The Eve of Web3 Explosion: In-depth Analysis of Investment Trends and Entrepreneurial Opportunities

The Web3 field is welcoming more and more users. Data shows that as of the end of July 2022, the number of independent addresses for Ethereum domain services has surpassed 500,000. Since 2017, the Web3 infrastructure has gradually improved, showing a transformation from the early "muddy paths" to the current "asphalt roads." However, the prosperity of the industry ecosystem is still highly correlated with market cycles, the value of on-chain data has not yet been fully excavated, and new application scenarios and user interaction mechanisms are yet to be developed. The Web3 industry is still on the eve of an explosion.

Recently, industry insiders attended a salon event discussing Web3 investment and entrepreneurial opportunities, where they explored the development of the Web3 industry, investment strategies, and observations on the entrepreneurial ecosystem alongside several other investors. Below is a summary of the related sharing content:

Key Points:

1. The greatest value generated since the birth of blockchain technology is the composability and standardization of databases.

2. Web3 reshapes the value of data; how to develop this data gold mine is a highly promising innovative direction.

3. The value creation at the application layer comes from entirely new mechanisms and interaction methods, rather than a simple transformation of traditional Web2 products.

4. The Web3 explosion is still in its early stages. Startup teams should focus on genuinely identifying product demands and target users, rather than blindly chasing short-term trends.

From the perspective of entrepreneurs, the development of the Web3 industry.

When entering Web3 in 2017, the industry infrastructure was still very incomplete, and even the developer ecosystem such as wallets was not mature, let alone applications. After four years of development, the infrastructure has gradually improved, transforming from a "muddy path" into a "paved road" that can accommodate vehicles. The middle layer and protocol layer have achieved an explosive growth from 0 to 1, and the application layer is also experiencing its first explosion against the backdrop of improved infrastructure, progressing from 1 to 100 and even 1000.

The gaming, NFT, and metaverse sectors are still in their early stages. The last bull and bear cycle gave rise to many of today's leading projects, such as OpenSea, Sandbox, Uniswap, Aave, and Axie, most of which were established between 2017 and 2019, rather than during the recent bull market.

The core value brought by blockchain technology

1. Composability, that is, interoperability. Smart contract code can be called without permission, and digital assets can natively interoperate across applications. This "Lego logic" allows the industry to develop very rapidly.

2. Unified database. Connecting all the data behind massive Web2 applications, users can log in to each application with just one Address. The value of this unified database will be enormous.

Two important investment themes:

1. Data Topics. On-chain data is a "gold mine" that can be analyzed by tagging addresses. From underlying data sources, data cleaning and analysis, to the protocol layer and application layer, unicorn companies have emerged at every level.

2. Application Layer. The next cycle will be a stage of large-scale explosion for the application layer. The killer applications of Web3 are not simply the addition of wallet logins, but rather the combination of blockchain characteristics to unlock new interaction methods through innovative mechanisms.

What can entrepreneurs do?

1. Reserve sufficient funds to cope with a bear market and stick it out until a bull market arrives.

2. Carefully identify the real product needs and target users, and do not blindly chase short-term trends.

3. First become a believer, then become a builder. Without strong conviction, it's hard to persist in a bear market.

4. Let go of historical burdens and immerse yourself in the industry for a while before starting a new venture. Understand the industry limitations and avoid aiming too high.

The difference between Web3 investment and traditional industry investment

1. Difficult to conduct in-depth due diligence, many projects are remote work.

2. The investor structure is more complex, with possibly dozens of institutions participating in a round of financing.

3. Whether institutions can provide additional value becomes a threshold for investment.

Investment Preference

1. Focus more on infrastructure and middleware.

2. Pay attention to innovative products, mechanisms, and designs.

3. Prefer entrepreneurs who are highly focused on the industry and venture into unknown fields.

4. I hope entrepreneurs truly believe in this industry and aim to achieve great things.

The biggest pitfall in the industry

Many people find that there are no users after entering, or that users primarily engage in exploiting opportunities. This is a phase issue in the industry, with multiple factors such as incomplete infrastructure and products not meeting essential needs. It is recommended to take some time to settle before starting a business.

The value that investment institutions can provide

1. Business Support: Deeply involved in product development, business direction, etc.

2. Resource Integration: token economic model design, project collaboration, etc.

3. Talent Recruitment.

4. Help projects develop in the right direction and reach a higher stage.