Web3 trends, driven by the advancement of blockchain technology, have been steadily gaining momentum for over a decade, resulting in the formation of distinct segments where decentralization and token-based economies play a pivotal role. These segments, known as verticals, are integral to understanding the Web3 landscape. In this article, we’ll delve into the primary Web3 verticals and examine the trends shaping each of them, while also discussing the layer classification within the ecosystem.
Web3 Infrastructure: The Core Vertical
The Infrastructure vertical is responsible for creating the technologies that enable a sustainable, decentralized internet. This foundation allows other verticals to disrupt entire markets by breaking old rules and introducing new ones. To better understand a project’s position within the ecosystem, it is divided into layers (L0, L1, L2, and L3). The layer classification, albeit arbitrary, serves as a helpful guide:
- L0: Basic infrastructure supporting multiple blockchains
- L1: Base blockchains used by developers to create applications
- L2: Scaling solutions for base blockchains
- L3: Blockchain-based application layer, including games, wallets, and more
L2 Solutions: The Key Infrastructure Trend
In the past two years, Layer 2 (L2) solutions have emerged as the leading Infrastructure trend. Teams with robust technical expertise offering scalable, secure, and decentralized network solutions attract grants, investments, and active communities at an accelerated pace.
DeFi: The Rise of Decentralized Finance
Decentralized finance (DeFi) is a collective term for traditional financial instrument analogs, and it represents one of the key Web3 trends shaping the future of finance. This vertical has captured the attention of global players, with institutions entering the crypto space and bringing new liquidity inflows to the markets. As Web3 trends continue to evolve, DeFi is expected to play an increasingly important role in disrupting traditional finance, fostering more transparent, accessible, and efficient financial services for users worldwide.
Synthetic Assets: Unlocking Investment Opportunities
In the realm of Web3 trends, one of the main DeFi developments gaining traction is the emergence of synthetic assets. These tokens are based on the value of an underlying asset, group of assets, or benchmark, allowing investors to benefit from fluctuations in the asset’s value without directly owning it. As part of the broader Web3 trends, the tokenization of real assets, such as real estate and luxury items, has the potential to revolutionize traditional markets by lowering the entry barrier for investors and providing increased accessibility to a wider range of investment opportunities. This growing interest in synthetic assets and tokenization showcases the transformative potential of Web3 trends in shaping the future of decentralized finance.
DEX: A Resurgence in Decentralized Exchanges
Decentralized exchanges (DEX) are becoming increasingly relevant, with several centralized exchanges (CEX) closing down in 2022. Users are concerned about the lack of transparency and control on centralized platforms, which drives them towards decentralized alternatives.
NFT SAFT: A Solution for Web3 Startups
NFT SAFT enables Web3 startups to accept investments for future tokens from funds, syndicates, or private investors. This method allows investors to manage their asset pool by reselling SAFTs for liquidity, without waiting for token unlocking periods.
Governance Tokens: Investing in Influence
Governance tokens, which grant the right to participate in DAO management, have seen an increase in value in 2022. More projects are attracting investments through the sale of governance tokens, making investors co-owners of the company.
CBDC: Central Bank Digital Currencies Gaining Traction
Incorporating Web3 trends into the financial landscape, over 100 countries are actively exploring central bank digital currencies (CBDCs), embracing the potential of blockchain technology to reshape traditional finance. This growing interest in CBDCs is a testament to the expanding influence of Web3 trends on the global monetary system. As a result, teams skilled in developing innovative solutions for CBDCs will be in high demand, positioning them at the forefront of this transformative shift towards a decentralized financial ecosystem.
GameFi: The Intersection of Blockchain and Gaming
GameFi, or play-to-earn blockchain games, offer cash rewards to players. Unlike traditional games, most blockchain-based games allow in-game items to be withdrawn and sold on NFT marketplaces.
Mobile Games: Tapping into a Larger Market
In line with the growing influence of Web3 trends, the gaming industry is also witnessing a shift towards mobile platforms. As most internet users access the web via smartphones, mobile games that integrate blockchain technology and decentralized features are poised to enter a larger market and gain widespread adoption. This convergence of mobile gaming not only enhances user experience but also unlocks new opportunities for gamers to interact with token-based economies and play-to-earn models, further propelling the growth of the decentralized landscape.
