• Before Web 3.0, users and builders had to choose between the limited functionality of Web 1 or the corporate, centralized model of Web 2

• Web 3.0 combines the decentralized, community-governed ethos of Web 1 with the advanced, modern functionality of Web 2.

• In Web 3.0, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible. Tokens give users property rights: the ability to own a piece of the internet.

WEB 1.0: 1990-2005

Web 1.0 refers to the first stage of the World Wide Web evolution. Earlier, there were only a few content creators in Web 1.0 with a huge majority of users who are consumers of content. Personal web pages were common, consisting mainly of static pages hosted on ISP-run web servers, or on free web hosting services.

In Web 1.0 advertisements on websites while surfing the internet are banned.

Web 1.0 is a content delivery network (CDN) that enables the showcase of the piece of information on the websites. It can be used as a personal website. It costs the user as per pages viewed. It has directories that enable users to retrieve a particular piece of information.

Four design essentials of a Web 1.0 site include:

1. Static pages.

2. Content is served from the server’s file system.

3. Pages built using Server Side Includes or Common Gateway Interface (CGI).

4. Frames and Tables are used to position and align the elements on a page.

Summary: Web 1.0 was about open protocols that were decentralized and community-governed. Most of the value accrued to the edges of the network — users and builders

WEB 2.0: 2005-2021

Web 2.0 refers to worldwide websites which highlight user-generated content, usability, and interoperability for end users. Web 2.0 is also called the participative social web. It does not refer to a modification to any technical specification, but to modify the way Web pages are designed and used. The transition is beneficial but it does not seem that when the changes occur. Interaction and collaboration with each other are allowed by Web 2.0 in a social media dialogue as the creator of user-generated content in a virtual community. Web 2.0 is an enhanced version of Web 1.0.

Five major features of Web 2.0:

1. Free sorting of information, permits users to retrieve and classify the information collectively.

2. Dynamic content that is responsive to user input.

3. Information flows between the site owner and site users by means of evaluation & online commenting.

4. Developed APIs to allow self-usage, such as by a software application.

5. Web access leads to concern different, from the traditional Internet user base to a wider variety of users.

Summary: Web 2.0 was about centralized services run by corporations. Most of the value accrued to a handful of companies like Google, Apple, Amazon, and Facebook

WEB 3.0: 2021 - (??)

Web 3.0 is a new buzzterm that is being thrown around by just about everyone, but what does it actually mean?

It refers to the evolution of web utilization and interaction which includes altering the Web into a database. It enables the up-gradation of the back-end of the web, after a long time of focus on the front-end with Web 2.0 Web 3.0 is a term that is used to describe many evolutions of web usage and interaction among several paths. In this, data isn’t owned but instead shared, where services show different views for the same web / the same data.

5 main features that can help us define Web 3.0:

• Semantic Web - Fetch content through search and analysis based on the capability to comprehend the meaning of words, rather than on keywords or numbers.

• Artificial Intelligence - Computers can distinguish information like humans in order to provide faster and more relevant results.

• 3D Graphics - The three-dimensional design is being used widely in websites and services in Web 3.0.

• Connectivity -Information is more connected thanks to semantic metadata.

• Ubiquity - Content is accessible by multiple applications, every device is connected to the web

Summary: We are now at the beginning of the Web 3 era, which combines the decentralized, community-governed ethos of Web 1 with the advanced, modern functionality of Web 2. Web 3 is the internet owned by the builders and users, orchestrated with tokens

Why Does Web 3.0 Matter?

As mentioned, the hallmark of web 2.0 is centralized platforms. There are some innate problems with this.

Centralized platforms follow a predictable life cycle. At first, they do everything they can to recruit users and 3rd-party complements like creators, developers, and businesses.

They do this to strengthen their network effect. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.

When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. To continue growing requires extracting data from users and competing with (former) partners.

Famous examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, Twitter vs. its 3rd-party clients, and Epic vs Apple.

For 3rd parties, the transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have learned to not build on top of centralized platforms. This has stifled innovation.

Now let’s talk about Web 3. In Web 3, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible. Tokens give users property rights: the ability to own a piece of the internet.

