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web 3.0
web 3.0

“summary” of the report “how web3 is shaping the future of finance”, 11FS

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https://content.11fs.com/reports/11fs-web3-report⁠

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web3 will build the first truly digital, truly global economy that will underpin the metaverse

web3 is the creation of new business models in the same way that web2 brought subscriptions and ads

web3 emerged as a reaction to macro trends

new business models and economic opportunities for a world that has less trust in institutions

the 2008 financial crisis led many people to distrust institutions and created space for alternatives in finance.

now nearly 50% of consumers view government and media as “divisive forces”.

social media and web2 businesses built tools to monetize data and target ads.

this led to the promotion of emotional reactions to drive engagement, creating further mistrust.

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https://facebookpapers.com/⁠

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improvements in trustless technologies, cryptography and decentralized computing unlocked new technical possibilities.

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https://nakamotoinstitute.org/bitcoin/⁠

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creators and independent artists are increasingly reliant on large platforms (e.g. Youtube, Spotify, Apple, Meta) for revenue,

but with limited control of their audience, revenues or IP.

during the pandemic, people became used to working online, and increasingly in shared spaces.

companies rushed to embrace the metaverse, a $13T opportunity.

report discusses the possibility that the Metaverse is moving towards becoming the next iteration of the internet, or web3.

this “Open Metaverse” would be community-owned, community-governed,

and a freely interoperable version that ensures privacy by design.

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https://www.citivelocity.com/citigps/metaverse-and-money/⁠

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web3 protocols and infrastructure gained maturity and developer support,

so builders and entrepreneurs had new tools to play with.

major brands like Adidas, Visa and Nike embraced NFTs and metaverse land.

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https://content.11fs.com/podcasts/148-insights-understanding-the-metaverse-and-play-to-earn⁠

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web3 is defined by a16z as the internet owned by users, managed with tokens.

VCs invest billions in metaverse, gaming and web3 projects.

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https://blockworks.co/report-vcs-invested-33b-in-crypto-and-blockchain-startups-in-2021/⁠

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VCs invested over $33 billion into crypto and blockchain startups in 2021 according to a report by Galaxy Digital.

this represents 5% of the money invested by VC firms across all sectors globally.

companies that focus on digital asset trading or building in Web3 raised the most capital overall

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49 new funds (to invest in crypto) were raised in 2021 with an average size of $300 million.

among the largest: Paradigm’s $2.5B, Andreessen Horowitz’s $2.2B, Hivemind Capital Partners’ $1.5B,

10T Holdings⁠

$750M.

adoption, expanding use cases and digital asset prices all contributed to the high demand and capital inflow.

median pre-money valuation was $70M, up 141% compared to $29M across all VC deals.

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so much capital is looking to invest in the sector that founders are now in a position to pick and choose investors

bitcoin price x VC investments

VC activity in crypto and blockchain historically moves in tandem with the value of cryptocurrencies

“Prior to 2021, private markets often lagged the bitcoin price, as visible in 2017 and 2018 in the chart below.

In 2021, however, VC activity has almost perfectly correlated to digital asset markets,

with significant inflows of capital occurring alongside BTCUSD price appreciation.”

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web3 <-> new business models and economic opportunities

how crypto technologies unlock web3’s potential

web3 is built on the primitives of crypto but it talks more to the business models and economic opportunities.

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web3 is the next evolution of the internet itself

web1 was defined by protocols like http (websites) and smtp (emails).

web2 was all about mobile, social and cloud. advertising and subscriptions have emerged as dominant business models.

web3 is changing ownership and access to data and assets again, to create entirely new business models.

so, the shift has gone: from protocol, to centralized ownership, to all of us the owners.

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web3 is growing fast, attracting talent and disrupting established structures

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in web3, open, permissionless and composable technology is used to

unlock concepts that enable programmable, global and 24/7 economies and markets

creating new use cases for finance, shared ownership and digital communities.

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