Mainstream Paradigms, Opportunities, and Challenges of Web3 Consumer Applications

Recently, market sentiment has been low. As policy dividends gradually materialize but fall short of expectations, and some celebrity-related Memecoins have attracted a large amount of speculative funds, the wave of cryptocurrency speculation driven by macroeconomic benefits seems to be nearing its end. More and more industry insiders are beginning to contemplate the next value narrative for the Web3 industry, with consumer applications in Web3 becoming a hot topic. Only with the emergence of more applications aimed at ordinary users achieving widespread adoption can this overbuilt infrastructure ecosystem bring about real users and sustainable business value.

This article will provide an overview of the mainstream paradigms of current Web3 consumer applications and explore their respective opportunities and challenges.

What are Web3 Consumer Applications

Consumer applications refer to software applications targeted at regular users rather than enterprise users. Web3 consumer applications are applications aimed at consumers that have Web3 characteristics.

According to common App Store classifications, the entire consumer application field can be roughly divided into 10 categories, each of which has different subcategories. As the market matures, many new products combine multiple features to find differentiated selling points, but they can still be simply categorized according to their core selling points.

Main Paradigms and Opportunities Challenges of Web3 Consumer Applications

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

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

This paradigm aims to leverage the technical characteristics of Web3 infrastructure to enhance product competitive advantages or provide new services. It brings two main benefits:

Ultimate privacy protection and data sovereignty

Opportunities: Privacy has always been the main theme of Web3 infrastructure innovation. From asymmetric encryption to the integration of technologies like ZK, FHE, and TEE, the aim is to create a network environment that does not rely on third-party trust, bringing data sovereignty to users. Many projects that boast "decentralized XX" fall into this category.

Challenges: Privacy protection as a core selling point does not have a clear competitive advantage. On one hand, laws and regulations can effectively alleviate privacy issues; on the other hand, an excessive emphasis on privacy protection may affect mainstream business models based on big data, making it difficult to design sustainable business models.

Low-cost global all-weather trusted execution environment

Opportunities: Numerous L1 and L2 provide developers with a new global, round-the-clock multi-party trusted program execution environment. This can effectively reduce the trust costs and development usage costs of multi-party collaborative business, such as in scenarios like cross-border payments.

Challenges: The applicable scenarios are quite demanding, requiring independent collaboration among multiple parties, balanced scale, data sensitivity, and other conditions. Currently, it is mainly concentrated in the financial services sector.

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

This type of application aims to enhance competitive advantages for products by introducing the high financial attributes of encrypted assets. It mainly brings three benefits:

Reduce customer acquisition costs through token-based marketing campaigns

Opportunity: Tokens can be created at a low cost for early user acquisition, which is more cost-effective compared to directly purchasing traffic.

Challenge: The cost of converting acquired seed users is high, and they are mostly speculators rather than true product users. Moreover, as the model becomes more widespread, marginal returns diminish.

User Loyalty Program Based on X to Earn

Opportunity Point: Utilize token rewards for key user behaviors, establish a loyalty program, and reduce retention and activation costs.

Challenge: User focus shifts from product features to yield, and a decline in yield can lead to rapid user loss. If relying on its own Token price, it faces market value management pressure.

Directly monetize the financial attributes of tokens

Opportunity: Providing a new fast monetization avenue for the project.

Challenge: Unsustainable business models can lead to a conflict of interests between the project team and users in the long run, accelerating user loss.

3. Fully serve the native Web3 users and address their unique pain points.

These applications focus on serving the Web3 native user base, mainly divided into two categories:

Constructing a new narrative, focusing on monetization design around Web3 user value elements

Opportunities: Provide new speculative targets for Web3 users, allowing them to gain asset pricing power and monopolistic profits from the early stages of the project.

Challenge: Relying on team resources to gain support from key individuals or institutions with "pricing power." It requires keen identification of changes in market trends and incurring significant costs to establish cooperation with "price makers."

Provide new tools or optimize the experience to meet the unmet needs of Web3 users

Opportunity: As the user base expands, segmented demands increase, making it easier to achieve PMF and establish a healthy business model. For example, trading analysis platforms, Trading Bots, etc.

Difficulty: The development cycle is relatively long, and it is difficult to obtain large amounts of financing in the early stages. It is necessary to maintain patience and stick to the original intention during the "coin issuance" craze.

These three paradigms are not completely independent; many projects will integrate multiple features. Entrepreneurs need to assess their own strengths and demands to choose the paradigm that best suits them to enter the market.