NEST Roundtable 18: Web3 Summary 2022

Participants:

Host:

Nicole, NEST Protocol

Woody, NEST Protocol

Cohost:

Ipollo Space

Guests:

DAO:

Positive DAO, JerryLi, CEO at PVD

UltiverseDAO, MoonLight, Ultiverse Host

LinkZDAO, Arnaud, Founder

Infrastructure:

Conflux, Chris, Expansion Manager

ICP, Anna, Head of BD

KCC, Cedric, BD Head of KCC, NA (North America)

Zonff Partners, Kylo, Investment Manager

Chainbase, JF, Ecosystem Lead

Applications (DeFi, GameFi, Marketplace):

WooNetwork, Ben, Ecosystem Growth Manager

BinaryX, Rudy, Head of Growth

CoinW, Kagan, Head of Turkey Market

Half-Life Saga, Wacky, Project Founder

HabitTrade, Nita, BD Manager

IVY Market, Erick Pinos, Americas Ecosystem Lead

Identity & Wallet:

BitKeep, Moka, COO

SpaceID, Solo, Head of Growth

Conference recording:

https://twitter.com/i/spaces/1LyxBqknBlEJN?s=20

Web3 2022 Summary Discussion

Woody: As 2022 draws to a close, the web3 industry has seen many exciting breakthroughs, developments, and crises as well unfortunately. We can basically divide the web3 into four sections and it also corresponding to our space.

1. governance mechanisms, also commonly known as DAOs.

2. infrastructure including operating systems, such as public chains, Layer2, etc. and underlying infrastructure, such as data storage, data indexing and management, privacy computing, oracle machines.

3. applications in SocialFi, GameFi, DeFi, metaverse, cryptocurrencies, NFT, etc.

4. identity, such as DIDs, wallets, domain names, etc.

DAO:

Based on your experience in the industry, how do you think the DAO industry performed from January to December this year? What are the key drivers?

MoonLight: A lot of projects are already quite down, especially towards the summer. I have seen a lot of people already decided to leave crypto, especially after FTX and Tarra. However, I still see a lot of builders staying here, doing a lot of things, and trying to make the space better and bring new blood to web3. I am still very positive about the journey.

Jerry: Actually, we can see the trend was still very up-and-coming. Different investment DAO has different mechanisms, for example in the decentralization ways. There are also new innovations and revolutionary tools in the DAO, like the dashboard to show their DAO cash flow or tools on the chain, etc. We see more DAOs developed by a lot of users and builders, especially the investment DAO despite the bear market.

Woody: Compared with traditional ventures, what is the DAO’s strength? Do you think there would be more ventures coming in next year?

Jerry: It would firstly reduce the risk of party threats. And you can have a border and a closer social network. The third thing is that you can have a comprehensive insight compared to an investment firm with the same amount of money under management.

Arnaud: There are many young talents who are students from famous universities all over the world, and they are very passionate about starting up their own businesses in the crypto space. And I think they are crazy mostly, especially in the GameFi, NFT, and SocialFi areas. We can link them, support them, form a community, and aggregate every useful resource through media to enlighten them. We are mostly deceived by the name like decentralized alternatives. It is also better to use centralized ways to organize a group and contribute to and manage it. Many DAO does not have very healthy cash flow because of the business model. So, to sum up, the first thing is that DAO can use some centralized ways to increase efficiency, secondly, focus on the business model and cash flow to integrate more contributors with the appropriate economic phenomenon, and the incentives and passion. We are still exploring.

Infrastructure:

Can you give us a big picture of this infrastructure industry? What is the investment or fund-raising trend?

Kylo: We can divide it into several categories: data, secret and metaverse, DeFi projects. I think the technology we used in 2020 and 2022 has not much difference. We invest it because of the market. In the future, I still think VCs would still like infra.

What is the current technology trend and the challenges in public chain last year? What will be the new opportunities next year?

Chris: From last year, the growth after luna crash and FTX, everything went down. Om terms of DeFi, we have experienced a very strong growth in regulatory compliance. For technology, we upgraded our network to have two spaces that coexist on one ledger: core and e-space. With the whole notion of China allowing NFTs but not ERC-20, this shows the tremendous market opening for us, especially on the contract network. I think there will be a big emphasis on regulatory compliance in my opinion, and it will carry out into the next year and the year after. This is a good development for projects that are long-term. I strongly recommend projects to explore new business models besides liquidity mining and governance tokens. And next year I think would be more wallets being launched to make it easier to onboard new users.

Anna: There are two big significant features updated for ICP, one is BTC migration and SNS (DAO). There’s also a big event: Julie’s painting, which is the first tokenization of fan art.

What would the friendship of the public change market? How to choose the best public chain?

Kylo: We thought the Solana would be the second largest public chain, but now as you can see, Solana nearly failed. There’s one lesson we learned, as a VC, we should invest in an ecosystem that is stable and can run by itself. Like Solana needs a lot of resources to make it run, while Ethereum doesn’t need the outsources to keep running, they would be more prosperous. The key thing is to find the stable nature of these blockchains, like cosmos, polygons, and Ethereum.

Based on the perform last year, what will be the opportunities and challenges in the next year?

Clayton: At the beginning of DeFi, oracle moved past largely, and had different types of exploit problems. But my belief is that real-world data is really important, especially if you want to be able to have real-world assets on chain or have real-world events reflect on chain.

JF: In general, what I see is about the data: data recording, data storage, data processing, and parsing, and data interoperability. The whole blockchain world is like a public ledger and in the form of digital, so it means that it essentially records the data, although most of the mare transaction data. We also have data storage fields that are mostly off-chain because their own change storage is mostly a high cost and time-consuming. We also have data interoperability which can be applied to cross-chain and on and off-chain oracles. Why it is an issue in this industry? Because people know that the data is transparent, but this does not mean that you can actually easily get the data. For builders, you need APIs, etc. The great challenge I see in the industry is to get indexed blockchain data, roughly indexed. The way to solve this is to fetch data and put them into the data warehouse so we can build something on top of that. The opportunities are the real-timeliness of the data.

