“Web3 in 2023: What's New, What's Next?” BitMart Off-the-Chain AMA #2 Recap

Web3, the next iteration of the Internet, is set to revolutionize the way we transfer value, making it instantaneous and borderless. As we look towards 2023, it’s important to understand the evolution of the Internet from Web1, where we could read and write online and transfer information globally, to Web2, marked by the rise of social media and the ability to transfer video and media at lightspeed. Now, Web3 is poised to change the way we transfer value and will have a significant impact on industries such as finance and e-commerce. Despite the tumultuous nature of 2022, experts in the field have high-hopes for the exciting developments we can expect to see in the coming year. Join us as we explore the possibilities of this new and exciting frontier.

Hosts:

BitMart @BitMartExchange

Cointelegraph @Cointelegraph

Cipholio Ventures @Cipholio

Speakers:

Special Guests

• Nickolas Hoog @nickolashoog, VP of Marketing at BitMart
• Wes Kapalan @ct_ser, CEO at Cointelegraph
• Lee Fan @toyoufromlee, Partner of Cipholio Ventures

Leading Projects

• Alex Salnikov @insider0x, Co-Founder of Rarible
• Stefan Rust @srust99, Founder of Lagu.na
• Josh Fraser @joshfraser, Co-founder at Origin Protocol
• Elsa Shi @BitMetis, Founder of BitMetis
• Ivan Linn @ivanlinn_ Founder of Wavv, Director & Chief Conductor of Assassin’s Creed
• Sandy Carter @sandy_carter, SVP and Channel Chief of Unstoppable Domains

Crypto Ventures

• Yida Gao @yidagao, General Partner at Shima Capital
• James Parillo @velvetmilkman, General Partner at Figment Capital
• Peter Yang @PYneer, Managing Director at Fenbushi Capital
• Maria Chak @chakkkattack, Head of Gaming, Metaverse of Republic Crypto
• Kenny Wu @kennywu15, Investment Director at Emurgo Ventures
• Eric Bai @hashederic, Managing Director at Cipholio Ventures
• Paul Solntsev @p_solntsev, Head of Cointelegraph Accelerator

L1s & L2s

• Jasmine Wan @SuiWorldHQ, Co-Founder of Sui World
• Greg Hemmer @gregoryhemmer, Head of Ecosystem at Shardeum
• Christian Oertel, Global Expansion Manager at Conflux Network

1. Opening Conversation

Nickolas Hoog (VP of Marketing at BitMart): What are the biggest challenges in transitioning from Web2 to Web3? Is it awareness, infrastructure, or educating the public?

Wes Kaplan (CEO at Cointelegraph):

From an industry perspective, the crypto industry faces challenges in regulation, KYC, and increasing trust and security. The recent FTX incident highlights the significance of onramps, proof of reserve, and proof of liabilities for 2023. In Web3, marketing relies on community involvement and requires a smooth offering for success. Companies should adopt a community-oriented approach and utilize their tools to create viral marketing campaigns, as strong marketing is crucial for success in this field.

Nickolas Hoog: What are the current marketing trends in Web3 and what actions should companies take to support the industry?

Wes Kaplan:

In the crypto industry, companies are either investing in marketing to stand out in the community or struggling. To succeed, new companies must focus on creating compliant and valuable projects that are easy to understand. They should clearly define themselves and their purpose without using technical jargon. The crypto community should also understand its target audience and select marketing channels that suit their habits for a more effective strategy. There are market share opportunities for companies that take advantage of it and present themselves in a way that appeals to the community.

Nickolas Hoog: How can Web3 companies effectively communicate the benefits of Web3 to their communities?

Wes Kaplan:

In marketing, content and community play a crucial role. Content is the backbone of your marketing, while an engaged community amplifies your message. Strong messaging and branding are also important for effective marketing. Networking, learning, and contributing to the industry help build your brand and increase visibility. PR is also a key aspect, by providing valuable commentary on your area of expertise. When these elements are woven together, that’s when you see results.

