Web3 Innovation Outlook 2024

Author: Meng Yan, Solv Co-creation source: X, @myanTokenGeek

The current trend is very obvious. If it develops normally, the crypto market will usher in a bull market in 2024, and funds and market sentiment will drive crypto asset prices to rise significantly. Although there have been three bull markets in the past decade, the external environment this time is obviously different. To put it simply, in the first few bull markets, crypto made money, and other industries also made money. People envied you, but they didn’t hate you. This time is different. The current global political and economic situation is gradually becoming complex, tense, and confrontational, making life difficult for many people. Against this background, it would be particularly dazzling if an industry that is generally regarded by the outside world as mainly speculative and gambling experiences abnormal prosperity.

And there are not many people willing to speak for crypto now. Since the violent collapse of the crypto market in 2022, the outside world's curiosity and patience for the crypto industry have basically been exhausted. Today, apart from stakeholders within the industry, it is difficult to find outsiders who are unbiased and have a positive view of crypto. If a bull market occurs in the crypto market, this kind of prejudice and strong negative perception can easily turn into jealousy and hatred under stimulation, and then turn into fierce intervention or even attack on the crypto industry. In severe cases, the market may collapse instantly due to external intervention, and some people may also be in trouble. People in the Crypto industry must be mentally prepared for this.

What should I do?

It is necessary to create some valuable, public-impact, and persuasive innovations in the Web3 field as soon as possible. This has become extremely important and urgent. .

The relationship between crypto and Web3 needs to be clarified. I define crypto as the transaction of encrypted digital assets, and  Web3 as a technological innovation movement aimed at building a trusted digital economy. Ideally, crypto and Web3 are related to each other and complement each other. Web3 is the real economy of crypto, and crypto is the virtual economy of Web3. But the actual situation is that over the years, this combination has been weak and weak, the yin has been strong and the yang has been weak. Speculative speculation has repeatedly changed its tricks, and Web3 applications have been stagnant for a long time.

There are three reasons for this problem. First, many people don’t believe that Web3 has a future. Second, the technical infrastructure required for the success of Web3 is very weak. Third, Web3 has not yet established its guiding ideology and methodology. Once these three problems are solved, innovative applications of Web3 will develop vigorously.

So can these three problems be solved in 2024? I think there's a good chance.

Let’s look at the first question first, which is the question of "Does Web3 have a future?" The narrative of Web3 is not difficult to understand. It is mainly based on a series of innovations in cryptography to build an autonomous and trustworthy contract environment in the digital economy. The technical foundation of Web3 is solid, its feasibility is undoubted, its logic is clear, and its value is clear. The future itself should not be a problem. But there is a lot of disruption to the Web3 narrative due to premature financialization. Vitalik complained about so-called Degen gamblers in his recent article for exactly this reason.

There is a secret that everyone in the industry knows, but few people openly state, that is, among the "most successful" people in "this industry", quite a few A large part of them don’t understand Web3 at all and don’t believe in Web3. In their bones, they have never believed that blockchain and decentralized technology have any use other than speculative trading. Therefore, as successful people in "this industry", in order to show their "transparency" and "honesty", they often semi-publicly promote on various occasions that blockchain is not applicable to the real economy, and laugh at Web3 as a castle in the air and impossible to achieve. . This situation has appeared on a large scale in Asia’s crypto circles, seriously interfering with people’s understanding of Web3.

The reason for this absurd situation is that the outside world generally confuses the crypto and Web3 industries. In fact, among the successful people in the crypto trading market, there are many who do not know much about technology, especially their understanding of cryptography. They just treat crypto assets as another speculative target to trade, through speculative trading or market manipulation. They have made good profits temporarily in the market. They do not understand, don't care and don't bother to learn the underlying logic of Web3. They cannot see the possible impact of cryptography technology on the real economy and life. If you confuse Web3 with crypto and simply use making money as the standard, you may regard these temporary trading winners as successful people in the Web3 industry, think that they have high cognition, and take their words as truth.

