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Source: ChainLinkGod
Original title: Why Nobody Really Uses Web3... Yes
Web3 represents the basic evolution of the Internet as we know it today, replacing centralized gatekeepers and intermediaries with decentralized protocols and community retained ownership. The inherent characteristics of Web3 are very attractive to the aborigines who live in an encrypted environment. However, we must also admit that Web3 is still a niche industry that has not been adopted by the mainstream.
Although the restrictions around blockchain scalability are most often cited as the reason for the lack of adoption of Web3 - which is usually a reminder that we are still in the initial stage, I believe this is just one of the many reasons why ordinary consumers do not consider Web3.
This article will analyze the six main reasons why Web3 has not been adopted by the mainstream, And what can be done to realize the real benefits of this technology to society.
[abstruse technical terms]
Web3 may be a concept that is difficult to explain to novices, especially because There is no universal definition. Everyone has his own interpretation of the most valuable characteristics. This inevitably leads to some problems, such as: "Why should I care about Web3?" and "How can Web3 benefit me in my daily life?".
Various properties of Web3 are often mentioned - decentralization, censorship resistance, immutability, transparency, etc. These explanations often include excessive technical decomposition of Web3 infrastructure, Full of industry terminology and technical balderdash (A technical term that is difficult for ordinary people to understand).
Although this explanation helps to understand the core values of Web3 and its underlying technical implementation details, these are just A means to an end. The real question that must be answered is: how can these profound concepts and intangible values ultimately be transformed into Web3 applications that ordinary consumers can understand and are interested in participating in?
Of course, to answer such a question, you must be able to point out clear real-world use cases.
[Speculation driven circular economy]
The first major Web3 application is to create digital tokens (such as Bitcoin) with predefined monetary policies and built-in peer-to-peer payment functions - all without the need for a centralized intermediary. Although digital tokens are attractive to many people, compared with traditional currencies, the usefulness of tokens only used to transfer from one person to another is quite limited, There are obvious trade-offs in terms of volatility, and the degree of acceptance by businesses is limited.
DeFi vs TradFi, DeFi removes the intermediate link of value transfer
If there is no obvious systematic failure in the traditional financial system, it is not enough to rely only on the value proposition of casting and transferring tokens. This understanding ultimately led to the next clear Web3 use case: Decentralized Finance (DeFi). DeFi extends the use of digital tokens beyond simple value transfer and uses them in financial primitives that consumers are accustomed to, such as loans, loans, exchanges and hedging.
However, given that many DeFi applications still focus primarily on tokens, As a result, a circular economy of speculative tokens has emerged, and part of its value comes from speculative monetization. This is not surprising, because Web3 aborigines who already hold tokens are obviously the initial product market fit point of DeFi products, but if consumers are not the owners of crypto tokens, DeFi seems to be more like a casino than an alternative financial system.
Figure: Example of "income farming" driven by speculation in DeFi circular economy
Tokenized assets to save?
This does not mean that all DeFi today is essentially a cycle of survival. A stable currency is a token whose value is linked to another asset (such as legal tender). It can create the so-called "programmable dollar", which can be traded globally and settled within a few seconds. Nowadays, digital currency has a closer relationship with ordinary consumers, because their life has been centered around the currency of acquisition, saving and consumption.
At present, a stable currency worth 140 billion dollars can be used in the DeFi application, making the DeFi ecosystem more useful and relevant to consumers, for example, by creating an on chain savings account.
When applying the value attribute of Web3 to the assets that consumers have used today, the "why" of Web3 becomes more self-evident.
In addition to the stable currency, I believe that this general method of on chain financial pseudo materialization - simulating and re implementing existing real world financial primitives on the chain - provides a clear way to introduce Web3 applications to the general population in a way that is relevant to the reality of daily life.
especially, Tokenized real world assets (RWAs), stable coins are a subset of them, This provides an opportunity to shorten the cycle of speculation that exists in DeFi. They can include real estate, corporate/government bonds, income sharing agreements, commodities and any other assets in the traditional financial economy. However, token RWAs are not without costs, especially in terms of decentralization and trust minimization. However, Web3 applications supporting RWAs can expand the value proportion of Web3 by an order of magnitude.
