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A simple guide to the Web3 stack

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Web3 is the latest buzzword to see an uptick in interest in recent months — What does it actually mean?

Around the Block from Coinbase Ventures sheds light on key trends in crypto. Written by Connor Dempsey, Angie Wang & Justin Mart.

A lot of definitions have been thrown around, but at Coinbase, we generally think of Web3 as a trustless, permissionless, and decentralized internet that leverages blockchain technology.

Web3’s defining feature is ownership. Whereas the first iteration of the commercial internet (Web1) was read-only for most users, and Web2 allowed users to both read & write on centralized platforms (Twitter, Facebook, YouTube, etc), Web3 gives users full ownership over their content, data, and assets via blockchains. It empowers users to read-write-own.

Where a third party like Facebook owns your identity and data in Web2, your identity in Web3 can move fluidly between platforms without your data being captured and monetized by service providers. While Web2 apps are centrally controlled, tokens in Web3 grant users the right to help govern the services they use, representing a form of ownership in the platforms themselves.

With that framing in mind, what does the Web3 stack look like?

The Web 3 stack

The Web3 stack is still nascent and fragmented, but with much innovation over the years, it’s beginning to come into focus. What follows is not a mutually exclusive nor completely exhaustive lay of the land. Rather, it’s a framework for thinking about this landscape as it continues to evolve.

Let’s start from the bottom up.

Protocol Layer

At the bottom of the stack, we have the protocol layer. This is made up of the underlying blockchain architecture on top of which everything else gets built.

Bitcoin is the granddaddy of them all, and while it doesn’t play a major role in Web3 today, it pioneered the ability for someone to own a scarce digital asset through the use of public-private key cryptography. Following Bitcoin, came a range of layer 1 smart contract platforms like Ethereum, Solana, Avalanche, Cosmos, etc, that serve as the foundation for many of the Web3 applications currently in production.

Bitcoin and Ethereum each have additional protocols built on top of them. Bitcoin has networks like the Lightning Network (for fast and cheap payments) and Stacks (for smart contracts), among others. To alleviate its capacity limitations, multiple layer 2 scaling protocols have been built on top of Ethereum.

With the rise of many layer 1 and layer 2 networks came the need to bridge value between them. Enter cross-chain bridges that serve as highways that let users move value from one chain to another (useful cross-chain dashboards can be found here and here).

Infrastructure / Category Primitives

The infrastructure layer sits on top of the protocol layer and is composed of interoperable building blocks (what we’re calling “category primitives”) that are highly reliable at doing a specific task.

This is a dense and diverse layer, with projects building everything from smart contract auditing software, data storage, communication protocols, data analytics platforms, DAO governance tooling, identity solutions, financial primitives, and more.

For example, Uniswap enables the swapping of one asset for another. Arweave enables data to be stored in a decentralized manner. ENS domain names can serve as a user’s identity in the world of Web3. A user can’t do much with each standalone application. However, when combined, these category primitives act like lego bricks that a Web3 developer can use to construct an app.

Use Case Layer

Atop the protocol and infrastructure layers sit the use case layer, where it all comes together.

Take a blockchain based game like Axie Infinity, which uses Ethereum tokens and NFTs that can be bridged to a low-cost/high throughput sidechain called Ronin. Players often use Uniswap to swap ETH for the tokens needed to play the game. Similarly, decentralized blogging platform Mirror uses the storage protocol Arweave to store data. Meanwhile, it leverages Ethereum to let publishers get paid in crypto, often by directing tokens to their ENS address.

You’ll notice that Uniswap appears both in our infrastructure and use case sections. This is because, while at its core Uniswap is simply a series of smart contracts, it also provides a frontend that users can interact with directly. Put differently, it simultaneously serves as a standalone user-facing app as well as infrastructure for other Web3 apps like Axie Infinity.

Access Layer

At the tippy top of the stack sits the access layer — applications that serve as the entry point for all manner of Web3 activities.

Want to play Axie Infinity or get paid for your content on Mirror? First thing you’ll need is a wallet, which serves as the main point of entry for most Web3 applications. Fiat onramps like Moonpay, Wyre, or exchanges like Coinbase help users trade their fiat money for crypto in order to get started.

With some crypto in a wallet, users can head to an aggregator like DappRadar to browse through and connect to all kinds of Web3 applications in one place. Other projects like Rabbithole help users discover and learn how to use various Web3 applications. There are also aggregators like Zapper, Zerion, and Debank that help users track all of their activities and assets across various apps.

