Web3 is Here, You’re Just Not Looking

Web3 is everywhere – you just don’t know where to look.

Yes, Web3 hasn’t had as much of a dramatic impact as some people thought it would, but that’s because some people hyped it up to take over the internet we know and use. Instead, it’s everything people don’t consider it to be – web3 wallet, marketplaces, etc.

Read on to find out more.

What is Web3?

Web3 is a transition to a decentralized online ecosystem where users have more control over their data and digital identity. Unlike in Web 2, where big tech holds most of the data power, Web 3 leverages blockchain technology to give back that power to users. This shift is not theoretical – financial and technological investments have supported it in a big way.

In Q2 2023, Web3 start-ups raised over $2 billion, up from $1.8 billion in Q1 – though this was down 18% YoY from Q2 2022 when they had raised $2.2 billion. This kind of funding reflects growing faith in the potential of technologies despite difficulties and market volatility.

The possibilities for Web3 are immense.

Decentralized Finance (DeFi)

Smart contracts are utilized by DeFi platforms, which are self-executing agreements whose terms are directly written into code. It gets rid of intermediaries and thus leads to cheaper transaction fees that occur in seconds as opposed to days.

For example, Aave and Compound enable users to earn interest on their digital currency assets while Uniswap allows for decentralized token trades devoid of any traditional exchange. However, there are risks involved with the DeFi space. This same decentralization allows for freedom but also exposes its safety vulnerabilities. In 2023 alone, CipherTrace reported losses of more than $1.3 billion within the DeFi sector due to hacks and exploits.

NFTs: More Than Just Digital Art

Blockchain can host NFTs which are unique digital assets and whose use cases are expanding quickly. For example, NTFs function as proof of ownership for virtual real estate in metaverses like Decentraland and The Sandbox. Artists in the industry sell music directly to their fans via NFTs thereby avoiding record labels involvement and earning more profits.

Chainalysis notes that the NFT market had $41 billion in sales volumes in 2022, at some point in time showing high levels of interest. True, there is room for growth but recently its buyers increased by as much as 105%. Despite a cooling-off period of the market in 2023 when total sales went down to around $24 billion, underlying technology remains vibrant.

DAOs

Decentralized autonomous organizations (DAOs) are another essential element of Web 3.

DAOs are organizations run by code, with the community governing them and no central authority. Members of a DAO hold governance tokens, which they use to vote on issues like funding allocation, project developments, and other massive aspects.

Deep DAO data reveals that, as of mid-2023, billions of assets were under management by DAOs across the globe. They’re revolutionizing corporate governance and allowing for different concerted action and investment strategies. For example, PleasrDAO, a group comprising DeFi leaders and digital artists, bought Wu-Tang Clan’s unique album for $4 million. That suggests how DAOs can pool resources together to make collective high-impact decisions.

Web3 Meets the Gaming Industry

Web3 and gaming work so well together. Blockchain-based games, Play-to-Earn or P2E games, let players earn real-world value from participating in-game activities. Games like Axie Infinity and The Sandbox have become popular with millions of users because they offer a difference.

As indicated by MarketsandMarkets’ report, the P2E market was worth approximately $3 billion in 2023. That represents a significant share of the larger $180 billion gaming industry and shows that Web3 is gaining ground here. The notion that players can truly own and monetize their in-game assets will always be popular.

Web3 Environmental Impacts

The impact of web3 on the environment, blockchain being a case in point, is one of the subject matters that has raised heated debates. There has been so much talk about blockchain networks because they consume a tremendous amount of energy; particularly those that use proof-of-work consensus mechanisms like Bitcoin.

According to data from the Cambridge Bitcoin Electricity Consumption Index, just the Bitcoin network alone uses more electricity per annum than some nations such as Argentina and the Netherlands do collectively. That’s insane!

This has led to growing criticism against blockchain technologies as ecological concerns overtake any advantages they bring. Still, these issues are well-known within the Web3 community, which actively searches for solutions. The second-largest blockchain, Ethereum, switched from proof-of-work to proof-of-stake in 2022, reducing its energy use by over 99%. This change, called The Merge, represented an important step towards a greener Web3 that was essential for the community, the fees, and the environment.

So, you perhaps knew more about Web3 than you thought. It’s already redefining various sectors and aspects of our digital lives. There are still some challenges to face, especially on the issues of security and environmental consequences, but that will improve over time. It will be interesting to see how much of an impact web3 has on the internet as it grows.