Web3

Web3 - the concept of decentralized Internet was first proposed by one of the creators of Ethereum Gavin Wood in 2014. However, the Web3 became widespread in 2021 due to the development of blockchain technologies and the non-replaceable token (NFT) market, as well as a surge in investor interest in the crypto sector.

By Web3 it is customary to understand the updated Internet, where the blockchain will be integrated, and therefore its main advantages: confidentiality, decentralization, lack of intermediaries, simplified data exchange and much more.

Crypto enthusiasts in 2022 believe that Web3 is able to fundamentally change business processes and existing business models, shifting the focus to two key concepts: decentralization and token-based economics (tokenomics).

Decentralization involves storing information on different servers in order to achieve a stable and secure decentralized network, network participants (developers) compete to provide high quality services to everyone who uses the service.

Cryptocurrencies are an integral part of Web3 projects. The fact is that project tokens provide a financial incentive for those who want to take part in creating, managing or improving a project. People can earn money by participating in the work of the protocol in various ways, both at the technical and non-technical levels - this is tokenomics.

The Web3 concept also aims to create more open, interconnected and intelligent websites and web applications that focus on machine-based data understanding. Through the use of AI and advanced machine learning techniques, Web3 strives to provide more concretized and up-to-date information as soon as possible. This can be achieved through advanced developments in big data analytics and the use of more efficient search algorithms.

Chronicle of development

2023

Market growth to $0.4 billion

In 2023, the volume of the global Web3.0 technology market amounted to about $0.4 billion. For comparison, a year earlier this figure was estimated at $0.3 billion. In the future, the industry is expected to show steady positive dynamics. This is stated in the materials of MarketsandMarkets, published on October 11, 2023.

Web3.0 is the concept of the next generation Internet, which involves the formation of a more intelligent and personalized network. The use of technologies such as artificial intelligence, semantic search, blockchain, etc. Within the framework of the Web3.0, it is planned to create a user-oriented decentralized Internet that will provide improved privacy, a high level of security and innovative capabilities.

MarketsandMarkets estimates that North America contributed the most to Web3.0 development in 2023. The Web3.0 market includes various services and applications such as smart contracts, decentralized identity management non-interchangeable tokens (NFTs) , and. decentralized finance (DeFi) Web3.0 is in second place in terms of solution costs, and the Asia-Pacific Europe region closes the top three, where the highest growth rates are observed.

Among the key players in the global industry Web3.0 the authors of the study name IBM, AWS, Oracle, Coinbase, Fujitsu, Huawei, Chainanlysis, Ripple Labs, Consensys, Gemini, Binance, Crypto.com, Web3 Foundation, Ava Labs, Covalent, Polygon Technology, Alchemy Insights, Kadena, Sapien, Storm, Brave, etc. Many of these companies are based in the United States.

As Web3.0 technologies develop further, significant changes are expected in many areas. For example, a decentralized Web3.0 architecture can make banking transactions safer and more efficient. Using blockchain to create traceable and transparent supply chains will help prevent counterfeiting and ensure authenticity. The new concept promises to change the process of online interaction, providing a more equal and user-oriented experience on the Internet.

One of the key factors in the growth of the Web3.0 market is the Open Source (open source) projects and communities, which contribute to the development of decentralized protocols, platforms and applications. Augmented (AR) and virtual (VR) reality technologies are becoming an integral part of the next generation Internet, which provide immersive effects and interactive experiences. Such solutions find application in games, education, healthcare and other industries. Another driver is peripheral computing, which brings data processing closer to its source, which reduces latency and increases overall performance. This is especially true for real-time applications and services in a Web3.0 environment. Smart contracts are also mentioned - special computer algorithms containing the terms of the contract and intended for automatic control and execution of contractual relations.

MarketsandMarkets analysts believe that from 2023 to 2030, the CAGR (average annual growth rate in complex percentages) in the global Web3.0 market will be 44.9%. As a result, by the end of the period under consideration, the volume of the industry may reach $5.5 billion. The deterrent is the lack of awareness of the capabilities and benefits of the next generation of Internet. Against this background, there may be a need for more accessible training resources on Web3.0 and blockchain.^[1]

Global investment in Web3 startups for the year collapsed by 73% to $7.6 billion

At the end of 2023, global investments in Web3 startups amounted to approximately $7.6 billion. For comparison, in 2022 this value was estimated at $28 billion. Thus, the fall was at around 73%, as reported in the Crunchbase study, the results of which were released on January 4, 2024.

It is noted that investments in the Web3 sector grew rapidly in 2021-2022. For example, in the first quarter of 2022, several Web3 startups held investment rounds worth over $100 million, while ConsenSys, Polygon and FTX raised more than $400 million. However, then the situation changed dramatically. So, in the first quarter of 2023, only two projects were able to attract more than $100 million.

Global investment in Web3 startups amounted to approximately $7.6 billion

This sharp shift in investor sentiment is explained by various factors, among which one of the most significant is risk appetite. Many venture capital investors are eager to invest heavily in fast-moving markets. However, as money becomes more and more difficult, and estimates and forecasts are Web3 decreasing, there are fewer people willing to take on the risks associated with this area, "says Paul Lalovich, partner at Agile Dynamics and leading expert on Web3 dynamics.

Global investment in Web3 startups quickly declined amid a difficult macroeconomic situation and rising interest rates, followed by crypto-zima and the collapse of the FTX. The Crunchbase report suggests that funding for Web3 projects decreased by 78% in the first half of 2023 compared to the same period in 2022 - from approximately $16 billion to $3.6 billion. The segment revived in the last quarter of 2023 thanks to several relatively large funding programs, such as the Series A round of the Blockaid project in the amount of $33 million^[2]

2022

$62 billion invested in Web3 projects in the world over the year

At the end of 2022, investments in Web3 projects on a global scale reached $62 billion. This area is actively developing, which leads to a rapid increase in the number of vacancies in the relevant area. This is stated in a report by McKinsey, published on July 20, 2023.

Web3 is the concept of the next generation Internet based on blockchains, cryptocurrencies and non-interchangeable tokens (NFT). Most traditional Internet applications and services are managed by centralized organizations that determine how they store and use end-user data. Unlike centralized management structures, Web3 technologies provide for the formation of a decentralized network in which community-driven projects can be implemented. Web3 is not regulated (everyone takes part on equal terms and no one is excluded) and does not require trust, so users can participate in transactions and interactions without trusting any particular party.

Investments in Web3 projects on a global scale reached $62 billion

According to McKinsey, against the background of the development of the Web3 concept, the demand for specialists in this area from 2018 to 2022 quadrupled. Moreover, the largest growth occurred in 2021 and 2022: in particular, in 2022, the number of vacancies jumped by 40% compared to the previous year. Web3 specialists involved in software development are most in demand.

However, the deployment of the Web3 ecosystem is associated with a number of difficulties. Among them, McKinsey specialists name immature and new technological platforms, regulatory issues, application reliability, etc. In addition, the value and user experience of Web3 over existing systems (which also continue to evolve) is often not fully understood: the benefits of the concept remain unclear to many consumers and businesses.^[3]

Coinbase doubles staff for Web3 development

In mid-February 2022, the cryptocurrency platform Coinbase announced that it plans to add 2,000 employees to its product, engineering and design teams because the company's management sees huge opportunities for the future of the third generation of blockchain-based Internet. Thus, the company's staff will double. Read more here.

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