Is there any significant change in the competitive landscape of the infrastructure industry over the last year?

Clayton: Being a builder of infrastructure is interesting because it’s very difficult to identify what the next trend is going to be. I severely underappreciated the importance of NFTs actually, we had these market needs show up where we need to be able to financialize NFTs or we need to be able to send them crafting. I think there are two things running simultaneously in terms of the competitive landscape. You have projects that pop up to respond to these trends and then you have these projects that are more long-term but have a thesis about what’s important in web3. You also have projects that are more short-term relevant to get more market and get more conversation in mind share.

Chris: The whole space is getting more and more competitive, especially when we talk about layer 1 and 2, there are more and more coming out on the daily basis. It will; be interesting to find out which ones will have which use cases and purpose. The second half of 2022 is becoming harder and harder.

Hana: I have noticed that in the previous year, there was a lot of discussion on NFTs, I think that trend will continue as a tool to finance projects. Also, I think there is a lot of talk about who is the custodian, what regulations are, and who should be responsible. I think web3 could help us to see sustainable regenerative finance and good new solutions.

Application:

Based on your experience in the industry, how do you think the application industry performed from January to December this year? What are the key drivers?

Rudy: In GameFi, it’s been a rough year, we are not good as well, we see many famous projects such as infinity fall during this time all due to the major decline and unsustainable models. However, I am still largely optimistic now in December. We are in fact seeing more entrants into the space and more traditional game developers exploring keys to enter. Last year, there were a lot of ecosystems involved.

Wacky: Outside GameFi, the NFT market was booming, and obviously the economics has completely targeted the rest of the market. There has been a drastic shift in terms of the type of projects and the quality of projects that have come to market. We now see more projects with really good products and developers, which are much better. I think the market is maturing and in general, positive in terms of volume and dollar amount.

Erick: I think the projects are now no longer able to raise money on just promises with no commitment to have to deliver, which is a good thing. Raising was in general hard at this time, but I think that those are the projects that deserve the attention and it’s always usually in a bear market when projects are able to focus on the product but acting and delivering. Also, one good thing about NFTs is that whether the price is going up or down, you can still utilize them. NFTs have use cases, especially in games. So, we do not need to focus on the price only. You could say the space was doing badly because of the price drop, I think it is more like a correction from the insanely quick hype cycle that happened after the Facebook meta rebrand in the general crypto. We were just returning to the average normal growth.

Kagan: The market value declined in crypto and also the exchange collapsed as well. The NFTs are still higher, I think. It is true that the market interest in decentralized products has increased.

Sea: Actually, it is interesting to see what happened in 2022, as this year we are facing a severe bear market, and we are losing lots of our size and agencies and institutions. But I think it is lucky to see that in the industry, people who are holding an NFT are still increasing. Since April, the trading volume began to decrease. So, I think NFTs are facing the same problem of the whole industry, but people are still keeping optimism to produce new projects and share new designs. Adding to GameFi, we didn’t see too much great GameFi this year. But as far as I know, many projects are planning and designing great game models, so hopefully, we can see them in the next year.

What are the outlooks and challenges?

Rudy: The majority bad thing about the games is they are not fun, so next year we are going to see a major pivot. You can even think about it as the overreaction to make games more fun. In fact, in the booming market, game projects were not very keen to explore cryptocurrencies and NFTs, but this year, they are shifting, so we will see better quality games in terms of production level, game complexity, and economy robustness. Also, many games are now moving away from play-to-earn.

Wacky: I believe gaming would be a boosting sector as people are looking for fun, and people really tend to spend money on games. And this will be pushing a new wave of NFTs.

Kagan: I think that the macroeconomic factor is probably going to be our biggest challenge next year for the crypto exchange. Also, the technological developments, regulations, CEX and DEX, etc. would affect.

Erick: All we can hope for CEX is regulation. For blockchain, things are more about ease of use for people, potential smart contract failure, or design failure. We have to focus on the use cases.

Johnny: The liquidity problem in 2023 will be still serious.

Nita: People are doubting about blockchain, cryptocurrency and web3. We can see less trust in exchanges and trading platforms. On the other hand, it’s interesting to see that trading is especially based on speculative investment and hype.

Sea: Despite the centralized and decentralized belief crisis, I still think people will believe in crypto and blockchain to do some difference, and it’s a challenge for dex and decentralized services. People should not only think about the product, but also the business model and utility.

Identity & Wallet:

How did the wallet and identity industry perform past year? And what are the key drivers?

Moka: From a user’s perspective, we believe that security and convenience are the two most important things about crypto wallets. There has been Luna, etc. happened, many of those were centralized entities that had many problems with risk management, and when bankrupt leaving users accessing trouble. And many industry players have changed from B2B to B2C, and the user base is growing too.

Solo: The peak of registration for domain names happens this summer, so July and August, and the biggest month were September. Good names were already taken, so it’s not necessarily a speculation, but more for a real use case. Though the hype really happened in the summer, it’s still a small portion of it.

How has the competitive landscape happened in the past year and what are the opportunities and challenges?

Moka: crypto wallet has obviously become one of the most important infra in the industry. I think the competition will be more intense in the coming year. Users will continuously look for the wallet to fulfill their needs in one quick assessment.

Solo: Every chain has one major name service that they get developed on it. The competition will be essentially erased to like the first one that can correctly aggregate different identities together and let users use any of them, no matter what chain they are going to.