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Web 3.0 has emerged as a major tech trend in 2022, post the rising popularity and adoption of Non-Fungible tokens (NFTs) and Metaverse over the last year.

Touted as the future of the Internet, Web 3.0 refers to the next generation of decentralized internet based on open source protocols. Web 3.0 leverages blockchain technology and comprises NFTs, cryptocurrencies, DAOs (Decentralized Autonomous Organizations), decentralized finance, and much more.

 

Defining Features of Web 3.0

 

 

Potential to Become a $1 Trillion Industry

Web 3.0 networks are still in nascent stages with a current market value of around ~$26.0 billion,but they offer a market potential of at least $1 trillion with ~15% of the digital economy shifting towards the virtual world and ~3% market growth from current estimated levels. The current market value of web 3.0 networks is pretty small compared to the ~$2 trillion market cap of the gaming sector, and the $15 trillion market cap of Web 2.0 companies that are currently facing a risk of disruption.

 

Core Applications

 

  • Gaming: Web 3.0 is changing the gaming ecosystem with a major shift from pay-to-play gaming toward play-to-earn NFT games. Gaming remains the most heavily invested sector of the web 3.0 ecosystem with major investments in games as well as infrastructure
  • E-commerce: Some of the major global brands and retailers such as Nike, Gucci, Balenciaga, Walmart and Coca-Cola among others have been investing heavily into the ecosystem by launching their own virtual products as well as building a presence in the metaverse
  • Infrastructure: Major global companies such as Meta, Unity, Roblox, Opensea, and Matterport among others have been investing heavily to develop and further enhance the next-generation ecosystem. Rising adoption and increased institutional interest have been further driving the investments in Web 3.0 infrastructure space over the last couple of years
  • FinTech: With the introduction of DeFi, the centralized and controlled traditional financial infrastructure is anticipated to transition to a more open and decentralized system

 

Web 3.0: A Seat at the Investor’s Roundtable

 

 

By The Numbers: The Booming Web 3.0 Industry

 

  • The industry attracted over $10bn in funding during 2021, with FTX and Forte raising over $1.3bn and $1.0bn respectively
  • The number of crypto wallets worldwide grew at a rate of 1,272% since 2016 to 300M+ users as of 2021
  • BTC daily transactions as of Jan’21 reached 400K+
  • 49% of millennials own crypto as compared to 38% Gen Xers and 13% of Gen Zers
  • The market capitalization of the cryptocurrency market reached an all-time high of ~$3Tn as of November 2021. Source: Fortune.com
  • There has been a huge shift in the gaming industry from pay-to-play games toward play-to-earn NFT-based games with the market expected to reach $400Bn by 2025
  • Over 1 million Unique Active Wallets connect daily to blockchain games, making it the most used category ahead of DeFi and other verticals

 

2022 and Beyond

The next few years look pretty promising for the web 3.0 ecosystem as it is still in nascent stages and is attracting increased investments from global private equity and venture capitalists, even though the global markets have plunged sharply over the past few months. In 2021, NFT startup funding grew by 130x to reach ~$5Bn with Moonpay, Skaymavis and Forte labs being some of the major deals. This trend is expected to grow further with some of the major investors such as Andreessen Horowitz raising $4.5Bn to invest in crypto and blockchain companies, followed by Binance Labs raising over $500M for a fund dedicated to investing in Web3 start-ups.

 

Source: CNBC 1, 2

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