The key to the successful implementation of Web3: returning the discourse power from traders to the actual participants

Solv Protocol co-founder Meng Yan pointed out that there are three main reasons why Web3 has not yet been widely adopted: lack of market belief in the future of Web3, weak infrastructure, and the industry has not established a solid methodology. However, these issues seem to be gradually resolved.

Web3 Industry Gradually Losing Favor Outside

Reasons: Lack of Substantial Innovation, Negative News Abound

There are not many people willing to speak up for crypto now. Since the drastic collapse of the crypto market in 2022, curiosity and patience from the outside world towards the crypto industry have been largely exhausted. Today, apart from stakeholders within the industry, it is hard to find external individuals without bias and with a positive view towards crypto.

The global political and economic situation is gradually becoming complex, tense, and confrontational, making life difficult for many people. Against this backdrop, if an industry widely perceived by the outside world as primarily speculative and gambling-driven appears to be unusually prosperous, it will stand out conspicuously.

Those in the crypto industry need to be mentally prepared for this.

Solution: Quickly Find Valuable Innovations in Web3

Facing the above issues, it is necessary to quickly identify valuable, influential, and convincing innovations in the Web3 domain.

Why Has Web3 Not Yet Found Practical Applications?

Before discussing Web3 innovations, it is necessary to clarify the relationship between crypto and Web3. As defined by Meng Yan:

• Crypto: Defined as the trading of encrypted digital assets
• Web3: Defined as a technological innovation movement aimed at establishing a trustworthy digital economy

Ideally, crypto and Web3 are interrelated, where Web3 is the physical economy of crypto, and crypto is the virtual economy of Web3. However, in reality, over the years, crypto has dominated this combination, appearing strong on the surface but weak in substance, with speculative maneuvers repeatedly innovating, leading to a long stagnation in Web3 applications.

There are three main bottlenecks causing the slow development of Web3 applications:

• The market fundamentally does not believe in the future of Web3
• The infrastructure required for Web3 success is very weak
• Web3 has not established a solid ideology and methodology

If these three issues are resolved, the innovative applications of Web3 should theoretically flourish. Will these three issues be resolved by 2024? Meng Yan believes it is possible.

Key One: Lack of Fundamental Market Trust in Web3

The first issue "Does Web3 have a future?"

Web3 Value Clear and Technology Solid

The narrative of Web3 is not difficult to understand, primarily based on a series of cryptographic innovations, constructing a sovereign and trustworthy contractual environment in the digital economy. The technological foundation of Web3 is also solid, feasibility is beyond doubt, logic is clear, and the value is evident; therefore, the development prospects should not be in question.

However, due to premature financialization, there have been many disturbances in the narrative of Web3. Vitalik recently complained about the so-called Degen gamblers, precisely for this reason.

Advocating a return to Cypherpunk! Vitalik's ideal social model for blockchain and Ethereum integrates speculation with development.

Market Perception Influenced by Misplaced Authority

There is a well-known but seldom openly acknowledged secret within the industry: a significant portion of the "most successful" individuals in "this industry" fundamentally do not understand Web3 and do not believe in Web3. These individuals have never believed that blockchain and decentralized technologies have uses beyond speculative trading. Therefore, successful individuals in "this industry" often publicly or semi-publicly propagate that blockchain is not suitable for real-world applications, ridicule Web3 as a castle in the air, impossible to achieve, particularly in Asian crypto circles.

This situation severely distorts the general perception of Web3.

The reason for this absurd situation is the common confusion of crypto and Web3 industries by outsiders. In fact, many successful individuals in the crypto trading market do not have a deep understanding of the technology, especially a shallow understanding of cryptography. They simply treat crypto assets as another speculative target for trading, temporarily achieving good returns through speculative trading or market manipulation. However, they do not understand, care, or bother to learn the underlying logic of Web3, failing to see the impact that cryptographic technology could have on the real economy and life.

If Web3 is conflated with crypto and judged simply based on profit-making, most people might perceive these temporary trading winners as successful individuals in the Web3 industry, assuming they possess high knowledge and taking their words as truths.

However, this is a serious misunderstanding; a successful trader in the crypto market could be a speculation expert, a market psychology expert, a market manipulator, an insider trader, a professional arbitrageur, or simply lucky, but none of these possibilities are related to their level of understanding of Web3. Such a successful individual could very well have no clear understanding of even the basic Web3 technology concepts; they might genuinely believe that cryptography is esoteric, blockchain is unfit for extensive use, and Web3 is purely hype.

In the real world, if a Wall Street trader were to dictate the innovation direction of an AI giant model or assert a structural error in a certain cancer drug's molecular formula, most people would think that person is delusional. No one would consider this person more authoritative than professors at OpenAI or Johns Hopkins University just because the stock trader made money from AI and biotech stocks. However, this scenario continues to play out in the Web3 industry.

The narrative authority of Web3 must be returned to those who are truly innovating and working on Web3, clearly articulate the narrative of Web3, demonstrate the future, logic, and feasibility of Web3 well, and the question of "Does Web3 have a future?" will be resolved.

Key Two: Web3 Infrastructure

The weakness of Web3 infrastructure has been a significant challenge in the past decade. People's expectations for Web3 have far exceeded the pace of infrastructure development, resulting in many applications and ideas that are promising but not feasible, or when implemented, have poor results. This is also a key reason why some skeptics assert that Web3 is doomed: because of a lack of technical understanding, judgments are made based on surface appearances. But is this really the case?

Web3 Infrastructure is Already Functional

Web3 infrastructure has made significant progress in recent years. When referring to infrastructure, it does not only mean blockchain but also includes zero-knowledge proofs (ZKP), accounts, DeFi, wallets, development tools, developer education resources, and various protocol layers and auxiliary components.

