Mainstream Paradigms, Opportunities, and Challenges of Web3 Consumer Applications

Recently, market sentiment has been low, as the realization of policy dividends has fallen short of expectations, and a series of popular Memecoins are exhausting liquidity in the crypto speculation market. This wave of cryptocurrency speculation driven by macroeconomic benefits seems to be nearing its end. More and more investors and industry participants are beginning to contemplate the next value narrative for the Web3 industry, and the Web3 consumer application track has become a hot topic. Only with the emergence of more mass-oriented applications can this overbuilt infrastructure ecosystem bring about true user adoption and sustainable business value. This article will review the mainstream paradigms of current Web3 consumer applications, exploring their respective opportunities and challenges.

Definition of Web3 Consumer Applications

Web3 consumer applications refer to software applications that have Web3 characteristics and are aimed at ordinary consumers. Their target users are the majority of everyday consumers, rather than enterprise-level users. Consumer Applications can be broadly divided into 10 categories, such as social, entertainment, tools, etc., with each category having different subdivisions. As the market matures, many new products will combine multiple features to highlight differentiation, but can still be simply categorized based on core selling points.

The Main Paradigm of Current Web3 Consumer Applications

Currently, there are three common paradigms of Web3 consumer applications:

1. Optimize the problems of traditional applications using the technical characteristics of Web3 infrastructure.

This paradigm aims to leverage the technical characteristics of Web3 infrastructure to enhance product competitiveness or provide new services. It mainly includes two directions:

Ultimate privacy protection and data sovereignty

Opportunity: Privacy has always been a key focus of innovation in Web3 infrastructure, from asymmetric encryption to ZK, FHE, TEE, and so on. This brings data sovereignty to users, allowing personal information to be directly hosted on local trusted devices, avoiding leakage. Many projects boast decentralization, such as decentralized social media, AI large models, etc.

Key Point: Market validation shows that having privacy as a core selling point does not have a significant advantage. On one hand, laws and regulations can effectively alleviate privacy issues; on the other hand, overly emphasizing privacy protection may impact mainstream business models and increase the difficulty of sustainable profitability.

Low-cost global all-weather trusted execution environment

Opportunity: Numerous public chains provide developers with a new global, around-the-clock multi-party trusted program execution environment. This can effectively reduce the trust costs and usage costs involved in scenarios such as multi-party collaboration and sensitive data processing. Stablecoins are a typical example of such applications.

Challenge: Although it has the advantage of reducing costs and increasing efficiency, the applicable scenarios are relatively stringent. Currently, it is mainly concentrated in the financial services sector.

2. Utilize encrypted assets to design new marketing strategies, user loyalty programs, or business models.

This paradigm aims to enhance the competitive advantage of products by introducing the high financial attributes of crypto assets. It mainly includes three aspects:

Reduce customer acquisition costs through token-based marketing activities such as airdrops.

Opportunity: Tokens, created at zero cost, can significantly reduce the risks of early projects and are a cost-effective way to acquire users. Many TON ecosystem projects and mini-games adopt this strategy.

Difficulty: The conversion cost for such users is high, mostly speculators, making it hard for them to become actual product users. Moreover, as the model becomes widespread, marginal benefits decrease.

User Loyalty Program Based on X to Earn

Opportunity: Utilize the financial attributes of Tokens to reduce retention and activation costs. The X to Earn model rewards key user behaviors with Tokens, establishing a loyalty program.

Challenge: User focus may shift from product features to yield, which is not conducive to long-term retention. If the yield is linked to the Token price, it will also bring pressure for market value management.

Directly monetize the financial attributes of tokens

Opportunity Point: Provides a new fast monetization channel for the project, namely direct sale of Tokens for cash.

Difficulty: This is an unsustainable business model. In the long term, it will lead to a conflict of interests between the project party and users, accelerating user loss.

3. Fully serve the native Web3 users and address the unique pain points of this group.

This paradigm focuses on the Web3 native user base, which is mainly divided into two categories:

Constructing a new narrative, monetization design around the value elements of Web3 native users

Opportunities: Provide new speculative targets for Web3 users ( such as SocialFi ), allowing for the initial acquisition of pricing power and monopoly profits on certain assets.

Challenges: Highly reliant on team resources and market sensitivity, it is necessary to gain the support of key individuals or institutions that possess "pricing power." Moreover, as the market develops, pricing power may shift among different groups, making it costly to maintain cooperative relationships.

Provide new tool-based products to optimize Web3 user experience

Opportunity: With the popularity of cryptocurrencies and the expansion of the user base, there are opportunities for segmented demand. Focusing on real needs can easily achieve PMF and establish a healthy business model, such as trading analysis platforms, Trading Bots, etc.

Challenges: The development cycle is relatively long, and early-stage financing is difficult. It is not easy to maintain one's original intention in the face of various temptations of "issuing tokens" or high valuations for financing.

These three paradigms are not completely independent; many projects will integrate them. Entrepreneurs need to choose the most suitable direction based on their own strengths and goals.