Web3 Use Cases & Opportunities
I am skipping over the basics to get straight into Web3 use cases and opportunities in Web3. If you are new to the Web3 world, check out this Web3 starter pack by Jay Drain Jr.
The potential for Web3 tech is evolving at a fast pace, but the adoption is still pretty small compared to the number of global internet users. At M25, we started to dig into current use cases and opportunities as we began to spend time with various projects in the Midwest. To better understand the ecosystem, I have broken down the current Web3 use cases into eight segments.
With different layers of Web3 Stack, most use cases are interconnected and are evolving. I plan on updating this post as I learn about new developments in the space. For each use case, you will find what it is, current examples, and opportunities.
Table of Contents:
1. DAO (Decentralized Autonomous Organization)
2. DeFi (Decentralized Finance)
3. CeFi (Centralized Finance)
4. NFT (Non-Fungible Token)
5. Metaverse
6. Guild
7. CBDCs (Central Bank Digital Currency)
8. dApp (Decentralized Application)1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
1) DAO
It’s a community-led entity with no central authority. The group forms on a shared purpose to own the value they are creating. Everyone in the group has a say in what happens through governance. The entity starts with a core team of people leading the group, but the goal is to have no leader over time and be fully decentralized.
DAO Examples:
- Protocols:
MakerDAO — A community of MKR token holders governs the Maker Protocol, the smart contracts that power Dai.
Uniswap — The Uniswap Protocol is a public good owned and governed by UNI token holders
- Social/Community:
Friends with Benefits DAO — FWB is a group of cultural creators and maintainers using Web3 tools to build community and foster creative agency.
Constitution DAO — The community that raised capital, bid at Sotheby’s, and lost in an effort to purchase a copy of the Constitution.
- Investments:
Seed Club — DAO that builds and invests in communities.
Duck Dao — Community-backed digital asset incubator that provides promising early-stage crypto startups with the expertise, financial resources, and marketing power needed to fast track their progress on the path to success
- DAO Tools:
SuperDao — An easy step-by-step process to start, manage, and grow a decentralized autonomous organization
Harmony — Open platform for assets, collectibles, identity, governance. An open and fast blockchain: 2-second transaction finality, 1000 times lower fees.
DAO Opportunities:
- Creation: Governance, Voting, and Formation
- Membership: Community Management, Marketing, Reengagement, Analytics, and Social media tools.
- Token: Visibility, Spending Overview, Treasury,
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
2) DeFi
On a high level, Decentralized Finance (DeFi) is financial tech based on ledgers. The new tech promises lower fees and no intermediates than the current financial system. With DeFi, you can lend, save, trade, and more without any bank or processor in the middle. You are trusting a protocol. Currently, most DeFi apps are built on top of Ethereum. Here is an overview of how DeFi breaks down:
DeFi Examples:
DeFi Opportunities:
- Bridges between different blockchains
- Identity: Credibility evaluation and Verification
- Dev Tools: Transaction flow, data APIs, Bots
- Insurance: Parametric, DAO, Smart Contract
- Analytics: Visualizations, Analysis, dashboards
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
3) CeFi
DeFi but with ease of use and security. The tech promises security and fair trade. Centralized finance (CeFi) helps bridge the gap between the traditional finance world and blockchain benefits. You are trusting a company that provides blockchain tech benefits.
CeFi examples:
- Exchanges: Coinbase & Binance
- Stablecoins:
USDC — Backed by a reserve of U.S. dollars held in an audited bank account.
- Lend & Borrow:
BlockFi — A cryptocurrency and Fiat lending and borrowing platform.
CeFi Opportunites:
- Custody service layer
- Proving Liquidity
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
4) NFT
Represents a digital identity, a collectible, or an asset. You hold it for future value, use it as a token to enter, build a portfolio of assets, and it’s also a way to show or identify credentials.
NFT Examples:
- Digital Assets:
Bored Ape Yacht Club — a collection of 10,000 Bored Ape NFTs. Bored Ape doubles as Yacht Club membership card and grants access to members-only benefits.
Party Horses NFT — Evolving NFT project that will generate real-world benefits, from bottles of rare bourbon to exclusive event access. Season One drop includes tickets to a party during the weekend of May 7 in Louisville (Diplo might be there?).
