Web3 has rapidly gained a lot of popularity in the tech world. It has become one of the most discussed topics in tech communities worldwide.
Even though many people don’t quite understand the whole concept, a bunch of companies have already started to invest millions in the metaverse for marketing and brand expansion. Even though the crypto market experienced a couple of downfalls that unfortunately led to losing the trust of the general public, blockchain technology and Web3 projects are still standing strong in the face of adversity.
Web3 can be defined as a blockchain-based decentralised internet that rests on token-based economies and permissionless applications. Many of these projects gained a lot of attention by disrupting the whole concept of the Web2 internet.
The reason behind that is linked to all the decentralised advantages of blockchain technology in creation of privacy-preserving applications and the inclusion of the crypto community in governance. Decentralised distributed ledgers are forecasted to become crucial components in the future of global economies.
In this article we are going to examine the foundational features of Web3 and examine some of the top projects in that category.
From its beginning, the internet has been evolving through phases. The Internet was born in 1989 when Tim Berners Lee published a paper called “Information Management: A Proposal” that was basically a foundation stone for the internet we know today. As the internet developed further and expanded the global market, giant tech companies emerged such as Amazon, Google, Facebook and Apple and delivered the Web2 era.
Big tech companies understood that ‘data is the new oil’ or in other words, that the global market is centred around customer data. The never-ending competition in the global market severely harmed the privacy of many users since the hunger for new revenue streams and a rapid expansion of the user base came at the price of the right to privacy.
81%
Percentage of consumers who heard about Web3 and think it will improve their overall happiness and well-being (Laxhub, 2023).
Regulators soon recognized the threat and enacted many significant data protection and privacy acts to put a stop to the unlawful conduct of huge tech companies. Whether these laws served their purpose or not, one thing is for sure – the ‘data-centred’ approach of Web2 needed to be upgraded with a user-centred approach.
If you want to learn more about the development of the internet and the emergence of Web3, why not read this article: ‘What is Web3?’
Web3 is a new version of the internet driven by user welfare. It is a decentralised and permissionless internet that lies on the foundations of privacy protection and full data ownership.
Web3 aims to become more open, transparent and decentralised than its predecessors allowing individual users to obtain greater control over their digital data, identity, transactions and social interactions. A new peer-to-peer network removes the need for intermediaries such as financial institutions, authorities, search engines, centralised servers and social media platforms.
Many people understand it as an umbrella term that includes technologies such as blockchain, peer-to-peer networking, decentralised applications and data storage. Built on a decentralised network that is not under the control of a single organisation, Web3 could produce a more interoperable internet, along with novel forms of governance, social interactions and finance.
Taking into account that Web3 networks will operate through decentralised protocols as the founding blocks of blockchain technology, we can expect to see a symbiotic relationship between blockchain technology and the core principles of Web3. However, the decentralised network is still in its early stages, and it remains to be seen how it will evolve over time.
Before we move on to the part about top Web3 crypto projects, we would like to point out one of web3 and blockchain’s main features. If you are a new user in the crypto world, you have probably noticed that the whole community is always talking about the importance of decentralisation. If you want to learn more about decentralisation, you can find out more about it in one of our earlier guides: ‘What is decentralisation & why is it important?’ .
A decentralised blockchain powered network is a key component of Web3 technology. Since blockchain is a distributed ledger that records transactions in a safe and transparent way, Web3 applications have the possibility to provide users with a higher level of cyber security and serve as a tamper-proof data storage provider.
Decentralised blockchain network enables automated and trustless transactions between parties with the use of smart contracts. Smart contracts are self-executing contracts with the terms of the agreement written directly into code. They are at the core of any decentralised ecosystem since their existence directly removes the need for a third party.
In our recent article ‘What are Examples of Web3? The Future of the Internet’ we illustrated the meaning of Web3 and examples of related technologies in general. If you take a look at that article, you will find out that Web3 encompasses many branches of technology such as crypto coins, edge computing, the governance concept of a decentralised autonomous organisation, smart contracts, non-fungible tokens (NFTs) and decentralised applications (Dapps).
