Market Fit you Say? Yes, we say. Web 3 use cases today & looking at the future
A bird’s eye view of some Web3 use cases that are actually working today and where we think we will see more working
Dissecting each Web3 startup, each chain, each DAO, each governance token would take many pages, and we do that elsewhere on our blog. But, for those who don’t yet see what Web3 can bring to the table, here is a bird’s eye view of some Web3 use cases that are actually working today and where we think we will see more working tomorrow. Admittedly, the second part is a lot more speculative than the first. Neither is this a comprehensive list, it is just meant to give an idea of the state of play & direction of travel.
None of this should be interpreted as an advice or recommendation to invest in or with any of these projects.
Web3 & Crypto Today
(Decentralized ) Finance:
Decentralized Exchanges (Uniswap chief amongst them): They create liquidity for tokens without the need for a central party in a way that wasn't possible before. It has done over 1 trillion in volume over 3 years.
Compound, Aave, Maker, allow you to lend and borrow against your assets without the need for an entity to sit in the middle and add fees and time to the process. And if you take a look at Celsius, BlockFi and other centralized Finance solutions that have recently collapsed, you might come out thinking that those DeFi alternatives are doing a pretty good job.
Stablecoins: sending stable value around the world in minutes for pennies is amazing. It has a lot of drawbacks compared to the traditional banking systems but also has a lot of advantages. For rich people it's worse than banking (sometimes), but for the not so rich it often allows them to do something which was previously not doable (like getting paid by Twitter through stripe)
If you want more links to "the real world" (even if we could endlessly debate that concept), take a look at goldfinch.finance or jia.xyz that lends to real businesses, helping liquidity flow across borders and accessing the developing world credit problem.
NFTs are also being used for IP in Decentralized Science at Molecule DAO.
In the same vein, for DeSci VitaDao, LabDao, and Vibebio might also be worth a look. Peer-reviewing scientific papers was one of the first use cases identified for the internet in 1998 so don't underestimate what all those smart people can do.
(Decentralized) Real World or Digital Assets Marketplaces
NFTs give physical properties to digital items (mainly, scarcity & programmability). In a few short years, it has become a market trading close to a hundred billion. It's mostly art (for now). But also a restraining order.
Braintrust is a decentralized talent network, which very much looks like a co-op.
Filecoin: buy decentralized storage for your digital stuff for cheaper than at Amazon.
Toucan.earth & KlimaDao: bringing carbon markets on-chain. Recently cited by Mark Cuban on the Bankless podcast as the best use case for crypto.
Norway: Bring transparency into who owns what in private companies
If ever the skeptic you might feel tempted to say that it's all speculation and useless, feel free. But "someone" definitely finds it useful. And there are 30 million installs of Metamask and an estimated 100 million people dabbling in Crypto, and according to Electric Capital, there were around 18.5K monthly active developers in web3 in December 2021 (versus 27K engineers at Google, but then again, Uniswap is ran by 50 people and Robinhood needs over 3000 to function). People are spending money to use products, even if you find them silly or circular. So it's not a tsunami yet, but there's definitely something brewing.
Tomorrow, the day after, and the decade(s) later
Real World Assets (RWA): There is 0 reason why stocks and bonds and every title piece of paper, PDF or database record that proves that you own something should continue to be a digitized form of paper managed by incredibly expensive companies like clearstream and take days to settle when you want to send it over to someone else. Every single one of those is moving to a blockchain like system. The EU has recently launched a DLT pilot regime to explore just that. The only reason we're not there yet is because of inertia and the fact that when managing Trillions, it pays to make sure you know what you're doing. But it's definitely the direction of travel.
Regenerative Finance: internalizing climate externalities, creating global markets for global problems/solutions, financial inclusion, UBI, community market places, ... The number of things currently being tried is amazing.
Decentralised Identities & Decentralised social networks, or Web3 Social. Lens.xyz is a great example. By promising that you own your relationships and that developers can't be kept / excluded / censored from building apps on the network, they offer a great advantage over the walled gardens and predatory actions of web2 social networks. Because of the network effects, this is likely to be even more of a "winner takes all" than web2 was.
Web3 gaming: some games love web3, some gamers hate web3. But the composability that web3 brings to game is likely to make it irresistible to most developers and communities. Major game studios have started building for Web3 recently and it will likely take a couple of years before the games are out. Building games is hard business.
Token-gated communities & commerce: Sayl & Salesforce referenced in the "today" section already allude to that. Shopify is making web-shops "wallet aware" and turning the users into "non-fungible buyers" or "non-fungible website visitor"..
Working for a DAO: VillageDAO from Consensys
Zero-knowledge Proofs: Blockchains are very transparent today, and a bit of a privacy nightmare. The ability to prove that something is true (for example, that your are over 18) without the need to actually show your ID card (where is also written your address and name, which is useless to prove that you are 18) is what ZK proofs enable. It should enable more privacy, and is something that Aztec - amongst other - is working on.
Ultimately, what's interesting about tomorrow is that Web3 offers an opportunity for rethinking almost everything we do today, from money systems to representative democracies. Like the internet in its early days.
But the internet in its early days was missing some key pieces of infrastructure. Web3 probably is too, but it has much more than Web2 ever had. And the activity in the DAOs of today are very reminiscent of the early internet forums used for collaboration. But now they have a cap table and an internet-native bank account they can spend from.
We won't get "there" without a lot of experiments, many of which will fail. Sometimes bubbles will form because everyone gets overly short-term enthusiastic. But it has always been part of the learning process and one should be cautious about treading on the frontier. Innovation comes from the fringe, if you are looking for safety, stability , and predictability it might be best to wait it out on the sidelines. There's nothing wrong with that.
This is not investment advice, nor a solicitation. Crypto markets possess a high level of risk, including volatility and regulatory uncertainty. Past performance does not constitute a guarantee of future results in any way. You are solely responsible for doing your own financial, legal, tax, or investment research before taking any actions.
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When numbers go up, everyone is a genius and no one needs a thesis. It’s when numbers go down and doubt seeps in that we need to remember why we invested in the first place.