Everyone talks about Web3, but what are the core elements of Web3?

Author: EOS Network Foundation

On June 15, 2022, at 20:00, the latest episode of the informal "You Talk" series by the EOS Network Foundation was launched, focusing on the topic of Web3. As an AMA series initiated by the EOS Network, "You Talk" invites leaders in the blockchain industry to discuss hot topics in the crypto field, share trends in crypto technology development, and unveil the stories behind the crypto world.

In today's episode, we are very fortunate to have invited Mr. Pan Zhixiong, founder of ChainFeeds; Mr. Funny, partner at 7 O'Clock Capital; Ms. Minako Kojima, CTO of AmbrusStudio; and Mr. Zicen, founder of HelloPool, to engage in an in-depth discussion on the topic of Web3.

This article is a review of the highlights from this AMA event, with some content edited.

Self-Introduction Segment

First, let us welcome all the guests, and please introduce yourselves to everyone.

Pan Zhixiong:

Hello everyone, thank you for the invitation from the EOS Network Foundation. I am the former research director of ChainNews and have been very focused on the development of the Web3 field. Currently, I am working on a new content aggregation tool called ChainFeeds, and I welcome everyone to follow it. Thank you.

Funny:

Hello everyone, I am Funny, a partner at 7 O'Clock Capital, mainly responsible for some investments in both primary and secondary markets. I am very happy to be here today at the Twitter Space event hosted by the EOS Network Foundation. Thank you to the organizers for the invitation, and I am excited to discuss Web3 with all the guests today. The Web sector is one of our research directions, and our fund has also invested in some projects. I hope we can explore and gain some insights together during today's event. Thank you!

Minako Kojima:

Hello everyone, I am Minako. I am a co-founder of Matataki, the first Social Token project in the Chinese community, and the decentralized Substack solution Meta Network. Many of the guests here are old friends I met during the last bear market. We have built many projects in the EOS ecosystem before. The first-place project in the token economy design competition co-hosted by Distributed Capital and Xorder is a profit-sharing Bounding Curve treasury I designed for DAO based on EOS.IO, which was ahead of Uniswap's solution by six months. It is still a very forward-looking design today.

The earliest prototype of the Social Token community Matataki was also developed by me based on the EOS account system. Currently, in this bear market, I am also working at Ambrus Studio, a Web3 game team, collaborating with everyone in a Work to Earn model.

Zicen:

Hello everyone, I am Zicen, the founder of HelloPool, and also the founder of HelloEOS. Many old-timers in the EOS ecosystem should have some impression of me, haha. Thank you to the EOS Network Foundation for the invitation. I am very happy to once again celebrate the bear market with everyone.

Q&A Sharing Segment

Question 1:

As we enter 2022, the wave of the Web3 revolution seems to be intensifying, with projects in Web3 social, Web3 gaming, and Web3 identity emerging one after another, often receiving high attention and impressive financing results. However, these projects can be seen as niche tracks within the Web3 world, and there seems to be no official and unified explanation for what Web3 is.

So, I would like to ask each of you: What do you think Web3 is, and what are the core elements that constitute Web3?

Pan Zhixiong:

I think the reason why everyone is talking about Web3 is that they hope to solve some problems of Web2, and the most important issue is user ownership. Users do not receive the corresponding value on the platform. For Web3, the core is to redefine user ownership, giving users complete autonomy over their data and actions.

I believe this can start with user assets. Users can control their assets on-chain through public key and private key signatures, rather than relying on the platform. Secondly, Web3 needs to be built on a trustless premise, so open-source technology and advanced cryptographic techniques are necessary.

Funny:

The previous guests mainly shared from the demand side of Web3, which is also a mainstream view. The emergence of Web3 is about the distribution of production materials, which is essentially a content issue. Web2 belongs to platforms, while Web3 represents a brand new decentralized and distributed internet form, where Web3 users have true ownership.

Currently, in Web2, user registration information, identities, etc., are all controlled and distributed by large enterprises. This centralized form gives large companies or platforms significant power and creates many problems, such as account bans, information leaks, and censorship. Moreover, in Web2, the main players capture the majority of the monetary value created on the internet. Web3, through decentralized networks, redistributes value to developers, creators, and users.

Additionally, I believe that the ultimate goal of blockchain is the metaverse, but this goal is too grand, and many hardware facilities are still insufficient for its realization. Therefore, achieving such a long-term goal will involve a long journey.

We have seen that the Ethereum Foundation recently set an interesting tone, calling it the tone of a decentralized society. If we take a small step forward from the tone of a decentralized society, it is actually Web3, because we know that Web3 is a very important step in the entire decentralized society.

