This year has been a particularly tumultuous one for the crypto market, with many decentralized and centralized entities failing or struggling to stay afloat. It feels as though we are in the final stages of the bear market, with bad actors and practices being purged in a process that is both dramatic and necessary for the maturity of the entire system. Despite this, the Web3 technologies that emerge from this crypto winter will change everything.
Web3 is the next stage in the evolution of information exchange, and it shares similarities with the shift from a predominantly agricultural society to one that is more industrial. It is a computing fabric that places people first and gives privacy top priority. The internet will be used in a new way thanks to blockchain technology, which will fundamentally alter our interactions with one another. Here are some predictions for what we can anticipate seeing in 2023 as we move into the future.
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1) Venture capital funding for cryptocurrencies will continue to fall through the first half of 2023, but that does not necessarily mean that it will be bad; Instead, it’s normalizing to the point where it makes sense. Investors are waiting for things to bottom out while also weighing the risk of a global recession and broader macroeconomic concerns because they don’t want to get cut. In parallel, new settlements (layer 1s/2s), interoperability (layer 0/bridge), lending, and trading protocols will continue to receive funding to fill the void left by recent hacks, deficits in the treasury, regulation changes, and exchange collapse.
2) The initial anarchist ethos of Web3 that disregarded the necessity of large corporations will end in 2023. Participants will finally realize that there is only a token whose only value comes from the user and speculator dollars when there is no outside funding from big brands. Instead, projects will embrace large brands and the advertising, marketing, and sponsorship funds they bring to the table to realize the dream of Web3 (a token that represents micro equity) by allocating significant outside capital to actual users. Web2 brands — like Nike, Starbucks, and Meta — will keep on testing in Web3, with a proceeded center around nonfungible tokens (NFTs) as the favored configuration, and with an accentuation on client securing and commitment over adaptation.
3) People will realize that many people’s conceptions of community in Web3 are absurd. “A bunch of speculators in a Discord sharing a common dream of rapid wealth who abandon the project once the growth carousel stops moving” was frequently used as a pretty word. While strong, engaged decentralized finance communities and online-to-offline decentralized autonomous organizations like LinksDAO will continue to be exceptions, the Web3 ideal of project/community fit was frequently just project/speculator fit in 2023. Therefore, the fundamentals of actual product-market fit cannot be ignored.
4) Quality and discovery will be prioritized as development costs for Web3 apps decrease and user acquisition costs rise. Web3 will have App Store and AdMob moments that will make it easier for developers and users to find each other. This position will initially be contested by wallets and L1s, but a new player will likely take over. In 2023, breakout Web3 apps will look more like the top-down loaded and highest-grossing apps from the early days of mobile, like Angry Birds in 2009, with simple user interfaces and graphics and intuitive but innovative engagement and monetization mechanisms.
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5) A wave of products with built-in stability, but without the dynamic boom-and-bust nature of the majority of crypto speculation, will result from the current trend toward “stability” and “sustainability” in games, which is in some ways a result of the bumps in Axie Infinity. As a result, the player experience will be bland and muted, resembling a clone of existing Web2 video games. Game developers will re-learn that speculating in the market is a part of the fun over time and will try to incorporate it in healthy and responsible ways.
6) With apps that are functionally clones of existing businesses but incorporate some fundamental blockchain components, Web3 will continue to provide a solid niche. Similar to many early internet companies (such as Amazon as a web bookstore) or mobile companies (such as Robinhood as a mobile stock trader), these apps will create a market niche of users who want the same traditional core product offering but have an affinity for Web3. Instead of focusing on their core product offerings, they will differentiate primarily through marketing and experience. Some of them will place bets on the moonshot of truly paradigm-shifting innovation, like Amazon.
7) Blockchain apps will increasingly rely on large-capitalization tokens to power token-related mechanisms to deal with compliance costs and overhead. Ethereum will keep on postponing its guide in 2023, yet when it does ultimately send sharding to decrease gas expenses, elective L1s will see a major dropoff in interest.
8) Stablecoins will find more applications outside of crypto capital markets, driving mainstream adoption and Web3 innovation, primarily among businesses. Legislatures and private blockchain innovative work will proceed, with some declaring concentrated public foundations like national bank advanced monetary forms or commercial center framework.
9) Just before the election season in the United States, culture wars over cryptocurrency will get heated toward the end of 2023. Accidental hacks like Wormhole, over-aggressive risk exposure like Terra, and outright fraud like SafeMoon will continue to occur. Cryptocurrency will see a rise in outspoken political positions. However, the domestic industry will suffer as a result of the United States government’s continued regulatory indecisiveness. Any regulation that does come into place will be patchwork, and it could still let risky projects getaway.
10) As builders progress through the bear market, new growth areas such as NFT profile-picture projects, play-to-earn projects, and alternative L1s, among others, will begin to emerge in 2023. The next cycle will be driven by the new narratives and, hopefully, by these new frameworks, real consumer utility and adoption will drive hundreds of millions of new crypto users and wallets.
