Web3 (also known as Web 3.0, also known as Web3) is a concept about the development of the World Wide Web, mainly related to blockchain-based decentralization, cryptocurrencies, and non-homogeneous tokens. In Web 3.0, users interact to meet their own needs and use blockchain technology in their interactions to create, distribute and circulate value. In this way, the entire process of user interaction and value circulation has formed the Web 3.0 ecosystem. Compared with the platform centralization characteristics of Web 2.0, Web 3.0 is committed to realizing a "decentralized" network ecology owned by users and built by users.
In this issue of intelligent internal reference, we recommend the reports of Guosheng Securities and Soochow Securities, "Web3.0 Era: Openness, Privacy, and Co-construction" and "Web3.0 Preliminary Study: A User-Led, Decentralized Network Ecology Based on Blockchain Technology", which reveal the main elements and characteristics of the Web3.0 ecosystem.
Source Guosheng Securities and Soochow Securities
Original title:
"Web 3.0 Era: Openness, Privacy, Co-construction", "Web3.0 Preliminary Study: A User-Led, Decentralized Network Ecology Based on Blockchain Technology"
Author: Song Jiaji Ren Heyi Zhang Liangwei Zhou Liangjiu
Web 3.0: User-led network ecology
During the Web 1.0 era, content was provided by the Website (PGC), and users could only passively browse text, images, and video content, and could not participate in the creation.
In the Web 2.0 era, there have been website models such as blogs, video platforms, and forum communities, where users can independently create uploaded content (UGC) on the platform, share and accept the views of others.
All this will undergo profound changes in the Web3.0 era: the Web 3.0 world will be fully open, the user's behavior in it will not be limited by ecological isolation, and it can even be considered that users can freely swim in the Web3 world (based on basic logic); user data privacy will be protected by means such as encryption algorithms and distributed storage; in the Web3 world, content and applications will be created and led by users, fully realizing user co-construction and co-governance (DAO, decentralized governance), At the same time, users will share the value of the platform (protocol).
▲ The main difference between WEB 3.0 and 2.0
In addition to a completely different Internet model and user experience, Web3 will bring a new traffic ingress paradigm. The traffic ingress pattern that occupies the user's attention in the Web2 era will undergo some interesting changes.
Driven by the distributed technology represented by blockchain, from decentralized point-to-point ledger experiments to decentralized smart contract platforms, countless new applications (Dapp) have been spawned, and slowly DeFi has formed a "financial service" in the digital world, and NFTs have accelerated the asset chain. We see that outside the traditional world (online and offline), users are moving closer and closer to a digital world where they live together. At this point, people are calling for a new online world, the metacosm, which can credibly carry the social identity and assets of individuals, and the community will have a stronger dominance.
The Web 3.0 technology stack can be divided into three main layers: the protocol layer, the application layer, and the network foundation layer. All of this is mainly built on the blockchain (of course, the protocol layer can also have an off-chain auxiliary part). From an application perspective, Web 3.0 covers almost most of web 2.0 areas such as DAO (and tools), privacy, applications, storage and data, games, creator economy platforms, and social networking.
With the booming cryptocurrency industry, a large number of Web 3.0 applications have emerged in the past two years, of course, most of these applications may end up being transitional products. Even some applications have flaws in the economic model and solve user pain points, and do not reflect more real needs than Web 2.0.
In any case, the Web3.0 ecosystem has emerged, and in the continuous application exploration, it will unveil the veil of Web3.0 step by step.
Web 3.0 ecological landscape
Web3.0 ecosystem module: 1) User identity: Users use wallets, master multiple avatars, and participate in the interaction of Web3.0 network ecology. 2) User interaction: User interaction through blockchain technology, so as to achieve value creation, distribution and circulation. 3) User organization: Users form autonomous organizations to create various applications, tools, protocols, etc. for the Web 3.0 ecosystem in collaboration. 4) Underlying support: The blockchain from the technology layer and distributed storage from the data layer jointly provide the underlying support for Web3.0.
Users participate in the interaction of the network world through the avatar, web 3.0, the collection of avatars is the user identity, the identity is really owned by the user, the user mastery, also known as the decentralized identity DID (Decentrliazed Identity). Compared with the user identity in the Web 2.0 era, the user identity of Web 3.0 is very different in terms of identity control, openness, security, and privacy. The user identity of the Web3.0 ecosystem is decentralized, and its expression and use have the following characteristics:
1) Decentralization: DID, as a collection of user identities, is completely controlled by the user, and is not completely controlled by any one institution. The authentication of user identity by any institution is only one element of the collection.
