Before going out of the circle next time: Web3 products need to make it easy for "ordinary people" to get started
Compilation of the original text: Bai Ze Research Institute
Compilation of the original text: Bai Ze Research Institute
You’re watching the 2022 Super Bowl and for the first time ever, you’re seeing an ad for a crypto company playing in the Super Bowl.
The Crypto_com Arena is home to the NBA's professional basketball teams, the Los Angeles Lakers and Los Angeles Clippers.
The cryptocurrency and NFT craze is finally breaking into the mainstream. With the rapid development of the Web3 industry, the public is more aware of cryptocurrencies and blockchain than ever before.
But the industry faces a huge barrier to entry problem.
In the Web3 industry, we hear a lot about getting to a billion users, but many might argue that this is not possible with the current Web3 infrastructure. In addition, there are too many barriers to entry for the average consumer.
As stated in VISA’s 2021 report, The Cryptocurrency Phenomenon: Consumer Attitudes and Usage:
“55% of non-crypto users cite the steep learning curve as the reason they are not investing in cryptocurrencies.”
In Gemini’s 2022 State of Encryption report, they state that education is the biggest barrier for users to enter the crypto industry:
“Globally, respondents were nearly twice as likely (40%) to say more educational resources about cryptocurrencies would help them get started as they were recommended by a friend (22%). More than half of Latin Americans ( 51%) and African (56%) respondents said that educational resources would make them more willing to buy cryptocurrencies. This was shared by 44% of respondents in Asia and 42% in the US.”
The huge barriers to cryptocurrency adoption lead me to believe that cryptographic products that abstract the complexity out of blockchain technology and help new users more easily enter Web3 are the future.
this may includeSimplify the wallet registration process、Use the Web2 login method everyone is familiar with、High-quality or no-code developer staffTool、andandBlockchain Infrastructure Solutions, they can lay the foundation for a seamless user experience. And centralized cryptocurrency exchanges can also help aggregate complex utilities into one place, known as “super apps.”
Below is a non-exhaustive list of some notable players in each vertical mentioned:
- Simple wallets to get started: Cupcake Protocol, Hypermint by Moonpay, Paper.xyz
- Web2 login methods: Web3auth, Crossmint, Moonpay, Reddit avatars, NBA Top Shot
- High-quality/no-code development tools: NiftyKit, ThirdWeb, Bueno
- Interoperability layers: Cosmos, Polkadot, Wormhole, LayerZero, Axelar
- Infrastructure solutions: Blockdaemon, Quicknode, Chainstack, Nodereal
image description
Broad overview of the current Web3 landscape - Source: Coinbase
Reddit and Dapper Labs are good examples of using the Web2 login method (using only username and password) to simplify the process for users to enter Web3.
In just four months, Reddit has managed to become one of the largest NFT marketplaces in the world, attracting tens of thousands of new users to NFTs. Most Reddit users don't even realize they're buying NFTs with crypto wallets. Reddit replaced the cryptographic terms "NFT" and "wallet" with "digital collectibles" and "vaults," and enabled users to easily store their digital collectibles without having to memorize seed phrases or master cryptographic knowledge.
secondary title
What are their strengths?
That is to allow users to use a simpler Web2 login method to access high-quality IP digital collections.
This unique combination has generated great interest among users, has low barriers to entry, and allows users to participate in the world of Web3 and cryptocurrencies with a login method that is familiar to all. If Reddit or Dapper Labs require users to set up their own encrypted wallets and manage private keys, this may prevent the growth of the number of users, and make users face more complicated usage process and bring security holes.
We are also now starting to see startups planting their flag in the Web3 space by offering Web3 infrastructure solutions, gaining significant traction due to the value they provide to the rest of the Web3 industry in terms of node/RPC support . In layman's terms, this means they help Web3 decentralized products connect to the blockchain and run smoothly for users (dApps, wallets, blockchain games). Node/RPC infrastructure providers can be thought of as creating more lanes on the highway as well as exit points, thereby providing easier traffic flow for those using the highway. Blockdaemon, Quicknode, Chainstack, and Nodereal are some of the well-known companies that have contributed in this regard.
Nodereal is a notable player as they help Web2 companies and game studios build products on the blockchain, offering custom Lisk and other Web3 solutions to companies that might not be able to build on the blockchain alone. Foremost among the company's clients is Netmarble, the number one South Korean mobile gaming studio. Netmarble and Nodereal have jointly developed a game application chain called FNCY, which has become Netmarble's own blockchain game platform.
In terms of interoperability technologies, as the Web3 ecosystem grows and more and more blockchains are involved, we see more interaction between the various players, which complicates the user experience. Therefore, an interoperability solution is very necessary. Right now, Polkadot and Cosmos, the two leaders in blockchain interoperability, lead developer activity under Ethereum, according to Messari.
secondary title
Web3 venture capital direction
In the current bear market and bleak macroeconomic environment, we are seeing less overall funding in the Web3 space, with crypto investments down 50% in Q3 compared to Q2, according to Fortune Crypto. And the investment from the second half of 2022 to the first half of 2022 has decreased by more than 77%. Most of the money raised has gone to Web3 startups focused on user adoption and payment infrastructure as well as developer tools.
