What does Web3 Look Like Today?
Even though Web3 and its philosophies are still dwarfed by Web 2.0 and sites like Facebook and Google, there are several projects that look like they will be frontrunners in the Web3 space. Let’s take a look at what they are, how they work, and why they are better than their Web2 counterparts.
Some of today’s most prevalent Web3 applications are in the decentralized finance, or DeFi, world. These applications, unlike Web2 counterparts like Robinhood, Fidelity, and traditional banks, allow users to truly own their money and use it as they please, without having to comply with any sort of restrictions or regulations. For example, Uniswap is a decentralized application that allows anyone, anywhere in the world, to swap between any two Ethereum-based tokens. Each time someone executes a trade, the users providing the liquidity to allow the trade to happen to get a small cut of the transaction as a trading fee. Unlike traditional finance, where only banks and wealthy institutions can provide liquidity, Uniswap allows anyone to add liquidity on trading pairs and start earning fees, and billions of dollars of capital are deployed and doing just that. Additionally, Uniswap is governed by a DAO, which means that anyone who holds the UNI token has a say in the future of the protocol, and can propose or vote on changes like migrating to a new blockchain, giving a dividend to UNI token holders, or how to allocate grants and treasury funds.
Another popular DeFi application is Aave, which is a decentralized money market. In traditional finance, banks essentially have a monopoly over providing loans to individuals or companies. Aave allows anyone to become a lender and earn a high yield on their assets. Since there is no bank or middleman taking a fee, the interest rates on Aave for lenders are significantly higher than that of a savings account. Holders of the AAVE token also help to run the Aave DAO and make decisions about the direction of the protocol.
YouTube, the world’s biggest video streaming platform, has become a household name and has made hundreds of millions of dollars for its content creators. However, some critics of YouTube cite its censorship of certain content and failure to pay ad revenue on controversial or non-advertiser-friendly content. Theta and Theta.tv hopes to fix this by creating a decentralized video streaming platform endorsed by one of YouTube’s co-founders. On Theta, anyone can start a livestream or upload a video, and people can tune in to watch the video just like they would on YouTube. However, instead of YouTube hosting all of the video files, Theta uses the viewers’ computers as the host, and viewers earn the TFUEL token for helping to provide bandwidth for the videos. This model means that users get to choose what they do and do not host on the internet while also still providing a censorship-free environment for creators.
Another Web3 innovation comes in the form of decentralized storage and web hosting. Today, companies like Amazon and Microsoft host the vast majority of online websites and have complete control over those websites’ uptime and content. Siacoin and the Skynet project offer a different solution, where websites and their data are stored in a decentralized manner that is also censorship-resistant. Anyone can offer to host encrypted website data and be compensated in the SIA cryptocurrency. For people who do not host websites but store a lot of data in the cloud with companies like Apple and Google, Filecoin and the Inter Planetary File System have created an alternative. Like Siacoin’s model, Filecoin allows people to host others’ data on their computers, and get paid the FIL token as compensation. Not only is the data more robust and secure from outages in this situation, but it is also cheaper and more secure due to the lack of a centralized middleman.
One of the most recent Web3 innovations comes in the form of a competitor to traditional social media. Lens Protocol, the decentralized social media from the team behind Aave, is creating a “social graph” that any social media or application can utilize. This means that social media companies can be created without having to worry about the most difficult task: onboarding new users. It is currently in the process of whitelisting users to join its platform and create their Lens profile, but already has massive interest from the cryptocurrency community. On Lens, users own their data and can do with it what they wish, instead of being at the mercy of Facebook, Twitter, and other companies.
Web3 development is well underway, and a lot of different industries will be disrupted by the blockchain and its capabilities to create a trustless, decentralized version of the internet. Ultimately, there is no guarantee as to whether or not these projects survive in the long term, but their strong fundamentals, dedicated following, and continued adoption demonstrate promise and interest in the idea of a free and open internet.
By Lincoln Murr