The global market for Web3 technologies, which includes decentralized applications and protocols built on blockchain, was valued at approximately $3.2 billion in 2021. This market is expected to continue expanding in the coming years as more people adopt these new technologies. Many experts believe that Web3 represents the future of the internet and will continue to be a widely discussed topic in the public sphere.
The popularity of Web3 has been growing in the recent past, despite the slowdown in the crypto and decentralized finance (DeFi) market in 2022. In the last year, interest in Web3-related topics has remained strong, with searches remaining around 30% of the peak seen in late 2021. It is likely that this trend will continue and that we will see a renewed surge in interest in Web3 technologies in the near future.
Here are six Web3 trends that are currently gaining traction and are expected to play a major role in the growth of the industry in 2023:
The core principle of Web3 is decentralization, which means that the internet will be free of intermediaries, such as big tech companies, that currently control and manage the flow of information. In 2023, it is likely that we will see a rise in the use of decentralized social media platforms. Already, there are platforms like Mastodon, which operates on a decentralized, federated model and is not based on blockchain technology. This trend could also lead to an increase in the adoption of blockchain-based platforms like Lens Protocol or Minds.
Significant growth in the tokenization of assets.
This is the process of creating digital representations of real-world assets on a blockchain. As mainstream players such as BlackRock and Goldman Sachs begin to explore the possibilities of tokenization, we will likely see an increasing number of assets being tokenized. This trend could have a significant impact on financial markets, but also on other sectors such as real estate and entertainment, where assets can be digitized.
The mainstream adoption of Web3
As large companies, such as Starbucks, continue to explore the potential of Web3 and incorporate it into their business models, more and more people will be exposed to the technology. For example, Starbucks announced their new NFT-based rewards program Starbucks Odyssey in 2022. Furthermore, Web3-native use cases, like Helium, are also expected to gain traction and popularity among mainstream users.
More innovations in the crypto insurance space.
DeFi and cryptocurrency investments may offer significant returns, however, they also come with inherent risks such as hacking, exploiting, rug pulling and scams. To safeguard their assets, investors are increasingly seeking insurance options, particularly after the incidents of LUNA and FTX in 2022. Platforms like Insurance.io, Nexusmutual.io, and Neptunemutual are already offering coverage against risks such as hacks, exploits, rug pulls, and scams. These insurance products come with premiums ranging from 0.2-0.9% per month, depending on the type of coverage. However, coverage periods and protection are currently limited, and most products are sold out. As the market matures, we can expect to see improvements in liquidity, capital efficiency, product availability, and costs of these insurance products.
NFTs have long been an illiquid asset, making it difficult for owners to convert them into cash. However, new liquidity solutions are emerging in the Web3 space to address this issue. Protocols like Sudoswap have created pools where NFTs can be bought and sold instantly, making it easier for users to exchange their NFTs for something more liquid. Marketplaces like OpenSea and Uniswap have also acquired NFT aggregator services that plan to utilize Sudoswap's liquidity to facilitate NFT trading.
In 2023, we can expect to see continued advancements in NFT liquidity tools, making it easier to buy and sell NFTs and increasing the overall liquidity of the NFT market. This will make the market more appealing to investors and collectors, and ultimately create a better Web3 infrastructure for users. An example of this is Masterworks, which enables everyday investors to own a portion of high-value traditional art at a lower cost by purchasing paintings and registering them as IPOs with the SEC, allowing shares to be sold for as little as $20. Overall, the development of NFT liquidity solutions is crucial for the growth and stability of the Web3 ecosystem.
Transparency in the crypto industry has become a growing concern in recent years, with events such as those involving FTX highlighting the need for more openness in project operations, finances, team, and partnerships.
To address this, many projects are now taking steps to be more transparent. Some of the actions being taken include:
- Revealing the identities of team members (doxxing)
- Publishing addresses of project wallets and treasury funds
- Creating independent DAOs with community members to govern decisions related to treasury management
- Publishing public roadmaps for community participation
- Making product updates and progress publicly available
- Announcing important internal project decisions
- Sharing mistakes and lessons learned publicly
- Disclosing connections with investors, associations, and other stakeholders
- CEOs and founders actively engaging with the community through blogs, Twitter, podcasts, and AMAs.
2023 is poised to be a pivotal year for the Web3 industry, as several trends are expected to gain traction and shape the future of the internet. The trends mentioned above will play a crucial role in making decentralized finance more accessible and secure for investors. It will be interesting to see how these trends evolve and impact the future of the internet.
This is a companion discussion topic for the original entry at https://insights.blockonomics.co/web-3-trends-poised-to-gain-traction-in-2023/