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5 Web3 Trends That I'm Keeping an Eye on for the Rest of 2023by@johnjvester
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1,154 reads

5 Web3 Trends That I'm Keeping an Eye on for the Rest of 2023

by John VesterSeptember 13th, 2023
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Web3 continues to move at a rapid pace. Find out what new trends have what it takes to last, mean to the ecosystem, and how you might leverage them.

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Web3 moves fast — new concepts or solutions seem to be hyped nearly every month. Some trends catch on — like L2s and NFTs, and some quickly sink into obscurity. A healthy distrust of the hype is good practice, but staying on top of things to understand the truly groundbreaking changes is essential, too.


In this article, I’ll try to help you keep up by highlighting some of the current trends that I think have staying power:


  • Account abstraction
  • Composability
  • Utility NFTs
  • In-game assets for gaming
  • Stealth addresses


So, let’s check out these five current Web3 trends, what they mean for the ecosystem, and how you might leverage them!

1. Account Abstraction

Account abstraction (AA) could be the most significant Web3 trend of this year due to its potential to finally make onboarding to Web3 as simple as it is in Web2.


Onboarding in Web3 is challenging because users need to install a crypto wallet, ensure they manage their keys securely, remember seed phrases, and acquire tokens to pay gas fees on their transactions. Compare that to entering your email or logging in with your social accounts in Web2, and it’s obvious why most users have yet to adopt decentralized apps (dApps).


AA solves these issues by abstracting user accounts into smart contract accounts. Another way of thinking about this is that AA means every account is now a smart contract that can contain logic, user authentication, social recovery, etc. The typical activities we associate with a user account — signing transactions, for example — have been abstracted out. This allows for powerful functionality, such as the ability for a dApp to sponsor users’ gas fees and the ability to pay gas fees in any token.


Many chains have chosen to implement--or are at least talking about implementing--AA.

For example, Argent X (a popular wallet) uses AA with Starknet to implement multicall, where wallets can sign multiple transactions at once (instead of waiting for each one to complete).


On Flow, account abstraction is even broader and is the basis for Walletless Onboarding, which uses hybrid custody to create an onboarding experience for users that is nearly seamless. The hybrid custody model uses AA to allow for account delegation — where a child account delegates control to a parent account through a Capability. This essentially allows one account to control another.


This means:


  • dApps can create wallets for users. There’s no key management, signing transactions, even knowing there is a blockchain behind the scenes.
  • dApps can delegate access back to the user’s account when needed.
  • dApp assets can be taken anywhere the user account goes — trading in marketplaces, etc.


That’s a much better user experience than we see in most web3 dApps.

2. NFT and Smart Contract Composability

Composability is the ability for developers to build on top of shared standards. It allows you to not only build solutions more quickly but also (since you are hopefully using open and proven solutions) to minimize risk. You could also say composability allows you to “mix and match software components like LEGO bricks.”


On Ethereum, one example is that smart contracts are themselves building blocks. Your dApp or smart contract can call any existing smart contract and use its functionality as needed. You don’t have to rebuild basic functionality every time.


Another example is with NFT composability. As long as NFTs adhere to established standards, a wide variety of dApps can interact with them. The popular NFT Doodles, for example, moved to the Flow blockchain because the Flow architecture allowed for increased composability, even allowing NFTs to be equipped with other NFTs, such as purchasing NFT wearables for their Doodle. This also meant that NFT holders could take their Doodles to social, games, live events, and more.

3. Utility NFTs

Most non-fungible tokens (NFTs) have no value other than the NFT itself (for example, generative art NFTs). For many people, this is enough! But more and more NFTs are starting to add utility — for example, token-gated services based on the NFT.


An early example of this is ENS. If you buy an ENS domain, you don’t just get the bragging rights of the NFT; you also get control over that ENS domain, including the ability to change its target address and metadata. As a result, an ENS NFT has a utility that goes beyond simple ownership.

NFTs, in general, are starting to add more real-world benefits and utility, and I expect more of the same in the future, for example:


4. In-Game Assets for Gaming

It’s been talked about for years, but are in-game assets for NFTs finally ready for prime time?

Traditional games have had “token” economics for years. In-game currencies and assets are part of the business model, and achievements are strategically placed to keep players playing (think loot boxes).


But in these traditional systems, players can’t transfer or sell their assets outside of the originating game. And if the company or game shuts down, your assets are lost.


Blockchain-based in-game assets allow you to keep, control, sell, buy, and use these assets across games. If your fabulous ax in World of Warcraft were an NFT, you could use it in other games that supported NFTs. If your Fortnite V-Bucks become tradable on a decentralized exchange for USDC, you could cash out whenever you wanted.


There are lots of in-game NFTs already:


  • Metaverse land, such as The Sandbox
  • God’s Unchained Cards
  • Axie Infinity Axies
  • In-game wearables in Decentraland


So far, in-game NFTs have seen success in the play-to-earn space. Will we see it expand to interoperability? Will we see more popular gaming companies adopt NFTs? We’ll see!

5. Stealth Addresses

Privacy is another hot issue on the blockchain. On most blockchain networks, transactions are public. If someone sends you tokens or an NFT, anyone can see the transaction and see the details — how much, the sender, the recipient, etc. While this is great for transparency, most users don’t want the world to know the details of their transactions.


Stealth addresses solve this issue by providing transaction privacy. They allow you to automatically create a new address for each transaction. These new addresses are tied to your main address, but that link is only revealed to the parties in the transaction. Outside observers are unable to see the details of the link. So they can see the transaction, but they don’t know it’s associated with your account.


This is important for adoption — if you were getting paid in crypto, for example, you wouldn’t want anyone to be able to see what your salary is. Vitalik Buterin recently proposed a system to bring stealth addresses to Ethereum.


Blockchain privacy has also seen a regulatory crackdown recently (see the Tornado Cash issue). And in some instances, this is for good reason. We’ll have to see where privacy goes from here, but stealth addresses are on an interesting path!

Conclusion

Those are five current Web3 trends that could be truly transformative over the next year. The space changes and advances quickly, though, so the best way to be early to trends is to stay involved, keep learning, and try out everything!


Have a really great day!


Also published here.