Which New Business Models Will Be Unleashed By Web 3.0?

Taking context from the history of business models native to Web 2.0 and to Web 3.0

Max Mersch
Apr 24 · 10 min read
A history of Business Models across Web 1.0, Web 2.0 and Web 3.0
  • In 2001, Google was making $85m in revenue while their rival Overture was making $288m in revenue, as CPM based online advertising was falling away post dot-com crash.
  • In 2002, adopting Overture’s ad model, Google went on to launch AdWords Select: its own pay-per-click, auction-based search-advertising product.
  • Two years later, in 2004, Google hits 84.7% of all internet searches and goes public with a valuation of $23.2 billion with annualised revenues of $2.7 billion.

Looking back at the wave of Web 2.0 Business Models

Content

The earliest iterations of online content merely involved the digitisation of existing newspapers and phone books … and yet, we’ve now seen Roma (Alfonso Cuarón) receive 10 Academy Awards Nominations for a movie distributed via the subscription streaming giant Netflix.

Marketplaces

Amazon started as an online bookstore that nobody believed could become profitable … and yet, it is now the behemoth of marketplaces covering anything from gardening equipment to healthy food to cloud infrastructure.

Open Source Software

Open source software development started off with hobbyists and an idealist view that software should be a freely-accessible common good … and yet, the entire internet runs on open source software today, creating $400b of economic value a year and Github was acquired by Microsoft for $7.5b while Red Hat makes $3.4b in yearly revenues providing services for Linux.

SaaS

In the early days of Web 2.0, it might have been inconceivable that after massively spending on proprietary infrastructure one could deliver business software via a browser and become economically viable … and yet, today the large majority of B2B businesses run on SaaS models.

Sharing Economy

It was hard to believe that anyone would be willing to climb into a stranger’s car or rent out their couch to travellers … and yet, Uber and AirBnB have become the largest taxi operator and accommodation providers in the world, without owning any cars or properties.

Advertising

While Google and Facebook might have gone into hyper-growth early on, they didn’t have a clear plan for revenue generation for the first half of their existence … and yet, the advertising model turned out to fit them almost too well, and they now generate 58% of the global digital advertising revenues ($111B in 2018) which has become the dominant business model of Web 2.0.

Emerging Web 3.0 Business Models

Taking a look at Web 3.0 over the past 10 years, initial business models tend not to be repeatable or scalable, or simply try to replicate Web 2.0 models. We are convinced that while there is some scepticism about their viability, the continuous experimentation by some of the smartest builders will lead to incredibly valuable models being built over the coming years.

  • Holding the native asset, building the network:
  • Taxation on speculation (exchanges)
  • Payment tokens
  • Burn tokens
  • Work Tokens
  • Other models

Issuing a native asset:

Holding the native asset, building the network:

Taxing the Speculative Nature of these Native Assets:

Payment Tokens:

Burn Tokens:

Work Tokens:

  • Governance tokens which provide the ability to influence parameters such as fees and development prioritisation and can be valued from the perspective of an insurance against a fork.
  • Tokenised securities as digital representations of existing assets (shares, commodities, invoices or real estate) which are valued based on the underlying asset with a potential premium for divisibility & borderless liquidity.
  • Transaction fees for features such as the models BloXroute & Aztec Protocol have been exploring with a treasury that takes a small transaction fee in exchange for its enhancements (e.g. scalability & privacy respectively).
  • Tech 4 Tokens as proposed by the Starkware team who wish to provide their technology as an investment in exchange for tokens — effectively building a treasury of all the projects they work with.
  • Providing UX/UI for protocols, such as Veil & Guesser are doing for Augur and Balance is doing for the MakerDAO ecosystem, relying on small fees or referrals & commissions.
  • Network specific services which currently include staking providers (e.g. Staked.us), CDP managers (e.g. topping off MakerDAO CDPs before they become undercollateralised) or marketplace management services such as OB1 on OpenBazaar which can charge traditional fees (subscription or as a % of revenues)
  • Liquidity providers operating in applications that don’t have revenue generating business models. For example, Uniswap is an automated market maker, in which the only route to generating revenues is providing liquidity pairs.

Fabric Ventures

Investing in decentralised data networks powering the shift towards human-centric computing

Max Mersch

Written by

Building Fabric Ventures || Imperial College & OpenOcean Alumni

Fabric Ventures

Investing in decentralised data networks powering the shift towards human-centric computing