How Web3 Gets to USD $177 Billion in 10 Years

According to Market.US, the global Web3 market size is expected to grow to USD $6.63 Billion in 2024 (up from USD 4.6 Billion last year).  By 2033, the projected valuation is USD $177.58 Billion!   The majority (56%) is attributed to the fully open, decentralized networks of Web3’s Public segment (compared to the more restricted blockchain networks within the Private, Consortium, and Hybrid segments).  And less than 25% of the total is attributed directly to Cryptocurrency, Web3’s current favorite child.   So, what else accounts for Web3’s total market share today and is expected to drive explosive growth in the near future?  The following outlines some of the top Web3 product categories with representative offerings.

NOTE FOR NEWCOMERS TO WEB3:  Web3 is still very tied to its technical roots.   Web3 offerings are described as projects tied to one of three technical layers (dApp at top layer, Protocol at middle layer, and Blockchain/DLT at bottom layer).  For a quick overview, see Nestor Dubnevych’s article Differentiating DLT, Protocol, and dApp for Proper Legal Structuring of a Web3 Project.

Top Web3 Product Categories

Decentralized Finance (DeFi) Platforms

DeFi platforms offer financial services including borrowing, lending, and trading without the need for traditional financial intermediaries like banks. These platforms use smart contracts on blockchains, primarily Ethereum, to manage transactions and enforce terms.  Examples:

- MakerDAO: A protocol that allows users to issue and manage the Dai stablecoin, pegged against the U.S. dollar.

- Compound: A money market protocol where users can earn interest or borrow assets against collateral.

- Aave: A decentralized lending system where participants can lend or borrow cryptocurrencies with a variable interest rate model.

 Non-Fungible Token (NFT) Marketplaces

NFT marketplaces facilitate the creation, sale, and exchange of non-fungible tokens, which represent unique digital items like art, collectibles, and in-game items on the blockchain.  Examples:

- OpenSea: The largest marketplace for user-owned digital goods, ranging from art and virtual lands to collectible games.

- Rarible: A decentralized platform that allows artists and creators to issue and sell NFTs.

- Foundation: A platform aimed at digital creators, which allows artists to auction their digital art as NFTs.

 Decentralized Autonomous Organizations (DAOs)

DAOs are member-owned communities without centralized leadership. A DAO's financial transactions and rules are recorded on a blockchain, making the organization transparent and resistant to censorship.  (DAOs described here illustrate a basic structure.  Expect to see focused DAOs in other categories as well --- such as MakerDAO listed in “DeFi Platforms”.)  Examples:

- Friends With Benefits (FWB): A social DAO, where membership is tokenized, offering access to a creative and cultural community.

- The Big Green DAO is a non-profit led philanthropic DAO that believes growing food changes lives. The DAO they are launching is an experiment in democratising and decentralising grantmaking.

 - Climate DAO:  Attempting to combat climate change by coordinating large groups of people to help empower investors to make changes in climate-effecting companies.

 Web3 Infrastructure Services

These services provide the necessary backend architecture to run decentralized apps smoothly. This category includes blockchain service providers, decentralized storage solutions, and indexing protocols.  Examples:

- Infura: Provides scalable APIs that enable developers to connect to the Ethereum Blockchain without running their own nodes.

- Filecoin: A decentralized storage network designed to store humanity's most important information.

- The Graph: An indexing protocol for querying data for networks like Ethereum and IPFS, powering many DeFi and NFT platforms.

 Cryptocurrency Wallets

Wallets are applications or physical devices that allow individuals to store and manage their cryptocurrency holdings. Wallets can be non-custodial, giving users full control over their keys and funds.  Examples:

- MetaMask: A browser extension that allows users to interact with the Ethereum blockchain and its ecosystem of DApps directly from their browser.

- Ledger Nano X: A hardware wallet that supports a wide range of cryptocurrencies and offers high security for digital assets.

- Trust Wallet: A mobile wallet app that supports multiple cryptocurrencies and integrates with decentralized exchanges.

 Privacy & Security Solutions

This category includes products designed to enhance privacy and security for blockchain and cryptocurrency users. These solutions help protect identity, data, and transactions from surveillance and malicious attacks.  Examples:

- Aragon:  Provides DAO’s no code tools for governance and collaboration.  An interesting offering is Aragon Court, a decentralized dispute resolution system, that allows DAOs to resolve disputes without relying on traditional legal systems.

- Orchid: Provides a decentralized VPN service, offering more privacy and security than traditional VPNs.

 Blockchain Analytics and Forensics

These tools help in analyzing blockchain transactions. They are used for compliance, monitoring suspicious activities, and understanding blockchain ecosystems through data.  Examples:

- Chainalysis: Known for its comprehensive blockchain data platform that enables government agencies, exchanges, and financial institutions to monitor blockchain transactions.

- Elliptic: Provides blockchain analytics for crypto asset compliance.

- CipherTrace: Specializes in blockchain forensics and cryptocurrency intelligence, catering to banks and law enforcement agencies.

 Decentralized Social Media Platforms

Decentralized social media platforms operate on blockchain technology, offering users control over their data and ensuring freedom from censorship.  Examples:

- Minds: An open source and decentralized platform that rewards users with cryptocurrency for their contributions.

- Steemit: A blockchain-based blogging and social media website that rewards users with STEEM cryptocurrency for publishing and curating content.

- Mastodon: A decentralized social network that uses open-source software allowing servers to run independently, yet federate to share certain data as a community.

 Gaming and Virtual Reality (VR)

Blockchain is increasingly integrated into the gaming industry, offering decentralized gaming economies where players truly own their in-game assets, and VR experiences enhanced by blockchain's ability to secure virtual goods.  Examples:

- Decentraland: A virtual reality platform where users can own and monetize plots of virtual land and other digital assets within a blockchain-based digital reality.

- The Sandbox: A community-driven platform where creators can monetize voxel assets and gaming experiences on the blockchain.

- Axie Infinity: A blockchain-based game where players breed, raise, battle, and trade digital creatures called Axies.

 Supply Chain Management Solutions

Blockchain technology can enhance the transparency and efficiency of supply chains by providing immutable records of product journeys from manufacture to sale.  Examples:

- VeChain: Utilizes blockchain technology to improve the transparency and traceability of supply chains, reducing costs and increasing security.

- IBM Blockchain: Offers solutions that transform industrial supply chains through transparent operations.

- OriginTrail: A protocol designed to bring interoperability to global supply chains by organizing and linking data across different corporate entities.

The Return of the Web3 Investor

 With the crypto-related bankruptcies of Terra Luna, FTX and others in 2022, it no wonder that Web3 funding dropped from nearly 74% (from USD 26.5 Billion to USD 7 Billion) YoY in 2023.  However, there seems to be cautious resurgence of better-informed investors not only in crypto (think Bitcoin ETF’s) but also in broader Web3 related innovations.   Although AI is the technology darling stealing many of today’s headlines, wise investors know that Web3’s expected Compound Annual Growth Rate (CAGR) of 44.1% through 2033 is too great to ignore.