Author: KK, founder of Hash Global Source: substack

We believe that Web3 is more than just Bitcoin and encryption Finance is Web3, the Internet of Value, and the evolution of Web2. Because it is an innovation in the underlying data storage method and payment method, the arrival of Web3 will not be as clearly visible as the upgrade from PC Internet to mobile Internet, but will "sneak into the night with the wind, moistening things silently." What is this "wind"? We believe that users' data and data assets are beginning to be created in large quantities on the chain, because the super user experience of Web3 is to revolve around users' data.

The core of Web3 is Own-owned. For Web3 to become Web3, not just crypto-finance, it must allow users to own data assets, not just financial assets. Users own their own data, which is the basis for users to get a better service experience and for different users to get different services. The Internet has gone from meeting needs to serving thousands of people, to serving thousands of people. AI gives us the productivity of thousands of services, but the large-scale value collaboration of thousands of services can only be supported by Web3.

I learned a lot from Professor Zeng Ming’s lecture on the judgment of AI development stages in the early stage (The video public account of Zeng Ming Academy is available). The professor told me that the same framework can also be used to judge the development of Web3, and I was very inspired. Our observations and practices in the past few years, the confusions we encountered, and the investment strategies we formulated accordingly can all be confirmed and form a thinking framework after we have a clear judgment on the development stage, so we are no longer so anxious.

The professor also gave the definition of native application (Killer App):

Make full use of it The unique technical advantages of new technologies;

Bringing great innovation to user experience;

Exploring Develop new business models;

Bringing massive user exponential growth to the super 2C service.

Based on this standard, Yahoo, which was launched in 1996, was the first generation of Internet native applications, and Web3 has not yet reached the native application stage. Why are other types of applications so difficult to develop except financial native applications? The reason may be as simple as we don't have enough non-financial Web3 users yet. None of the early native applications of the Internet were born out of the blue. They all experienced a long period of popularization and even local promotion before they became killer apps. Without AOL's years of promotion to Internet users, there would be no Yahoo; Alibaba, Tencent, and Ctrip have all gone through a long process of user accumulation.

We believe that the development stage of Web3 has two phases: the pioneer of Web3-encrypted finance is running much faster, with active addresses reaching about 600 million, which is equivalent to 99 The number of Internet users per year, so we have already seen financial native applications such as USDT, wallets, and Defi; but the ontology of Web3 - the next generation Internet, is far from complete user penetration. Only when a large number of users' data assets and services surrounding these data assets appear on the chain, will users actively choose to use wallets to interact with the Internet and use Internet products, can Web3 come.

For any technology to be integrated into the mainstream economic system, it must use commercial applications as a carrier. At the current development stage of Web3, we need commercial applications in various industries. For their own business purposes, we should seize the core technical characteristics of Web3, create and issue a large number of data assets for users on the chain, and use this to develop our own new Internet business model. . In the process, they will create huge business value and become the first generation of native applications of Web3.

The development of all Internet businesses is based on data, whether it is centralized or decentralized. The commercial applications of Web3 are dAPPs that focus on data-decentralized. The data assets mentioned here refer to the user's identity, membership level, movie premiere tickets, concert tickets, highlight moments of musicals, the first batch of crowdfunding cards when a singer debuted, and the world's first photo of Mr. Aoiji. 5,000 likes, "Fan Xian's Smile" will be distributed in real time when a certain episode is played in Qing Yu Nian, as well as various types of check-in vouchers, etc. They will all use NFT as the data carrier, and the original content of the data can be stored on decentralized storage infrastructure such as Greenfield.

We have sorted out five core technical features of Web3: 1) unified ID for the entire network; 2) value Internet: the Internet and banking network are combined into one network; 3) Everything can be capitalized: finance and data; 4) A complete cross-regional and cross-platform ""Live data"; 5) Can directly reach users at both the information and value levels.

Web3 commercial applications built by seizing these technical features will have the following five characteristics:

Global data: has cross-platform and cross-regional data. Data can be capitalized, tradable and authorized to AI models to enable intelligent services for users. The operation of on-chain data will become very important.

Good ones can give you the right ones: producers of content and products are directly linked to consumers, and experience and pricing can be differentiated.

Direct value connection: With embedded financial network, value can be transferred point-to-point like information. Clearing and settlement integration. Allocation can be automated and timely via smart contracts.

Effective incentives: Only when the business model is healthy and sustainable can the project issue NFT and ecological tokens to complete the cold start of the project and accelerate ecological development.

New organization: The interests of entrepreneurial teams, shareholders, upstream and downstream industries, users and fans can be unified through tokens, reshaping the organizational form of various industries, Corporate organizational structure is no longer the only option.

We believe that such Web3 commercial applications are truly valuable Web3 applications that are in line with the current development stage. The current expansion of Internet commerce and content overseas has actually given the Web3 business application team the best opportunity. If Hong Kong is used as a base, the location is also advantageous. Web3 is the best infrastructure for global business. Web3 technology outputs standards, and it also has embedded finance and self-complete functions.

The growth path we envision for a Web3 commercial application aiming to hit the global market can be:

Use Web3 to build a globally unified and fully functional user or fan account system.

