Why do we say that Web3 is not far from mass adoption?

Author: JamesX

Why do I say that Web3 is not far from Mass Adoption?

Or rather, the ultimate goal of Web3 Mass Adoption is actually Web2.5.

And here are a few projects and product ideas that can truly help Web3 achieve Mass Adoption 👇

The image below is the answer I received from GPT when I asked, "What problems still exist on the road to Web3 achieving Mass Adoption?"

To be honest, it makes perfect sense and basically addresses the industry's pain points. Among them, points 3 and 5 are difficult to solve through product innovation and optimization within the industry, but the other issues have teams in the industry continuously optimizing and addressing them.

Moreover, recently, through my own usage and research of other reports and data, I have discovered several outstanding projects that are helping the Web3 industry get closer to the goal of Mass Adoption. So I’ll briefly write about this content to share with all industry practitioners.

1. Why must Web3 platform login be a wallet?

The experience of "Connect wallet" and the one wallet one account model has always been regarded as a core advantage of the Web3 industry over the Web2 industry.

However, this has also become the biggest obstacle preventing the vast majority of users from trying out Web3 platforms, as the learning curve and risks associated with acquiring initial on-chain assets and using Web3 wallets are too high.

Therefore, why not adopt a Web2.5 perspective, allowing users to use various Web3 platforms and register accounts without any Web3 wallet, while also continuously optimizing AA wallet-like products, enabling users to cross the threshold into the Web3 world within a non-wallet/centralized exchange Web3 application.

Currently, the most core product in this direction is privy_io, which supports almost all Web2 and Web3 account login systems and already has over 3 million users.

If you are a user/practitioner who enjoys trying out the latest Web3 products, you must have been amazed by how widely Privy’s login/account/wallet components have been adopted in recent months and how smooth the experience is.

I have even seen some apps that have no need for Web3 asset interactions using Privy’s login component to attract high-net-worth Web3 users that match their user profile. This shows that Web2 and Web3 are not completely isolated industries; once the user experience of a product is smooth enough, why should Web3 platform logins require users to have a wallet?

I have a bold hypothesis for the future: it is even possible that a type of DeFi platform (or on-chain financial platform) will emerge where users can complete one-click operations from traditional payment accounts (PayPal, Apple Pay, credit cards) to acquiring on-chain assets and depositing them into on-chain protocols without needing a Web3 wallet. (Of course, this is closely related to the progress of the PayFi narrative that we will discuss later.)

2. Cross-chain interoperability/multi-chain account management ------ a track that will inevitably unify at the user experience level

Currently, the liquidity fragmentation issue among various L2s in the ETH ecosystem, as well as with different technical architectures like the Solana ecosystem, Move language ecosystem, and even the BTC ecosystem, is a major core pain point troubling all on-chain user experiences.

Recently, a project called dAppos, which has been widely discussed in the Chinese-speaking community, launched intendasset, an additional multi-chain operable asset type that helps users through asset staking, which can alleviate the pain points of users needing to pay high cross-chain costs and navigate complex operational steps.

However, I want to point out that this is essentially a semi-centralized product model, and there is another role in the industry that can provide similar services, helping users obtain an "Intendasset" that can be transferred and used across multiple chains through staking assets, and that role is CEX.

Because:

1. The user experience of depositing assets to DAppos for custody is not much different from depositing assets to a CEX.

2. CEX exchanges, especially leading CEXs, are currently the largest participants in cross-chain liquidity management/services.

3. CEXs inherently have a disincentive for users to withdraw assets to the chain, so staking assets with CEXs to provide an "intendasset" for use in on-chain environments can help CEXs retain more user assets on their platforms.

4. Leading CEXs currently have better compliance and capital management security endorsements in the current industry context. (Excluding those CEXs that might collapse or issue problematic assets.)

However, due to the psychological shadow left by the FTX collapse, whether a model will emerge where CEXs provide large-scale services to users in this narrative direction remains to be discussed in the industry. I welcome everyone to leave comments and discuss below. (I can already foresee that some people will think this idea is ridiculous.)

To clarify: I am not saying that various cross-chain/interoperability protocols & cross-chain bridges are useless; it’s just that the current experience, fees, and security are indeed not user-friendly enough. I also look forward to more on-chain native, decentralized, and trustless solutions in the future.

