What Should Web 3.0 Builders Focus On To Emerge Stronger From The Bear Market?

As pointed out in a16z’s recent 2022 State of Crypto Report, crypto has historically followed something the authors term the ‘price-innovation cycle.’ A wave of rising prices attracts new builders, who develop novel solutions to long-standing problems, even as prices fall.

These new applications renew interest in Web 3.0, which brings waves of users into the space, causing cryptocurrency values to rise again. Though there are ups and downs, the trajectory overall is one of growth.

The silver lining is that, with less hype and euphoria about rising prices, builders can devote more attention to developing truly innovative protocols. Recall the major advances that led to the ICO craze, DeFi summer and the NFT boom.

Each major rally was preceded by a phase where imaginative people rolled up their sleeves and put in the work. We are in such a phase right now. Here are four key areas where builders should be investing their time and talent if they want to ride the next bull market.

Web 3.0 user experience (UX) must improve

The leading edge of Web 3.0 is populated by ‘early adopters,’ who are generally more tech-savvy and more willing to experiment with the unknown. However, the capabilities and features that attract early adopters often intimidate less advanced users. This creates entry barriers that stifle Web 3.0 adoption.

The biggest barrier to entry is often based on overcoming the technical hurdles required to participate in Web 3.0. Users need a wallet to interact with protocols. Addresses used to send and receive transactions are composed of a long string of numbers and letters – a far cry from the username and passwords of Web 2.0.

Furthermore, it’s a massive responsibility to take on the burden that historically has been the purview of banks – custodying your own assets. If a user loses their private key and seed phrases, there is no customer support line to call. Those funds are inaccessible.

The next wave of successful projects will find ways to ease the transition of new users into the space by simplifying these technical hurdles and unfamiliar processes involved with entering Web 3.0.

Web 3.0 needs to expand financial services

Basic lending and borrowing are core pillars of the traditional financial system that are being replicated across DeFi. By migrating consumer financial offerings – mortgages, car loans, business loans – to DeFi, opportunities are created for lenders to leverage their crypto assets to generate interest on liquidity.

Additionally, borrowers who may not have a traditional bank account gain access to loans that otherwise wouldn’t be available to them – all based on their crypto collateral or proof of eligibility.

That said, bringing TradFi to DeFi is not sufficient. In order to become the default financial system of the world, DeFi must expand on the core financial services already ubiquitous in TradFi to pull people and institutions into the new realm of decentralized finance.

This is where education on why decentralization is important comes in. People need to understand the benefits of owning and controlling their own financial destinies instead of putting their money in the hands of banks.

The 2008 financial crisis illustrates what can happen when power and control are centralized in the hands of a few who act in their own interests rather than in the interests of the majority. The core value of cryptocurrency is putting power in the hands of people rather than corporations to own and control their own value.

Builders should focus on enabling Web 3.0 e-commerce

Web 3.0 threatens to break the stranglehold of retail giants on e-commerce, delivering greater decision-making power to consumers. A key element involved in facilitating this transition again comes down to implementing a frictionless user experience that offers the benefits of Web 3.0 with the look, feel and convenience that users have already come to expect from Web 2.0.

To use an example, new financing options, such as “buy now, pay later” services, which are a staple of Web 2.0 e-commerce, will further spur adoption of Web 3.0 for e-commerce. Research shows that offering a “buy now, pay later” option at checkout increases conversion rates by seven percent versus traditional card transactions.

Another way to capture the attention of shoppers is through engagement via decentralized autonomous organizations (DAOs). Increasingly, we are seeing brands and influencers launching DAOs as a way to turn customers into community members, granting them decision-making power over contests, new product features and sometimes sources of income from shared investments.

Looking for capital? Build infrastructure

When 300,000 people raced across the country to strike it rich during the California gold rush, it was Samuel Brannan, a merchant who supplied miners with equipment, who made the most money of all. With Web 3.0 going through a bear market, choosier VCs are taking a page out of Brannan’s book and focusing their investments on infrastructure.

Infrastructure projects are projects that others can build upon – and a recent Messari report indicated that such projects were showing strong signs of growing profitability. It shouldn’t be a surprise. There are some fascinating things happening in the infrastructure space.

New infrastructure is enabling permanent file storage, low-cost on-demand and streaming video and even decentralized wireless networks to power the internet of things. With such an array of new tools to build with, who knows what will come next?

Time to roll up our sleeves

Bear markets are not new phenomena, which means history has lessons for us. This includes the history of the internet itself. When the tech bubble burst in 2000 following the euphoria of the late-1990s, that was not the end of the internet. Rather, with the noise and nonsense of projects with bad fundamentals filtered out, a new generation of stronger projects emerged.

The new wave featured improved e-commerce, increased financial service offerings, enhanced infrastructure, and improved UX. That means this is an exciting moment. History is full of bulls and bears trading places, and the bulls that emerge from this period may affect daily life for decades to come.

Source: dailyhodl.com