2) Form of expression: The user issues the identity authentication information issued by each institution to himself, and stores it on the blockchain address that the user fully controls, and this blockchain address is often also the user's wallet address.
3) How to use: Log in to each application on web3.0 through the wallet. The user experience is similar to weChat login in the web 2.0 era. The difference is that DID is owned by the user and mastered by the user, while WeChat will be limited by the platform.
1, three major labels, openness, privacy and co-construction of the world
The openness of Web 3.0 is reflected in:
1) The user's access in a certain Internet application "field" is fully free and the threshold is low; for example, the user often uses a blockchain account address to log in to the application on the chain, without registration permission, and the operation is convenient;
2) User behavior is not restricted by third-party subjects, Internet applications break the original so-called ecological, ecological boundaries and barriers, under the principle of composite code operation logic, the applications have a high degree of combination and complexity; the most direct case is the so-called DeFi Lego, any application can call or aggregate the underlying underlying basic protocol (such as DEX), and the synthetic asset platform maps real-world assets to the chain (no delivery relationship), This is equivalent to breaking the so-called online and offline and virtual and real boundaries.
3) In addition, applications based on different infrastructures within Web3.0 can be interconnected by "cross-chain" protocols; therefore, the behavior of multiple applications in the Web3.0 world can produce a similar social relationship map, further enhancing the potential of data value mining.
To take a game application metaphor, users can not be restricted by third parties, it is very convenient to enter a game world; users can freely implant their favorite characters/images into the game, and even make the characters act across platforms/domains, and in the Web 2.0 era, such as games such as Glory of the King, you cannot decide the choice of characters, let alone kill the favorite Monkey King into the world of Warcraft - it is not difficult to connect the platform in this regard, but because the control is not in the hands of the user. Of course, you can also trade gear such as character skins (with the help of NFTs) and even build a complex market of game gear derivatives based on other DeFi protocols. In summary, web 3.0 is a way of surviving across application platforms, virtual and real-world.
Privacy: Transfer of ownership and value of data. Data privacy has become the focus of global supervision, the current solution is to strengthen legal protection, so that users realize that the theft of user data is illegal; the second is to introduce privacy computing, through homomorphic encryption, multi-party secure computing, trusted execution environment and other technologies, to ensure that data is explicitly invisible during use. In the web 3.0 era, users will tend to protect personal data privacy in a more radical way, triggering a shift in data ownership and value. With the decentralization of applications, when on-chain data is verifiable, user behavior, generated data, and even application protocols also need to be protected by privacy. Privacy protection is multifaceted, including the privacy protection of the basic blockchain platform, stored data privacy (distributed storage), user private key management, anonymity protocol and other aspects.
DAO: A networked world of co-construction, co-governance and shared value. The construction of the Web3.0 ecosystem, such as applications, tools, protocols, etc., is inseparable from collaboration, and the organizational form of orderly collaboration of users is called DAO (Decentralized Autonomous Organization). Dao is a decentralized organization, users are organized and formed by common goals, using blockchain technology and smart contract procedures to formulate and enforce rules, so as to achieve a form of community self-governance that can ensure fairness. Users' content creation in Web 2.0 Internet applications is limited in many ways (limited by platform review, cross-platform restrictions), and even more restrictive in terms of community governance, thus limiting the value capture of users in terms of creator economic sharing. The principle of Web 3.0 openness will break these limitations, while blockchain incentives effectively feed back the economic value of content to creators.
Blockchain technology is the core technical foundation that has been established in the form of DAO. The rules of organization are written through blockchain smart contracts and are enforced by the program guarantee. At the same time, the rules are stored on the block and cannot be easily tampered with. The establishment process of the DAO will also produce the creation, distribution and circulation of value. DAO is established in user interactions and continues to create value in interactions. Dao distributes the value by issuing project tokens and NFTs, so that users can enjoy the DAO's right to governance and revenue. DAO tokens and NFTs can also circulate in DeFi.
As an organizational form in the Web3.0 era, DAO is quite different from the traditional organizational form in terms of organizational structure, organizational rules, and ownership of rights. DAO has the following advantages: the organizational rights are distributed to all members of the organization in the form of organizational tokens, thereby realizing community autonomy and distribution of rights and interests, thereby greatly stimulating the participation and enthusiasm of the members of the organization, and playing an important role in promoting the construction of web3.0 community projects.