[Hyper Financialization]
Although DeFi, stable currency and RWAs provide great opportunities to expand Web3 into the mainstream, it should be considered that ordinary consumers do not really care about finance. They may not use many financial services, nor care about the technical details of how financial products are settled at the back end. In the final analysis, they only want to engage in business activities, such as using credit cards to buy some groceries. If the main promotion of Web3 is based on the melting of super gold, a large part of the whole potential market will be completely missed.
This is the source of a lot of confusion about Web3. If Web3 is a "decentralized version of the existing Internet", where are all the typical Internet use cases we are used to? Information transmission, social media, video streaming, online commerce, or the blog you are reading now?
Figure: Web1 vs Web2 vs Web3
Web3 is about defining how content producers and consumers interact. Where are these Web3 content platforms?
The non-financial use case of Web3 is still in its infancy, but some explicit use cases are emerging. For example, the Web3 implementation of the social media platform can take the form of a decentralized protocol, in which users can truly own their online personal data, including all the content they produce and their followers/followers' social maps. Then their configuration files can be migrated to various front-end interfaces with different content audit policies.
Aave's Lens Protocol is an example of a decentralized social graph protocol designed to achieve this goal. Through the interaction stored on the Polygon PoS blockchain, the user's social graph can be migrated across applications. The ability to have their own social identity is a powerful Web3 primitive, which can directly address concerns about existing platforms.
Figure: Decentralized social graph protocol allows independent interfaces to be established on it
Decentralized social media may or may not be the ultimate killer non-financial Web3 application. Instead, it could be the creator economy, games, the metauniverse, DAO, or any other use case.
However, it is clear that we must expand our industry from pure hyperfinancialization.
[Landmines of user experience]
In theory, Web3 provides a user experience (UX) far superior to the current situation of the Internet. Web3 does not need to manage too many unique user names and passwords for each website, or entrust a centralized service provider. Web3 enables users to authenticate themselves through a single private key, which can be widely used in any application that supports Web3. This not only greatly simplifies the user experience, but also allows users to truly own their own data and access applications directly without the approval of a centralized broker.
When it works, it is very effective.
Figure: Differences in login experience between different versions of networks
However, this is only "when it works". In practice, users must browse different incompatible authentication standards, Manually process private keys and Seed Phrases, download and learn how to use new browser extensions or mobile wallets, and adjust all these to meet different blockchains and their own set of standards. The result is often frustration and confusion.
Figure: Another standard will solve the Web3 authentication problem
Mnemonics? Chain IDs? Gas price? Token approval? Restore transaction? Finalize? If Web3 native users want to interact with Web3 applications on the chain today, these are rather profound and highly technical concepts, and they need to understand these concepts. Even with a good understanding of these concepts, the interaction with Web3 applications usually feels like walking on an eggshell, hoping to interact with the process (Hardware wallet ->Web3 extension ->front-end website ->RPC node ->blockchain) Some things in will not be interrupted.
Just as users do not need to understand the underlying architecture of Web2, they should not need to understand the underlying technical nuances of Web3
At present, the poor user experience of Web3 is not the fault of any specific project or protocol. There are many ongoing efforts to unify experience. However, it is undeniable that the user experience of Web3 is not ideal today. Secure private key management is also a serious responsibility. In the Web2 world, consumers have few similar things. Unfortunately, if your mnemonic is lost, there is no "reset password" option.
Interfaces like the one below are so common in Web3, no wonder the loss rate of new users is so high.
"Connect Wallet" itself is a rabbit hole. Good luck
Overcoming this user experience (UX) barrier requires a first principle approach to minimize the technical details and risks users face. I believe that this will eventually lead to the generation of Web3 "super applications", which abstract the various complexities inherent in the Web3 infrastructure and only provide users with the content they need to see in order to interact in the Web3 world.