Gamification of Education: Merging Learning and Gaming
The integration of game mechanics and rewards for achievements in learning, often referred to as “gamification,” has gained significant attention in recent years. By incorporating blockchain technology and token-based incentives, this approach not only fosters a more engaging and motivating learning experience but also aligns with the core principles of decentralization and user empowerment.
Improving Game Quality: Bridging the Gap with Traditional Gaming
As Web3 trends continue to shape the future of gaming, it is becoming increasingly important for the GameFi sector to bridge the gap between their offerings and the broader gaming industry. Most GameFi games currently lag behind in terms of graphics, storylines, and mechanics when compared to their traditional counterparts.
Interoperability: Streamlining the Gaming Experience
Projects allowing for the exchange of in-game items and achievements between players are gaining momentum. Seamless transitions between games, intersecting economies, and platforms for storing game experience contribute to this trend.
New Web3 Trends: DeFi Meets Gaming
Many GameFi developers are incorporating DeFi elements like farming, staking, or mining into their games, enabling gamers to reinvest in-game assets and earn additional income.
SocialFi: Revolutionizing Social Networks with Web3
Web3-based social networks, or SocialFi, gain additional value by connecting with decentralized finance on the blockchain. This allows users to earn money from publishing content and engaging with it.
Donations: Supporting Content Creators
Subscribers can send cash rewards to creators, thereby supporting the creation of new content.
Monetization of Consumed Content: Rewarding Authors and Audiences
Some platforms reward popular content authors, while others reward audiences for their views, listens, or time spent on the platform.
Data Rights: Incentivizing Data Sharing
Users can be rewarded for agreeing to share their data, which can then be monetized by targeted advertisers or analytical agencies.
Social Tokens: A New Frontier in Personal Finance
Social tokens, tied to the activities of a specific person, open up a vast array of possibilities. From simple payments for interactions with celebrities to investing in young talents, social tokens are redefining personal finance.
DeSci: The Future of Decentralized Science
Decentralized science (DeSci) is a profound topic with enormous potential, offering new opportunities for research and innovation.
Funding Scientific Research: Crowdfunding the Future
DeSci enables independent, transparent research without corporate or governmental influence. Concerned communities can fund research projects through crowdfunding initiatives.
Distributed Storage of Scientific Developments: Democratizing Access
Distributed storage solutions allow for wider access to scientific developments or protection of patents and monetization through controlled access.
Commercialization of Science: Bridging the Gap with DeFi
DeFi tools enable a portion of earnings from commercially successful scientific discoveries to return to the investors who funded the research, creating a more sustainable and equitable scientific ecosystem.
Outlook for 2023: The Future of Web3 Trends
As we head into 2023, the Web3 landscape is poised for continuous growth and transformation. With an increasing number of projects and innovations across various verticals, the future looks promising for the decentralized world. In summary, the key trends to watch out for in 2023 include:
- Infrastructure developments, with a focus on L2 scaling solutions, providing a solid foundation for the expanding Web3 ecosystem.
- The DeFi sector will see further growth in synthetic assets, decentralized exchanges, NFT SAFTs, governance tokens, and CBDCs, as institutions and individuals alike embrace the potential of decentralized finance.
- GameFi will continue to evolve, with a focus on mobile games, gamification of education, improved game quality, interoperability, and new ways to earn through DeFi integration.
- SocialFi will revolutionize social networks, enabling content creators and users to benefit from donations, monetization of consumed content, data rights, and the emerging market of social tokens.
- DeSci will shape the future of scientific research and innovation by promoting crowdfunding, distributed storage of scientific developments, and commercialization of science through DeFi tools.
By staying informed and adapting to these Web3 trends, businesses and individuals can position themselves at the forefront of the decentralized revolution, seizing the opportunities and reaping the benefits that come with embracing the new era of Web3 trends and technology.