Lastly, we’re close to a future in which Web2 platforms where cryptonative communities already gather, like Reddit and Twitter, serve as an entry point for Web3. Reddit’s long-awaited crypto initiative will let certain communities tokenize, rewarding users with tokens and likely NFTs for active participation. Twitter already boasts an integration with Bitcoin’s Lightning Network to let users tip others in BTC.

The ever-evolving stack

The protocols, infrastructure, user applications, and access points named above make up the nascent, yet evolving world of Web3: an internet owned by its users. Beyond ownership, the power of Web3 lies in its modularity and interoperability. Essentially, this means that there are endless ways that the above stack can be combined to create new and interesting use cases — a feature that we expect will lead to a Cambrian explosion of new, world-changing applications.

While the framework and layers we highlighted will likely stay unchanged, we expect the projects and opportunities within them to evolve dramatically in the coming years.

Web3 Reads

Web3 Tweets

Previous editions of Around The Block

This website does not disclose material nonpublic information pertaining to Coinbase or Coinbase Venture’s portfolio companies.

Disclaimer: The opinions expressed on this website are those of the authors who may be associated persons of Coinbase, Inc., or its affiliates (“Coinbase”) and who do not represent the views, opinions and positions of Coinbase. Information is provided for general educational purposes only and is not intended to constitute investment or other advice on financial products. Coinbase makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information on this website and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. Unless otherwise noted, all images provided herein are the property of Coinbase. This website contains links to third-party websites or other content for information purposes only. Third-party websites are not under the control of Coinbase, and Coinbase is not responsible for their contents. The inclusion of any link does not imply endorsement, approval or recommendation by Coinbase of the site or any association with its operators.


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Content Subscription Service Onlyfans Adds Ethereum-Based NFT Profile Feature

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Content Subscription Service Onlyfans Adds Ethereum-Based NFT Profile Feature

The internet content subscription service Onlyfans has announced the launch of a feature that leverages non-fungible token (NFT) technology. The newly-added feature, introduced on Thursday, gives Onlyfans members the ability to display authenticated NFTs as their profile pictures.

Onlyfans Steps Into the Realm of NFTs

The London-based content subscription service Onlyfans is well known for its direct funding for content creators, its one-time tips, the firm’s pay-per-view (PPV) features, and of course, NSFW content.

This week, Onlyfans has revealed it is experimenting with blockchain technology as the firm is allowing users to show off their NFTs. According to a report from Reuters, Onlyfans CEO Ami Gan explained that the move is meant to empower the platform’s userbase.

“Our mission is to empower creators to own their full potential,” Gan explained to the Reuters author Elizabeth Culliford. “This feature is the first step in exploring the role that NFTs can play on our platform.”

Onlyfans is behind the eight ball when it comes to joining the NFT industry, as a large swathe of well-known businesses and popular brands have already jumped in. Moreover, Twitter’s verified NFT profile feature is similar to the Onlyfans NFT profile concept. Twitter launched the feature last month.

On Febraury 6, Bitcoin.com News reported on Alphabet’s (Google) plans to explore blockchain and Web3 technology. Furthermore, Alphabet’s subsidiary Youtube published a blog post explaining that it has plans to leverage non-fungible tokens (NFTs). The CEO of Instagram, Adam Mosseri, said Instagram is exploring NFTs and reports note that Meta is also experimenting with the technology.

According to Onlyfans CEO Ami Gan, the NFT support will be for Ethereum-based NFTs, and in order to know they are verified, an Ethereum logo mark will be present. The company didn’t disclose whether or not it would support other blockchains that support NFT tech going forward.

What do you think about Onlyfans adding NFT support? Let us know what you think about this subject in the comments section below.

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Philippines’ PDAX Secures $50 Million For Metaverse Expansion

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The Philippine Digital Asset Exchange or PDAX announced on Thursday the completion of its $50 million Series B funding round headed by Tiger Global.

This round was also attended by investors from earlier rounds, including Beenext Ventures and Cadenza Capital Management.

Several other financial institutions have also joined as co-investors in this project. These include Kingsway Capital, Jump Capital, Draper Dragon, Oak Drive Ventures, DG Daiwa Ventures, Ripple, and UBX Ventures. Since August 2021, PDAX has raised $12.5 million in Series B investment.

In an interview, PDAX chief operating officer Kyle T. Kua credited the country’s widespread crypto acceptance to the Filipinos’ innate digital savvy, as well as the development of the Play-to-Earn (P2E) sector over the past decade.

“Many Filipinos took time to start studying cryptocurrencies and delving into the market, whether by trading, investing, or playing,” Kua said.

Knowing how gregarious Filipinos can be, interest in creating crypto wallets and playing these games exploded throughout the Philippines in highly urbanized cities and the countryside.