Traditional organizations vs DAO
The current DAO is mainly built on the Ethereum blockchain network. This is due to the fact that Ethereum has built a distributed, decentralized smart contract platform, and the DAO needs to rely on smart contracts to program the governance rules, thus ensuring that the DAO can operate according to the rules it writes. Objectively speaking, the DAO is still in the embryonic stage of development, with many deficiencies: 1) it depends on the program, there may be bugs; 2) it presets rules, the implementation is not flexible, and it is not suitable for handling complex situations; 3) the DAO governance model is not perfect, and there are governance loopholes. At the current point in time, due to the shortcomings of the DAO, it is not possible to completely rely on the automatic execution of the program, so most of the current GOVERNANCE methods of THE DAO adopt the combination of on-chain governance + off-chain governance - through the smart contract programming on the blockchain, most of the simplified, highly repetitive, frequently invoked rule execution settings are completed, and at the same time, complex rule governance is carried out by setting up an executive committee, DAO user voting, etc.
▲Dao governance method practice
2. Web3 promotes the integration of the "real world" and the "virtual world"
In the Web 3.0 era, the metacosm will be a highly imaginative and creative form of the network. In the Web2 era, people are accustomed to using the "virtual world" and "real world" as the boundaries of the online and offline worlds. The metaverse built on the basis of Web3 will be the deep integration of the so-called "real world" and "virtual world".
In the Web2 era, there are obvious ecological boundaries of the Internet (this is due to the way centralized companies operate), and an Internet giant controls the core access of the ecology, and there are relatively few cross-ecological applications - such as cross-ecological restrictions on online payment tools and blocking hyperlinks between important Internet application entrances. The so-called Internet applications are actually limited to activities within different ecological areas. In the metaverseic world of the Web3 era, the "chasm" and boundaries of the Web2 era will be broken.
In addition to the cross-chain application mentioned in the previous section that solves the fusion between different main chain ecologies, the metaverse world and the so-called "real world" will continue to merge. For example, a subject in a metaverse, in addition to economic activity in the DeFi market, can also hold real-world asset interests. That is to say, the assets in the metacosm do not exist between the "virtual world" account and the "real world" account system, and the metacosm will be the fusion form of the "real world" and the "virtual world". It is generally believed that although the world of the metaverse is co-built by users, different applications can freely open up and integrate through various means, but the virtual world of the metacosm cannot be opened with the asset account of the real world, because there is an isolation between the ecology of the real world, so the "external metaverse" cannot break into the ecology of the current Web2 era.
Second, policy, regulation and new traffic value
In 2021, the government issued corresponding policies to vigorously support the development of Web3.0-related industries. The 14th Five-Year Plan has repeatedly mentioned the need to vigorously develop blockchain technology, and at the same time to increase the development and construction of metaverse-related technologies such as immersive video, virtual reality, and 8K high-definition video. The State Council and local governments have competed to issue policy documents to vigorously promote the construction of local meta-universe-related industries. At the same time, the government imposes strict regulation on virtual currencies. In 2017, the central bank issued an announcement pointing out that virtual currencies do not have legal tender functions and need to pay attention to related risks. In September 2021, the National Development and Reform Commission and 11 other departments issued a notice prohibiting the addition of new virtual currency "mining" projects, while accelerating the orderly withdrawal of existing projects, and completely prohibiting "mining" behavior. The application of blockchain technology has gradually landed in the fields of finance, logistics, digital copyright, insurance and so on. In the financial sector, the cost of financial transactions is reduced while improving the payment of fast-completed transactions. In the field of logistics, logistics costs can be reduced and the production and delivery of goods can be traced. In the field of digital copyright, works can be authenticated to ensure the authenticity and uniqueness of ownership. In the field of insurance, through the application of smart contracts, the policy is automatically triggered.
▲Policy guidance and encourage the healthy development of the industry
The regulatory challenges posed by Web 3.0 are undoubtedly enormous, and the context of openness, privacy, and co-construction does not mean that Web 3.0 applications do not need to be regulated. But there is no doubt that due to the huge innovation of the Web 3.0 application business model, the way of regulation is bound to change greatly to adapt to the development of new things.
Therefore, in the Web 3.0 era, regulation will show the following development trends: 1) For the channel/business that communicates the two worlds of Web 3.0 and Web 2.0, it will bear the brunt of it and seek a suitable regulatory model to adapt to the development of Web 3.0:
2) In terms of privacy and anonymity, it is possible that the underlying implementation of KYC, the application layer to achieve moderate anonymity: for the privacy and anonymity brought by the distributed network, on the one hand, there is a need for privacy and anonymity, on the other hand, not privacy and anonymity means that regulation will be completely ignored. In the real world, regulation must exist, and Web 3.0 will explore ways to integrate with regulation. One approach that seems feasible is to implement regulation at the bottom of the blockchain network, which means that there will be regulatory constraints such as KYC in the underlying account, and moderate anonymity at the intermediate protocol layer and application layer. Of course, the means of supervision are also flexible, and information such as user KYC can be stored in a multi-signature network with regulatory participation.
