As the blockchain market is going further north, the Web3 industry branches out, coining the new technological phenomenons. But what is awaiting such a complex industry in the future?
To shed light on Web3’s potential, I asked Mgoes – a builder of SocialFi platform WalletChat – to share his expert insights on behind-the-curtains of the decentralized industry.
– Seeing that you have vast experience in crypto and Web3, I would really love to know: how did you find yourself in this industry?
– It was completely random – a friend just wouldn't shut up about Bitcoin back in 2014 :) Until I took a look. It took until 2021 though for me to get drawn in to do this full-time.
– You are currently running WalletChat – a decentralized social platform. How does blockchain actually enhance social communication platforms?
– There's been a lot written about this. But the basic building blocks that Web3 social offers and Web2 cannot are uncensorability and a more effective flow of value to participants, i.e. creators and users. It is far from clear what the winning products will look like and how they will deploy their features, but it is highly likely that they will have these principles baked in at their core.
– Which potential does SocialFi have? Is it possible that blockchain-based media will dominate in the media dimension? Which steps should be taken for achieving this advantage?
– Yes it is, and this is the future we're all working towards. It won't be instant though, and it's not clear that any of the existing products will achieve that status. It may take well over 10 years for X or Instagram to be replaced by a Web3 alternative. The best thing we can do is to continue building – it will take hundreds of new products experimenting with different configurations of the principles I just spoke about – all competing for attention – and the best few eventually coming to dominate.
– In 2021, one of the technologies that directly impacted the crypto was NFT. In 2024, are there any tech pieces that bring the equal revolution to the market?
– In terms of infrastructure, we have more performant blockchains like Solana and L2s, and we also have dePIN, which includes infrastructure for decentralised AI. I think though that most of the new primitives take a while to fully mature – and I'm personally spending more energy keeping my eyes on new projects built on the existing infrastructure, as even primitives that appeared one or two cycles ago are still in their infancy, in the larger scheme of things.
– Are NFTs dead? Why? If they are, can they be saved and how?
NFTs as a category are far from dead. I'd say the opposite – they are still in the process of being born. Thus I'm super bullish on this category. NFTs as 10k PFP collections is a different matter though and I'm not sure. There is no intrinsic reason why this format should dominate in the future. There is so much more NFTs can do. If we zoom in even more and talk about the specific NFT projects that have been dominating thus far, then I'm mostly bearish. History tells us that after any cambrian explosion (like the Dot-com bubble), 98% of projects die and only 2% go on living. Moreover, the initial cohort will be followed up with many new generations that will build on the learnings of the current NFT projects and do better. Just like Facebook did for MySpace.
– Many see the cross-chains as the latest pivotal trend. Can we see its reflection on the market?
Cross-chain will definitely continue increasing in importance, the more we have different cohorts of people using different chains, or the same people using different chains for different things. Even if you are an ETH maxi today, you need to operate cross-chain as, usually, you don't bridge your assets directly onto the L2, and different apps will be present on different L2s. In this world, we will need a much better cross-chain infrastructure than we currently have. This said, I think the trend to build better cross-chain tools will continue for a long time, along with many other trends.
– We see that the smaller Web3 solutions surpass large networks in developer quantity. While Ethereum and Solana remain leaders, many investors cast their eyes on Celestia, Near Protocol, Ripple, WhiteBIT Coin, memecoins, and other assets. What do you think, why is such a tendency taking place?
– In developer quantity? I don't think that's the case but would love to see the stats, if I’m wrong. I'm pretty sure Ethereum still has the largest development pool by far and even if this were about to change, it takes a while for developers to reskill and become comfortable using other languages.
On top of this, similar network effects can be observed when it comes to established user bases. It will take really novel use cases that are not available otherwise, for existing users to switch to a different chain.
If you are talking about investors eyeing returns though – that's a different story. There will always be more speculation on the hot new thing, partly because something with a 100x smaller market cap has a 100x larger upside. This metric doesn't necessarily correlate with developer or user interest though. Even though raising more money does help with improving these metrics, eventually.
– Does this mean that a large number of local networks and their tokens will pull out mastodons from the market?
– Like I just said, I don't think so. It takes a lot of time and effort to displace incumbents with established network effects. For each Solana, there will be 500 EOS-es.
– And which market would you personally like to see: the one with diverse token’s leadership, or monopolistic/oligopolistic market with dominance of a few large assets? Why?
– I think the best scenario is to have a bit of both. Monopoly of one or a few products is never a good thing – even though when it comes to blockchains, as long as that one product is sufficiently decentralised, it can't behave in the same way as a traditional monopoly.
Though still, a healthy competition is always the best at helping the best ideas flourish. On the other extreme, having 1000s of small chains and none of them achieving scale is also not optimal – any one of them would lack the capacity to secure high value assets, and many protocols will rely on having trillions of dollars in liquidity or billions of users to achieve optimal utility. Many DeFi products and social networks are examples of this.
– Seeing that Web3-solutions’ tokens become even more popular, would you say that investors turned to prioritising asset’s utility within tokenomics/market analysis as a sort of fundamental factor?
– I wish! Certainly some do. But whenever the market becomes hot, it also drives irrational behaviour – or rather it becomes rational to do things that are irrational in the long-run. In other words, the game changes from investing in things with utility and long-term potential to funding whatever is likely to moon next and give you a 100x.
Tokens rarely moon because the utility or user base has increased 100x within a month – it is literally about predicting which narratives will people vibe with next, and jumping on the bandwagon before others do. Memecoins being the best performers this cycle thus far is exhibit A of this.
– Will Ethereum overcome Bitcoin?
– Depends on how you define 'overcome'. Will it flip Bitcoin's market cap? It's not looking like that right now but things could change. Will Ethereum have a much higher volume of transactions than BTC? Already the case and likely to continue. At the end of the day, it's not a zero sum game for these two. Historically flourishing BTC has been good for ETH and vice versa. Just like in web2, Meta going up is also good for Amazon.
– Name top three of your favourite altcoins
– Sorry, but I won't comment. I steer away from giving hot tips on what to invest in, because this is not a one-size-fits-all situation, and your approach will depend on so many factors, such as are you planning to hold for multiple cycles, are you looking for a quick flip, do you invest based on conviction or whatever trends, how diversified is your current portfolio, and etc. Anybody who tells you 'buy A, B, or C' is a crook or shilling their own bags. Happy to talk about the products I'm using though!
– Will Web3 ever overcome Web2, or will they remain separate industries?
– Neither one or the other. They will gradually merge, just like the Internet has been merging with the physical world, over the past 25 years. Yes, there will be some Web3 companies that obliterate their Web2 predecessors (remember Netflix vs Blockbuster). There will be some Web3 products happily coexisting with their web2 alternatives (like Amazon vs Walmart). And there will also be Web2s that adapt and develop Web3 capabilities before anyone disrupts them (Telegram comes to mind as a potential contender). And finally, not everything needs to be on-chain on crypto-native just like not every business got disrupted by the Internet (think dine-in restaurants).
– What is awaiting Web3 in the future?
– A lot of ups and downs. Many billionaires minted faster than ever, many people having lost their life savings faster than ever. A lot of great products that become indispensable to us. Greater financial freedom and freedom of expression for the whole world. A more level playing field, wherever you are, whoever you are. Basically the evolution of the internet, but on steroids.
Paul Osadchuk
