What is Web3?

On what is the model-based? What distinguishes it from the current system of operation?

So far in the story: Web3, also known as Web 3.0, is a term used to represent a massive potential future phase of the internet that has generated quite a buzz around 2021. The model, a decentralised internet based on blockchain technology, would differ from the current versions, Web 1.0 and Web 2.0. Users will own platforms and applications in web3, as opposed to now, when tech behemoths dominate the platforms.

Understanding Web3 — Being covalescent

This three-part essay focuses on the three-dimensional aspects of the current chapter in the history of the World Wide Web, known as Web 3. Dimension 1 examines the problems of today’s web and how Web 3 addresses them; Dimension 2 examines what the Web 3 stack is; and Dimension 3 examines how developers may rely on it.

Dimension 1- WHY

Today’s World Wide Web, or internet, lacks two critical properties:

It is not a “state” that is independent of trusted operators.

It lacks a native mechanism for transferring state.

The lack of state is caused by the simplicity of the protocols upon which the web is constructed, such as HTTP and SMTP. If you ask a node (a device linked to the internet) about its history or current status at any time, it has no notion. From the standpoint of a user, this would be equivalent to accessing the internet for the first time using a new browser (no history, favourites, saved settings, or auto-complete), every time you use anything connected to the internet. Consider having to enter your user information every time you attempt to access a service, or having to download all of your favourite apps every time you open your device. The internet would be unusable, or at the very least incredibly inefficient.

  • State, however, is crucial to the development of services and applications as it can represent value. As such, two key developments have remedied the state drawback. First, as Brendan Eich highlights, cookies were invented in order for web based applications written in JavaScript to preserve state on each local device. The problem with cookies however is that they are created and controlled by service providers, not the user. The user does not have any control over which provider is giving them state or has access to their state.
  • The second development to address the lack of state is centralised service providers who store user state on their own devices. Today’s huge internet businesses, such as Google and Facebook, all control the state, and thus the value created by billions of individuals. There’s nothing intrinsically wrong about this, as their users have profited from the same companies’ services and value. The issue is that the internet benefits these concentrated firms far more than it does the general populace.
  • The lack of a native mechanism to transfer state, the second essential missing attribute of the internet, is a by-product of the first issue. You can’t transfer state (or the value it generates) if you can’t hold it. The ability to move value quickly and readily is at the heart of economic development and modern finance. Any improvement in the efficiency with which you can transmit value has a domino effect. The internet has made it orders of magnitude easier to share information, creating enormous opportunity for new enterprises and services. However, if firms cannot easily trade value, they must find another way to benefit from their services.

This is why, over the years, the web’s incumbent business model has become advertising, as advertising businesses are the only ones that can efficiently store and transmit the state of billions of users. Again, there is nothing inherently wrong with advertising. But the problem, this time, is three-fold:

  1. Third-party intermediaries facilitate and profit from every single advertising transaction;
  2. Advertising favours established businesses, which puts new businesses at a disadvantage, limiting the economy’s growth potential
  3. A richer advertising economy is reliant upon more user data (which feeds ad models), creating misaligned incentives with users and bad UX.

An Orchestration to the internet

The web is a technological advancement in and of itself. It’s just a collection of pipes that don’t care what humans do with them. Humans must finally select where to point it. It has been clear over the years that its current course will not benefit people who aren’t already profiting from it. A better direction for the web’s next decade or two would be to facilitate:

  1. Any participant’s generation of native economic worth; and
  2. The transfer of this native value to any participant.

Many developers and businesses around the world have begun to build (or #BUIDL) on this new state layer. This is growing easier by the day, thanks to open platforms like Ethereum. As people become increasingly aware of what these new capabilities enable them to accomplish, they have begun to unite around the need for a more open and equitable internet, often known as Web 3.

Dimension 2- What?

As mentioned in Dimension 1, today’s internet is a stateless internet, which means that its participants cannot hold their own state or move it from one to another natively. Blockchains, beginning with Bitcoin, provided us with a mechanism to store state in a digitally native manner. Web 3 is a term coined by those of us in the crypto and blockchain community to describe this new basic capacity. Although we are still in the early stages, we are beginning to gain a general idea of the benefits it will provide. L4, for example, has compiled some excellent information on these advantages.

What the Web 3 stack looks like today, and likely in the future:

The layers in the framework above begin at the top and make their way down the y-axis. Colors reflect the compatibility of modules in different tiers. For example, as seen above, today’s Crypto Goods (yellow) are compatible with EVM (blue to yellow), but not with the Bitcoin Script (green to red). EVM, on the other hand, is compatible with the Ethereum Blockchain (blue), but not with the Bitcoin Blockchain (green). This enables us to incorporate a future Crypto Good into the framework that is compatible with the Bitcoin Script and so recorded on the Bitcoin Blockchain (although this is highly unlikely due to technical challenges). Such modularity is critical to Web 3’s robustness, because updating one of the levels should not necessitate a total rewrite of everything below it It’s also worth noting that, while the modules within each layer may look radically different in 5 years, the layers themselves are intended to be comprehensive and contain all of the parts that make up Web 3.