Use NFT and tokens as business carriers to conduct business, and NFT can be used as various data labels.

Make full use of public domain traffic, use Web3 tools and various Web2/Web3 wallets to host and build private domain systems.

Quickly establish complete and constantly updated private domain data in real time, and better develop business based on data analysis and feedback.

The cross-industry and inter-industry transfer of data on the chain is cheap and accurate.

Users receive personalized and intelligent services for the data assets they hold, and gain a product experience that far exceeds Web2.

Product stickiness increases and good dissemination and retention are achieved, forming a self-closing loop of data growth.

The above path is particularly suitable for industries such as performance ticketing, film and television culture, entertainment creation and IP co-construction. Without Web3's membership and fan system, the content economy and IP economy cannot be effectively developed: helping creators maximize functional value, generating a large amount of emotional value and asset value for fans, supporting the incubation and co-construction of IP, and the value of the entire chain Distribution, these are where Web3 can best exert its capabilities. We have begun to actively invest in these areas. We also invest in Web3 business supporting facilities necessary for application development, including data links, smart tokens, payments, stable coins, human resources and global payroll services. We hope that excellent entrepreneurial teams will come to us. As long as you manage your business logic, we can find technical teams to support everything else. At this time when technology development is leading the application, it is the most imaginative and opportunity stage to start a business in the commercial field. When discussing this path with CZ, CZ said that another key is the execution ability of the team. Therefore, we attach great importance to the team’s past background and capabilities. We especially hope to cooperate with Web2 resource parties and winners to jointly promote the commercial implementation of Web3.

We think together with the project team: the core of all Internet businesses is data. Whoever helps users create more data will have a moat for future business. Why are Alibaba, Byte and Tencent so profitable? If Byte and Tencent open up user data and traffic, how will we conduct business? Our criteria for evaluating Web3 commercial application projects are:

Have you ever wondered why we need to help users create on-chain data assets? How does on-chain empower the business itself?

How many data assets can be created?

How to apply and analyze data so that users can get a more attractive experience (such as retention and desire to upgrade)?

How to realize the value of data? How to connect AI models? How to reduce costs and increase efficiency?

Web2 can no longer be rolled out, we need better Cheaper data traffic. Since Web3 data is open on the chain, application teams can share data in a co-constructed manner to jointly promote business growth. We encourage and work hard to promote Open Data. Open Business!

Web3 commercial application is not the chain reform of a few years ago, nor is it a simple industry plus Web3, but will be the first generation of Web3 native applications that truly revolve around data assets on the chain. I have not talked about the chain reform until now The core - token incentives, because I think tokens have been overused by us. Token incentives seem to be free, but you have to pay back what you give out. There is no free lunch in the business world, just like the original Didi business model. The formation of the project will ultimately depend on the project party and VC Let’s jointly coordinate and call for a halt. Factors such as the lag in Web3 encryption financial regulation, the overuse of the token economy, and the maturity of value have diverted industry attention; industry talents and capital have been excessively attracted and consumed in various real situations. and fake financial innovation. Can Web3 return to the origin of value and the most basic business logic? Can it bring a better experience to Internet users? When commercial applications have real product users and have wallet addresses, then we can promote the token economy so that token holders will not be speculators and fools, but will have a strong business foundation. , Web3's big killer - the token economy can run. It will be healthier to put data assets first, and then financial assets. I told CZ that I hope that every commercial application token will be like BNB in ​​the exchange industry. There is a solid value foundation and necessity.

Web3's infrastructure has developed to support applications and Web2 to compete in obtaining user data. To eventually replace Web2, Web3 must have more user data than Web2. Geoffrey, the founder of Chain, said, "Content assets are aggregated online, resulting in killer apps for PCs and mobile Internet; while data assets are created on the chain, which can generate key users for Web3 native applications." The Internet is developing from online aggregation of content assets to on-chain issuance of data assets.

Mr. Liang Xinjun asked me why AI has developed faster than Web3 in recent years. I gave my answer: Web3Because they have their own finance, the entrepreneurial team seems to be starting a business on Wall Street and Vegas, with many temptations and easy distractions; while AI is like starting a business on campus, and is focused enough. Mr. Liang said that Web3 and AI are actually integrated. Web3 must also grasp business logic and solve business problems. I deeply agree. Now that AI is running ahead, Web3 has to keep up. If the data assets generated by AI are issued on the chain instead of entering the data islands and information cocoons of Web2, they can form a self-closed loop of growth in commercial value. The future digital economy based on Web3 and AI is exciting. The smart business that will explode in the next ten years proposed by Professor Zeng is the combination of Web3, AI and XR technologies.

Web3 is to Internet commerce what Bitcoin is to finance. It’s been almost ten years since Ethereum was born, Web3 commerce is taking off, and the opportunity to participate in co-building a Web3 commerce is now comparable to buying $100 in Bitcoin. If you are interested in Web3 business, whether you are an entrepreneurial team or a resource provider, please contact us. If Web3, the business soul, can keep up with the body of AI, we need your support and participation.

The article is based on the materials of the HG Web3 business closed-door exchange meeting