Ishan: What are you excited about for 2023 at Cointelegraph?

Wes Kaplan:

We have launched a podcast and a full-stack marketing service agency called CT Studio. CT Studio has recently started a presale for a Snoop Dogg and Billy Ray NFT collection called “A Hardworking Man.” The collection includes various redeemable items such as concert tickets and airline gift cards. They also have a market analysis tool called Markets Pro and potential new releases coming in mid-February.

2. Leading Project

Ishan: How do your respective niches in Web3 disrupt Web 2.0 in DeFi, NFTs, infrastructure, etc.?

Sandy Carter (SVP and Channel Chief of Unstoppable Domains):

Our category is digital identity. In Web2, digital identity is tied to a specific platform and the data associated with that identity remains with the platform. In Web3, digital identity is tied to a domain, and the user owns and controls their identity, including any data associated with it, allowing it to travel with them through the metaverse.

Digital identity is a fundamental human right and Web3 technology is empowering individuals to take control of their data. By decentralizing the way data is handled, users are able to decide when, how, and with whom their data is shared. This shift towards user-controlled data not only provides greater transparency, security, and potential for users to receive larger discounts for sharing their data but also a major disruption in the marketing industry, which is why I am invested in this space.

Josh Fraser (Co-founder at Origin Protocol):

DeFi’s Origin Dollar is a stablecoin that earns interest in user wallets, offering top DeFi yields with ease. DeFi disrupts traditional finance with its transparency, flexibility, and permissionless access. Transparency offers complete visibility into funds, while flexibility offers composability and quick multimillion-dollar loans globally. Permissionless access solves issues of bank account closure or frozen funds due to conditions such as country or sales spikes.

Origin Story is our NFT product, known for hosting high-value sales and partnering with NFT leaders. NFTs are shifting from speculative to delivering real-world value, like tokenizing homes with our partner, unicorn real estate firm Roofstock. We recently made history with the blockchain sale of a home, improving the transfer of ownership with clarity and certainty. This technology has the potential to revolutionize real estate by offering clear property ownership titles. Blockchain’s impact in this area is just starting and will likely be even greater in the future.

Alexander Salnikov (Co-Founder of Rarible):

Rarible started as a marketplace and now we are more and more evolving into an infrastructure product that allows you to use API or to create your own marketplace using our enterprise offering or a standalone builder.

NFTs are enabling new products that were not possible in the Web2 world. NFTs allow for true ownership of digital assets and interoperability, something that was lacking in traditional online platforms. Web3 technology is not just improving existing products, but creating entirely new ones, making NFTs a prime example of its disruptive potential.

In DeFi, transparency and security are key, but NFTs take it a step further with interoperability in the Web3 space. The ability to have a unified metaverse, where you can travel and bring your assets with you, all through the use of your wallet, is the major disruptive quality of Web3. This interoperability allows for a seamless and interconnected digital world, rather than separate and disconnected spaces.

Stefan Rust (Founder of Lagu.na):

The past decade has seen significant advancements in the separation of state and money in the form of Bitcoin, Ethereum, ICOs, DeFi, NFTs, metaverses, and gaming. The aim is to create systems suited for a world where electricity, mobile phones, and the internet are basic needs.

Truflation and Nuon are working towards bringing transparency and accessibility to tracking the cost of living changes and real-world asset prices on the blockchain. The goal is to disrupt traditional, opaque methods of trading real-world assets and provide a clearer understanding of these transactions to stakeholders.

Tokenizing assets as synthetic tokens can offer better accessibility and investment opportunities but faces regulatory and technical challenges. Progress is slow but new tech and regulations may pave the way for tokenized assets. Blockchain and tokenization are disrupting the economy, creating new jobs and wealth, accessing previously inaccessible assets, and breaking down traditional barriers to entry, making finance more accessible and open. It’s an exciting time to be part of this rapidly evolving industry.