Thus, I believe the core elements of Web3 mainly include:

First is decentralization; second is privacy; third is a complete identity belonging to Web3, or an identity in a decentralized society; fourth may be the interest distribution of DAO organizations, including incentive mechanisms and creating new value distribution methods. Lastly, there are also non-fungible tokens as a form of identification.

So, I think the concept of Web3 has been evolving over time, but the core elements remain the same.

Minako Kojima:

I completely agree with the views of Mr. Pan and Funny. I believe that in addition to users owning the ownership of data, accounts, and assets, they should also have the ability to self-host. This way, the items in my games, the content I publish, my social relationships, and other user assets will not be subject to rent-seeking by giants, nor will they be rug-pulled due to the collapse of small teams or the abandonment of products by large companies.

For example, the open-source Minecraft solution Minetest, which I recently participated in maintaining, allows many community server providers to support users in downloading all world files, enabling them to fork a copy at any time.

The Minetest team also uses the self-hostable Mastodon as their main social media platform, and even their follower count on Mastodon is double that on Twitter.

In addition, the largest Linux community in China, SHLUG, has also moved its weekly Hacking Thursday events online, using the self-hostable open-source meeting solution jit.si to organize meetups. Although these are not traditional examples of crypto, they effectively convey the concept of Web3.

Therefore, I believe Web3 is not just a rebranding of crypto and Dapps; it also includes other open-source technologies.

Zicen:

Actually, all designs around Web3 have always revolved around a core logic, which is the redistribution of rights and interests compared to Web2.

This means that Web3 requires at least three core elements: open-source community (transparent rules), user autonomy, and shared system dividends (incentives for contributions). These underlying logics were already defined when BM proposed the DAC concept in 2013, and later when Vitalik Buterin proposed the DAO concept.

This is a very efficient way of collaboration, which has been popular internationally for many years, so I won't elaborate further.

Question 2:

An interesting saying is that we are currently in the Web2.5 era, which is a critical construction period for the transition from Web2 to Web3. Do you agree with the term Web2.5?

What is the current landscape of the Web3 ecosystem? What do you think is the best entry point for Web3 to land?

Pan Zhixiong:

I will focus on the question of the best entry point. We can see that last year and the year before, applications in crypto were quite popular, but it was clear that they were mainly focused on DeFi or NFTs. What are the characteristics of these applications?

First, they are not applications that require high bandwidth, and their usage frequency is relatively low due to limitations in underlying infrastructure. Therefore, various applications do not have very good technical support.

I believe the entry point for Web3 should start with some applications that require lower bandwidth: on one hand, fields like video and audio require a lot of bandwidth, and for example, the storage layer is not yet prepared; issues with IPFS performance have not been adequately addressed. On the other hand, applications like DeFi and blogging are very simple entry points that do not require large bandwidth but are high-frequency needs. We have seen that Mirror's development has been very rapid; Mirror.xyz started with user content publishing, which is primarily text-based, possibly accompanied by some images, very simple and efficient, but in the future, it will definitely need to expand into more areas like video and audio.

Funny:

The emergence of the term Web2.5 has certain reasons, mainly because on the road to Web3, our underlying infrastructure, middleware, and distribution platforms are still not very complete. For example, at 7 O'Clock, we have invested in many infrastructure projects, but currently, the development progress of these infrastructure projects is still relatively slow, with many not even reaching the testing phase.

On the other hand, the reason we say we are currently in the Web2.5 stage is largely due to the heat of the application layer. For instance, the recently popular Stepn, which claims to be Web3 sports, and more gaming projects. In short, the application layer is leading, but the infrastructure is lagging behind.

Regarding the best entry point for Web3 to land, we also agree with Mr. Pan's point about bandwidth. Currently, the bandwidth and underlying public chains indeed cannot support the construction and widespread application of large-scale applications like social and gaming, so I see these entry points:

First is Layer 2; many public chains have already started their expansion journey, including ETH, because everyone realizes that without expansion, we might forever remain at relatively simple needs like DeFi. If we want to develop applications like games, expansion is essential, and miner fees are also a significant issue. ETH is a representative of mainstream infrastructure, and if all infrastructure public chains can be integrated into a large network, then the entire ecosystem's demand for infrastructure will be met, followed by the construction of some middleware.

From recent market investment trends, people are also inclined to invest in some high-frequency, low-bandwidth applications. We have already seen many niche areas transitioning to Web3, and with the improvement of infrastructure, Web3 will flourish.

