Web3 in Progress: Collapse, Fusion, and Rebirth

Author: Wu Xiao

The integration of Web2 and Web3 is irreversible and an inevitable trend. An infinite incremental market will emerge in the metaverse, and the struggle for rules, standards, and discourse power will be the main battlefield for the integration of Web2 and Web3. Chaos is a ladder, and blockchain entrepreneurs are also迎来了最后一次的机会窗口.

1. The Collapse of the Web 2 World

The world of Web2 is currently in a fierce red ocean of competition, with years of battles over burning money, subsidies, acquiring new users, and traffic, leaving users in distress. In the absence of a new incremental market, more and more internet giants have entered into a heated melee.

Over the past decade of internet boom, Web2 has already reshaped the physical world. Whether it is e-commerce, mobile payments, or social media, it has influenced the boundaries of human life and social interactions in cyberspace and physical space globally.

However, due to the mutual influence and integration with the physical world, more and more internet companies have found themselves in opposition to traditional industries and regulatory bodies. For traditional industries, the impact brought by the internet is negotiable; they are mostly competing for employment and quantifiable resources, such as Uber and local taxis, Amazon and chain supermarkets in various countries, and increasingly, more traditional companies are being attracted into Web2 to seek new incremental markets.

The underlying incremental market is that the global market for Web2 technology skills has never been evenly distributed. Companies that master internet technology and standards are mostly established in technologically advanced countries. In contrast, the services and technical support in most countries around the world are provided by a few multinational internet companies, allowing them to sweep through and win global markets more quickly.

The friction between internet companies and regulatory bodies is gradually becoming more pronounced, and this friction mainly stems from the struggle for discourse power and the interpretation of rules. Whether it is Europe’s GDPR, which increasingly protects user privacy and data, or the U.S. antitrust legislation against internet companies, these are regulatory bodies gaining a deeper understanding of data, platforms, and AI. After the pandemic, a global economic crisis has long been brewing. Aside from a few regions still experiencing growth, most countries on Earth are deeply mired in a significant economic crisis.

In the post-pandemic era, countless businesses have gone up in flames, and numerous industries have collapsed to zero. Traditional Web2 giants are facing unprecedented challenges, whether from pressure from traditional industries, the maturity of regulatory bodies, or the contraction of incremental markets, all squeezing the survival space of Web2. At such a chaotic and brutal juncture, we see the entire Web2 world falling into the shadow of death.

On the other hand, the sky city driven by blockchain in cyberspace stands atop the graves of millions of internet companies, setting sail.

2. The Reshaping of Code and Cyber Order

"Never has a technology been able to gather consensus globally, compile, and execute programs."

The internet is not such a technology, as the giants have built walled cities around the rules they set and the data they control. Today, any developer wanting to publish their software and games on an Apple phone must first apply for Apple's D-U-N-S number. All listed applications must go through Apple's review, and all transactions must pay high channel fees.

The birth of blockchain technology has led all Web3 pioneers to complete their exodus.

Today, Ethereum has over 10,000 nodes globally, providing solid guarantees for all applications, user assets, and key data on the chain. This has forced countless Web2 companies to accept Web3 rules, allowing all developers to freely program and develop on Ethereum.

In my 2019 article "Blockchain - The Paradox of Future and Reality," I explained that the core value of blockchain lies in defining rules in cyberspace. If the Web2 world is the giants drawing boundaries around rules, then the Web3 world breaks all rules, unleashing the productivity of global developers and ushering in self-growth and self-evolution of the Web3 ecosystem.

When the order of cyberspace is reshaped, we see a chain reaction of growth and self-driving force.

Because the verified contracts on the blockchain are public, the code's reusability has reached unprecedented heights. For crypto art, formalized contracts like Erc721 and Erc1155 have helped countless creators who do not understand code. For DeFi, standardized security contract libraries allow numerous projects to happily build "code Legos," focusing on their areas of expertise. The countless repeated constructions of wheels in Web2, and even the numerous shifts from open-source to closed-source or the so-called "self-original," are systematic marginal costs.

Because the code rules on the blockchain are unified, ecological innovation and secondary creation have endless possibilities. Projects with native innovation in Web3 can dynamically link together. Every collaboration in Web2 incurs significant costs. The integration of user data and the change of rules are insurmountable mountains. However, the competition and cooperation of Web3 projects can ignore any rules.

Yes, even competition in Web3 can break through all barriers. Whether it is Looks airdropping to Opensea users or liquidity pools integrating different DeFi to provide higher liquidity and APR, the competitive and cooperative relationships in the Web3 world are evolving into forms never before seen in human commercial history. But it is precisely this Web3 that provides the best soil for ecological innovation and secondary creation. Communities and ecosystems can propose projects at any time to add more features; they can also initiate forks at any time to take a completely different path.