Elsa Shi (Founder of BitMetis):

BitMetis is building a cross-game infrastructure to provide efficient, secure, and interoperable identity solutions for the whole blockchain game ecosystem because we focus on the blockchain game sector.

According to data, young Americans spend more than an hour a day playing video games, surpassing time spent on sports and reading. Games are important as they allow us to express emotions and experience different lives. But centralized development and distribution methods of traditional (Web2) games have many problems, leading to player disappointment and concerns over the ownership of assets and accounts.

The fast development of blockchain technology and the rise of Web3, have the potential to bring significant changes to the gaming industry. The use of blockchain technology, such as non-fungible tokens (NFTs), can guarantee digital property rights and player involvement in game direction and development. For developers, blockchain can improve the creator economy and offer more monetization opportunities for players. Overall, the integration of blockchain technology in gaming has the potential to bring about fundamental changes in the industry.

Ivan Linn (Founder of Wavv, Director & Chief Conductor of Assassin’s Creed):

Wavv is a Web3 music platform created to address issues in the music industry. The platform seeks to provide a direct and transparent connection between creators and consumers through the use of blockchain and tokenization technology, eliminating middlemen and improving transparency. The creation of Wavv stems from my frustration with the music industry and a desire to build a community-driven platform that empowers musicians.

Music creators can focus on creation with blockchain tech by simplifying post-production steps & giving control over revenue and copyrights. These steps can be outdated and involve various agencies & regulations, making it difficult for creators. Blockchain technology provides services to democratize ownership, making the process easier and allowing creators to focus on music, rather than navigating the business side.

Asians in the video game world have talented anime and video game music creators and composers. With the recognition of a video game soundtrack being nominated for a Grammy, Wavv works with artists such as Yoko Shimomura from Final Fantasy and more to bring their music to a wider audience.

3. Crypto Venture

Lee Fan (Partner of Cipholio Ventures): What are some of the trickle-down domino effects taking place right now, and how will that affect the crypto ventures community?

James Parillo (General Partner at Figment Capital):

An optimistic outlook prevails as prices, sentiment and people’s spirits show improvement. Despite continued uncertainty in the market, opportunities arise for the growth of crypto and blockchain-focused narratives. MPC wallets, with two years of development, are expected to become decentralized and accessible to retail investors, driving the next stage of self-custody adoption.

The emergence of liquid staking and the continued relevance of the L1 thesis also suggests a promising future. 2023 is expected to be an exciting year with various mini-narratives and trends shaping the market, while innovative middleware applications are being developed and transforming the industry. This year is expected to be remembered as the phoenix rising from the ashes in future years.

Peter Yang (Managing Director at Fenbushi Capital):

The current venture market cycle is experiencing a wider impact from fraudulent activities and collapses, affecting more investors and causing greater pain. The fallout is bigger than in previous cycles, with more late-stage companies failing. The primary market may not see a direct impact but a 6-month lag is expected.

The fall of FTX and similar funds may lead to favorable legislation for centralized exchanges. Investors will have higher standards, with later-stage investors avoiding blockchain companies and early-stage investors requiring Big Four audited financials. Startups’ future will depend on meeting investor demands through audited financials, strong product-market fit, revenue, or by moving to less regulated countries. The next year will show how startups adapt to these changes, either by better practices or moving offshore.

Lee Fan: How do you go about doing diligence into these startups that you invest in?

Paul Solntsev (Head of Cointelegraph Accelerator):

When assessing candidates for the Acceleration program, three factors are considered: product, market, and team. The product must solve a real problem and have demand. The market must target large, low-penetrated markets for growth potential. The team must have the ability to deliver the product and possess intelligence, energy, and discipline. To evaluate the product, we look at metrics such as traction and usage. For the market, we focus on large markets with low penetration. To evaluate the team, previous startup experience is preferred, but not necessary, and we assess intelligence, energy, and discipline. Practically, we work with projects that already have a demo product to test for demand and user engagement.