About privacy and anonymity, a possible regulatory scenario
3) In the process of DAO governance, it is bound to introduce supervision as a governance party: DAO is an important governance mechanism for the operation of the Web 3.0 world, but the ideal DAO solution does not seem to solve all problems, often after the need for arbitration, recovery of stolen assets and other issues, the real social government agencies and regulators often have a very realistic role. For example, when there are frequent hacking incidents on DeFi systems and other losses caused by unpredictable events, it is not enough to rely solely on DAO. At this time, it is often necessary to solve it by means of real social government and law. For example, when a DeFi project is at risk, relying solely on community-based governance may not be able to urge development teams to protect or recover users' crypto assets. On the contrary, when a crisis occurs, it is the centralized institutions and legal deterrents in real society that can really deter attackers. For example, when some of a hacker's personal information is exposed and some of its assets are frozen by a centralized organization, the hacker is willing to negotiate with the development team and promise to return the stolen assets.
What is the paradigm of the Internet's important traffic (entrance) value in the Web 3.0 era? Web 2.0 competes for user attention and capital flow to monetize traffic value. In the Web 3.0 era, traffic ingress value is still important, but it is by no means limited to this.
For example, Uniswap, one of the biggest contributors to promoting "DeFi Summer", from a user-facing point of view, also wants the same traffic entrance as Web 2.0 - users use its DEX protocol to complete the transaction exchange function, and the user's fee is used as the traffic monetization of the protocol (platform) (part of which is fed back to the LP), from this point of view, Uniswap is not fundamentally different from other Web 2.0 applications. But as the underlying DEX protocol, Uniswap can be invoked by other protocols, producing compounding features (the so-called DeFi Lego). The most typical applications such as revenue machine gun pools, transaction aggregators, etc., where users complete DeFi "mining" revenue and transaction exchange functions on these applications are often called DEX protocols such as Uniswap, and these protocols are hidden behind the user, and there may be multiple protocol invocation processes in between. But for Uniswap base protocol traffic monetization, the effect is the same.
Due to the openness of the Web 3.0 world, these calls are completely open without issues such as licensing and ecological boundaries. Therefore, the traffic value paradigm of Web 3.0 will show the characteristics of openness. In addition, the value of Web 3.0 traffic is also strongly related to the number of protocol calls.
At present, many social (WeChat, Weibo), entertainment (Steam), finance (Oriental Wealth) and other platforms we see are the beneficiaries of the evolution of Web1.0 to Web 2.0, what is the evolution to Web3.0 in the future?
Web 3.0 is full of imagination, and its final landing form is not clearly judged now. But its trend is already showing signs. In the evolution to Web 3.0, there have been many products in the form of a hybrid Web 2.0 and Web 3.0. Typical representatives of this are the NFT trading platform Opensea and Metamask wallets. Opensea relies on NFT transaction fees for its revenue, similar to the traditional e-commerce or centralized exchange model.
Metamask wallet has embedded in pc browser plug-ins such as Chrome and mobile app forms, as an important user entrance, Metamask integrates swap aggregation function, users can directly call the DEX protocol to complete the token exchange, then pay an additional fee to the Metamask platform. Both are typical Web 2.0 products. But user operations on both platforms are typical of the Web 3.0 world.
In the Web 2.0 era, all kinds of APP have become the main front of applications, spawning businesses such as buying and brushing machines, and a large amount of time and data of users is bundled in the head APP. Existing Web 3.0 applications are mainly accessed in a web browser manner on the PC side. The mobile phone is accessed by a web browser, and the wallet app can also be used as an entry point, but the specific application is still accessed in a web way. Unlike in the Web 2.0 era, where vendors prefer to develop standalone mobile apps and PC clients, Web 3.0 may break this phenomenon. Apps and clients may be more convenient for user behavior data collection, and it may also facilitate the management of ecological applications by core vendors (app store audits and management like appstore), which will change in the era of Web 3.0, which focuses on privacy and development. Perhaps Web 3.0, as the name suggests, will be the foundation of everything.
Zhi dong believes that in the era of Web 3.0, users will enjoy real data autonomy, and at that time, the Internet will definitely have a new look. But there are also risks behind great autonomy, and policymaking may be even more important.
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