Web3 in 2023: The most promising developments

“Bear markets are for building”. This mantra was recurrent on the web3 community’s social media throughout the whole of 2022. Now that the year is reaching its end, it’s a good time to look at the main vectors of web3 building efforts and pick some of its most interesting projects to follow in 2023.

This is not an easy task: web3 is a general notion describing blockchain use in online services, hence applications are plenty. However, some directions do stand out by the potential of their reach, and among them decentralized identity, social media, and metaverse.

Decentralized Identity

User data stored on third-party servers is vulnerable, and numerous cases of data abuse or leaks regularly confirm this point. One of the solutions to this problem has been conceptualized as decentralized identity (DID) – a tool that would store user data on a blockchain, allowing to connect to online services without revealing it.

Microsoft launched ION, its DID solution built on Bitcoin, back in 2021, and released the Microsoft Entra Verified ID tool in 2022.

In May, Ethereum creator Vitalik Buterin published a white paper on the so-called Soulbond Tokens (SBT), a new type of token that would act as non-transferrable badge. The idea has enticed several players, including the Japanese Sumitomo Mitsui Financial Group, and a group of international crypto companies led by Cobo (crypto custody builder), MetaMask (developer of the eponymous wallet) and Gnosis DAO (government body of a crypto prediction market). Both parties are working on their own versions of SBT now.

Jack Dorsey’s Block is tackling the DID issue in a different way. In June the company’s subsidiary TBD shared its vision of “Web5” (as in Web2 + Web3), a concept which could allow traditional Web2 services to become compatible with Web3 identity management tools. TBD intended to build Web5 tools using Microsoft’s ION.

Social media integration

This year was marked by a rising interest in crypto from major social networks: Instagram and Facebook rolled out an NFT functionality, which allowed creators and collectors showcase their NFTs and distinguish NFT-featuring posts.

Reddit added crypto rewards and released a collection of NFT avatars on Polygon (Ethereum’s layer-2), which granted their owners special treatment on the platform. In July, Reddit launched an NFT marketplace, which was a success: by mid-December its users have opened almost 5 million crypto wallets and minted over 6 million NFTs, yielding $12 million worth of secondary trades to date (data: Dune).

Twitter was the first major social media to foray into crypto. Back in 2021 it added Bitcoin to its tip jar feature and a blockchain-verified NFT profile picture option. After this year’s takeover by Elon Musk, the company was rumoured to work on a crypto wallet with the help from the crypto exchange giant Binance. Such wallet would be indispensable for turning the platform into an “Everything app” that Mr Musk has been dreaming of, but the recent news about Twitter losing users and money have put a big question mark on this project. What’s more, after yesterday’s Twitter poll where over 57% of respondents (a total of 17.5 million accounts) voted for Elon Musk to step down as a CEO, the fate of the social media became even more uncertain.

Telegram, a popular messaging app, rolled out its crypto payment bot in April, accepting Bitcoin and TON, a native crypto of the TON blockchain built by the Telegram community. It was completed with a fully functioning crypto wallet and an NFT name service. According to Telegram founder Pavel Durov, the company could soon launch a decentralized crypto exchange.

Overall, the current crypto integration into the social media stays rather modest, but as crypto adoption progresses, it is likely that social media will advance more in this direction. Also, the current social media landscape can be disrupted by the new projects, such as Jack Dorsey’s BlueSky or Tether’s video chat Keet, built on the new P2P apps building platform Holepunch.

Better metaverse

The current open metaverses like Decentraland or The Sandbox are not frequented as much as their founders would have wanted: in October the companies were registering respectively 7’700 and 4’500 daily users. Most industry observers agree that this is most likely due to poor graphics and a lack of interesting things to do.

These problems could be tackled by two big metaverse projects expected in 2023: Otherside, developed by Bored Apes Yacht Club’s mother company Yuga Labs, and The Open Metaverse, developed by Ripple and an NFT project Fluf World.

 

Written by D.Center