Blockdaemon, the cryptocurrency infrastructure company I work for, predicts that the future of Web3 will be built on a foundation of seamless user experience (UX). Seamless usage, seamless monetization, and seamless governance.
The success of the Web3 project will depend on delivering such a seamless experience to all users, including developers and businesses in the blockchain space.
Blockdaemon believes that blockchain-based solutions are the future of digital infrastructure. But for such solutions to take off, the user experience must be of high quality. This means that both users and developers should have easy access to the Web3 infrastructure and the apps built on top of it.
A year to prepare for the future
The work developers will undertake in 2023 will lay the foundation for the next surge in crypto adoption. Its foundation is built on cheap, modular, scalable and reliable blockchain infrastructure. The Ethereum protocol will provide a clear example to prove our point.
Billions of new users and hundreds of businesses will use crypto assets in the future, with essential infrastructure developed after 2023. But to do that, you need a great product and use cases.
The bull market in late 2020 and into 2021 has made clear the need for a solid infrastructure to support such applications.
Unlike previous market cycles, 2021 saw massive adoption among enterprises and developers. Both financial institutions and Dapp (decentralized app) developers needed a simple way to develop on top of a secure blockchain infrastructure.
Many of the companies that developed during the bull market will suffer during the market downturn. This is mainly due to a lack of cash flow financial management skills.
Well-thought-out and appropriately funded projects will survive and thrive this “crypto winter,” while others will struggle or fail.
The Ethereum protocol is by far the highest-grossing blockchain network. Moving from the energy-hungry Proof of Work (PoW) to the much more energy efficient Proof of Stake (PoS) with ‘Merge’ is an important foundation for the future. Since the consolidation took place in September, when the merge took place, Ethereum supply inflation has been near 0%.
The Importance of a Stable Blockchain Infrastructure
In the last 20 years, infrastructure services have dramatically changed the way online business is done.
The advent of cloud-based infrastructure has drastically cut costs for web companies. Consumers enjoyed faster, more responsive applications, and developers could focus on creating innovative products.
The need for a stable blockchain infrastructure has existed since the birth of Bitcoin, but it is relatively recent that developers have access to the tools needed to underpin the growth of a decentralized future. Thing.
Cloud infrastructure has brought great benefits to the web. Blockchain will follow the same deflationary path as any other technology, dramatically reducing the costs of legacy systems. But blockchain killer app development hinges on high-quality infrastructure similar to what Web2 leverages.
Infrastructure support is essential to meet the growing demand for Dapps with complex needs covering a wide range of use cases.
In 2023, projects will need to focus on meeting these complex needs and use cases to prepare for future success.
Prepare for future success
To prepare for the next wave of growth, 2023 will be a turning point for crypto projects.
In order to perform well in the current market conditions, we believe Web3 companies need to focus on three imperatives:
1. Discover product market fit
In order for a company to win, it needs to narrow down the product it offers. This will focus scarce resources of time and money on areas where they can add significant value. It is important to have a deep understanding of the market and find product market fit.
Many large institutional investors want to invest in product-oriented companies. Web3 companies should focus on building products that provide a better and more seamless experience for their blockchain customers.
The ability to withdraw staked Ethereum (ETH) is considered such a feature and will be available to individual and corporate stakers around March 2023. Removing the lockup period that existed on Ethereum’s PoS network would remove the biggest friction.
2. Vertical integration of strengths
Real long-term value comes from becoming a vertical expert in one (or more) of the growing areas of the future.
A realistic focus on the product must be blended with a vision of what future customers want. By creating value in areas where there is potential for growth, companies can be strongly and profitably positioned for the future. Being vertically integrated in key growth areas creates a competitive advantage.
A company’s ability to create deep technology solutions in one (or more) of those areas will add value to customers over the long term.
3. Preparing the infrastructure for growth
Historically, companies with the right product can grow exponentially when the market goes up.
However, for blockchain companies that have experienced dramatic growth in a short period of time, it is unrealistic to scale node operations on their own. While popular blockchain platform outages are common during bull markets, this is equivalent to blackouts at major retailers during busy periods such as the holiday season.
This means that blockchain companies must manage the associated costs and expenses while preparing their infrastructure for the imminent flood of new customer acquisitions.
Here too, the Ethereum blockchain is setting an example, with proto-dunk sharding with EIP (Ethereum Improvement Proposal) 4844 scheduled for Fall 2023 as a scaling solution for the Layer 2 ecosystem.
This infrastructure improvement is expected to increase blockchain capacity by a factor of 10-100, an important step towards the goal of 100,000 transactions per second.
2023 will be the year of development. Once the market recovers, companies that have taken advantage of this period will be ideally positioned.
The ultimate ideal for the next wave of crypto adoption is for customers to seamlessly use blockchain without having to understand the underlying technology. Blockchain will become a frictionless, user-friendly way of transporting value and data, just like you can make video calls without knowing VoIP.
Social media giants will embrace cryptocurrency payments without users knowing that blockchain works behind the scenes.
Ultimately, stable access to a robust and scalable blockchain infrastructure makes them possible.
Mr. Friedrich Zwanzger: Head of Ethereum ecosystem for Blockdaemon, a blockchain infrastructure platform.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: Web3 Needs Seamless Infrastructure to Drive Adoption