Web3 Is Fragmented, Or Why We Need a Unified Base Layer

Web3, envisioned as the next phase of the internet, promises decentralization, enhanced security and greater user autonomy. However, a decade since its inception, the landscape of Web3 paints a complex picture, marked by fragmented development and slow adoption. The challenges include steep learning curves for developers, fragmented platform models and a disparity between speculative interest and genuine user adoption.

The Ethereum Paradigm: The "iOS" Model in Web3

Ethereum emerged as a trailblazer in the Web3 space, introducing a novel platform that required developers to adopt Solidity, a new programming language, and to adapt to its specific development framework. This approach, reminiscent of Apple's iOS ecosystem, was revolutionary yet restrictive. It set a precedent, but also led to barriers. Learning a new language and adapting to a unique framework meant a steeper learning curve for developers. This exclusivity, while fostering a dedicated community, inadvertently narrowed the scope of developer engagement.

The Rush of Liquidity and Its Consequences

The early success of Ethereum led to a significant influx of liquidity into the Web3 space. This premature allocation of capital, while fueling growth, inadvertently encouraged a trend of replication rather than innovation.

Many projects, lured by the immediate availability of funding, adopted Ethereum's architecture model, leading to a lot of similar platforms, slowing down progress. This rush of liquidity thus fueled a cycle of 'copy- paste (copy-pasta)' in architectural designs, stifling the evolution of more diverse and potentially more effective Web3 solutions.

Rise of "Android-like" Platforms

In response, "Android-like" platforms such as Polkadot, Cosmos and Avalanche with its parachain, appchain or subnet approaches surfaced, promoting interoperability and flexibility.

These platforms proposed a model where individual blockchain projects, akin to apps in the Android ecosystem, could operate on their own but remain interconnected. While this approach aimed to address Ethereum's limitations, it too imposed its own set of constraints, mainly by requiring adherence to specific frameworks and languages.

The result was a diversification in the Web3 space, but not necessarily a simplification or unification.

Interoperability in Web3: A Band-Aid, Not a Cure

In the Web3 world, the push for interoperability as a solution to its fragmentation is akin to applying a band-aid on a deeper wound. These efforts to bridge diverse blockchain ecosystems, while innovative, often complicate the user experience, placing undue burdens on both developers and users. Such bridges add layers of complexity that a polished interface can hardly mitigate, revealing a fundamental flaw: the focus on fixing surface-level issues rather than addressing the root causes of fragmentation. This approach hinders genuine user adoption, as it complicates rather than simplifies interaction within the Web3 space.

Developer Perspectives and Project Quality

The rise of many platforms in Web3 created a diverse landscape, with about 100,000 active developers—a fraction compared to traditional programming environments. Having many options is good, but it also splits the developer community.

Moreover, the ease of funding in Web3, through grants and blockchains paying to build on them, led to many projects with varying quality. The emphasis on rapid funding and market speculation overshadowed the need for solid product-market fit, often resulting in projects with limited user engagement and retention. This has led to low on-chain transaction volumes, creating a cycle of hype and decline that is temporarily masked by speculative market interest during bull runs.

The Illusion of Growth and Its Aftermath

In the pursuit of growth, many projects resorted to tactics like artificially inflating social media engagement, creating a false sense of progress and interest. But, after getting money, it became clear that not many people were using their product.  Excuses ranged from the need for more public education on crypto and calls for clearer regulation, to blaming poor market conditions like bear markets.

There was a prevalent hope that a future bull market would resolve these issues. However, this way of thinking ignores a big problem: if a project's token truly had utility, its adoption and value should not be so heavily correlated with market cycles. The overreliance on market trends over actual utility undermines the foundational principle of tokenomics, calling into question the purported 'utility' of these tokens.

The Reality of Token Misuse and On-Chain Activity

Token misuse, often employed for short-term gains rather than true utility, has undermined the credibility of numerous Web3 ventures.

This is clear when you see the low transaction volumes on many projects, a clear sign of the disparity between the hype-driven speculative interest and actual, sustainable use. In response to this lack of genuine activity, some blockchains themselves have resorted to generating artificial transactions. This hidden inflation, designed to create an illusion of bustling activity, aims to appease network validators and investors.

It fails to address the underlying issue: the absence of substantial user adoption and real-world utility in the projects built on these platforms. This cycle of unrealistic expectations and then feeling let down doesn't just hurt one project—it makes people doubt if the whole Web3 idea is trustworthy and will last.

Enterprise Adoption Hurdles in Web3

The fragmented and inflexible development environment of Web3 has also been a significant barrier to enterprise adoption. For large corporations, navigating the Web3 landscape is not merely a technological shift but a comprehensive change management challenge.

The necessity to either hire new talent proficient in niche programming languages or to upskill existing teams has proven to be a daunting task. Moreover, committing to a specific blockchain infrastructure carries the risk of betting on a potentially less capable or eventually obsolete technology.

This uncertainty has led many enterprises to either explore private blockchain solutions, more tailored to their specific needs, or to adopt a 'wait-and-see' approach, hoping for the Web3 space to mature and become more accessible. As a result, the last decade has seen little to no significant enterprise engagement on public blockchains, reflecting a cautious stance towards the promises of increased transparency and decentralization offered by Web3.

Comparing Web3’s Adoption with AI

The adoption trajectory of Web3 starkly contrasts with that of AI technology. AI's rapid uptake can be attributed to developer freedom and minimal framework restrictions, highlighting the need for a more open and accessible environment in Web3 development. The success of AI and other technologies underscores the importance of a developer-centric approach, something that Web3 has struggled to balance.

The Need for a Unified Base Layer

The fragmented state of Web3 highlights a crucial requirement for a solid foundation, much like the role the internet played for Web2. This essential base layer should empower developers from various backgrounds, allowing them to innovate without being tied down to a specific framework.

By adopting this unified approach, we can not only make innovation more feasible but also create a user-friendly environment, fostering wider adoption.

The key to the future success of Web3 lies in addressing these challenges and moving towards a more cohesive, accessible and practical framework. By aligning with the needs of both developers and users, Web3 has the potential to fulfill its promise as a transformative force in the digital world.