Question 3:

If Web3 is a scene, then public chains are the underlying infrastructure that supports Web3 scenes. So I would like to ask everyone to share: What actions should public chains take to benefit from the development dividends of this wave of Web3?

For a well-established public chain like EOS, does achieving EVM compatibility provide more opportunities for EOS to develop Web3?

Minako Kojima:

I think in the last cycle, public chains like Ethereum, Polygon, and BSC have already set many good examples. For instance, the recently popular Gitcoin Grant has become the most important publicity platform for Web3 startup teams. It not only avoids rent-seeking by public chains but also allows for various subsidies, fostering collaboration and providing roadshow opportunities. These benefits are crucial for various small Web3 teams to survive in the bear market, just like we often say in Dota, you need to stand firm to output.

I have personally registered two projects and also participated in the Gitcoin Grant Chinese community project. We expect to have a Twitter Space event on Friday to focus on roadshows and answer user questions.

EOS has its advantages in many technical aspects. Even today, emerging blockchains like Flow have imitated many technical designs from EOS. Looking from today's perspective, if EOS had been able to incubate a project similar to Gitcoin in the last cycle as a protective ground for developers, the situation today would be very different.

Regarding the EVM compatibility issue, I still believe that many of EOS's technologies are commendable even today, so I think achieving EVM compatibility for EOS is optional.

Zicen:

My view on this issue is very similar to Minako's: prioritize developers. In the competition among public chains, the core is to innovate around the question of "what blockchain technology can do." Developer innovation creates hotspots, and the market follows and replicates. EOS accumulated a large number of quality developers in 2018, who created many dApps based on EOS.

Therefore, I believe that if public chains want to benefit from the development dividends of Web3, they must prioritize the developer community.

Question 4:

For public chains, foundations have always played an important role in ecosystem incubation. The EOS Network Foundation's function is to provide funding, technology, operations, future planning, and ecosystem building support for the development of the EOS ecosystem, further unleashing the full potential of EOS as a high-performance blockchain.

What role can the foundation play in the development of Web3?

Funny:

First of all, as the host mentioned, the foundation should provide funding assistance. This is also a very important aspect for a public chain. If you want to attract developers to build on the public chain, you must introduce corresponding funding support and incentive policies.

I have also gained deep insights into the EOS developer community, and during the EOS hackathon, many quality projects emerged. Therefore, the funding, technology, operations, future planning, and ecosystem building support provided by the EOS Network Foundation are important driving forces in helping the EOS ecosystem establish a large developer community.

Secondly, the foundation needs to help the ecosystem determine some Web3 priority issues. For example, in the gaming sector, we all know that games can definitely attract a large number of users, but currently, we see that all Play to Earn games have very low bandwidth, simple models, and cannot even be called games. Quality games, like AAA games, need to include a large storyline, playability, and very refined economic models, but such games have very high performance requirements for the chain.

Imagine this: if a project has a large number of users, and these users can provide positive feedback to developers and projects, can we provide significant technical support for these specific track projects across the entire technical network? We could even say that these AAA masterpieces can operate very smoothly on-chain, and when the user base grows rapidly, there won't be any downtime.

For the EOS network, I believe this could be a very good development opportunity because everyone may initially focus on profitability, but the development of public chains ultimately depends on technology.

Minako Kojima:

In 2018, I participated in the EOS hackathons held in Hong Kong and San Francisco, which can be said to be the best two hackathon experiences I have ever had. I learned a lot.

However, since then, there haven't been many similar events for EOS. In contrast, ETH holds large hackathons every few months and continues to support the ecosystem. For the EOS Network Foundation, it is worth learning from their practices. For example, funding for secondary financing like Gircoin (EOS has a secondary crowdfunding platform Pomelo) and reactivating the community through various measures.

Question 5:

Lastly, in the past month, market bearish sentiment has been spreading, and all of you are community leader-level figures who have been deeply involved in the industry for many years. Therefore, I would like to ask everyone to share:

As ordinary users, how should we layout Web3 in a bear market?

Pan Zhixiong:

This question can be explored from two roles: ordinary users and developers.

For ordinary users, even in a bear market, the market will still burst with many fresh affairs and innovative products. On one hand, financial-related aspects carry risks, and everyone should remain rational and cautious. However, for products and functions not related to finance, everyone can try more, such as content related to the creator economy, using various new Web3 tools, and maintaining curiosity, which may yield returns.

For developers, the various technology stacks of Web3 are also continuously iterating and improving. They should research various new platforms and technologies and explore and experiment with different technologies.

Zicen:

I believe decisions should be made with a goal-oriented approach. If your goal is to change the world, then stick to your chosen track and continue to delve into it; if your goal is profit, then that's another matter.

