Mainstream Paradigms, Opportunities and Challenges of Web3 Consumer Applications

The recent market sentiment has been sluggish, as the policy dividends gradually materialize but fall short of expectations, and a series of celebrity Memecoins have depleted the liquidity of 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 of Web3, with consumer applications in Web3 becoming a hot topic. Only with the emergence of more applications aimed at ordinary users achieving mass adoption can true user value and sustainable development be brought to this overbuilt infrastructure ecosystem. This article will provide an overview of the mainstream models of current Web3 consumer applications and explore the opportunities and challenges they face.

Definition of Web3 Consumer Applications

Web3 consumer applications refer to software applications aimed at ordinary users that have Web3 characteristics. The target users of these applications are mostly ordinary consumers, rather than enterprise users. They can generally be categorized into 10 major categories according to the App Store classification, with different subdivisions within each category. As the market matures, many new products combine various features to seek differentiation, but they can still be simply classified based on their core selling points.

Main Paradigms of Web3 Consumer Applications and Their Opportunities and Challenges

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

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

This paradigm utilizes the technical characteristics of Web3 infrastructure to enhance product competitiveness or provide new services. This is mainly reflected in two aspects:

Ultimate privacy protection and data sovereignty

Opportunity:

• Continuous innovation in privacy technologies, such as ZK, FHE, TEE, etc.
• Provide users with data sovereignty to avoid privacy leaks.
• Applicable to multiple fields such as decentralized social, AI, video, etc.

Challenge:

• Consumers have limited concern for privacy, and laws and regulations can partially address the issue.
• Overprotecting privacy may affect user experience or increase usage costs.
• Conflicts with mainstream data monetization business models.
• Introducing tokens may bring unnecessary speculative attributes.

Low-cost global all-weather trusted execution environment

Opportunity:

• Provide a global, round-the-clock multi-party trusted program execution environment
• Reduce the trust cost and development cost in multi-party collaborative scenarios.
• Stablecoins are a typical application.

Challenge:

• The applicable scenarios are relatively limited, mainly focused on the financial services sector.
• Requires multi-party collaboration with independence, balanced scale, data sensitivity, and other conditions.

2. Design new marketing strategies, user incentives, or business models using crypto assets.

This paradigm leverages the financial attributes of crypto assets to enhance product competitiveness. This is mainly reflected in three aspects:

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

Opportunity:

• Capture users using tokens created at zero cost
• Compared to direct purchase of traffic, it has a higher cost-performance ratio.
• Suitable for many TON ecosystem projects, mini games, etc.

Challenge:

• The cost of converting seed users is high, mostly speculators rather than real users.
• It is easy to misjudge the product-market fit.
• As the model becomes popular, marginal benefits decrease and costs rise.

User Loyalty Program based on "X to Earn"

Opportunity:

• Utilize token rewards to reduce user retention and activation costs
• Incentivize key user behaviors

Challenge:

• Users' focus may shift from product features to yield.
• A decline in yield will lead to rapid user attrition.
• If based on token price, it will face market capitalization management pressure.

Directly realize the financial attributes of tokens

Opportunity:

• Provides a new business model for quick monetization
• Avoided the long cycles or high difficulty of traditional models in the early stages.

Challenge:

• Unsustainable, will face conflicting user interests in the later stage.
• Lack of stable cash flow, overly reliant on financing and market conditions
• Not conducive to the long-term healthy development of the project

3. Fully serve Web3 native users and address their unique needs.

This paradigm focuses on the Web3 native user base. It can be divided into two categories:

Construct new narratives and create new asset classes around the value elements of Web3 users.

Opportunity:

• Having the pricing power of a certain asset at the early stage of the project
• Can achieve a certain level of monopoly profits

Challenge:

• Rely on team resources and key personnel support
• The pricing power of crypto assets dynamically shifts among different groups.
• Need to continuously identify trends and collaborate with emerging forces
• Competing with other projects, "price-setters" prefer high costs.

Provide tool products to meet the specific needs of Web3 users.

Opportunity:

• With the popularization of cryptocurrency, the expanding user base brings segmentation opportunities.
• Focus on real needs, making it easier to achieve product-market fit.
• Easier to establish healthy and sustainable business models
• Such as trading analysis platforms, trading bots, information platforms, etc.

Challenge:

• The product development cycle is relatively long.
• It was difficult to obtain large-scale financing in the early stages.
• You need to be patient in the wealth myth and stick to your original intentions.

These three paradigms are not completely independent; many projects may simultaneously reflect multiple characteristics. Entrepreneurs need to comprehensively assess their own advantages and demands to choose the most suitable direction. With the development of the industry, new paradigms and opportunities are likely to emerge in the future.