NFTs give users the ability to own objects, which can be art, photos, code, music, text, game objects, credentials, governance rights, access passes, and whatever else people dream up next. NFTs exist on top of blockchains like Ethereum. Ethereum is a decentralized global computer that is owned and operated by its users.

Blockchains are special computers that anyone can access but no one owns. Ethereum is powered by a fungible token, ETH, which is used to incentivize the physical computers that underlie the system. ETH is also the system’s native currency for transactions, like NFT purchases. There are many ways for users to acquire fungible and non-fungible tokens. You can buy them, but there are also ways to earn them.

Uniswap famously retroactively airdropped 15% of its governance tokens to early users of the protocol. Community grants like this have become common in Web 3 as a way to build goodwill and incentivize adoption. You can also earn tokens through creative and entrepreneurial activities. For example, people are earning roughly $100M worth of ETH per day selling NFTs.

Tokens align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This fixes the core problem of centralized networks, where the value is accumulated by one company, and the company ends up fighting its own users and partners.

Before Web 3, users and builders had to choose between the limited functionality of Web 1 or the corporate, centralized model of Web 2. Web 3 offers a new way that combines the best aspects of the previous eras. It’s very early in this movement and a great time to get involved.

• The blockchain space is expanding at extremely fast speeds, exacerbating the scalability problem.

• Layer 1 solutions are used to tackle the scalability problem. Layer 1 blockchain protocols have to be decentralized, secure and scalable.

Many would say 2021 was the year of the metaverse and P2E models withing the gaming ecosystem. While this may be true, 2021 was also the year of Layer 1 protocals and their respective native tokens. Solana, Luna and Avax have all experienced 1000x growth in the last two years.

So what is the hype behind Layer 1’s, and who are some of the biggest players? This blog post explores these questions.

Layer 1’s: Why do we need them?

The blockchain space is expanding rapidly as new solutions and applications are constantly being launched on a variety of networks, many of which are facing the scalability problem. Scalability is one of the pillars of the blockchain trilemma that poses a challenge for the expansion and operability of blockchain networks, with the other two being security and decentralization.

The Scalability Trilemma

As postulated by Vitalik Buterin, the founder of Ethereum, the term “scalability trilemma” refers to a blockchain’s ability to juggle three organic properties that constitute its fundamental principles – security, scalability and decentralization.

The trilemma states that any blockchain technology can only feature two properties at most, never all three at once. Thus, the current blockchain technology will always have to compromise on one of the fundamental properties. An excellent example of this is Bitcoin.  Through no fault of its own, while its blockchain has managed to optimize decentralization and security, it has had to compromise on scalability – through no fault of its own.

One of the forefront solutions for tackling the scalability problem is the introduction of Layer 1 solutions. A Layer 1 blockchain is a set of solutions that improve the base protocol itself to make the overall system a lot more scalable. The two approaches proposed for implementing Layer 1 solutions include the consensus protocol and sharding.

Ethereum: The Wall Street of Crypto

• Launch Year: 2015

• Consensus Mechanism: Proof-of-Work (moving to Proof-of-Stake in 2022)

• Unique Selling Points: Largest network effect, first-mover advantage, largest number and variety of applications.

Ethereum was the first blockchain to implement smart contracts. Since then, it has practically become a household name and the chain that every new L1 project is secretly trying to overtake.

Ethereum has the largest number of DApps as well as the widest variety which is keeping it at the forefront of this race. Its main weakness is scalability and this is the angle of attack many projects are using but a lot of it gets fixed with the implementation of ETH2.0. Additionally, it kickstarts a staking industry where even institutional investors are showing interest.

Part of the DeFi narrative is the creation of Web 3.0 – the decentralisation of the internet. Ethereum is Turing-Complete, which means that essentially any possible application or use case can be implemented on Ethereum. This has led to the creation of thousands of decentralised applications, or DApps – anything from decentralised exchanges (DEXs) and decentralised insurance, to entire video games. The possibilities are quite literally endless. Ethereum 2.0 is the planned update to the network and will drastically improve scalability and lower the costs of using Ethereum. Anticipation of this upgrade, along with NFTs, has largely driven the Ethereum narrative over the last few months with huge amounts of ETH being locked up in the ETH2.0 staking contract.

