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Is the Web3 innovation explosion limiting user adoption?
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In the decade since Ethereum cofounder Gavin Wood first coined the term “web3,” we’ve seen the promise of a new digital empire become a reality. Cryptocurrency has become a trillion-dollar pillar of the global economy; NFTs have become entrenched in high-stakes art and investment exchanges; blockchain-based financial services have gone from novelty to normal.
For all of the above, we can thank the dreamers and developers who took it upon themselves to create solutions that consumers didn’t even know they needed. It’s no exaggeration to say that their creative determination built our nascent web3 empire; today, the ecosystem comprehends tens of thousands of dApps and a wide variety of defi services.
The question is: can the same creativity overturn this too?
In theory, the explosion of innovation on web3 should accelerate user adoption. As offerings multiply and diversify, the ecosystem naturally becomes more intriguing. However, while user adoption has been respectable In recent years, the rates we see today are far out of proportion to web3’s apparent value proposition.
Why? We have a chain fragmentation problem. According to a relationship According to CoinPaper, over 1,000 distinct blockchains were operational as of January 2024. The Ethereum ecosystem currently features over 50 L2s, with another 50 expected to launch soon, all competing for users and liquidity.
This fragmentation has a profound impact on the experience. Users often have to manually switch between networks within their wallets or interfaces, which can be confusing and lead to frustrating (or even costly) errors. The proliferation of L2, L2, and L3 chains forces users to keep their available assets and gas tokens in their wallets if they want to try out emerging applications built on those chains. And when they do, they face a learning curve: each blockchain poses its own set of rules, transaction fees, and functionality.
Given these challenges, is it any wonder that traditional consumers have been hesitant to jump into Web3? To unlock widespread user adoption among traditional consumers, we need to deliver more seamless and intuitive user experiences.
The intuitive answer would seem to be to encourage developers to improve cross-chain compatibility and interoperability. However, relying on individual developers to provide global interoperability is a bit like asking someone to empty the ocean with a bucket: the scale of the challenge makes the request ridiculous.
Today, the web3 ecosystem features a thousand active blockchains; we could see ten times that in five years. Blockchains are proliferating at an exponential rate, as innovators create chains that cater to specific industries, interests, or business use cases, and given the early success and adoption of blockchain modularity thesisThis fragmentation will likely intensify.
But even if chains were proliferating a tenth as fast as they are today, developers would never be able to keep up. Unlike web2, where innovators can build once and attract users from across the internet with few limitations, web3 developers typically have to distribute instances of their apps across multiple chains to chase users and liquidity. As a result, developers must spend their time building insecure, inefficient, and inelegant cross-chain messaging solutions instead of elevating their core value proposition.
To return to our empire metaphor: instead of expanding the reach and resources of Web3, architects and builders are reduced to patching cracks and digging tunnels connecting sections of the city, exhausting themselves with work that most citizens will never see or appreciate.
So how can we alleviate web3’s UX problems and give developers more time for value-added innovation? The answer lies in chain abstraction.
Imagine a world where our fragmented chains were abstracted away. Developers could create a single instance of their app on the chain of their choice and attract users on any chain without disruption or inconvenience; users wouldn’t need to know which chain the app was built on or worry about whether their assets and gas tokens are compatible.
To build this functionally abstract ecosystem, web3 proponents should meet several requirements. First, user balances should be unified, aggregated, and accounted for across chains to ensure that users can spend their balances freely without any issues while avoiding intentional or accidental overdrafts. Additionally, developers should not need to incorporate complex integrations into their solutions to facilitate cross-chain accessibility.
Just like Rome, an abstract web3 empire won’t be built in a day, but there’s no doubt that we need to start building it today. Unless there’s an ecosystem-wide effort to prioritize abstraction, we won’t have the opportunity to unlock mainstream adoption. We owe it to web3 architects and innovators to ensure their visionary work gets the acclaim, appreciation, and use it deserves.
May Relekar
May Relekar is the co-founder of Arcana. A former product manager at Wow Labz, Mayur co-founded Arcana to simplify the complexities of blockchain and improve user experience. The company is backed by leading funds and investors in the industry, including Balaji Srinivasan, Polygon Ventures, Republic Crypto, and Woodstock Fund.