Because smart contracts can design rules, the integration of Web2 and Web3 is being redefined in terms of power dynamics. The difference between an image and an NFT, the distinction between CeFi and DeFi, the differences between games and blockchain games—all these reflect the redefinition of power dynamics between the Web2 and Web3 worlds. When Web2 companies actively embrace Web3, they will find that blockchain-native users are already fully familiar with Metamask, accustomed to using crypto assets to purchase various NFTs, and passionate about different forms of crypto and computational art. Such communities are actively guiding more Web2 users into this world, forming a thriving organization.

3. Singing While Riding the Waves in Web3

More and more companies are actively embracing Web3, and the kings of Web2 are joining the grand process of building the cyber sky city.

In the field of art, today the world's largest art museum—the State Hermitage Museum in Russia—is minting NFTs and attempting to move its collections online; the British Museum, the largest museum in the world, has officially sold batch after batch of NFTs; the Venice Biennale, one of the three major exhibitions in the art world, has launched an exhibition of crypto art for the first time this year.

An era's understanding of art and the gathering of consensus elevate the artistic works of that era. To be radical, all physical world artworks are in a process of zeroing out. Whether it is Van Gogh's Sunflowers or Qi Baishi's traditional Chinese paintings, they are all a condensation of the artistic consensus of their time.

In today's era, the post-00s generation has grown up playing Honor of Kings and scrolling through Douyin. The number of people learning oil painting and traditional Chinese painting is decreasing, leading to a fragmented understanding and consensus of traditional art.

Where attention goes, money follows. Perhaps in the future, these works will still hold value, but it will be archaeological value rather than artistic value. Because if we only compare years, the ancient Egyptian murals along the Nile have thousands of years of history, but today they are more fully reflected in archaeological value, and their artistic expression has become difficult to influence the global art scene.

Against the backdrop of the impending global wave of Web3, more and more crypto art, cyberpunk, and programmable art are gaining greater recognition.

In the financial sector, more and more countries are announcing the legalization of cryptocurrencies, and an increasing number of organizations, universities, and foundations are accepting donations in cryptocurrencies. Countless companies, institutions, and even sovereign state funds are purchasing crypto assets.

Sovereign states find it difficult to choose real estate in other sovereign countries for asset allocation, yet more and more naturally choose crypto assets, because they increasingly understand that code is law, which represents global financial liquidity.

So, how can partners in the Web3 world gain their advantages in the integration of Web2 and Web3?

I believe it still lies in the continuous exploration of the blockchain-native world, enhancing one's understanding and cognition of blockchain-native innovation. Web3 projects are inherently interconnected; a single project may stand alone, but countless Web3 projects will naturally form a brilliant sky.

In the future, Web3 users will simply log in with their wallets and naturally see all their on-chain assets in one interface. Using any of their NFTs, they can play in different games. Opening a chat room allows easy access to their NFT community. They can casually request the latest song and settle payments with any token. Opening their favorite video application can recommend more interesting videos based on on-chain data, such as the ensemble drama of Azuki or the history of Uniswap. Automatically accumulated membership credits will allow them to enjoy all Web3 services. NFTs created by users can be automatically recommended to countless interested collectors, quickly converting into money in either Web2 or Web3.

These scenarios will require a grand integration of Web2 and Web3, bringing a new cyber lifestyle experience to global users. After all, no one wants to repeatedly register on different platforms, constantly provide their personal information, log in and out countless times, accumulate countless unused membership points, or spend hundreds of hours only to receive game assets that do not belong to them, or have their personal privacy leaked for big data exploitation.

In the world of the internet, we have no choice, but this time, in the blockchain-driven transformation of Web3, we sing while riding the waves.

4. The Butterfly Flapping Its Wings in Chaos

The establishment of the ideal of Web3 is by no means a smooth road. In fact, growing in the Web3 world may be a more brutal form of evolution than in the Web2 world.

Web2 users, while losing their data and privacy, have also gained security and stability. For an ordinary user accustomed to losing their bank password and resetting it with their phone, stepping into the dark forest of Web3 is their most dangerous moment. They may never realize that losing their private key or granting permission to a phishing Dapp in Metamask could mean losing all their assets.

In other words, when we choose to believe that "code is law," we also need to take full responsibility for all our assets. When we endorse a project that chooses a fair launch, it also signifies our understanding that it may very well be in a "scientist first" state. A Web3 world is a fair world, but it will not be an equal world. Because it is impossible for everyone to be a coding geek, and the top technical geeks can navigate freely in the Web3 world.

However, because everything is still in its early stages, we see that Web3 is a blue ocean of more opportunities. These opportunities come from the continuous influx of incrementals migrating from the Web2 world. When Facebook, Twitter, and Instagram all choose to accept NFT certification to become hexagonal warriors, we will see global internet users gradually recognizing some unique users. When over a billion users worldwide who cannot access banking services open Metamask, we will witness waves of new users continuously diving into the Web3 world.