But this is a serious misunderstanding, because Web3 and crypto are not the same thing. A successful trader in the crypto market may be a crypto speculator, a master who accurately grasps the speculative psychology of the masses, a market manipulator, an insider trader, an arbitrageur, or simply a lucky person. , but all of this may have nothing to do with his level of knowledge about Web3. It is entirely possible that such a successful person does not even know the basic technical concepts of Web3. It is entirely possible that he believes from the bottom of his heart that cryptography is a bible, blockchain is not useful, and Web3 is purely a gimmick. In the real world, if a Wall Street trader points out the direction for the innovation of a large AI model, or asserts that there is a structural error in the molecular formula of a certain anti-cancer drug, most people will think that this guy is delusional, and no one will ever think so. He made money in AI and biomedical stocks and thought he had more say than OpenAI or the professors at Johns Hopkins University. But in the Web3 industry, a crypto trading expert (or more likely just a market manipulation expert or insider trading expert, commonly known as a sickle) talks nonsense about ZK, L2 or advanced tokenization technology, but it can attract everyone's applause. The absurdity of this situation should be fully appreciated.

We must return the voice of Web3 to those who are really doing Web3 innovation and work on Web3, clearly explain the narrative of Web3, and explain the future and logic of Web3. and feasibility are well demonstrated, the question about "whether Web3 has a future" will be easily solved.

The second problem, which is the weak technical infrastructure of Web3, has been a very serious problem in the past ten years. In fact, people's expectations for Web3 are far ahead of the development of infrastructure, so that for many applications, the ideas cannot be said to be bad, but they cannot be implemented, or the results are very poor after being implemented. This is also one of the important reasons why some crooked monks assert that Web3 is useless: because they don’t understand the technology, they can only judge based on superficial phenomena.

But Web3 infrastructure has come a long way in the past few years. The infrastructure mentioned here does not only refer to the blockchain, but also includes various protocol layers and auxiliary components such as ZK, accounts, DeFi, wallets, development tools, and developer education. It should be pointed out in particular that stablecoins are also an infrastructure, and may be one of the most core infrastructures. The development of stablecoins, compliant stablecoins and CBDC is actually an important condition for today's Web3 to talk about application innovation.

To what extent has the Web3 infrastructure developed now? In short, it is beginning to take shape. In terms of performance, it has reached a level where it can make a difference. In terms of cost, with some subsidies and incentives from the token economy, it also has the conditions for large-scale promotion. Therefore, from a macro perspective, both performance and cost are sufficient to support the basic chain of some large-scale, high-concurrency application scenarios.

The current main problem is that there are many sects, and the problem of fragmentation has begun to appear. Each has its own strengths and weaknesses, and there has not yet been a comparison in all aspects. Balanced options. Ethereum has good security, large asset scale, and a large number of developers, but its performance is too poor. Various EVM main chains and L2 have excellent performance, but have limited asset scale. Solana has good performance and complete tools, but the number of developers is too small. In short, full competition has begun, but there is no player who fully meets the economic and technical characteristics. However, overall, the development of Web3 technology infrastructure has been initially put in place, providing innovators with rich combination options. Web3 innovators of 2024 should no longer use weak technical infrastructure as an excuse.

The third issue, that is, the issue of guiding ideology and methodology, is the most urgent issue at present. It is no exaggeration to say that ideologically, the entire Web3 industry is still groping in the dark, not knowing where to go to be the first to break through.

Before Google established its advertising business model in 2004, the Internet industry was in this state. Many people understand the key points and capabilities of Internet technology, have speculated on some directions based on theory, and have made some applications, but they have not yet been fully implemented, except for email and Internet media that simply transmit or distribute content, as well as pornography, gambling, and drugs. Besides, I don’t know what to do with the Internet, let alone how to make money.

