The internet we use today is dominated by a few big players that control various industries. Centralization is affecting every layer of the internet. But things are about to change drastically.
Web3 is paving the way to a more transparent and fair network that delivers a private and secure user experience. Decentralized Autonomous Organizations (DAOs), Decentralized Finance (DeFi), cryptocurrencies, private and digital infrastructure, virtual digital media such as NFTs, new types of social media, and blockchain-powered video games are all examples of Web3 products. This article will investigate how each of them disrupts the status quo.
DeFi applications
DeFi applications are financial products that run on a public blockchain such as Ethereum. These products do not require permission and do not use third parties. Instead of financial intermediaries like brokers or banks, everything is automated in the protocol with the help of smart contracts.
The total value locked in decentralized finance has exploded by more than 100x since December 2019. The main goal of decentralized finance is to become an alternative to the banking sector and replace the traditional technologies of the current financial system with open-source protocols. That is, open access to decentralized lending and new investment platforms. DeFi allows users to receive passive income from cryptocurrency assets without incurring fees for transfers, loans, and deposits.
“The DeFi boom is a very near equivalent of an apocalyptic event for the traditional financial institutions.”
Mohith Agadi, digital marketer and journalist
Popular DeFi products
Perhaps the most famous project in decentralized finance is MakerDAO, a decentralized lending protocol. More than half of the Ether blockchain resides on this platform. The project covers a range of different functionality, but the main advantage is a special type of smart contract called a Collateral Debt Position.
Using CDPs, a user can send a certain amount of ETH to a smart contract and issue their token, backed by the second most used cryptocurrency. At the same time, the created DAI tokens are, in fact, a secured debt to MakerDAO. The platform acts as a bank, but absolutely any user can take a loan from this bank. DeFi clients often use borrowed funds to fill the liquidity gap as an alternative to expensive bank money.
Other well-known credit and deposit platforms are InstaDApp, BlockFi, and Compound.
Decentralized finance also includes equity token platforms such as Polymath and Harbor; exchange protocols — Uniswap or Bancor, which allow you to instantly convert one cryptocurrency to another; forecast services such as Augur; digital asset management platforms such as Melonport, and others.
DAO system
DAO stands for “Decentralized Autonomous Organization”. A DAO is an autonomous system in the blockchain controlled by program code that has no dependence on the notorious human factor.
The main feature of DAO is that it does not have a central node that manages the entire system without coordination from other participants. In other words, there is no hierarchical structure in decentralized autonomous organizations. Every participant in the ecosystem has the same rights and can vote for changes in the protocol on an equal basis with every other participant.
You may ask “What is DAO in cryptocurrency?” To answer this question it’s worth noting that the objective of the DAO economy is to involve users in the active management and development of the ecosystem of a particular platform. As a rule, users participating in voting can receive rewards. There are many ways to vote on the network, but users often need to lock in their coins or sign a transaction from their address in favor of the selected offer.
Some famous examples of DAO platforms include MakerDAO, Uniswap, Compound, DASH.
Social media
The social media platforms we use today possess a number of problems when compared to their would-be Web3 successors. The channels are limited, censored, and run according to an internal agenda. They are usually controlled by large corporations and, in some cases, by the government, which grants that institution total freedom to control the users’ points of view and shape them according to the ‘party line.’
Web3 can completely change the way social networks function. With the help of blockchain, it will not be possible to restrict social platforms. Any user can join them, regardless of their geographic restriction.
Examples of social networks on Web3 include:
BitClout is a Web3 social network that mixes speculative trading and social media. The network was built on a customized blockchain. It has a similar design to Bitcoin, except it can store more sophisticated social network data, including posts, profiles, and followers.
Showtime is a Web3 social network that allows users to share their NFT collection. Creators can bring their entire NFT collection to Showtime while also seeing what other developers are up to.
gm.xyz is a community-based social network on the Ethereum network. It is similar to Reddit. A user can quickly get started by connecting their wallet and using features like upvote/downvote, communities, and posts.
Sapien is a community-driven, decentralized social network that rewards creators while supporting ownership and privacy. Sapien offers a one-of-a-kind feature called Sapien passport, which serves as your NFT ID throughout the Sapien ecosystem.
In a nutshell
Web3 is here to stay. Although we are in the early stages, where most products are still in development, mass adoption of Web3 is already inevitable. No matter how long it takes — anyone can take the first step today and benefit from this new internet.
“I think Web3 is not only better for the world, but it’s also going to beat Web2. It’s going to be more popular because people get really excited when they actually get to participate.”
Chris Dixon, internet entrepreneur and investor