Solana: The World’s Fastest Blockchain

• Launch Year: 2020

• Consensus Mechanism: Delegated Proof-of-Stake

• Unique Selling Points: Extremely fast and cheap to use, the programming language Rust is also used outside of crypto which means a larger pool of potential devs

Solana is a Layer 1 delegated Proof-of-Stake (DPoS) blockchain with the objective of providing scalability without compromising on decentralisation or security. Solana is another programmable blockchain and has subsequently become decentralised finance hub, with a growing ecosystem and a booming NFT economy. SOL is the native currency of Solana, and has recently made it into the top 10 cryptocurrencies by market cap.

The main selling point of Solana is its speed and efficiency. The key innovation is the Proof-of-History consensus which is a sequence of computation allowing for the cryptographic verification of the passage of time between two events. Other blockchains rely on sequential validation of blocks which requires validators to talk to each other to reach a consensus on the passage of time when a transaction occurs*.* This slows down the network because the previous block of transactions must be confirmed by every validator node on the network before the next block can begin. Due to this innovation, the Solana blockchain can comfortably handle over 50,000 transactions per second.

With over 400 projects centered around DeFi, NFTs, and Web 3.0, the Solana ecosystem has seen explosive growth since the start of the year, and I expect that to continue through 2022.

Avalanche: Incentivizing DeFi

• Launch Year: 2020

• Consensus Mechanism: Proof-of-Stake

• Unique Selling Points: Fast and cheap, heavy incentives for use, EVM compatible

Avalanche is a Layer 1 blockchain utilizing a Proof-of-Stake consensus mechanism with full smart contract capability. Avalanche is Ethereum Virtual Machine (EVM) compatible and uses the same programming language as Ethereum (Solidity). The number of Solidity capable developers is huge and so there has been no shortage of development, which is partly why the Avalanche ecosystem has seen rapid development and subsequent growth throughout 2021.

Avalanche allows for the creation of custom blockchains and assets. There are 3 key aspects of Avalanche, the X, P, and C chains. The X Chain (Exchange Chain) API is used for setting the conditions and rules for the creation and trading of digital assets on the Avalanche ecosystem. The P and C chains both utilize the Snowman Consensus Protocol. Snowman is basically a more efficient, linear version of the Avalanche consensus and is optimized for smart contract functionality as well as speed and security, and cross-compatibility with Ethereum.

Avalanche offers a cheaper and faster alternative to both Ethereum and Polkadot and is generally more decentralised with thousands of validators. The ecosystem has seen rapid growth – a lot of the protocols built on Avalanche are essentially copy and pasted from Ethereum DeFi which has cut down development time. Another DeFi hub, Avalanche is another contender we believe will have a place in the growing decentralised economy.

Mina: The World’s Lightest Blockchain

• Launch Year: 2021

• Consensus Mechanism: Ouroboros Samasika (Proof-of-Stake)

• Unique Selling Points: Privacy, decentralisation, next to no entry barriers for validating

Mina is the world’s first succinct Layer 1 blockchain with application support. A succinct blockchain allows transaction verification to be independent of the chain length – Mina does this by utilizing consistently sized cryptographic proofs, called zk-SNARKs. Utilizing a version of the Proof-of-Stake (PoS) mechanism called Ouroboros Samasika, the entire Mina ledger fits into a file roughly 22kb in size. Considering that the Ethereum ledger is roughly 7 Terabytes in size this is an impressive feat and has led to Mina being labelled “the World’s Lightest Blockchain”.

Playing on the use of SNARKs, decentralised applications on Mina are called SNApps. Also called Snarkified Applications, SNApps add an additional layer of privacy to smart contract and transaction execution allowing the verification of any conceivable dataset without having to disclose the details of the data. The Mina network is also highly decentralised since the entry barriers for becoming a validator are basically non-existent.

SNApps haven’t been implemented yet but that is another key focus for the developers. I don’t expect anything major to come from Mina just yet, however it is still early in the development roadmap and a lot of the planned development should come to fruition during the end of 2022.