Coinbase and Robinhood are two examples of how consumers can use their experience to create frictionless Web3 wallets.
In particular, Coinbase has built Web3 browsers directly into its main mobile applications. The browser uses secure multi-party computing (MPC) to generate private keys in a distributed manner. The result is a "semi managed" wallet system, in which the user's private key is divided into three entities and any two parts need to sign on the transaction. The user and Coinbase each hold part of the key. The third part can be used as a cold storage solution or stored in a trusted third party. If users cannot access their devices (and therefore their key parts), they can use the recovery mechanism to regain access to the wallet.
Although not as trust minimization as a pure self preservation solution, this type of compromise significantly improves the user experience, and may be a more secure solution for many users who are prone to accidentally losing their keys. Other solutions, such as social recovery, also provide a feasible way to create UX types that users are accustomed to in the Web2 world.
[Dial up era of Web3 throughput]
At present, one of the most frequently mentioned limitations of Web3 is the limited scalability and high latency of the widely adopted public blockchain. As I discussed in the previous article on the real trust model of blockchain, scalability is generally considered to be equivalent to increasing transaction throughput. However, a more comprehensive explanation of scalability is to increase transaction throughput while maintaining low verification costs for blockchain ledgers. Blockchains with higher throughput do exist, but their transaction throughput still has an upper limit, and they usually need to choose between decentralization, security or reliability.
Figure: The three difficulties of blockchain show the trade-offs that must be made in traditional blockchain design
As Vitalik Buterin once said, "Money Internet should not cost 5 cents per transaction." Considering the gas cost of using Ethereum in the past few years, this is a bit ironic, but most people generally believe that this is an effective statement. Even with clear actual use cases and improved user experience, if the transaction takes a long time to complete and costs a lot, the next billion users will not be able to join Web3.
Because this is one of the most obvious obstacles to the large-scale adoption of Web3, many blockchains are very focused on improving scalability, whether through parallel computing, modular rolls, side chain clusters or other methods.
Many of these solutions are still in their infancy, But I firmly believe that scalability is a technical challenge, It can and will be overcome to a great extent in the next few years. However, it is unclear what a highly scalable Web3 ecosystem might look like: An independent L1/side chain multi chain world, a multi roll world composed of Layer 2 solutions, or a high-throughput server farm Layer 1 blockchain? Maybe these three will coexist?
Figure: Comparison of different extension technologies of Matter Labs from ZkSync
[The obvious]
When discussing the obstacles faced by Web3, we must also address the obvious: The lack of clear legal framework and guidance on encrypted assets, decentralized applications and decentralized organizations limits Web3's ability to reach global scale. Like any new technology that fundamentally subverts the existing industry, the pain of growth is inevitable, but not all things can be solved by technology alone.
Without a clear legal framework or policy guidelines, traditional institutions and organizations will not have the clarity they are accustomed to and desire, Unable to participate in the Web3 ecosystem and deploy resources to it with confidence. Once such frameworks and guidelines are in place - implemented through industry cooperation to avoid stifling innovation, institutions and organizations are more likely to really start to set foot in Web3 as service providers or Web3 gateways for their existing customer groups.
It should be clear that I am not advocating any specific legal framework or policy guidelines, but acknowledge the reality that large-scale adoption of Web3 depends to a large extent on clear and reasonable guidance. What form this takes will depend on a large number of variables. Killing innovation is not a feasible or positive result for the Web3 ecosystem, but the fact that Web3 is regarded as a "wild west" environment is also not conducive to its long-term growth.
In an ecosystem where fraud is considered uncontrolled, institutions may feel uneasy
[Looking forward to the future]
Web3 represents a paradigm shift in the trust attributes of applications, shifting power from centralized intermediaries to deterministic and transparent software. But as with any innovative new technology, various obstacles must be overcome before global adoption can be achieved. Although the bottleneck of large-scale adoption of Web3 is much more than that described in this article, by addressing the above challenges head-on, Web3 will have more advantages than ever before and expand its benefits to all aspects of society.
Editor in charge: Kate