Eric Bai (Managing Director at Cipholio Ventures):

Our investment approach in Web3 prioritizes user acquisition to Web3, especially in the Fiat Wallet gaming and DeFi sectors. We also aim for sustainability in the crypto space through real-world yields and synthetic assets in DeFi. The team behind a project is crucial and we invest in those with growth and innovation potential and have a scholarship program to attract top talent. During bear markets, we support projects by emphasizing cost-cutting measures. Despite a slow investment market, there are growth opportunities in infrastructure, staking, exchanges, and security audit firms that continue to grow even in a bear market and attract investors.

Lee Fan: Which is for these pre-revenue projects and early-stage projects in the crypto space, what do you think about valuation? What do you think about when you’re writing your term sheets?

Kenny Wu (Investment Director at Emurgo Ventures):

Evaluating projects in the Web3 world is challenging as most are in their early stages and lack evaluation criteria. To tackle this, we focus on comparing projects based on their traction, which is seen as crucial to growth in the digital world. By comparing user acquisition and retention strategies, we can get a sense of each project’s expected valuation.

Sustainability is another key factor in our evaluation process. Projects that have the ability to generate their own cash flow, even in a bear market, are considered more valuable. The recent incidents involving FTX and Genesis have highlighted the importance of sustainability in the Web3 world.

Projects like BitMetis, which is developing its own wallet and onboarding users, also catch our attention as they have the potential to generate stable and sustainable cash flow. Despite market conditions, good projects will always be good, but our focus on valuation is centered on traction and sustainability.

Lee Fan: What is some advice that you would give to entrepreneurs and developers looking to build in the Web3 and metaverse space?

James Parillo:

Building a Web3 startup requires having a strong and skillful team with a positive attitude. There are two types of builders: those with a proven track record and those who are starting out. Entrepreneurs should focus on their strengths and hire for their weaknesses.

CEO and CTO roles require different skill sets, and it’s essential not to do everything yourself. Work with people who motivate and challenge you, and make sure the team is aligned and rowing in the same direction. A well-thought-out product market fit and go-to-market strategy are essential. Choose your co-founders, employees, and partners wisely and strategically. Make sure they complement your skills and will support you through good and bad times. A full-package vision, even if not fully developed, is important.

Lee Fan: Where do you think we’d go from here in 2023?

Peter Yang:

Regulation is expected to have a significant impact on the crypto and blockchain industry, starting with the regulation of stablecoins. The outcome of regulatory developments in Europe, with MiCA and in the UK, will determine industry compliance and influence the types of projects that are developed.

The industry is likely to go through phases of growth and decline in different verticals. Investors are expected to demand sustainable and transformative business models in the coming year and cycle, leading to higher standards in the industry.

Eric Bai:

The LSD (Lend, Borrow, and Derivatives) sector is one that is gaining attention. With the upcoming upgrade of Ethereum in Shanghai in March, there will be an increase in the number of Ethereum-based derivatives in the market, drawing attention from investors and industry participants.

Kenny Wu:

For 2023, the focus will be on tractions, regulations, and securities. The aim is to make the Web3 space more decentralized, secure, and compliant. The key focus will also be on infrastructure and L2 solutions.

James Parillo:

In the current crypto space, regulation is a key challenge and presents a variety of interesting thoughts and ideas. To tackle the scaling issue, there is a need to scale both horizontally and vertically through the use of app chains, L2s and L3s. The focus is on creating interoperable systems that are complex and efficient. The use of ZK (Zero-Knowledge) technology is expected to play a significant role in improving privacy, and efficiency and creating more complex data sets.

Another key focus area is improving the user experience by using front-ends for account abstraction on Ethereum. Teams are working on developing wallets to make the onboarding process easier for new users.