It is important to note that stablecoins are also a form of infrastructure and possibly one of the most critical. The development of stablecoins, compliant stablecoins, and CBDCs is actually a crucial condition for discussing innovative applications in Web3 today.

How far has the development of Web3 infrastructure progressed? In short, it has started to take shape. In terms of performance, it has reached a level where actions can be taken, and in terms of costs, with the support of some token economy subsidies and incentives, it is ready for large-scale adoption. Therefore, macroscopically speaking, both in terms of performance and cost, it is sufficient to support some large-scale, high-traffic application scenarios.

Overall, the development of Web3 infrastructure has taken initial steps, providing innovators with a rich array of options. In 2024, innovators in Web3 should no longer use weak technological infrastructure as an excuse.

Web3 Infrastructure Challenge: Fragmented Resources

Indeed, the main problem with current infrastructure is the proliferation of factions, and the problem of fragmentation is starting to appear. In terms of blockchains, each network has its own strengths and weaknesses, and there has yet to emerge a balanced option in all aspects.

What is chain abstraction? Improving user experience more comprehensively than account abstraction

Ethereum has good security, a large asset scale, and a large number of developers, but its performance is poor. Various EVM competing chains and Layer2 have excellent performance, but limited asset scale. Solana has good performance and comprehensive tools, but the number of developers is too few.

Key Three: Web3 Core Ideology

The third issue pertains to the problem of guiding ideology and methodology, which is currently the most urgent. It is not an exaggeration to say that the entire Web3 industry is still groping in the dark in terms of ideology, uncertain about which direction to take to break through first.

Before Google established its advertising business model in 2004, the internet industry was in a similar state. Many people understood the key points and potential of internet technology, speculated on some directions based on theory, made some applications, but none of them succeeded yet. Except for simple content delivery and distribution like emails and illicit content, they did not know how to utilize the internet or how to make money from it.

Today's Web3 is in a similar situation; there are many theoretical ideas, but except for transferring digital assets and speculative trading, there is no practical application, and they do not know what else to do with the internet, let alone how to profit from it. The entire industry is awaiting a major breakthrough in methodology.

In recent years, the Web3 industry has made important progress at the forefront of thought. This includes a more precise description of Web3's core values, shedding the ideology of crypto punk, more comprehensive token application considerations, and beginning to actively incorporate compliance thinking.

More Precise Description of Web3 Core Values

Firstly, there is a more precise understanding and description of the core values of Web3. More and more people are starting to regard "sovereignty" and "trustworthiness" as the fundamental core values of Web3, adjusting the previous attitude of idolizing "decentralization."

In reality, "decentralization" is just one means to achieve sovereignty and trustworthiness, and in many cases, it is not the most rational means.

In 2024, through in-depth theoretical exploration and successful practical cases, the most innovative individuals in the Web3 industry will be able to break away from the myth of "decentralization only," focusing more on sovereignty, sovereign accounts, sovereign assets, sovereign data, cross-verification, trustworthy computation, and other more fundamental elements. This will lead to significant changes in the Web3 technology stack, transitioning from solely relying on blockchain to fully applying the latest cryptographic technology achievements such as zero-knowledge proofs, visual cryptography, decentralized identity, and more.

Shedding the Crypto Punk Ideology

Secondly, there is a realization of reality and a response to the needs of users for privacy protection and respect for authority in actual applications.

Previously, the entire Web3 industry could not escape the constraints of the blockchain "crypto punk" ideology, emphasizing extreme transparency, one person one vote, and simple consensus mechanisms that are both unreasonable and inconsistent with the real world.

As the industry develops, new Web3 applications can effectively and precisely protect privacy, avoid information overload, support the authority of authorized institutions in factual matters in the real world, and effectively apply advanced Web3 technology to meet real-world needs.

More Comprehensive Consideration of Token Applications

The third advancement in thought is the expansion of token applications. A few years ago, the blockchain industry generally treated tokens as equity. However, today it is understood that tokens are not just equity; they can be proof of ownership, new forms of digital items, or components of smart contracts.

It can be said that wherever token applications expand, blockchain can be applied; almost all problems worth solving on the blockchain should consider tokenization as a solution. When the entire Web3 industry gradually converges the innovations on the chain to tokens, it is possible to quickly form a complete methodological system.

Beginning to Actively Incorporate Compliance Thinking

The fourth change is a fundamental shift in attitudes towards regulation. Today, regulatory and law enforcement agencies in more regions have stronger confidence in determining what behaviors are innovative, fraudulent, or illegal, with fewer concerns, less hesitation, and more decisive actions.

Web3 integrating regulatory technology (RegTech) and even actively supporting reasonable regulatory mechanisms is both a response to the situation and a trend. More and more Web3 projects will proactively support regulatory requirements, which is essential and timely.

This does not mean that all methodological issues of Web3 have been resolved; in fact, many issues remain unresolved. For example, how to achieve a balance between freedom, compliance, privacy, and transparency? How to profit? How to demonstrate advantages that make competitors helpless in the competition with Web2? However, industry thought has indeed progressed and is emerging in the right direction.

Web3 May Have the Opportunity to Land in the Near Future

Based on the above three judgments:

• If Web3's narrative authority can successfully transition to genuine participants
• If Web3 infrastructure is already sufficiently usable
• If Web3 core ideology is gradually improving

Meng Yan believes that in the next year or two, there may be large-scale innovations with the potential for physical economy applications, enabling Web3 projects to become sustainable long-term investments rather than merely speculative tools.