Web 3, also known as Web 3.0, is the next evolution of the internet. Unlike Web 2.0, which focused on centralization of data and services, Web 3.0 aims to create a decentralized structure where data and ownership are distributed among users.
One of the key features of Web 3.0 is the ability to use the same account or "wallet" to log in to various services. This allows for more seamless access to different platforms and eliminates the need for multiple logins and passwords.
Another important aspect of Web 3.0 is the ability for users to own and sell digital assets, such as game items, at will. These assets can be converted into non-fungible tokens (NFTs) and used in various sales or even in other games.
Additionally, Web 3.0 allows for the monetization of free information provided to businesses through movements such as Play to Earn, Move to Earn, and Learn to Earn. This allows users to earn money for their contributions to the platform.
Finally, Web 3.0 also enables a more secure and private way of sharing data. Instead of companies owning and controlling user information, Web 3.0 allows for the sharing of data on the blockchain, which allows for fund (token) transactions without providing personal information.
Overall, Web 3.0 aims to create a more decentralized and user-centric internet where data and ownership are shared among users, rather than controlled by a select few. So, it would be a more secure, private and fair internet for all.
Assessing the Potential of Web 3 Projects
The decentralized technology space is filled with a wide variety of projects, each with its own unique features and potential. In this chapter, we will dive into different categories of Web 3 projects and examine the methods that can be used to analyze them. Whether you're an investor, developer, or simply curious about the latest trends in decentralized technology, this chapter is for you. So, let's get started and explore the exciting world of Web 3 projects.
NFT Projects: What to Look For
NFTs, or non-fungible tokens, have gained popularity in recent years, with many projects focusing on minting a limited number of NFTs to form a community and establish a floor price for the tokens. One particularly successful type of NFT is the profile picture (PFP) based NFT, which has formed a dedicated community with a high floor price, known as "Blue Chip NFTs."
When evaluating an NFT project, there are a few key factors to consider.
First, the active community is an important aspect to look for. A vibrant community can indicate a high level of interest and engagement with the project. Additionally, it is important to check for a strong presence on social media and the interest of existing blue chip holders.
Second, it is important to monitor changes in the floor price and community activity relative to the volume of tokens being mined. This can provide insight into the overall demand for the NFTs and the potential for future growth.
It's also important to note that for NFT projects, if additional roadmap is introduced after NFT is actually sold as PFP, it will take a considerable amount of time for the roadmap to actually be implemented, and if the only real money for the project is NFT sales, the project can continue based on sales and secondary market resale royalties. In order to gauge the true activity level of a community, it is important to measure the number of users who are truly active and engaged, rather than just looking at the total size of the community. This can be done by checking the number of responses or comments on social media posts.
Additionally, when it comes to PFP NFTs, it is important to pay attention to the direction of continuously creating the value (ownership) of PFP NFT among relatively few investors. The most stark and accurate process of NFT being made into a blue chip was generally seen to increase the likelihood if the movement of existing blue chip holders was active in the project.
To sum up, when evaluating NFT projects, it is important to ensure that there is an activated community with a high number of dedicated holders and consistent buying inflows, that the project has a solid plan for utilities and is financially feasible, and that there is a sufficient daily trading volume for a floor price.
- Active community: Indicates high level of interest and engagement with the project
- Strong presence on social media
- Interest of existing blue chip holders
- Changes in floor price and community activity relative to volume upon completion of mining
- Additional roadmap is introduced after NFT is actually sold as PFP
- For NFT projects, it will take a considerable amount of time for the roadmap to actually be implemented
- The most stark and accurate process of NFT being made into a blue chip was generally seen to increase the likelihood if the movement of existing blue chip holders was active in the project
- A vibrant community can indicate a high level of interest and engagement with the project
- Measuring the number of users who are truly active and engaged, rather than just looking at the total size of the community
- Pay attention to the direction of continuously creating the value (ownership) of PFP NFT among relatively few investors
- Ensure that there is an activated community with a high number of dedicated holders and consistent buying inflows
- Ensure that the project has a solid plan for utilities and is financially feasible
- Ensure that there is a sufficient daily trading volume for a floor price.