If you are a Web3 practitioner, please genuinely love your career, your project, and your boss, and then invest in BTC and ETH. If you are an investor, please keep a close eye on the Web3 ecosystem, follow active development teams, and then invest in BTC and ETH. If you are a user, please pay closer attention to Web3, take advantage of opportunities, and then invest in BTC and ETH. The reason I say this is that I believe Bitcoin is the fundamental basis of the entire crypto industry, and Ethereum is the fundamental basis of the entire public chain ecosystem. Understanding this statement will enable you to make the right choices at the right time.

Of course, investing carries risks, and everyone should make their own judgments and choose wisely. This is just one perspective; you can continue to observe the market and make your own judgments.

Community Q&A Interaction Segment

During the previous Twitter preheating phase, users could freely ask questions to the guests through comments. Users whose questions were selected by the guests will each receive a reward of 25 EOS.

First, we would like to thank everyone for their enthusiastic questions. Now, four lucky questions have been selected; let me see what questions everyone has asked!

Funny:

Generally speaking, institutions tend to focus on niche tracks and usually make some layout investments in each niche track. Once a project emerges, the returns can be very considerable. However, for ordinary users, many Web3 projects are currently in very early stages, and some haven't even reached the public offering stage, making it difficult for ordinary users to access such investment opportunities. As mentioned earlier in the Web2.5 discussion, currently, about 90% of projects may not survive to Web3.

For 7 O'Clock, we are optimistic about niche tracks in Web3, including: infrastructure, middleware, privacy, SocialFi, DAO, GameFi, creator platforms, gaming guilds, etc.

If the questioner is a retail investor, you don't need to worry about the track; just focus on how to profit in Web3. One simple way is to take advantage of airdrops. High-quality airdrops can be found in Layer 2, such as Arbitrum, zkSync, etc., which have not yet distributed their airdrops. You can also pay attention to identity verification projects, such as Spruce, which was recently invested in by a16z.

Additionally, experience more projects and pay attention to cross-chain aggregation tracks. Currently, in this market, SocialFi may be difficult to emerge, but GameFi is still worth exploring.

Zicen:

My advice to ordinary investors is: when we pursue tenfold or hundredfold returns, we can pause our thoughts on business models and focus more on timing. Then look for opportunities where chips are concentrated and the secondary market performs well.

Of course, if the questioner is a very capable developer, then the ecosystem certainly needs developers to think about building products for the future.

Pan Zhixiong:

Web3 and crypto have driven the iteration and evolution of many technologies, such as early discussions on distributed consensus systems. However, now people believe that various cryptographic technologies, led by zero-knowledge proofs, will become a technology with more possibilities in the future. We can see the application of zero-knowledge proof technology in blockchain scaling and privacy, and it will become even more important in the future.

I believe that tokens are not a necessary option for Web3 protocols or projects; it’s just that people are currently more focused on the benefits and governance rights that tokens bring. There are many other ways to expand the differences between Web3 and traditional applications, such as more open protocols, standards, and cryptographic technology foundations.

Additionally, many people focus on decentralization issues, but I believe that the characteristics of decentralization are more about solving problems rather than being a goal.

Minako Kojima:

A significant drawback currently is certainly the usability issue. Google conducted an experiment showing that loading a page with 10 search results takes 0.4 seconds, while loading a page with 30 search results takes 0.9 seconds. Just a 0.5-second delay can reduce Google's overall traffic and revenue by 20%. Not to mention the user experience of Web3, which has made significant progress over the past two years but still needs improvement.

Another implicit limitation I want to mention is the orthodoxy in narrative. Many creator communities think of Web3 when they mention NFTs, and when they mention NFTs, they think of scams. There was a joke that an OG spent half a day explaining what Web3, ownership, and NFTs are to outsiders, only to have them open OpenSea and see a sea of text and junk… This is roughly the current situation faced by Web3 developers.
Thank you to the guests for their answers, leading us to further understand the value and opportunities in the NFT market. Thus, this episode of the informal "You Talk" (Talk With ENF) comes to a close.

Thank you to all the guests for their wonderful speeches, to everyone present for their active participation, and to our media partners 7 O'Clock Capital, Planet Daily, Chain News, Chain Catcher, Foresight, Jinse Finance, Deep Chain Finance, DeFi Dao, Carbon Chain Value, and WebX Labs for their strong support of this event.

In the future, the EOS Network Foundation will continue to advance its related work at a high speed, and we look forward to the EOS ecosystem opening a new chapter of vigorous development with the help of the EOS Network Foundation.