdrop targeting - Say a project wants to airdrop a Solana coin to all Pudgy Penguins holders. With Clusters, you can easily query which SOL addresses are linked to Pudgy Penguin EVM addresses.

• Social Leaderboards - you might be active in different chains and communities but you want to have your activity consolidated in one profile within a wallet aggregator app (think of Zapper, Zerion, Daylight) as opposed to having to add addresses manually.

I expect a lot of applications, particularly those willing to capture a multi-chain and non-EVM audience to integrate with Clusters thereby allowing users to "Connect via Clusters".

I hope you enjoyed the Issue #2 of the Web3 Watch newsletter and I would appreciate feedback both in terms of content and also suggestions regarding open-source projects that will supercharge apps that haven't even been built yet, as long as they are legit of course!

If you are looking to build or deliver a use case via blockchain-enabled technology check Labrys out, this is what we do day in day out. Alternatively don't hesitate to drop me a DM, always happy to have a good web3 chat.