web3 projects offer new ways to use a decentralized internet that protects user privacy and isn't controlled and monetized by giant corporations.
What you will learn
web3 projects can help users monetize their own data, in contrast to the way major corporations harvest and profit from users' personal data on Web2.
Five web3 projects worth checking out are DAI (DAI), Uniswap (UNI), Chainlink (LINK),Maker The Graph (GRT) and Basic Attention Token (BAT).
Helium mines its native HNT token through the use of radio-wave technology. It uses a decentralized machine network that also offers wireless coverage of Internet of Things (IoT) devices.
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web3 projects are offering new incentives to capture the attention of the next billion users. The term web3 comes from the idea that the world wide web is in its third phase. The first phase began with text and old-school static images on computers. The second phase, based on centralized servers, brought interactive applications and social media platforms. The third phase is being driven by decentralized applications (dApps) that utilize smart contracts, tokenized assets, and distributed ledger technologies.
In web3, blockchain plays an integral role in creating a webscape based on decentralization and token-based economies. With web3 projects, users can monetize their own data as a solution to Web2, where big companies profit from sucking up vast quantities of personal data from people surfing the internet. Community-led web3 projects also offer consumers alternative games, art, fashion, and finance apps that are secured without a third-party entity.
That’s possible through the power of blockchain. As a distributed ledger technology, blockchain creates a decentralized network. Smart contracts are programs stored on a blockchain that run and execute functions according to set criteria. You can deploy smart contracts to do a wide range of functions — all without any intermediaries or enforcers.
This article will cover how web3 can revolutionize how people work with smart contracts and what they do with their computers and smart devices.
First, let’s dive further into the web3 ecosystem to break down how all the moving parts fit together. We’ll cover how web3 interacts with smart contracts, cryptos like Ethereum, and decentralized applications or dApps. Then we’ll zoom in on the details of what some new blockchain projects look like and what makes them so interesting.
Smart contracts, or digital self-executing contracts built on blockchain, are a key component of web3. These contracts power a range of functions, from executing financial transactions to identifying users to running a decentralized autonomous organization or DAO. Thus, smart contracts underpin web3 and the new digital landscape.
We will now break this down further by giving an example of programming mechanics. Let’s say you want to write smart contracts on the blockchain for basic transactions. To allow people to view information that’s already stored on that contract, you can invoke something called a function call, which doesn’t require a fee. However, for users who want to send a new transaction object, the smart contract requires a fee, which is called a gas cost. Programmers can put countless combinations of options, features and functions into smart contracts to achieve their goals.
A transaction hash is a string of characters that’s unique to a specific transaction that happens on a blockchain. String memory, which hosts all the hash information, is located on the public blockchain. This data can help you find your transaction object, funds, and transaction receipt. Additionally, your smart contract address is another piece of unique information on blockchain made possible through the technology of the interface and form control. Records of events that happen related to smart contracts, like changes to the smart contract state or token transfers, are stored in event logs.
Thus, all information stored is accessible, transparent, and secure. So let’s dive more into one example of blockchain, Ethereum.
web3 projects exist across many different blockchain networks, but we’ll begin by looking at Ethereum. Ethereum was the first blockchain that enabled smart contracts and is where many pioneer web3 technologies were developed. These include major networks like Binance Smart Chain and Solana, which use revised versions of the Ethereum Virtual Machine (EVM) to support smart contracts. On Ethereum, smart contracts are run using web3 js, which is a collection of libraries that allow your code to communicate with Ethereum nodes on the network.
These pieces of the puzzle come together to make a wide variety of decentralized apps or dApps possible.
Decentralized applications are a newer concept that’s key to web3, in part because they give users and developers the power to own and sell their own data. A decentralized application can be built on Ethereum or other networks, such as Solana. DApps allow users who are not computer programmers to interact with smart contracts, giving them a much higher level of functionality. The dApps can take the form of video games, social media apps, virtual worlds, and more.
The term “web3 projects” refers to projects built using the above technologies and tools. In the last few years, the market for web3 projects has boomed. At the core of web3, projects like these encourage people to take action collectively and build a new tokenized society.
The way that web3 and smart contracts work together will be instrumental in growing crypto markets. Here's a look at five successful projects. They all have been in the top five of web3 projects based on market cap.
DAI is a cryptocurrency that uses smart contracts to maintain a 1:1 peg with the U.S. dollar. To achieve its peg, DAI uses an open-source software called Maker Protocol that locks various cryptocurrency assets in smart contracts. Unlike other stablecoins, which are typically backed by assets, DAI is backed by collateralized debt.
Users can lock crypto assets in the protocol to generate new DAI tokens and return the DAI tokens to the protocol to recover their assets. Still, DAI's total supply isn't altered when users borrow or return tokens. Instead, the protocol's smart contracts vary the supply in response to the number and price of the tokens in its contracts.
Uniswap is one of the longest-running and most-popular decentralized exchanges on the Ethereum network. It was one of the first to use and perfect the now-commonplace Automated Market Maker (AMM) model. The Uniswap AMM model lets users trade coins, earn rewards for supplying liquidity, and add new tokens for other users to trade.
In 2020, Uniswap released the UNI token. UNI is a governance token that lets users vote on significant protocol changes and initiatives.
Chainlink is a decentralized oracle network that lets users connect their external data with the blockchain. Oracles feed external information to the blockchain so smart contracts can be executed based on real-world scenarios. For example, an online gambling smart contract allowing users to bet on weather events could be linked with a weather station via an oracle.
Many of Chainlink's users are enterprises seeking to integrate their business with the blockchain. Although Chainlink doesn't operate its own blockchain, it relies on node operators to retrieve data from off-chain feeds and enable the other actions needed to keep the network running. Node operators are rewarded with LINK tokens for supporting network operations.
The Graph is a query protocol on Ethereum's middle layer that allows developers to design dApps. The project's unique angle is the dApp-launching efficiency it offers, allowing users to save time and energy in development. The Graph's mission is to become a powerful decentralized web3 layer that's immune from the manipulation of tech companies. Additionally, the initiative shortens the time it takes to bring dApps to market, saving time and effort during the development process.
Indexers are in charge of maintaining nodes and processing queries across the network. In doing so, they stake the native GRT token. Because malevolent action could cost an Indexer their stake, this incentivizes all network participants to perform honestly. GRT currently has a $1.9 billion market cap.
Basic Attention Token (BAT) is the Brave web3 browser's native cryptocurrency. Brave is a free, open-source web browser that rewards users for their "attention" in BAT. Thus, by watching privacy-preserving advertisements, users can earn a passive income. Brave also protects users from being followed around the internet by website trackers and other unpleasant actors.
Brave also offers the TOR browser, which enables semi-private browsing. The browser reduces internet surveillance and gives you a safe way to hide your surfing history from big tech corporations. To increase rewards, users can choose to view more ads. Furthermore, Brave includes a "Tip" option that may be connected to a variety of social media platforms. This tool makes thanking your favorite content creators simple without any third parties, so that the creators get 100% of your tip. At the time of writing, BAT has a market cap of $1.2 billion.
Ready to dive deeper into web3 and create smart contracts of your own? You can build dApps, protocols, and smart contracts at Hedera using its innovative technology. What makes Hedera unlike anything else on the market is its Hedera Hashgraph and unique protocol. It offers predictable gas fees and carbon-negative energy use. Creating smart contracts using Hedera Hashgraph is straightforward and efficient.