X2E Projects: What to Keep in Mind
X2E, or "X to Earn" projects, have become increasingly popular in recent years, but so far, no sustainable projects have emerged. This is because these projects often rely on token inflation and a lack of token incineration to maintain market prices. In the long run, X2E projects will need to focus on the services they provide and shift to an "X and Earn" system, rather than an "X2 Earn" system. When evaluating an X2E project, it's important to consider the following factors:
- Countermeasures against rapid expansion of initial inflation (if not, the rate at which token prices collapse is accelerated)
- Enough incinerators compared to expected token inflation
- Non-harvesting incinerators in place and non-harvest incinerators produce sufficient incineration
- The liquidity pool of mining tokens is large enough and there is a plan for external inductive inflows
- NFT inflation is moderate
- The token economy the incineration rate of mining tokens is higher than the inflation rate, or it keeps inflation at around 1% per year
- Cashing of mining tokens is a bypass cashing rather than a direct swapping and project income from external funding or royalties is significantly higher than the cost of providing liquidity.
These factors will help to determine whether or not the X2E project is sustainable in the long term and if the token price can be maintained. It's also important to note that, in the case of X2E project analysis, the analysis focuses on how long the price of mining tokens will last without the premise that the price of mining tokens will be maintained.
In summary, when assessing an X2E project, it is important to examine the token economy, the rate of token inflation, and the token incineration rate, as well as the project's overall sustainability. With these factors in mind, it may be possible to identify projects that have the potential to maintain market prices and provide a good investment opportunity.
DeFi-Based Projects: What to Look For
DeFi, or decentralized finance, is a rapidly growing field in the cryptocurrency industry. When evaluating DeFi-based projects, there are a few key factors to consider:
- Changes and size of Total Value Locked (TVL)
- Volume and frequency of transactions
- Utilities of tokens (governance, etc.)
Uniswap, which started with Ethereum, and OpenSea, an NFT marketplace based on DeFi, are currently at the forefront of the DeFi space. However, with the introduction of Uniswap V3, the concentration of TVL has been reduced and there is a growing movement towards creating real value through the use of utilities such as fee distribution in DeFi tokens. Governance tokens are often used in DeFi projects and they can be viewed as the main utility, along with whether the project's own utility is profitable and whether there is anything to "govern." When evaluating DeFi projects, it is important to consider:
- Whether the project offers enough differences compared to Uniswap and is growing by collecting TVL
- If the transaction volume is sufficient as the interest rate is related to the transaction volume based on Real Interest
- If the project has a governance system, is there something that the project can make enough money and "decide"?
In summary, when analyzing DeFi projects, it is essential to look at the project's TVL, transaction volume, and utilities offered by the token, including governance.
Blockchain Mainnet Projects: What to Look For
In 2017, the majority of Web 3 projects were focused on creating new blockchain mainnets. These projects often used initial coin offerings (ICOs) based on Ethereum, issuing tokens as ERC-20 before launching their own mainnets. Today, there are still many blockchain mainnet projects being developed, both as Layer 2 projects and as new Layer 1 projects with substantial funding, such as Aptos and Sui. When evaluating a blockchain mainnet project, there are several key factors to consider:
- The fastest investment method for ordinary investors, such as a launchpad or ICO
- Existing investment destinations and sizes (VC, exchanges, foundations, etc.)
- Any transactions or activities, such as airdrops, conducted on the testnet
- Compatibility with EVM or smart contracts and information on token issuance for key services such as AMM DEX, SWAP, NFT Marketplace, Bridge, etc.
- The foundation's expected funding situation and investment programs for the blockchain economy.
One of the most important aspects of a new blockchain mainnet is the ability to support new decentralized applications (Dapps) through EVM compatibility. This requires existing Ethereum-based projects to be forked or trained by the foundation to create an environment where funds can be invested and settled. Additionally, before launching a new blockchain, various tasks such as tests are carried out.
In conclusion, analyzing Web 3 projects can be a complex task due to the diverse and constantly evolving nature of the decentralized technology space. However, there are certain fundamental elements that can be used as a starting point for analysis, such as the flow of funds and level of user engagement. These elements are crucial in understanding the success and potential of a Web 3 project.
Additionally, the concept of ownership in a decentralized ecosystem is a key characteristic that sets Web 3 projects apart from traditional Web 2 projects. As the Web 3 space continues to grow, it is important to stay informed and adaptable in our approach to analyzing these exciting new projects.
- Analyzing Web 3 projects can be complex due to the diverse and constantly evolving nature of the decentralized technology space
- Flow of funds and level of user engagement are fundamental elements that can be used as a starting point for analysis
- Understanding the success and potential of a Web 3 project can be determined by these elements
- The concept of ownership in a decentralized ecosystem is a key characteristic that sets Web 3 projects apart from traditional Web 2 projects
- It is important to stay informed and adaptable in our approach to analyzing Web 3 projects as the space continues to grow.