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Web 3.0 focuses on decentralization driven by the concept of peer-to-peer internet solutions that let users have the freedom to control the data. Learn how Web 3.0 is different from its predecessors.

 reached $3 trillion in 2021 and has plenty of room for more growth. After the 

 took the internet by storm, Web 3.0 emerged to become one of the new buzzwords in the cryptocurrency realm. While Web 1.0 and Web 2.0 bolstered the growth in the internet world, Web 3.0 focuses on decentralization by giving users the freedom to control their data. But what exactly is Web 3.0?

 have different origins, they are inevitably becoming interchangeable. For this article, we’ll use the first term.] 

Web 3.0 is one of the new buzzwords for the next significant evolution of the internet. Web 1.0 took place from 1990 to 2004, when most websites were static and created by businesses. During this phase, people who saw an opportunity bought domain names to sell later at higher prices to businesses in need of these domains.

Web 2.0 was the era of user-generated content and social media. Users were encouraged to interact and connect with one another through social networking like blogs, vlogs and social media, which eventually became mainstream. The evolution translated to a larger amount of content creation whereby most of the data was controlled by a smaller group of tech giants like Google, Microsoft and Facebook. This also raised the question of whether users were able to retain their privacy.

As the web continues to evolve, Web 3.0 focuses on decentralization driven by the concept of peer-to-peer internet solutions where individuals control how their data is used. Web 3.0 is anticipated to boost data transparency and content accessibility by relying on blockchain technology, especially since many applications and services are beginning to be powered by blockchain technology, metaverses and artificial intelligence (AI). 

This technology helps eradicate the use of a central authority for data storage, and helps preserve security through distributed consensus. Essentially, Web 3.0 aims to put more control back into the hands of people, its users — instead of major companies.

With more users entering the cryptocurrency market, there are certain novel aspects of Web 3.0 that propel sectors such as decentralized finance, or DeFi. 

 is a financial system operating independently of centralized financial intermediaries like banks and conventional financial institutions. Instead, it’s based on a decentralized 

Financial transactions in a DeFi system are carried out using smart contracts, which are self-executing software applications that operate on the blockchain. Without the need for a centralized authority, these smart contracts facilitate peer-to-peer trading, lending and borrowing of cryptocurrencies and other digital assets.

With numerous DeFi platforms and protocols being developed to give users more transparency, security and control over their financial transactions, DeFi has become a well-known use case for blockchain technology. The traditional financial environment is projected to change in the years ahead due to the DeFi ecosystem's ongoing expansion.

Given the rapid growth of Web 3.0, let’s take a look at some of the most exciting updates coming to the market and the tokens to consider investing in.

Note: All token prices are as of April 9, 2023.

 is a decentralized spot and perpetual exchange. With GMX, users can trade a variety of 

 and have up to 50x leverage. This protocol managed to gain a significant market share from 2021 to 2022 because of its unique fee-sharing mechanism. Holders of the protocol’s native token, GMX, and 

 (LPs) are both eligible to share the fees received from transactions that take place on GMX. This incentivizes LPs to participate, ensuring deep liquidity that attracts traders.

 means keeping a cryptocurrency in a wallet to sustain a blockchain network's operations. In return for securing the network, stakers are rewarded with more cryptocurrencies. The issue here is that once users stake their cryptocurrencies, they’re no longer able to participate in other aspects of the market to earn more rewards.

 tackles the abovementioned problem. Its users can stake their cryptocurrencies in a process known as “liquid staking,” in which cryptocurrencies are held by a group of node operators. This allows users to earn rewards without the technical complexity and hardware typically required. 

Lido also provides capital efficiency by giving users “st” tokens after they’ve staked with Lido. These st tokens represent their ownership of the underlying staked asset (such as stSOL or stETH), and can be used in other areas of the DeFi market.

 due in just a few days time, users will be able to withdraw their staked token from Lido, proving its capital efficiency.

 is a decentralized trading platform that’s available on both 

. During its initial phases when Trader Joe launched on Avalanche, the team aimed to allow users to trade on their platform with minimal 

. This was achieved through partnerships with other DeFi projects to incentivize users to use Trader Joe, which allows them to earn double rewards. In this way, the team created a more robust trading platform with higher liquidity, reducing the slippage experienced by traders.

Recently, Trader Joe has attracted significant market attention with the rollout of their 

 (LB) protocol, which utilizes liquidity bins. With LB, it is now possible for traders to experience zero slippage. 

 is the native token of Layer 1 blockchain The Open Network. This is a project being built by Telegram, a globally accessible messaging service with 55 million daily users. By creating projects on The Open Network, projects are looking to tap on and provide their services to the existing Telegram users. 

