Solv Protocol co-founder Meng Yan pointed out the three main reasons why Web3 has not yet landed and developed: the market fundamentally does not believe in the future of Web3, the infrastructure is very weak, and the industry lacks a solid methodology. However, it seems that these problems are gradually being solved.
Web3 Industry is gradually losing favor from the outside world
Reasons: lack of substantial innovation, negative news is frequent
Solution: find valuable innovations in Web3 as soon as possible
Why is Web3 currently not landing?
Key 1: The market fundamentally does not believe in Web3
Web3 has clear value and solid technology
Market sentiment is influenced by the wrong people
Key 2: Web3 infrastructure
Web3 infrastructure is already capable of taking action
Challenges of Web3 infrastructure: fragmented resources
Key 3: Web3 core thinking
More precise description of the core value of Web3
Get rid of the cypherpunk ideology
More comprehensive thinking about token applications
Start actively thinking about compliance
Web3 may have a chance to land in the near future
There are not many people willing to speak for crypto now. Since the drastic collapse of the crypto market in 2022, the curiosity and patience of the outside world towards the crypto industry have basically been exhausted. Today, it is difficult to find external individuals who do not have bias and hold a positive view of the crypto industry, except for stakeholders within the industry.
The global political and economic situation is gradually becoming complex, tense, and confrontational, and many people are having a hard time. Against this backdrop, if an industry that is generally regarded as mainly speculative and gambling suddenly becomes prosperous, it will appear particularly glaring.
If the crypto market welcomes a bull market in the future, this bias and strong negative sentiment can easily turn into jealousy and hatred, and then turn into intense intervention or even attacks on the crypto industry (such as regulation). In a more serious situation, the market may collapse instantly due to external intervention, and some people may be troubled.
People in the crypto industry need to be mentally prepared for this.
In the face of the above problems, valuable, influential, and persuasive innovations in the Web3 field must be found as soon as possible.
However, before talking about Web3 innovation, the relationship between crypto and Web3 should be clarified. Meng Yan defines it as follows:
Crypto: defined as the trading of encrypted digital assets
Web3: defined as a technological innovation movement aimed at establishing a trusted digital economy
Ideally, crypto and Web3 are interrelated. Web3 is the physical economy of crypto, and crypto is the virtual economy of Web3. However, in reality, crypto has dominated this combination for many years, with a weak physical aspect and a strong virtual aspect. Speculation and various market manipulations in the crypto industry have led to a long-term stagnation of Web3 applications.
The main reasons for the slow development of Web3 applications are three key points:
The market fundamentally does not believe in the future of Web3
The infrastructure required for Web3 success is very weak
Web3 has not established a solid ideology and methodology
If these three problems are solved, the innovation of Web3 applications theoretically will flourish. So, can these three problems be solved in 2024? Meng Yan believes it is possible.
The first problem is “Does Web3 have a future?”
The narrative of Web3 is not difficult to understand. It is mainly based on a series of cryptographic innovations to build a trusted contract environment in the digital economy. The technical foundation of Web3 is also solid, and its feasibility is beyond doubt. The logic is clear, and the value is also clear. Therefore, the development prospects of Web3 should not be a problem in itself.
However, due to premature financialization, there have been many interferences with the narrative of Web3. Vitalik recently complained about the so-called Degen gamblers, which is also due to this reason.
(Advocating to return to being a cypherpunk! Vitalik’s ideal social form of blockchain and Ethereum, integrating speculation and development)
There is a well-known but rarely openly stated secret within the industry, that is, among the “most successful” people in “this industry,” a considerable portion of them do not understand Web3 and do not believe in Web3. These people never believe that blockchain and decentralized technologies have uses other than speculative trading. Therefore, successful individuals in “this industry” often semi-publicly proclaim in various occasions that blockchain is not suitable for the real economy, ridicule Web3 as a castle in the air, and claim that it is impossible to achieve, especially in the Asian crypto circle.
The above situation seriously interferes with the general understanding of Web3.
The reason why this absurd situation exists is that the aforementioned outsiders generally confuse the crypto and Web3 industries. In fact, among the successful traders in the crypto market, many do not understand the technology, especially have a shallow understanding of cryptography. They simply treat crypto assets as another speculative target and have temporarily gained decent profits through speculative trading or market manipulation. However, they do not understand, care about, or bother to learn the underlying logic of Web3, nor can they see the potential impact of cryptographic technology on the real economy and life.
If Web3 is mixed up with crypto and simply judged by profitability, most people in the market may regard these temporary trading winners as successful individuals in the Web3 industry, believing that these people have high awareness and treat their words as truth.
But this is a serious misunderstanding. A successful trader in the crypto market may be an expert in speculation, adept at grasping market psychology, a market manipulator, an insider trader, or a professional arbitrager. They may also be just lucky. However, all of these possibilities have nothing to do with their understanding of Web3. Such a successful individual may not even have a basic understanding of Web3 technology concepts and may genuinely believe that cryptography is a cryptic language, blockchain is not practical, and Web3 is just a gimmick.
In the real world, if a Wall Street trader points out the direction of innovation for a large AI model or asserts that the molecular formula of a certain anti-cancer drug has structural errors, most people would think that this person is delusional. No one would think that this person has more authority than professors from OpenAI or Johns Hopkins University just because the trader made money from AI and biopharmaceutical stocks. However, this repeatedly happens in the Web3 industry.
The discourse power of Web3 must be returned to those who are truly innovating and working on Web3. The narrative of Web3 must be clarified, and the future, logic, and feasibility of Web3 must be well demonstrated. The question of “Does Web3 have a future?” will be easily resolved.