Binance Smart Chain: A Centralised Alternative

• Launch Year: 2020

• Consensus Mechanism: Proof-of-Stake

• Unique Selling Points: Fast and cheap to use, integrated with Binance (the world’s largest exchange by volume), EVM compatible

Created by Binance and launched in September 2020, Binance Smart Chain (BSC) is a smart contract capable, Ethereum Virtual Machine compatible, Proof-of-Stake Layer 1 blockchain. BSC runs in parallel with Binance Chain which was originally created to support Binance DEX. BSC sacrifices decentralisation to improve scalability – there are only 21 validators processing transactions at any one time. BNB is the native token for Binance Smart Chain and sawhuge growth throughout 2021 as developers view it as a cheaper and faster alternative to Ethereum.

Another popular DeFi hub, Binance Smart Chain has seen relatively extensive use with a peak of just under $50 billion in total value locked (TVL) before the correction in May – mostly in PancakeSwap, a decentralised exchange built on BSC. The chain has been the centre of some controversy due to the considerable number of rug pulls and scams executed in recent months. However, it is undeniable that the growing number of DeFi projects and NFT activity has secured Binance Smart Chain as a practical alternative to Ethereum for many who do not want to pay exorbitant gas fees.

Polkadot (DOT): The Internet of Blockchains

• Launch Year: 2020

• Consensus Mechanism: Proof-of-Stake

• Unique Selling Points: Fast, good value accrual through Parachain leasing

Polkadot is a Proof-of-Stake multi-chain network of interoperable, customisable blockchains. Labelled an “Internet of Blockchains”, Polkadot aims to provide a scalable platform where any conceivable application can create a specialised blockchain that suits the needs of that application whilst also having a seamless link to other blockchains on the Polkadot network, as well as other external ecosystems such as Ethereum.

Although not technically a Layer 1 blockchain, Polkadot brands itself as a Layer 0 protocol due to its structure – a base layer with Layer 1 blockchains built on top. One of the most anticipated events in crypto this year has been the launch of Polkadot Parachain Auctions. This is the process where various projects can bid for a Parachain slot and become part of the Polkadot ecosystem.

With Parachain Auctions having just kicked off at the end of November 2021, Polkadot is for sure one of the assets to watch for the remainder of 2021 and beyond.

TerraLuna(Luna): The Alipay of Blockchains

• Launch Year: 2018

• Consensus Mechanism: Proof-of-Stake

• Unique Selling Points: Fast, Volume, Stablecoin positioning

Terra

The creators of Terra, Daniel Shin, and Do Kwon, wanted to create coins that have less volatile pricing than cryptos like Bitcoin, but still have plenty of room for growth.

Terra’s stablecoins achieve price stability through collateralization – using Luna - in a similar mechanism as fiat currency once did by using an underlying asset such as gold. For example, Luna could be held as a reserve for the issue of crypto-backed stablecoins.

The project has proved popular in the Asian markets for e-commerce and has a large userbase in South Korea, where its headquarters are. For example, taxi users in Mongolia can pay some drivers in the stablecoin Terra MNT pegged to the Mongolian tugrik. Tokens minted on the platform are known as Terra currencies and exist alongside the network's native token for governance and utility LUNA. Terra and LUNA have a complementary relationship.

Terra already has stablecoins pegged to the US Dollar, South Korean Won, and Euro, among others. One of the biggest reasons Terra has ballooned in popularity is because it is a viable alternative to bitcoin due to its capacity to handle volume. Transactions involving all Terra stablecoins currently make it the 3rd largest by crypto by volume, behind only Bitcoin and Ethereum. Additionally, each transaction pays a small fee to Luna stakeholders, in effect, it means the group of Terra holders that have staked their crypto earn further crypto assets from the transactions that take place. Luna can still be prone to erratic changes in price though it's seen less frequently than Bitcoin.

Luna

LUNA is Terra's cryptocurrency that a couple different roles on the platform:

1. A method to pay transaction fees in its gas system (utility token).

2. A way to take part in the platform's governance system. By staking your LUNA tokens, you can create and vote on proposals with changes regarding the Terra protocol.