We are now even seeing giants like BNB Chain launch a $10 million program for startups to work on increasing active users and increasing user adoption. Meanwhile, Coinbase Ventures gave their outlook on the market today:
“Coinbase Ventures made nine investments in Q4, the lowest quarterly investment totals since Q2 2020. In this slowing market environment, we have taken the opportunity to narrow our near-term focus areas. We Also doubling down on existing portfolio companies."
In terms of payment infrastructure, we have seen some growth over the past few months. Ramp raised a $70 million Series B round led by Mubadala Capital and Korelya Capital in early November 2022. Ramp provides a frictionless payment infrastructure designed to allow users in low-income areas to use more local payment methods to move in and out of cryptocurrencies. Ramp is working hard to make cryptocurrencies more accessible to more people around the world, especially in Latin America and Asia.
In addition to Ramp, we also saw Sardine, which provides payments infrastructure for real-time fraud prevention, raise a $51.5 million Series B round led by a16z in late September.
We've also seen recent funding rounds for development tools-focused companies Stardust and Thirdweb. In late August 2022, Thirdweb raised $24 million in Series A funding led by Haun Ventures, and Thirdweb built a developer toolkit that makes it easy for startups to launch almost any type of platform in Web3. Stardust, a company focused on blockchain game development tools, recently raised a $30 million Series A round led by Framework Ventures.
As for cryptocurrency venture capital, CoinFund is looking to raise $250 million for its new seed funding, while BlockTower managed to raise $150 million to focus on investing in interoperability, credit and payments in Web3.
Longhash Ventures is poised to deploy $100M in its Fund II to invest in Web3 infrastructure:
“Over the next five years, [Longhash Ventures] hopes to double down on projects that provide scaling solutions, cross-chain systems, and other tooling impacting games, NFTs, metaverses, and more.”
secondary title
Funding gaps that need to be filled
The funding gap to be filled is consumer-focused Web3 startups, but more specifically, the infrastructure that allows users to easily, simply and seamlessly enter Web3.
Venture capital is currently focused on infrastructure and tooling for developers, but if we want to achieve mass adoption, we also need to invest in how to do this effectively for consumers. Infrastructure received significant funding, receiving 20.1% of all cryptocurrency venture capital deals in Q3 2022.
Fundamentally, the other gaps in the market that need to be filled are the aftermath of the overhiring and rapid expansion seen during the recent cryptocurrency bull market, followed by the rapid contraction seen during the current bear market cycle. The reverberations of many hacks, ecosystem crashes (like Terra/UST), exchange bankruptcy (like what FTX experienced) are still alive today even in the Web3 ecosystem.
Going into 2023, I believe that project founders and crypto companies will pay more attention to building safe, high-quality products, focusing on acquiring real users and revenue traction. For founders who are currently considering raising capital, having traction, both in terms of actual revenue and actual users, will set your company apart. This traction indicates that there is a demand for your product or service and shows the real value your company can provide to the market.
An interesting example is Pudgy Penguins, which doubled down on cultural popularity by distributing well-crafted GIFs on Web2 platforms such as Instagram, driving brand exposure at full speed. What’s unique about the marketing strategy is that this Web3 brand is trying to reach non-crypto users culturally and directly through viral Instagram posts and GIFs (Pudgy Penguin NFTs are not a requirement for participation) that anyone can view, share and use.
secondary title
Startups that make it easy for users to get started with Web3
The four startups below are new players in the space, focused on building seamlessness and breaking down barriers to entry for consumers.
One of the most innovative use cases for wallet creation is linking physical goods to digital assets through the Cupcake Protocol. Custom NFC tags for physical goods, coupled with Web3 mechanisms such as token airdrops and wallet creation, bring the physical world into Web3.
Next to any physical item with Cupcake's NFC tag, users simply tap their phone, enter their phone number, and instantly mint their first NFT on their new crypto wallet. (Participating in this experience does not require an encrypted wallet in advance, nor does it require any encryption knowledge). In seconds, anyone with a smartphone can touch Web3. The possibilities are endless, as Cupcake can serve as a powerful tool for any brand to adopt Web3 technologies.
Another notable startup in the Web3 onboarding space is Web3Auth, formerly known as Torus Wallet. Web3Auth has raised $13 million in a Series A round led by Sequoia Capital, Union Square Ventures, and Multicoin.
Web3Auth is building a very key wallet that allows users to use all the cool apps, and it removes the complexity of private keys by letting users log in using methods they are familiar with, all users need is an email address and password, It makes the login process familiar, simple, and understandable for anyone.
Using the Web2 login method also makes it more secure, as Web3Auth users won't be able to use their valuable private keys for insecure things like screenshotting them to a photo album, or keeping private keys in a keylogger for convenience, and being hacked molecular theft.
Decaf is building a full-featured point-of-sale platform to help merchants accept crypto payments in USDC or Bitcoin. Decaf also has an NFT gating function, allowing merchants to airdrop NFTs to customers, and holding NFTs can enjoy additional perks. They’re also fully integrated with payments company Block (formerly Square) to make it easier for merchants to manage inventory and manage taxes. Decaf also has a one-click wallet creation function similar to Cupcake Protocol.
Summarize
Summarize
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
risk warning:
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