Figment Capital, a leading investor in this space, has some exciting announcements coming up in the next few weeks, so be sure to keep an eye out. The company is focusing on key areas such as scalability, interoperability, privacy, ZK technology, and user experience, and is looking forward to meeting the community in East Denver.

4. L1 & L2

Ishan: What factors do you anticipate will contribute to the demand and utilization of newly emerging blockchains as new L1s and L2s emerge?

Jasmine Wan (Co-Founder of Sui World):

The launch of Sui’s mainnet in Q2 brings to mind the success of projects like Solana and Terra. Terra has seen significant success due to its high APY of 20%, attracting traditional funds to invest in crypto. Solana, on the other hand, has seen rapid growth with a large number of retail users.

The key factors in the success of a blockchain project are the ability to gain support from traditional funds and big investors, and the ability to attract retail users through accessible and user-friendly applications. These two factors can greatly increase TVL and boost the overall growth of a blockchain project.

The success of Solana and Terra highlights the potential impact of traditional funds entering the crypto industry, even with a small investment.

Christian Oertel (Global Expansion Manager at Conflux Network):

Conflux is a fully compliant blockchain network in China, publicly endorsed by the Chinese government. It has been in development for 5 years and uses ERC-722 and ERC-1155 tokens that can be sold via the RMB for wider adoption. Conflux has seen significant growth, with 150 registered companies using the network and big companies deploying NFTs, such as McDonald’s and Oreo. Little Red Book, a social media platform with 150 million users, has also integrated Conflux NFTs.

As more companies adopt blockchain, it’s crucial to make it accessible to developers and users through simpler onboarding processes such as MPC wallets for seamless integration with web2 experiences. Regulation is a critical factor for shaping the industry in the coming years and ensuring future adoption, regardless of whether it’s a L1 or L2.

Ishan: What is your view on the growing L3 narrative and the debate between modular and monolithic blockchain systems?

Jasmine Wan:

L2 projects are often centralized, and the focus is on developing more L2 solutions based on L1 and creating a new form of L1 for all. These solutions are expected to have better scalability and security, thanks to the use of the Move programming language. In the future, it is possible to see projects that connect the consensus from L1 with Ethereum and the benefits of Move, serving as a bridge between the two.

The definition of L3 is unclear, but there are projects that serve as a bridge between different blockchains like L0 and Wormhole. This is crucial for the growth of the industry, but security is a major concern. The industry remains open to L3 projects and eagerly awaits more possibilities in this space.

Ishan: What advancements in scaling can we expect to see in the crypto industry in 2023?

Christian Oertel:

The crypto industry has faced the challenge of scaling for a long time. While L1 and L2 solutions have been developed, most of them are underutilized due to slow transaction times or long roll-off times. L3 solutions, specifically for gaming, offer customization in terms of transaction costs and speed, resulting in a better user experience. The hope is for a big company to build on top of app chains, making the technology more accessible to the general public.

Optimistic roll-ups, such as Arbitrum and Optimism, offer fast roll-up times but slow roll-off times, requiring the use of different bridges for security and fast off-ramping. An app chain bridge could act as a secure L2 between networks, allowing assets to move freely between different chains.

Increased regulatory compliance and pro-blockchain regulations can lead to the emergence of new players and use cases for the technology, which can be widely used in everyday life.

Thank you all for joining the 2nd episode of a series of excited Off-the-Chain Twitter Spaces, and we would like to invite you to join our future ones to discuss and learn more about the industry and market trend. We look forward to hosting you!

Disclaimer: The content shared in this article reflects the views of the respective speakers and not the view of BitMart. Nothing shared in this article should be considered as financial or legal advice. The use of BitMart services is entirely at your own risk. The value of digital currencies can go up or down and there can be substantial risk in buying, selling, holding, or trading digital currencies. You should carefully consider whether trading or holding digital currencies is suitable for you based on your personal investment objectives, financial circumstances, and risk tolerance.