The same is true for today's Web3. There are many theoretical ideas, but except for the transfer and remittance of digital assets and speculation, none of them have worked, let alone Know what profit models there are besides selling assets in various ways. The industry as a whole is indeed looking forward to a major breakthrough in methodology.

I am optimistic about this. Over the past few years, and especially this past 2023, the Web3 industry has made some important advances at the forefront of thought.

The first is the understanding and description of the core value proposition of Web3, which is more precise than before. More and more people are beginning to regard "autonomy" and "trustworthiness" as the fundamental value propositions of Web3, adjusting the previous attitude of "decentralization" as the norm. In fact, "decentralization" is only one of the means to achieve autonomy and trustworthiness, and in many cases it is not the most reasonable means. I believe that in 2024, through in-depth theoretical discussions and some successful case practices, the most cutting-edge innovators in the Web3 industry will be able to get rid of the fundamentalist myth of "decentralization only" and focus more on autonomous identity and autonomy. Accounts, autonomous assets, autonomous data, cross-validation, and trusted computing are more essential elements. This will lead to major changes in the Web3 technology stack, from relying solely on blockchain to fully applying the latest technologies such as ZK, VC, and DID. Achievements in cryptography technology.

The second step is to start to face reality and respond to users’ needs for privacy protection and respect for authority in practical applications. Previously, the entire Web3 could not get rid of the shackles of the "cypherpunk" ideological origin of the blockchain, one-sidedly emphasizing extreme transparency, and one-sidedly advocating a simple consensus mechanism of "one person, one vote, the minority obeys the majority", which is unreasonable and unfair. Out of tune with the real world. With the development of ZK technology and the application of VC and DID technology, new Web3 applications can effectively and accurately protect privacy, avoid "information big pot", and support the authority of real-world authorized agencies in fact determination, thereby integrating advanced Web3 technology is effectively used to meet real-world needs.

The third is the expansion of token applications. A few years ago, the blockchain industry generally regarded tokens as "tokens", representing valuable rights and interests within the ecosystem. However, as Web3 gradually accumulates experience in various fields, people gradually begin to realize that the only thing blockchain is best at is managing tokens. Therefore, the expansion of blockchain application scope is largely manifested in token management. expansion of scope. The token itself is by no means just a "token". The token can be a token value carrier, a proof of rights and interests, a new expression form of the digital item itself, or a component of a smart contract. . It can be said that wherever the token expands, the blockchain can be applied. Almost all problems worth solving on the blockchain should be solved by tokenization, and things that are not suitable for tokenization should be considered. There is a high probability that it does not need to be put on the blockchain. When the entire Web3 industry gradually converges on-chain innovations to tokens, it will be possible to form a complete method system faster.

The fourth is a fundamental change in the attitude towards supervision. Things are different now. Regulatory and law enforcement agencies in more regions today have stronger confidence in determining which behaviors are innovative and which are fraudulent or illegal. They have fewer concerns, make more arbitrary decisions, and act faster. Web3 integrates regulatory technology (RegTech) and connects with or even actively supports reasonable regulatory mechanisms. This is both a situation and a general trend. I have observed that more and more Web3 applications actively support supervision, which is very necessary and timely.

This is not to say that all methodological issues of Web3 have been solved. In fact, there are still many unresolved issues, such as how to balance freedom and compliance, privacy and transparency. How to achieve a balance between them, how to make a profit, and how to embody the advantage that is beyond the reach of opponents in the competition with Web2. However, I think that among at least some of the Web3 innovators, long-standing dogma is dissolving and new ideas are starting to emerge in the right direction.

Based on the above judgments, I believe that in the next one or two years, the Web3 industry will have clear value creation logic and large-scale real economy applications. Potential innovation. And those truly innovative Web3 projects will begin to receive sustainable long-term investment on a large scale, so that long-term sustainable and accumulative construction in the Web3 industry will begin to show a higher rate of return than short-term speculation.