3. A volatility absorber for the price of stablecoins minted on Terra.

In short, Terra has had an amazing year, but it will need to see continued user growth and adoptionto really compete with Ethereum more broadly.

Ethereum is the largest DeFi protocol with over $162 billion in total value locked, according to DeFi Llama. The Terra ecosystem has 13 DeFi protocols built on it, while Ethereum has 373. I expect 2022 to be a year where the Terra team continues to build upon this exciting protocol.

Tier One: The most basic of terms

Blockchain - A digitally distributed, decentralized, public ledger that exists across a network.

Ledger - An immutable database that stores a series of blocks of transactions after being confirmed by the network

Bitcoin - The first iteration of digital currency created by Satoshi Nakamoto

Ethereum - A generalized platform aiming to go beyond just digital currency through the use of smart contracts and dApps. Alt L1's - Layer 1 protocols taking alternative approaches toward solving the scalability trilemma

Memecoins - Cryptocurrency that originates from an internet meme or has some other humorous characteristic. (Doge, Shiba Inu)

Tier Two : Understanding this means you’re a Crypto Native!

Smart contracts - Programs that run when predetermined conditions are met, used to automate the execution of an agreement

dApps - Apps that offer similar functions of normal apps, but run on a peer to peer network

Gas - On $ETH, gas is used to describe a unit of measurement for the amount of computational power needed for executing specific operations on the network

CEX’s - Exchanges that act as a trusted intermediary for the buying and selling of cryptocurrency (custodial)

DEX’s - A type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online (non-custodial)

DeFi - Decentralized finance offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks. Instead, it uses smart contracts on a blockchain.

Metaverse - The Metaverse is a massively complex and interoperable network of real time rendered 3D virtual worlds which can be experienced synchronously and persistently by an unlimited amount of users.

TIER Three: Complex terms in Crypto

NFTs - A non-fungible-token is a non-interchangeable unit of data stored on a blockchain that can be sold or traded. Types of NFT data units can be associated with digital files such as photos, videos, and audio.

Scalability Trilemma - The blockchain scalability trilemma, coined by Vitalik Buterin, states that trade-offs are inevitable between three components: decentralization, security, and scalability.

You can have one or two, but not all three.

Layer 2s - Layer 2 refers to a secondary framework or protocol built on top of an existing blockchain system.

The main goal of these protocols is to solve the transaction speed and scaling difficulties being faced by the major cryptocurrency networks.

Yield Farming - The crypto equivalent of earning APY on deposits with banks.

At its core, yield farming is a process in which liquidity providers lock up their assets in a liquidity pool, & receive incentives in the form of trading fees or emissions of a governance token

AMMs - An AMM (Automated Market Maker) is the underlying protocol that powers DEX's

AMMs allow assets to be traded permissionlessly through the use of liquidity pools, instead of a traditional market of buyers and sellers.

Liquidity Pool - A liquidity pool is a crowdsourced pool of cryptocurrencies or tokens locked in a smart contract that facilitate trades on decentralized exchanges

Trading with liquidity pool protocols like Uniswap requires no buyer and seller matching for orders to go through.

Synthetics - Synthetic assets are essentially tokenized derivatives. In TradFi, derivatives are representations of stocks or bonds that a trader does not own but wants to buy or sell.

Synthetics assets allow investors to tokenize and trade anything on the blockchain.

Governance - In the absence of a central authority, decentralized networks rely on governance structures for their projects.

Blockchain governance typically employs mechanisms to make decisions on project direction, on-going updates, and to make sure everything runs efficiently

Stablecoins - Cryptocurrencies where the price is designed to be pegged to a cryptocurrency, fiat money, or exchange-traded commodities.

Liquid Staking - Liquid staking allows holders of tokens to stake their assets & receive a derivative or liquid representation of that asset that can be used in dApps.

Using liquid staking, ETH 2.0 stakers are able to simultaneously stake their Ethereum while remaining liquid

DAOs - A decentralized autonomous organization is an organization represented by rules encoded as a computer program that is transparent, controlled by the organizations members and not influenced by a central government.

Interoperability - Blockchain interoperability refers to the ability of different blockchain networks to exchange and leverage data between one another to move unique types of digital assets between the networks' respective blockchains.