This popularity is attributed to the availability of smartphones and other devices and because the daily revenues of certain P2E games exceeded the daily minimum wage.

PDAX, which has seen a 35-fold increase in user sign-ups since the lockdowns began, added five more coins to its roster of cryptocurrencies on February 3.

“These five new tokens are among of the most sought after in our community,” said Nix T. Eniego, PDAX associate vice president for marketing, referring to Polygon (MATIC), Cardano (ADA), Dogecoin (DOGE), Polkadot (DOT), and Avalanche (AVL) (AVAX).

Total crypto market cap at $1.975 trillion in the daily chart | Source: TradingView.com

Related Reading | No Point Separating the Virtual From The Real, Father Of PlayStation Criticizes Metaverse Push

The PDAX Backstory

PDAX is a central bank-licensed digital asset trading platform founded in 2018 by CEO Nichel Gaba. It offers Filipinos a “safe, user-friendly” platform for buying and selling digital assets and participating in metaverse applications.

The app was officially introduced in the Philippines in 2019 and is accessible online and on iOS and Android devices.

PDAX launched in 2020 in collaboration with the Bureau of the Treasury and Unionbank Bonds.ph. This blockchain-enabled tool allows retail customers to buy government bonds directly from their smartphones.

Opportunities For Personal Wealth

According to Gaba, cryptocurrency is the most revolutionary technology since the internet. So, PDAX has secured $50 million in Series B funding to bring metaverse apps to the Philippines.

The Filipinos already use applications to earn money through NFT projects, cross-border money transfers, commerce, and other related investment. The Series B funding will establish a safe and accessible infrastructure for the country’s digital asset industry.

PDAX facilitates the exchange of cryptocurrencies and fiat cash between metaverse applications and the PDAX network. However, there is still more to be done in terms of building up the necessary infrastructure.

The platform is now in the middle of advancements that will make access to digital assets safer, simpler and more efficient for all stakeholders.

As the field matures, PDAX will continue to collaborate with authorities to ensure that all these technologies safeguard and provide value to consumers.

PDAX thinks that blockchain technology and digital assets would provide the Philippines a fair playing field, creating opportunities for personal wealth and growth among the Filipino people.

The Philippines has more than 100 million people; however, most do not have easy access to financial services.

One of the goals of PDAX is to make cryptocurrency accessible to every Filipino.

Related Reading | Disney And VeVe Announce NFTs For Disney IP

Featured image from MegaBites, chart from TradingView.com

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‘China’s crypto ban had little impact on Neo,’ says organization’s developers

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It’s had a brutal fall from all-time highs, but the project still retains a market of $1.6 billion and has a dedicated community of developers.

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What is Harmony (ONE) blockchain and why it is getting so much traction?

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Harmony (ONE) is a new blockchain network that is gaining traction as more developers and crypto investors become aware of its features.

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England’s Manchester United Set to Unveil Tezos Blockchain Shirt Sponsorship, Report

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Tezos blockchain has reportedly agreed to a training kit sponsorship with Manchester United in a deal that will see the latter receive over $27 million per year. This deal adds to Tezos’ growing list of sports teams it has sponsored since May 2021.

Tezos’ Investment in Sports

The most successful football club in the English Premier League, Manchester United, is reported to have signed a training kit sponsorship deal with Tezos blockchain. As part of this agreement, Manchester United will reportedly receive over $27 million per year, or £20 million. In exchange, Tezos will become the football club’s training kit sponsor.

According to a report by The Athletic, Tezos’ sponsorship agreement with the 20-time English champions follows the end of Manchester United’s sponsorship deal with the American insurance company Aon.

Tezos’ partnership with Manchester United, if confirmed, will become the blockchain firm’s latest sponsorship of a sporting entity. In May 2021, Tezos announced it was sponsoring Major League Baseball team the New York Mets. During the same month, reports also emerged that Tezos had reached an agreement to build the Formula One (F1) team Red Bull Racing Honda’s “first-ever NFT experience.”

Front-of-Shirt Visibility

According to the report, Tezos is also the sponsor of McClaren Racing in three racing categories: F1, Indycar, and Esports. Elsewhere in Europe, the blockchain entity recently became the technical partner of Team Vitality, a French esports organization. The agreement, just like the reported Tezos and Manchester United deal, gives the esports entity front-of-shirt visibility.

Meanwhile, The Athletic reports that both Manchester United and Tezos have either failed or refused to comment on the reported sponsorship deal. The publication nevertheless suggests that the sponsorship agreement will likely see the football club utilize Tezos’ blockchain to exploit potentially beneficial emerging technologies like the metaverse and Web3.

What are your thoughts on this story? Tell us what you think in the comments section below.

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