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Web3 or popularly referred to as Web 3.0 is the latest version of the internet, it is slowly becoming a major adoption trend following the rise of blockchain networks and cryptocurrencies. This new version of the Web takes a different approach from its predecessor Web 2.0, which is the supporting infrastructure for platforms such as Facebook, Twitter and E-commerce ecosystems like Amazon.
While Web 2.0 has been fundamental in the development of the internet, the past few years have exposed critical issues when it comes to users’ security and data privacy. Web 3.0 seeks to address these issues by introducing a decentralized internet, where users can participate in ecosystem governance and reap financial rewards whenever their data is monetized. In Web 2.0, centralized parties have the autonomy of control over users’ data and revenue sharing.
Currently, most of the advanced innovations in Web 3.0 fall within the crypto industry. This is because cryptocurrencies are built on blockchain networks whose architecture is based on decentralization. Ideally, Web 3.0 decentralized protocols feature a peer-to-peer ecosystem hence eliminating the middleman. In addition, they are run and governed by a community (miners or validators) depending on the underlying algorithm.
Gavin Wood, the founder of Parity Technologies and early advocate of Web 3.0, defines this new phase of the internet as a shift from limited internet communities to a globally decentralized ecosystem. In a recent interview with the famous American-based Magazine Wired, Wood explained the underpinnings of Web 3.0 infrastructure, Cryptography,
“Cryptography, at its basic level, allows me to talk to my friend but for the communication channel to be public or go through a third party with me still having a good level of expectation, credible expectation, that it will be a private conversation.”
The Rise of Web 3.0 and Decentralized Finance (DeFi)
With Bitcoin making a grand debut over a decade ago, Web 3.0 has grown significantly to feature decentralized markets. These came about as a result of smart contract platforms like Ethereum, Cardano and Fantom, which enable developers to create decentralized applications (DApps). The DApp ecosystem hosts various innovations, including Decentralized Finance (DeFi) services and the upcoming Non-fungible token (NFT) market.
DeFi, which has been on the rise for the past three years, is perhaps one of the success examples of Web 3.0. This decentralized market features most of the services offered by existing traditional finance firms; however, they are offered through decentralized protocols instead of users going through a financial intermediary. One area that is showing massive potential for growth is the DEX market.
Contrary to the approach taken by their counterparts in centralized exchange markets, DEXs are designed to remove entry barriers such as regulatory hurdles. Today, one can access the digital asset market by simply creating a digital wallet and swapping some of the tokens that exist within various blockchain ecosystems.
The NFT ecosystem is another Web 3.0 niche that is fast gaining the attention of stakeholders, including those outside the crypto industry. At the core, NFTs introduce a decentralized avenue of authentically owning digital collectibles or off-chain wallets through blockchain technology. This value proposition has trickled down to other industries such as social media ownership, with creators leveraging NFTs to directly engage their fan base.
So, what are some of the DeFi and NFT projects that are shaping the future of Web 3.0? The next section of this article features three projects whose underlying design is based on the principles of a decentralized web.
1. Adaswap
Adaswap is set to launch as pioneer DEX on the Cardano blockchain, which introduced smart contract capabilities in September 2021 following the Alonzo Hardfork. The Adaswap DEX will operate as an automated market maker (AMM) protocol, featuring an ecosystem where users can swap Cardan-native tokens. Given the potential of Cardano’s DApp building platform, it is inevitable that many DeFi projects will shift to leverage its scalability and fast transaction finality.
Like most Web 3.0 platforms, Adaswap features a native token ASW that will be used for governance and liquidity incentives. The project follows a Free Finance model that focuses on wealth retention and generation for its network users. ASW token users will be exempted from all transaction and staking related fees. Besides the DEX, Adaswap plans to launch an NFT marketplace to offer exclusive digital collectibles endorsed by prominent brands.
2. Timechain
Timechain is a Canadian-registered Money Service Business (MSB), with a cutting edge in Decentralized Finance (DeFi). The firm’s product suite includes an application that allows users to send crypto or fiat in the form of a direct message. In addition, this application offers users an opportunity to earn rewards by holding crypto or fiat through the Timechain wallet.
Coming down to the DeFi market, Timechain has designed a DEX aggregator on the Fantom blockchain. The platform enables crypto users on Fantom to find the most favorable exchange rates when buying or selling the ecosystem's native tokens. They also plan on integrating other DApp-oriented chains, including Ethereum and Binance Smart Chain (BSC).
Similar to the approach taken by most DeFi protocols, Timechain’s ecosystem is powered by a native token dubbed TCS. This token will be used for on-chain operations such as liquidity mining, yield farming and cross-chain bridging. Furthermore, it will reduce the transaction cost for swapping digital assets within the Fantom ecosystem.
3. Creaton
Creaton is an NFT ecosystem designed to give creators control of their content. As it stands, centralized platforms such as YouTube have the creative market on choke hold. These intermediaries go home with the lion’s share of the revenues, not to mention their control over a creative’s content. Creaton changes this narrative by featuring a creator-centered ecosystem where artists can engage with their fans directly.
Unlike the Web 2.0 social media platforms, Creaton’s decentralized NFT model focuses on enabling creatives to reap the most out of their content. The platform, which is built on Polygon blockchain, features a decentralized subscription payment model. Fans can therefore pay to view content from their favorite artists without going through an intermediary. Notably, Creaton’s subscription model allows for real-time payments instead of limiting creators to monthly subscribers.
Creatives who leverage this ecosystem also have the potential of reaping rewards perpetually, given Creaton’s permanent storage solution that is powered by Arweave. This DAO governed project is now making in-roads into the NFT market, with the latest highlight being strategic investments from NuCypher, ExNetwork and ZBS Capital.
A Game-Changer in Data Privacy and Security
As mentioned earlier, Web 3.0 is a game-change in data privacy and security. Facebook, which is infamous for its user data controversies, is a good example of the broken Web 2.0 infrastructure. Mark Zuckerberg appeared before the senate in 2018 following the Cambridge Analytica scandal, which is believed to have interfered with multiple global elections through data gathered by Facebook. The firm was later fined up to USD 5 billion in 2019 for breaching its users' data privacy.
Thanks to Web 3.0, times are gradually changing. Monopolies such as Facebook are being shunned in favor of decentralized social networks that give users control over their data. Even better, decentralized ecosystems grow more secure as users join the ecosystem. This is because governance is eventually distributed to a larger base, making it hard for malicious players to reverse transactions or double-spending.
Going by the increasing rate of data privacy awareness, it is likely that the Web 3.0 infrastructure will be a fundamental building block of futuristic internet communities and financial markets. This is the only way that today’s internet users and investors can regain control over their data and monetize it when an opportunity arises.
Conclusion
Though it may sound like a far-fetched concept, the Web 3.0 era is here with us. Most of the industries that exist today especially in the digital and financial landscape have little to no option but to ride with the wave. Even tech giants such as Facebook have started to pivot, with the company recently rebranding to Meta in preparation for the Metaverse ecosystem. That said, it will take some time before Web 3.0 technologies are fully adopted by the gatekeepers that exist on Web 2.0.