The Web3 industry is on the verge of an explosion, with independent ETH addresses surpassing 500,000.

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Recently, the number of independent Ethereum domain service addresses has surpassed 500,000, indicating that the Web3 user base is continuously expanding. Since 2017, the Web3 infrastructure has gradually improved, and the industry's development has evolved from the "muddy path" stage to the "asphalt road" stage. However, the prosperity of the industry ecosystem is still highly correlated with market cycles, the value of on-chain data has yet to be fully tapped, and new application scenarios and user interaction mechanisms still need to be developed. The Web3 industry is still on the eve of an explosion.

A certain capital partner recently attended a salon themed on Web3 investment and entrepreneurship, where he discussed the current development status of the Web3 industry, investment layout ideas, and observations on the entrepreneurial ecosystem with other investors. Here are the key points from his sharing:

Core Viewpoint:

• Composability and a unified database are the greatest values brought by blockchain technology.

• Web3 redefines the value of data; how to mine this data gold mine has immense innovative potential.

• The value creation at the application layer originates from brand new mechanisms and interaction methods, rather than simply transforming traditional Web2 products.

• Web3 is still in its early explosive stage, and startup teams should focus on identifying real product demands and target users, rather than blindly chasing trends.

The Development of the Web3 Industry from the Perspective of Entrepreneurs

The sharer has been an entrepreneur in the Web3 field since 2017, experiencing the industry's evolution from "barren" to gradually improving infrastructure. He likens this change to the evolution from "muddy paths" to "asphalt roads." Over four years, the middle layer and protocol layer have exploded from 0 to 1, and the application layer has also achieved a breakthrough from 0 to 1, moving towards the stages of 1 to 100 and even 100 to 1000.

The gaming, NFT, and metaverse sectors are still in their early stages. Many of the current leading projects, such as OpenSea, Sandbox, Uniswap, Aave, and Axie, were established between 2017 and 2019. These projects have gone through difficult bear market periods and ultimately evolved into industry giants.

The core value of blockchain technology

After years of contemplation, the sharer believes that the core values brought by blockchain technology are twofold:

1. Composability, which means interoperability. This is reflected in the permissionless calls at the code level and the cross-application interoperability of digital assets. This "Lego brick" style of composability enables the entire industry to develop at a rapid pace.

2. Unified database. This means that the massive underlying data of Web2 applications will be interconnected, allowing users to log into various applications with just one address, and all data will be stored in the same place. The value of this unified database will be tremendous.

Based on this, the sharer proposed two important investment themes:

1. Data. On-chain data is a "gold mine" that allows for tagged analysis of addresses, breaking down data silos. From underlying data sources and data analysis processing to upper-layer protocols and applications, the entire data ecosystem contains enormous opportunities.

2. Application Layer. The next 3-4 years may be a phase of large-scale explosion in the application layer. The killer applications of Web3 are not simply adding wallet login, but need to innovate interaction mechanisms in specific scenarios by combining the characteristics of blockchain, creating actual value.

Advice for Entrepreneurs

1. Reserve enough funds to cope with a bear market, and persist for at least 2-3 years.

2. Focus on finding real product demand and target users during a bear market, and do not blindly chase trends.

3. First become a believer(, then become a builder). You must have enough passion and faith in the industry.

4. Put aside historical burdens and immerse yourself in the industry for a while before deciding on a business direction. It is important to understand the current state and limitations of the industry.

( Investor Perspective

Characteristics of Web3 investment:

• Due diligence is quite difficult, as the team may be spread across the globe.
• The investor structure is more complex, with a round of financing potentially involving a dozen institutions.
• Investment institutions need to provide value-added services in order to gain investment opportunities.

Investment Preference:

• Focus more on infrastructure and middleware.
• Look for innovative products and mechanisms at the application layer.
• Value the deep understanding and innovative ideas of entrepreneurs in the industry.

Industry Challenges:

• Users have difficulty acquiring and retaining, mostly "scraping the cream" users.
• There is a gap between the actual situation of the industry and external appearances.

Value that investment institutions can provide:

• Provide in-depth support and advice on business and product direction.
• Assist in the design of token economic models, resource integration, talent recruitment, etc.
• Help projects develop in the right direction and expand into larger markets.

![Yunjiu Capital Niu Fengxuan: We are still on the eve of the Web3.0 explosion])https://img-cdn.gateio.im/webp-social/moments-5bac5db43257d08e5959861fb855aede.webp###