On another front, current multi-chain users face another major pain point: the wallet management system for multiple ecosystems and chains. Although various mainstream wallets are continuously adding native support for new public chain ecosystems, such as OKX Wallet and Phantom, which already support multi-ecosystem wallet management with a single account (including but not limited to EVM, BTC, Solana ecosystems, etc.), users still need to open their wallets to click the address bar at the top to find and copy the corresponding different address strings when transferring or receiving funds.

Although there are various address abstraction services within the EVM ecosystem, such as ENS for .BNB, .ARB, etc., and the Solana ecosystem has its own .SOL service, users actually hope for a product service that can provide a multi-address management experience across ecosystems.

Debank offers a Web3ID minting service, but the registration fee of nearly $100 has already deterred me (and it requires users to deposit assets to Debank L2 before registering and paying, which is indeed not a good user experience).

It wasn't until I recently saw another project, clustersxyz, that I felt a sense of excitement.

Cluster is an All-Chain Name Service product based on LayerZero, and its product logic is quite simple. Users need to register an account name like "jamesx/" and bind a main wallet. After that, they can generate a multi-chain wallet management account with one click. For example, if you want to transfer funds to my Solana account, you can simply input "jamesx/sol," and it will be parsed into my Solana address by the integrated application.

Currently, a "xxxx/" account will automatically generate corresponding addresses for eight mainstream Web3 public chain ecosystems: /evm/, /sol/, /btc/, /ripple/, /aptos/, /doge/, /tron/, and /cosmos/.

As long as enough protocols integrate the address resolution of clusters accounts, this experience can be said to be very convenient (and the registration fee is currently as low as 0.01E, about $30, which is very competitive compared to the costs of registering individual .xxx accounts and the lack of a unified management product).

It is worth noting that the founder of Clusters is actually the founder of delegatedotxyz, who already has sufficient industry experience and resources to help Clusters gain faster adoption in the industry (along with the support of LayerZero).

So my expectation for the future is: when receiving payments, I can use any "jamesx/xxx" as my receiving account (and even after deeper product integration with Privy, email addresses may also become cryptocurrency receiving addresses), and when managing assets across multiple chains, the cross-chain experience can be as convenient as transferring funds directly between different accounts on a CEX.

3. What is the essential difference between Web3 social and traditional social application tracks?

Web3 Social is an unavoidable topic in Web3's journey towards Mass Adoption, including the recently popular Ton/Telegram ecosystem and the Farcaster ecosystem, which announced a $1 billion valuation financing this year, both of which are highly anticipated by the industry.

Many people believe that the core essence of Web3 social lies in "decentralization," "censorship resistance," and "permanently stored on-chain immutability," etc. However, I think otherwise.

Let’s discuss what I believe are the two fundamental differences between Web3 social and Web2 social that many users or practitioners have not yet understood.

Difference One (which many practitioners have already grasped): Web3 Social fundamentally has the underlying conditions to create entirely new asset types.

This point is actually easy to understand because current Web3 social projects rely on public chain ecosystems. Once there is a public chain, issuing various assets becomes incredibly convenient. Initially, there were NFT-gated social applications where users needed to purchase NFTs to use the corresponding social applications, followed by token-gated community software where users had to hold corresponding tokens/NFTs to enter specific chat groups. These all involve having assets first, and then building social interactions based on those assets.

Later, people realized that issuing additional assets could create more value. This led to the emergence of fan keys on http://Friend.tech, the DegenTips token airdrop in the Farcaster ecosystem, and various projects in the Telegram ecosystem that are issuing tokens for social platforms, all creating a new logic of asset types for users of social platforms, which indeed has generated significant wealth creation and breakout effects, raising users' expectations for Web3 Social (the expectation of making money).

This is something that Web2 social platforms cannot achieve at all. For example, I cannot directly airdrop an asset that can be traded on the secondary market to users of the Xueqiu app; otherwise, the outcome would be even more exaggerated.

Difference Two (which most practitioners have not yet grasped): The accessibility of social data and the fundamental disruption of the logic of social application development.

In the traditional social media landscape, each application is essentially a data island, so each social application needs its own independent account + data service system. Most platforms do not open external data access interfaces, and for those that do provide external data API services, such as Twitter, the cost of data access is very high. Therefore, you see that third-party platforms providing account management/data services for Twitter generally charge a not-so-cheap membership fee to cover data access costs and make a profit.

Telegram is also one of them, providing certain data APIs for miniApp developers, but since TG itself is a real-time communication application, data such as contacts or chat information is considered private, and general users would not want to grant developers access. Thus, the Ton ecosystem based on TG can only access some simple user information dimensions to determine how many tokens to airdrop to you.