The problem of weak Web3 infrastructure has indeed been a major challenge over the past decade. People’s expectations for Web3 far outpaced the development of infrastructure, to the point where many applications, although good in theory, could not be implemented or had poor results. This has also led to a long stagnation of Web3 applications.One of the important reasons why some people claim that Web3 has no future is because they lack technical understanding and can only make judgments based on surface phenomena. But is this really the case?
The infrastructure of Web3 has made significant progress in recent years. When we talk about infrastructure here, it not only refers to blockchain, but also includes various protocol layers and auxiliary components such as Zero-Knowledge Proofs (ZKP), accounts, DeFi, wallets, development tools, and developer education resources.
It is worth noting that stablecoins are also a type of infrastructure and may be one of the most crucial ones. The development of stablecoins, compliant stablecoins, and CBDCs is actually a vital condition for discussing application innovation in Web3 today.
So, how far has the infrastructure of Web3 developed? In short, it has started to take shape. It has reached a level where it can perform well in terms of performance and has the conditions for large-scale promotion, thanks to subsidies and incentives from some token economies. Therefore, both in terms of performance and cost, it is already sufficient to support large-scale, high-traffic application scenarios.
Overall, the development of Web3 infrastructure has reached an initial stage, providing abundant options for innovators. Web3 innovators in 2024 should no longer use weak technological infrastructure as an excuse.
However, it is true that the main problem with the current infrastructure is the proliferation of factions, and the issue of fragmentation is beginning to emerge. Regarding blockchain, each network has its own strengths and weaknesses, and there has yet to be a well-balanced option in all aspects.
What is chain abstraction? It is a more comprehensive improvement in user experience compared to account abstraction.
Ethereum has good security, a large asset base, and a large number of developers, but its performance is poor. Various EVM competing chains and Layer 2 solutions have excellent performance, but limited asset scale. Solana has good performance and complete tools, but has a small number of developers.
The third problem is the issue of guiding ideologies and methodologies, which is currently the most pressing issue. It is not an exaggeration to say that the entire Web3 industry is still groping in the dark in terms of ideology, not knowing which direction to take to break through first.
The internet industry was in a similar state before Google established its advertising business model in 2004. Many people understood the key points and potential of internet technology, speculated on some directions based on theory, and developed some applications. However, none of them had been successful, except for simple email delivery and distribution and dubious content. They did not know what the internet could be used for, let alone how to make money.
Today’s Web3 is also like this. There are many theoretical ideas, but apart from transferring digital assets and engaging in speculative trading, none of the applications have become feasible. It is still unknown what profit models exist besides various asset sales. The entire industry is awaiting a major breakthrough in methodologies.
Meng Yan is optimistic about this. In the past few years, the Web3 industry has made some important progress in terms of cutting-edge ideas. This includes a more precise understanding and description of the core values of Web3. More and more people are starting to consider “autonomy” and “trustworthiness” as the fundamental values of Web3, adjusting the previous attitude of regarding “decentralization” as the ultimate goal.
In fact, “decentralization” is only one of the means to achieve autonomy and trustworthiness, and in many cases, it is not the most reasonable approach.
Meng Yan believes that through in-depth theoretical exploration and successful practical cases in 2024, the most cutting-edge innovators in the Web3 industry will be able to break away from the misconception of “decentralization only” and focus more on autonomy, autonomous accounts, autonomous assets, autonomous data and cross-verification, and trusted computing. This will lead to significant changes in the Web3 technology stack, shifting from relying solely on blockchain to fully applying the latest cryptographic technologies such as zero-knowledge proofs, visual cryptography, and decentralized identities.
Secondly, there is a growing recognition of the reality and response to the privacy protection and authority-respecting needs of users in practical applications.
Previously, the entire Web3 industry could not escape the constraints of the “cypherpunk” ideology originating from blockchain. It unilaterally emphasized extreme transparency, one-person-one-vote, and simple consensus mechanisms that were both unreasonable and inconsistent with the real world.
With the development of the industry, new Web3 applications can effectively and accurately protect privacy, avoid the information “big pot of rice” problem, and support the authority of authorized institutions in matters of fact. This allows advanced Web3 technologies to be practically applied to meet the needs of the real world.
The third progress is the expansion of token applications. A few years ago, the blockchain industry generally regarded tokens as value rights. But now, tokens are not just about rights. Tokens can be any form of value carrier, including proof of rights, new forms of digital items, and components of smart contracts.
It can be said that wherever token applications expand, blockchain can be applied. Almost all problems that are worth solving on the blockchain should consider tokenization, while things that are not suitable for tokenization most likely do not need to be put on the blockchain. When the entire Web3 industry gradually converges innovative solutions onto tokens, it will be possible to form a complete methodological system faster.
The fourth change is the fundamental shift in attitude towards regulation. Regulatory and law enforcement agencies in more regions today have stronger confidence, less concern, more decisive decision-making, and faster actions in determining which behaviors are innovative, fraudulent, or illegal.
Web3, integrating regulatory technology (RegTech) and even actively supporting reasonable regulatory mechanisms, is both a situation that cannot be avoided and a general trend. More and more Web3 projects will actively support regulatory requirements, which is necessary and timely.
The above does not mean that all methodological issues of Web3 have been resolved. In fact, there are still many unresolved issues, such as how to achieve a balance between freedom, compliance, privacy, and transparency? How to generate profits? How to demonstrate an advantage that leaves opponents helpless in competition with Web2? However, the industry’s thinking has indeed progressed and is emerging in the right direction.
Based on these three judgments:
– If the discourse power of Web3 can successfully transition to genuine participants
– If the infrastructure of Web3 is already sufficient for use
– If the core thinking of Web3 is gradually improving
Meng Yan believes that in the next one or two years, there may be large-scale innovations with the potential for real-world economic applications, allowing Web3 projects to become sustainable long-term investments rather than just speculative tools.
CRYPTO
Web3
The core thinking of Web3