- Marketplaces:
Opensea — Discover, collect, and sell NFTs
- Protocol:
POAPs (Proof of attendance protocol) — a unique NFT given to people to commemorate and prove they attended an event (virtual or physical)
- Domain:
ENS — Decentralised naming for wallets, websites, & more
NFT Opportunities:
- Infrastructure
- Studios
- Games & Collectibles
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
5) Metaverse
A network of 3D virtual worlds focused on social connection. It’s an online space for people to socialize, learn, collaborate and play. Users can interact with the words either on a screen or a headset for a unique experience.
Metaverse Examples:
Decentraland — blockchain-based virtual reality world owned by its users. Users can purchase land, buy clothes, hang out in groups, and many more uses.
Zepto — Virtual world to customize a unique 3D avatar and meet friends from all over the world from anywhere.
Metaverse Opportunities:
- Event Management
- Interworld communication
- Business management tools
- Manufacture Virtual goods
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
6) Guild
Organized work — “collective of crypto-enabled developers, designers, and thinkers that share resources (be it knowledge or labor) in the pursuit of a common goal (source).” A way to earn financial rewards or equity as the group works together and contribute to projects
Guild Examples:
- Education:
dOrg — full-stack Web3 development collective.
Developer DAO — Developer DAO exists to accelerate the education and impact of a new wave of web3 builders.
- Distributed Work:
Raid Guild — a decentralized collective of Web3 mercenaries shaping the future of distributed work.
- Play-to-earn(Gaming):
GuildFi —infrastructure that aims to connect players, guilds, investors to accelerate game finance
Axie Infinity — A digital pet universe where players battle, raise, and trade fantasy creatures called Axies.
- Learn-to-earn
Rabbithole — Learn how to use and contribute to decentralized apps, earning tokens based on your on-chain activity.
Continuum — Social platform owned by creatives (M25 backed)
Guild Opportunities:
- X-to-Earn
- Industry Vertical Guilds
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
7) CBDCs
A central bank issues Central Bank Digital Currency — “only a few entities such as central banks can access or alter the blockchain.”
CBDCs Examples:
Sand Dollar — Digital version of the Bahamian dollar (B$). Like cash, Sand Dollar is issued by the Central Bank of The Bahamas through authorized financial institutions.
eNaira — Serves as both a medium of exchange and a store of value, offering better payment prospects in retail transactions than cash payments in Nigeria.
Digital Yuan — Expected to be primarily used for retail payments in China.
CryptoRuble — Digital currency currently in development, commissioned by Russian President
CBDCs Opportunities:
- APIs
- Privacy
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
8) dApp
“Digital applications run on a blockchain network of computers instead of relying on a single computer.” Think of a Web2 application; there is probably a Web3 application that utilizes a peer-to-peer network and does not have a single authority.
dApp Examples:
- Browser:
Brave — web browser known for its fast browsing experience and ad blocker
- Data Storage:
Web3.Storage — Decentralized storage in minutes. All data stored is accessible on the public IPFS network via a content ID.
- Social Network:
Aether — Open source, self-governing communities with auditable moderation and mod elections (Reddit alternative)
- Blogging:
Mirror — allows articles to become an NFT.
- Music:
Audius — Decentralized music-sharing and streaming protocol
- Gaming:
Forte —end-to-end blockchain platform enables the emergence of community economics, a system where the interests of game developers and players are aligned, leading to healthier, sustainable game communities.
dApp Opportunities:
There are many opportunities in the space and too big of a list to type out here. Only time will tell which apps get prioritized in adoption and use the full breadth of blockchain as the underlying technology.
1.DAO, 2.DeFi, 3.CeFi, 4.NFT, 5.Metaverse, 6.Guild, 7.CBDCs, 8.dApp
That wraps up how I think about Web3 use cases and opportunities in the current market. It’s exciting to watch the space evolve and find a market-product fit. At its core, for Web3 to succeed, Web2 is necessary. At M25, we are watching the Web3 ecosystem evolve, caustically looking at various projects and taking shots at different use cases.
If I am missing any core use cases or you are building something in the US Midwest, let me know: abhinaya [at] M25vc [dot] comAbout Abhinaya Konduru:
Abhinaya is a Senior Associate at M25 investing in pre-seed investments in the Midwest. She helps make new investments and works with portfolio companies.
If you are in the Chicago Tech world, text me “hi” at +1 (312) 847–2515 to learn about weekly dinners/breakfasts.
About M25:
M25 is a Chicago-based VC firm investing in Pre-Seed and Seed stage, tech startups headquartered across the Midwest (14 states) in any industry except life science/pharma or vices (alcohol, tobacco, etc). We are the most active VC firm in the region having invested in 130+ startups in the last 6 years.