In this grand wave of integration, how to guide large companies to understand blockchain and the rules of Web3, transforming them into a productive force for building Web3 is crucial. Just like internet companies that can now accept NFT certification, they are constantly helping us promote Web3 products, attracting more users to experience, use, and support the transformation of Web3. Just as the invention of electricity and the internet awakened global C-end users, it relies on the large-scale application of technology. More builders and innovative applications that cannot be born in Web2 will make these internet giants submit, accept the standards and rules of Web3, and integrate into our camp.

WAGMI

WAGMI means We all gonna make it, and here "all" is never just the pioneers of blockchain, but the entire Web2 world today, extending to all global users. A spark can start a prairie fire. Blockchain should not become a self-indulgence of a few but should be a revolutionary technology that drives the world forward.

The barriers of technology and cognition still give us an advantage in this cycle; it is the best time to educate and guide traditional tech companies. Because internet giants have already seen the opportunities within, if they miss out, they will attempt to create their own understanding and new standards, coercing users and blocking traffic, thus preventing the birth of the Web3 world.

Today, whether in terms of market value or ecosystem, the worlds of Web3 and Web2 are incomparable. The total value of all crypto assets combined may not even match the market value of a single company in Web2. What we can do is use accumulated cognition, technology, and rules to conduct a dimensionality reduction attack, converting the power of Web2 in bulk while connecting all Web3 applications through the underlying blockchain.

Today, there are still many blank spaces with huge opportunities. I have experienced this entire NFT cycle, providing technical and ecological support for dozens of leading projects. Here, I will briefly discuss a few directions that I personally believe have great potential:

1. NFTs and digital collectibles will be a great opportunity for off-chain users to understand Web3.

Compared to DeFi and other financial infrastructures, ordinary people have a more direct understanding of NFTs and digital collectibles. Most people do not understand smart contracts and will not grasp the computational principles behind DeFi, making it difficult for ordinary off-chain users to directly experience DeFi.

NFTs, on the other hand, are much more intuitive; even the most basic images and shapes can be judged on their aesthetic appeal. Moreover, the price differences and various styles provide a purchasing experience very similar to shopping. Buying an opened NFT feels like buying clothes, while unopened ones resemble blind box purchases. This overall experience is very suitable for ground promotion, and compared to many luxury goods, NFTs may have better liquidity and value retention. Today, the chances of carrying a Hermès bag out are not many, and even if you do, you may not know its authenticity. However, wearing a rare NFT while speaking on Twitter not only attracts like-minded individuals but also significantly expands one's influence, similarly showcasing taste and social circles as luxury goods do. Therefore, all brands will issue their own NFTs, or they will be left behind in the wave of Web3.

2. Building the infrastructure and overall environment for the integration of Web2 and Web3, lowering the entry barriers will present great opportunities.

For example, Flow, which leads the wave of NFT initiation, fully supports USD and credit card deposits, establishing a complete ecosystem for off-chain users to experience NFTs. This is not just a payment issue; it also involves creating an overall environment that lowers barriers. The overall user base on Flow is vastly different from that on Ethereum; perhaps there are not many Crypto OGs, but more new traffic accustomed to logging in with email and paying with credit cards is onboarding into the Web3 world through them. Opportunities like this are spread across various countries. The king in a niche field is still a king.

3. Rapidly landing projects that integrate Web2 and Web3 will yield systematic dividends.

Whether it is Adidas and the BAYC community issuing NFTs to sweep the Web3 world or Nike acquiring RTFKT, Web2 giants have recognized systematic opportunities. The collision of fan bases and the scarcity of NFTs from both sides is like thunder and fire. In the future, many projects that integrate Web2 and Web3 will start with NFTs and then build or connect to blockchain-driven metaverses, sweeping across the globe. In the world of Web3, all metaverses can read each other's NFTs, allowing for natural circulation. Centered around user intent, as long as users agree, their assets, roles, and data can seamlessly traverse any world. When countless metaverses are born, systematic dividends will inevitably arise.

From this cycle to the next, we still face a chaotic and nascent Web3 world. Web3 may still need one more cycle to build this vision, but the gears of fate have already begun to turn, and all blockchain entrepreneurs need to soar high in this chaos.

5. Death or Rebirth

Regardless of success or failure, in the next cycle, we will witness the death or rebirth of Web3. Web3 has never claimed that it will definitely succeed; its underlying strength lies in whether the awakened builders can persist. When too many traders make money and leave; when builders cannot survive due to bad money driving out good; when the pioneers of Web3 abandon their faith and submit to the forces of Web2; Web3 will also become an illusion that can never be realized, dissipating like countless idealisms in time. People will choose to return to existing internet services, mechanically repeating clicks on "I have read the above terms," repeatedly registering on different platforms and products.

However, since the birth of Ethereum, we have seen a path never before taken. A foundation that can connect global developers. A technology that can transparently connect over a trillion assets and data. An ecosystem that is not a company but is freely developed by countless developers every day. Just like three years from now, I can still remember that afternoon when I first deployed a smart contract on Ethereum. Amazement, excitement, and a hint of joy. "Aha, so this is how you can mint an NFT."

When the pioneers look up, they see the distant Web3 sky shining with stars.