Since the technology behind Web3 is constantly developing, many new projects are emerging under this umbrella term. To get an idea of the ranking of such projects, we have decided to list and explain the most popular decentralised protocols: Ethereum, Polkadot, Cosmos, Ripple, AION and Sia.
These protocols and networks enable users to interact with one another directly, safely, and without intermediaries. Web3 networks will operate through decentralised protocols and in the future, we can expect to see a strong symbiotic relationship between them.
Ethereum is one of the biggest Web3 projects and the most established decentralised protocol. If you have ever read anything about crypto, you probably heard about Ethereum. The crypto world’s biggest distributed network includes approximately over 2700 decentralised applications and a $166 billion market cap.
Ethereum is a widely used platform that runs on smart contracts. In fact, it was the first smart contract-based blockchain. Most of the pioneering Web3 technologies were built on Ethereum and many Web3 developers consider Ethereum as a lynchpin of the entire Web3 movement. Top Web3 projects such as Ethereum deploy smart contracts to allow developers to build decentralised applications and network protocols.
The wide use of Ethereum has other benefits as well. For instance, popular blockchain networks such as Solana and Binance Smart Chain use adapted versions of the Ethereum Virtual Machine (EVM) for supporting smart contracts. Therefore, Ethereum technologies can be transposed throughout many blockchains and DeFi industries.
However, even top platforms are vulnerable. Back in 2020, Vitalik Buterin, Ethereum’s co-founder VitalikButerin“>tweeted that hackers may have gained access to the exchange funds yet failed to transfer the money into their own wallets because of a security setting that demands multiple passwords to process a certain transaction. This incident illustrates that even though blockchain is not bulletproof, it still provides a higher degree of security.
Even though blockchain technology enhances security, you still have to be careful. New technologies open new market trends and revenue streams. Where there are new ways to monetize, cyber criminals see that as an opportunity as well. For example, decentralised exchanges caught the attention of cyber perpetrators multiple times. Always do your own research and educate yourself about potential threats. You can start by reading our ‘How to use crypto: Security best practice’ article.
The Polkadot Web3 project aims to fix a common problem in the blockchain space. The blockchain world remains partially fragmented and mainly not interoperable because top web decentralised protocols and tools tend to compete with each other. Even though competition is vital for any emerging market, the mentioned fragmentation makes accessibility harder for ordinary network users and developers. They basically do not know which network to choose to mint NFTs, make token transactions or create decentralised applications.
Polkadot wants to bring to the table an effective interoperability solution by connecting different chains and enabling seamless communication between those chains. It is a multi-chain protocol with the main objective to connect all blockchains into one broad interoperable blockchain network. Therefore, Polkadot enables transfers of any digital assets or data across blockchains.
Even though Polkadot clearly wants to become the ‘blockchain of blockchains’, it isn’t totally in direct competition with popular networks such as Ethereum. In fact, Polkadot’s goal is to connect Ethereum solutions and tools with other blockchains. If you google Polkadot, you will see that it is referred to as the ‘Ethereum killer’. Since they have similar ambitions, they seem like competing networks at first.
You probably wonder how that is going to work? Well, Polkadot enables developers to build blockchains, known as parachains, using its decentralised protocol in the native Polkadot network. These parachains are going to share the same Proof of Authority (PoA) consensus. Since the consensus is embedded within Polkadot, parachain developers may further focus on the specifications of their blockchains. All these parachains will be connected to a common blockchain known as the relay chain that serves as a common link between all parachains.
What sets Polkadot apart from competing networks is that these parachains are unique and operate independently with the ability to communicate with each other. That is a vital function for Web3.
Cosmos is another Web3 project that enables developers to create interoperable blockchain networks and provides network users with scalability, data privacy and security through the Tendermint consensus mechanism.
While Polkadot wants to solve the blockchain’s interoperability problem, Cosmos aims to make blockchain technology less complex, more scalable and environmentally friendly. It has been referred to as Blockchain 3.0 due to its key features. The decentralised network focuses on modularity. This allows a network to be easily built using code that already exists.
