Mainstream Paradigms, Opportunities, and Challenges of Web3 Consumer Applications

Recently, market sentiment has been sluggish, liquidity is gradually drying up, and the speculative wave in cryptocurrencies seems to be nearing its end. More and more investors and industry participants are beginning to contemplate the next value narrative for the Web3 sector. Against this backdrop, consumer applications in Web3 have become a hot topic. Only with the emergence of more mass-oriented applications and widespread adoption can true user value be brought to this overbuilt infrastructure ecosystem. This article will provide an overview of the mainstream paradigms of current Web3 consumer applications and explore their respective opportunities and challenges.

Definition of Web3 Consumer Applications

Web3 consumer applications refer to software applications designed for ordinary consumers that possess Web3 characteristics, rather than those aimed at enterprise users. These applications can usually be found in app stores and cover multiple domains, such as social networking, entertainment, productivity tools, and more.

Mainstream Paradigms of Web3 Consumer Applications

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

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

This paradigm seeks to leverage the characteristics of Web3 technology to enhance product competitiveness or provide new services, primarily reflected in two aspects:

Ultimate privacy protection and data sovereignty

• Opportunities: Utilize technologies such as encryption, ZK, FHE, and TEE to provide users with data sovereignty and avoid privacy leaks.
• Challenge:
  • Consumers have a limited concern for privacy, unless there is a large-scale privacy infringement incident.
• Overemphasizing privacy protection may affect mainstream business models and increase the difficulty of sustainable profitability.

Low-cost global 24/7 trusted execution environment

• Opportunity: Utilize the trustworthy environment provided by blockchain to reduce the trust costs of multi-party collaboration.
• Challenge: The applicable scenarios are relatively limited, mainly focused on the financial services sector.

2. Design new marketing strategies, user loyalty programs, or business models using cryptocurrency assets.

This paradigm seeks to leverage the financial attributes of crypto assets to enhance product competitiveness, mainly reflected in three aspects:

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

• Opportunity: Capture users with tokens created at zero cost, reducing early project risks.
• Challenge:
  • The users attracted are mostly speculators, and the conversion cost is high.
  • Such models exhibit diminishing marginal returns, and customer acquisition costs gradually increase.

User Loyalty Program Based on X to Earn

• Opportunity: Utilize token rewards to reduce user retention and activation costs.
• Challenge: User focus may shift from product features to yield, which is detrimental to long-term development.

Directly monetize the financial attributes of tokens.

• Opportunity: Provides a quick way for projects to monetize.
• Challenge: Unsustainable business models will lead to a conflict of interests between users and the project team in the long run.

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

This paradigm focuses on serving Web3 native users, which are mainly divided into two categories:

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

• Opportunity: Having the pricing power of a certain asset at the early stage of the project, obtaining monopoly profits.
• Challenge:
  • Need to gain the support of key individuals or institutions with "pricing power".
  • The pricing power of crypto assets dynamically shifts between different groups, requiring continuous strategy adjustments.

Provide new tooling products to optimize the Web3 native user experience

• Opportunities: With the popularization of cryptocurrencies, the user base is expanding, bringing opportunities for niche markets.
• Challenge: The product development cycle is relatively long, early-stage financing is difficult, and it is necessary to maintain patience and original intentions.

These three paradigms are not completely independent; many projects may simultaneously possess multiple characteristics. For entrepreneurs aspiring to the consumer application field of Web3, the key is to choose the most suitable paradigm based on their own strengths and demands.