Telegram miniApp development documentation: https://docs.telegram-mini-Apps.com/packages/telegram-Apps-sdk/init-data/user

However, for Farcaster, which is fundamentally an open social platform logic that targets Twitter, the underlying technical architecture of Web3 social allows developers to freely access all user data. For example, all publicly published content from your account and all social interaction data such as likes, comments, and shares can be accessed by any developer within the Farcaster ecosystem to build their own social applications.

The simplest logic is that apart from the official client Warpcast, there are also client applications like TakoProtocol's Takocast and the independently developed recaster client by 0xHaole, along with dozens of other client applications that focus on completely different aspects.

Each has a different interaction experience, each has a different recommendation algorithm feed, and each has its own unique features for integrating other on-chain applications. However, every user can use the same account to browse all content within the Farcaster ecosystem through any client (although some platform algorithms may actively filter some content).

This application development logic is disruptive and is completely unattainable in the traditional social application field, except in cases where several social project teams are under the same company (like Facebook, Instagram, and Threads).

To give a more direct example, suppose Twitter's underlying architecture is built on a Web3 social protocol similar to Farcaster. I could completely develop an algorithm that only recommends borderline or adult content, creating a "Twitter for adult content." In this client, the recommendation algorithm would only show you content that fits that label, and the application team wouldn't need to focus on "content creator" growth at all, as they could simply filter and recommend existing content data from Twitter.

This is the essence of how Web3 social fundamentally disrupts traditional social applications: the developmental accessibility of user data and the convenience of ecological applications. This is also why I say that BTC/ETH have built an open, decentralized financial operation system for the world, while protocols like Farcaster have built an open social, content, and identity underlying technical architecture for the world. The applications that emerge from this ecosystem will certainly not be smaller than the current DeFi or so-called "Crypto" industry.

Moreover, these logics do not rely on any tokens; users can use them directly. Additional tokens or new asset types will only be an attractive point for this ecosystem in its early stages.

For example, I could even create an e-commerce application that automatically recommends products to you based on your social data, social graph data, or even on-chain asset data, without relying on your social data to create a social application.

(Of course, regarding concerns about user data privacy, I believe that as the industry develops, there will be continuous regulations and technical standards to improve and meet the needs of more users.)

4. The popularization of Web3 finance still relies on the compliance promoted by the traditional financial industry and the PayFi track

The two core logics of Web3 finance:

a. Cryptocurrency assets are recognized and accepted as value storage and investment targets by the mainstream market. I won’t elaborate on this; it is the most fundamental narrative of the entire Crypto industry.

b. On-chain assets serve as settlement tools/payment tools to disrupt traditional off-chain payment systems.

This reminds everyone to pay attention to PYUSD, a dollar stablecoin issued by PayPal, a leading company in the North American payment system, which has seen incremental data that I remember has already surpassed $1 billion.

Those with experience living in North America know that once PayPal ramps up, it can quickly expand the payment channels for PYUSD.

Moreover, once PayFi is designed to meet offline payment needs, there will be very strong local compliance requirements (refer to the domestic digital RMB), so those who can engage in this business must have very strong traditional financial industry or local resources, meaning it is not suitable for small developer teams (unless your business funding flow is somewhat gray).

Some may ask, is there greater development space for DeFi wealth management? Personally, I think the narrative space is already limited. If you look at semi-centralized Ethena and the upgraded SKY of MakerDAO, you will see that some degree of centralized financial team involvement is still needed. As the industry continues to grow, there will definitely be stricter compliance and regulatory requirements. On-chain DeFi is more suitable for meeting simpler and more direct yield logic, such as basic lending functions (and even then, it is over-collateralized lending).

However, once companies like PayPal better help users complete the experience of depositing dollars to on-chain US dollars, the business and data in the DeFi track should see relatively rapid growth in the short term, which can also help solve the high entry barriers for users in the entire Web3 industry.

Therefore, the future popularization and promotion of Web3 finance is also a certain trend, but its relationship with DeFi is not that significant; it is more about "on-chain finance" supported by traditional financial companies.

So, the above is my expectation for the future of Web3 Mass Adoption. To summarize briefly:

1. A more Web2-like user login/account experience.

2. More convenient asset transfers (cross-chain) and optimized address management experiences across chains/ecosystems.

3. The developmental Web3 social underlying technical architecture giving rise to a new ecosystem for social application development.

4. More daily on-chain financial payment/settlement experiences (PayFi) driven by traditional financial forces.

Looking back, do you think it should be called Web3, or is Web2.5 more appropriate?