Secondly, Cosmos tends to resolve the biggest problems of other widely used and stronger blockchains such as Ethereum. Specifically, we are talking about scalability. The main problem with the Ethereum blockchain is that gas fees are very high, and it conducts only 20 transactions per second. If you compare it, for example, to Pay Pal that does more than 190 transactions per second, Ethereum’s score seems pretty low. The main ambition behind the Cosmos Web3 project is to provide a higher degree of scalability while being more environmentally-friendly.
From a technical point of view, Cosmos utilises a bridge-hub model that connects different chains. The ecosystem contains multiple hubs, and each hub connects a group of exterior chains known as zones. In the middle we have the primary Cosmos Hub.
Cosmos is a good ecosystem to create decentralised projects. A few interesting, decentralised projects have already been built on Cosmos such as Osmosis, Sentinel, the Regen Network and the Akash Network.
Ripple is basically a peer-to-peer network that consists of a real-time gross settlement system, remittance network and currency exchange. It is currently the only enterprise blockchain company with products in commercial use.
Ripple facilitates cross-border payments and provides instant settlements without the need of a third party. The network also provides liquidity services that can be used by banks and other financial institutions as well.
The decentralised network built upon a distributed open-source protocol supports tokens representing fiat money, cryptocurrency, commodities and other units of value such as mobile minutes or frequent flyer miles. The main objective of this Web3 project is to enable secure, rapid and cost-effective cross-border financial transactions of any size.
A huge global decentralised network that offers fast cross-border transactions and cost effectiveness caught the eye of the U.S. Securities and Exchange Commission (SEC) that filed a lawsuit against Ripple Labs in 2020 alleging that the company has been conducting a $1.3 billion unregistered securities offering by selling XRP, the platform’s native token.
The final decision may have an impact on the whole crypto industry. There have been raging discussions onUtahPolitician%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1602333120996311041%7Ctwgr%5Ee5c547b2fe41a491b203b60c86478b618d75065b%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcointelegraph.com%2Fnews%2Fis-ripple-poised-to-settle-with-sec-this-week-crypto-twitter-weighs-in”> Twitter claiming that a possible settlement could be a loss for the whole digital world and Web3.
AION is an enterprise-level blockchain protocol that allows communication and value transfer between divergent blockchains. It utilises a Proof-of-Stake (PoS) consensus mechanism to secure the network and provide data privacy and scalability as its key features.
AION also wants to bring interoperability to the crypto table. Blockchains have been mainly formed in isolation from each other that resulted in fragmentation and accessibility issues. Similar to Polkadot’s goal, AION found that interoperability should be resolved primarily. The Multi-Tier Blockchain Network (MTBN) created through the AION decentralised protocol aims to connect divergent chains.
The AION protocol can grow the network in many ways. For example, an array of participants can create bridges and deliver services within a network of blockchains. Therefore, a priority in the creation of the MTBN has been to allow a maximum number of participants.
The Sia protocol was created in 2015 with a defined ethos of being entirely decentralised. Sia’s main objective is to provide a high level of decentralisation to data storage. In other words, the core goal is to give users full control over their data and ensure that data is protected against failures. Since then, it has become a decentralised marketplace of cloud storage space.
Sia can be defined as a decentralised protocol that enables crypto users to store their data on the blockchain through cloud storage without depending on an intermediary. The concept is similar to Dropbox or Google Drive since users rent storage space on the platform through a peer-to-peer network.
Let’s briefly explain how decentralised cloud storage works. Instead of renting storage from a centralised provider, peers on Sia platform rent storage from each other by forming contracts. These contracts are agreements between a storage provider and client that define what data will be stored and at what price. Contracts are stored in a blockchain and therefore, they are publicly auditable.
You probably wonder what Web3 brings to the table for an ordinary internet user. The answer is simple – high levels of control over data, enhanced cybersecurity, and the right to privacy.
Ever since the internet became widely used in the late 90s, it has become deeply intertwined with our everyday lives. The new generation of internet centred around blockchain technology, Web3 and decentralised protocols as its building blocks has the power to address the main deficiencies of the Web2 ecosystem.
Even though Web3 still needs some time to truly evolve before it is ready for mainstream adoption, there are already many Web3 crypto projects that are at the same time working on enhancing the internet as we know it today and resolving the remaining issues of blockchain technology to provide easier accessibility and use for ordinary users.