The token, TON, is used to pay for transaction fees when interacting with the blockchain. Given Telegram’s huge existing user base, The Open Network is well poised to tap on this market.

 is one of the cryptocurrencies with the highest recent trading volume, given its highly anticipated airdrop of the ARB token that’s finally come to the market.

This Layer 2 scaling solution for Ethereum provides a mechanism known as 

. By enabling off-chain processing, it aims to increase the speed and scalability of Ethereum transactions while preserving the network's security and trustlessness. With Arbitrum executing transactions, network congestion is significantly reduced, allowing users to benefit from lower gas fees.

With a robust DeFi ecosystem on top of it, as well as being home to GMX, 

, the Arbitrum ecosystem is well received by the market, and it will be exciting to keep an eye on its upcoming developments.

 offers an optimistic rollup aimed at increasing Ethereum’s scalability. 

The distinction between Arbitrum and Optimism is in terms of how they manage 

, a feature that enables users to contest inaccurate transaction outcomes , in return for which they receive rewards. This is critical for guaranteeing the accuracy and integrity of network transaction processing. Optimism uses a single-round fraud-proof, whereas Arbitrum uses multi-round fraud-proof.

 (CEX) giant Coinbase recently announced the launch of their own Layer 2 solution using Optimism’s “stack,” the underlying infrastructure required to build a Layer 2. This has increased speculation around Optimism and its potential. Given that the 

 is looking to be launched this year, there are quite a few things to look forward to from Optimism in terms of how it can enhance the scalability of the cryptocurrency market.

 protocol is a decentralized exchange (DEX) specialized for stablecoin swaps. The protocol was created to allow users to swap between different stablecoins (USDT, USDC, etc.) with low slippage and low fees. This is made possible as Curve uses an automated market maker (AMM) model. Hence, Curve has managed to increase the market share captured by bringing efficient and cheap stablecoin swaps to users.

Another feature that allows Curve to achieve low slippage is its “yield,” offered to LPs in the Curve pool. By depositing stablecoins into the Curve liquidity pool, LPs are rewarded with fees collected from the trading activity that takes place on Curve. This serves as a form of yield for the LPs and incentivizes them to deposit stablecoins, creating deeper liquidity in Curve’s swap pools.

With the recent USDC depeg, the need for a stablecoin swap has become even more relevant, as users have suffered from huge slippage when trying to swap out their stablecoins into other cryptocurrencies.

 is a decentralized algorithmic stablecoin protocol built on the Ethereum network. It was created to provide users with a stablecoin pegged to the U.S. dollar.

Frax has a two-token system. The first token is the Frax stablecoin itself (FRAX), which maintains a 1:1 peg to the U.S. dollar. This is achieved through the “fractional algorithmic reserve” mechanism whereby Frax is able to dynamically adjust the FRAX supply based on existing market demand. The protocol issues new FRAX to increase the supply when FRAX demand is high. On the other hand, when demand for FRAX is low, the protocol burns FRAX.

The second token is the collateral token, Frax Share (FXS), which serves as a 

 share and aids in preserving the stability of the FRAX stablecoin. As compensation for providing collateral, the protocol distributes a fraction of freshly produced FRAX tokens to FXS holders. Conversely, FXS holders receive part of the burned tokens when FRAX is destroyed in return for providing stability to the system.

With the recent depeg of USDC, the market has grown cautious of centralized stablecoins. One significant example would be the price increase experienced by decentralized stablecoin protocols’ native tokens, such as LQTY and FXS, indicating the market’s growing interest toward greater custody and transparency over their funds.

 is a decentralized oracle network built on Ethereum. It’s an essential infrastructure that’s integrated by countless protocols to provide accurate and secure data inputs and outputs for smart contracts. This allows on-chain protocols to interact with real-world data and events outside of the blockchain, bringing about real-world use cases.

To minimize the risk of data manipulation and single points of failure in Chainlink, the protocol uses a “decentralized oracle network” mechanism in which multiple nodes are in charge of fetching and delivering data, increasing the reliability of the data delivered. In addition, node operators are rewarded in LINK for their contribution. This serves as a form of incentivization for them to provide accurate data.

The Chainlink team is highly efficient and has been working on 

 to their protocol. In 2023, the team is looking to push out even more upgrades, so this is something we can anticipate.

Top 10 Web 3.0 Crypto Coins to Watch (2023 Edition)

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