Top 10 Venture Capital Opportunities for Web 3

After 40 years of development, the Internet has gradually entered a new era. On the one hand, consumer Internet has stagnated due to the monopoly of giants; on the other hand, the development of corporate Internet has made rapid progress in the past 10 years, and SaaS has become the most eye-catching stock.

Since 2010, the giants of the consumer Internet have entered the harvest period, and the monopoly profits of the major giants have skyrocketed, occupying 90% of the top 10 market capitalization. On the other hand, in the field of innovation, there are no giants anymore. Although in China, due to the slow response of the giants, mobile Internet giants ByteDance and Meituan were given opportunities. But on the whole, there is no dispute that the global consumer Internet has entered a stagnant state.

We often say that innovation always occurs at the edge. Just as the Internet was born in the 1970s and the World Wide Web was born in the 1990s, the original Internet was only composed of a few university nodes. After 40 years of development, no one can predict the situation. Develop various applications that change the world.

Now a new paradigm shift is coming , that is, in the hacker world that is often unknown to ordinary people, the Bitcoin blockchain was born in 2009, planting the seeds for the development of Web3 in 2021. I think Web3 will be a huge paradigm change, and the top 10 venture capital opportunities that it bred are as follows:

1. The technical architecture of Web3 must be blockchain

Although there is no necessary connection between Web3 and blockchain, the development of the industry has brought the two together. The blockchain technology produced in 1982 has not been widely used for a long time since its birth, until the birth of Bitcoin, which created a technical foundation for users to truly own information on the Internet.

After the Internet from 1.0 to provide users with information to the era of user information interaction in the 2.0 era, users who have entered the Web3 era have information. The underlying logic of development is that more and more Crypto assets are deposited on the Internet in the information society. This concentrated expression of the world. Nine of the top 10 companies are Internet companies.

Web3 needs blockchain technology to support the realization of the vision that users fully own information and Crypto assets. As the underlying technology, blockchain will be the largest entrepreneurial opportunity in the Web3 field. It is no exaggeration to say that the market size of blockchain public chains will exceed Now all Internet companies, because Google and Facebook are logically just an application running on these public protocols, just as all Internet companies need to run on the TCP/IP protocol, all future social networks and information search Will run on the blockchain protocol at the bottom.

Although the Bitcoin public chain now occupies 40% of the market value of the crypto market, Ethereum, which was currently online in 2015, has surpassed the performance of the Bitcoin market. Of course, if you think Ethereum will dominate the world, then the public chains such as Solana, Avalanche, NEAR, Polkdot, and Cosmos, which were born after 2018, may prove that this conclusion is too early.

Representative companies: Ethereum, Solana, Avalanche, NEAR, Polkadot, Cosmos.

2. Decentralized identity system

Today’s Internet companies own everything about users, and users are forced to register their own accounts with each company. The valuation of companies is based on how many users they have and how much advertising revenue they use to generate advertising revenue.

The slogan of the Web1.0 era is that no one on the Internet knows that you are a dog; Web2.0 is the era of social networking. If you register on Facebook with a screen name, you will be ridiculed; in the Web3 era, users will have their own information completely. 

Owning your own information starts with owning your own identity.

OpenID was born in 2005. Users have their own identity information, and the information is stored on an independent server. Websites that support OpenID can obtain user information after being authorized by the user. Unfortunately, Facebook Connect and Google Login defeated OpenID and became the mainstream of third-party login.

Windows Cardspace was born in 2003. Users can integrate their own identity information in the operating system. Websites that support this protocol can apply to users for access, but this product has never been widely used. 

Therefore, it seems that the promotion of independent identity information management products is very difficult, even for large enterprises, it is difficult to succeed. Until the Web3 era, users need to own their own Crypto assets to provide users with strong enough motivation to own and manage their own information.

As mentioned, the development of history often requires a process of one generation. As users of the original Internet users, they value their Crypto assets more and hope to own and control their Crypto assets.

In the technical framework of Web3, users will pay for the access and use of the website, so they should have their own data rights.

In the future, everyone will have a domain name and a web page located in the decentralized IPFS. 

Representative company: ENS.

3. Storage and access of distributed data

In the Web3 era, users have their own data and need to pay for storing the data. For example, the NFT purchased by the user needs to be stored in a place that can be permanently accessed. In addition, convenient access requires data transmission and indexing services.

Representative companies: Filecoin, Arweave, The Graph, Livepeer, ByteTorrent.

4. Communication protocol

Due to technical limitations, different application scenarios will require different blockchain technologies, and different blockchains need to communicate with each other. Smart contracts on one blockchain may need to call contracts on another blockchain , Digital assets located on one blockchain may need to be loaned to another blockchain.

Representative company: XCMP, EPNS, XMTP.

5. Resource allocation optimization agreement

Although the DeFi produced in 2018 has the vision of decentralized finance and civilian finance, I think it is impossible for the blockchain to change the traditional financial industry. Although the top 10 companies in the world by market capitalization today are Internet companies, banks still cannot provide credit loan services to the high-tech industry, and the development of high-tech companies still relies heavily on venture capital funds. New technology cannot transform a traditional industry at all, and it is more likely to create a new industry.

With the advent of the cloud computing era and the in-depth changes in industry and agriculture by Crypto information technology, more assets are embodied in digitization. Various tokens represent not only computing resources and storage resources, but may also represent Crypto assets and assets in the physical world. Finance, as a scientific theory of value exchange across time and space, will be applied to distributed network collaboration.

For example, in 1980, the contract net protocol designed by Reid Smith was used to split a large task and subcontract it to other partners for joint completion. Because no tokens are used in the protocol, it has great limitations. In the future, the Software Agent, which is driven by artificial intelligence technology and can replace user decision-making, can use financial protocols such as payment, transaction, lending, and hedging to coordinate network resources to complete user tasks.

It can be said that the decentralization and personal ownership of Crypto assets in the Web3 world require the collaboration of network resources. 

Representative company: Uniswap, Compound, AAVE

6. Social Network Protocol

In the Web3 era, because there is no intermediary, decentralized users need an open social network protocol to contact users. The user’s identity value does not have the intermediary of Facebook, and more needs the social network built by users to reflect their own value.

Representative company: Context, CyberConnect, DESO, RSS3

7. NFT

In addition to Crypto artwork, NFT believes that its greater role should be a programming unit.

If smart contract is a class in object-oriented programming, then NFT is the Singleton in object-oriented programming.

8. Wallet

Just as the user interface of Web1.0 and Web2.0 is a browser, the wallet will be a browser of Web3.0, carrying the functions of managing user information and accessing DApp.

Representative company: Argent, MetaMask

9. Shared network

The debate about whether the Internet is centralized has never stopped, and there are no conclusions about whether the Internet should be neutral. But with the development of mobile devices and sensors, we have the opportunity to build a shared wireless network. Just like the P2P network, the users of the network are also the service providers of the network. Unlike P2P, the emergence of tokens can provide settlement between users and providers.

Representative company: Helium, DIPNET

10. Content Creation Economy

In the Web3 era, users who have their own creative content and their own readers will get rid of the charging model of relying on the platform to distribute traffic and share advertising fees.

Representative company: Mirror

Finally, I would like to say that 90% of people believe that blockchain practitioners are lunatics or wandering on the edge of the law. 9% of people became enthusiastic about the blockchain and decided to allin blockchain, and then found out that they did not meet their expectations or thought they were cheated, and were disappointed. Only 1% of people can persevere and become a force to promote the development of the industry. The future leaders will be born from these 1%.

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