The state layer saves the state of everything that happens underneath it. It is nearly entirely provided by blockchain technology and lets any member to participate as long as they adhere to the rules of the preferred network. The goal of any successful network will be to have a default and stable infrastructure, similar to today’s DNS providers. No one notices them when they work properly (99% of the time), but we all feel the anguish when they don’t.

This layer can be either public or private/permissioned. One could argue that state is a solitary and universal reality by definition, and therefore establishing private layers is tantamount to building alternative universes.

Computation Layer:

Software allows humans to give instructions to computers. The Web 3 Computation Layer allows humans to instruct the State Layer to do what they want. Not every Computation Humans can send instructions to computers using software. The Web 3 Computation Layer enables humans to tell the State Layer what to do. However, not every Computation Layer allows for anything to be done. Bitcoin’s script, for example, is quite restrictive in that it only allows for transaction orders. The Ethereum Virtual Machine (EVM), on the other hand, is a full Turing Complete machine that can execute any arbitrarily complex calculation using a state layer that supports EVM.

The Computation Layer chosen by application developers (and blockchain developers) is critical since it specifies which blockchains a specific application may run on. For example, any EVM-compliant application can now execute on the Ethereum blockchain and not on the Bitcoin blockchain.

Component Layer:

Combining the State and Computation Layers expands the design area for new types of digital value by 1,000 times (aka programmable money). As a result, we’ve already seen a lot of experimenting by developers. Some of these solutions have so much potential (see examples below) that entire sub-economies might be created on top of a given component.

Protocol Layer:

Components developed on the State Layer must be brought to life. Certain functions are becoming standardised because they are so basic and common to the lifespan of these components. This is due not just to the fact that these functions must communicate in the same language (hence the name Protocol Layer), but also to network effects that make them more efficient. These protocols effectively allow for the establishment of healthy markets for key components, similar to what we have in the physical world, but orders of magnitude cheaper and more efficient.

Application Layer

The majority of activity on Web 3 will be through third-party applications built on all of the layers below, similar to the conventional web. Users recognise value in Crypto-Kitties, which are Crypto Goods, for example, because of all the functionality made available by apps that consume Crypto-Kitties, such as cryptokitties.co, kittyrace.com, or cryptogoods.com. Because Web 3 applications have distinct attributes and requirements than regular web applications, they are commonly referred to as decentralised apps, or DApps.

Dimension 3 How?

Dimension 1 discussed how today’s internet is a state-less internet — its players can’t hold their own state or move it natively from one to another. Blockchains, beginning with Bitcoin, enabled us to create a stateful web of computers. Those of us in the cryptocurrency and blockchain ecosystem have begun to refer to this new internet as Web 3, which we discussed in Dimension 2.

Web 3 introduces a completely new infrastructure layer with which programmes can communicate, as well as new client functions and needs. Users must also learn new UX concepts in order to use these applications. As a result, the architecture of Web 3 apps introduces new features to the current Web 2.0 framework as well as new elements to the existing Web 2.0 framework.

What Do Developers Need To Know?

Tools & Frameworks

Knowing what tools and frameworks to employ, as well as being proficient with them, is an important part of any developer’s job. Although the Web 3 space is still in its early stages, we are beginning to see usable technologies that allow developers to get to an MVP level and iterate at a quicker and faster pace. This is particularly obvious on Ethereum, where developers are beginning to flock in greater numbers as a result of the efforts of many in the community.

Design Choices

Web app vs native app: This is a decision that has been around for a long time, but it has taken on new life with Web 3 applications. Most DApps today are online apps for two simple reasons: a) it eliminates the need for the user to download a new app every time, and b) consumers can use your app without having to establish a new wallet every time. The limited number of native DApps available all force the user to create a new wallet, which is not the optimal user experience. It’s simple to see how this isn’t a viable future, as users are unlikely to have keys for hundreds of wallets. There will be more seamless ways of enabling native apps to overcome this UX difficulty in the near future, but for now, online apps will suffice.

Desktop vs mobile: The Web 3 version of this option isn’t about picking one or the other, but rather about how people end up utilising your DApp on both. On the desktop, most users have interacted with DApps through a Chrome extension such as Meta-Mask. Despite, the fact that the user must download a new extension, the user is still engaging with a familiar browser experience.

Extensions, on the other hand, are not possible on mobile, at least not on iOS. As a result, wallet apps, such as Coinbase Wallet, have browsers within their apps. The DApp experience is the same in the browser view as it is on the desktop.

Other challenges with no solutions to date:

Who pays for gas: Every DApp launched on Ethereum today requires its users to pay the transaction cost, known as gas for the Ethereum network. This will not be possible in the long run if millions of non-crypto-native users utilize Web 3 applications. There are a variety of theoretical solutions, some of which are more practicable than others, such as gas re-layers, but none of them are operational as of yet.

App-specific accounts or notUniversal identification is one of the most exciting Web 3 applications. Because there aren’t many functional identity solutions available today, some DApps still require users to register an account, allowing some identity to be associated with their app activity. This is not dissimilar to the Web 2.0 manner of doing things. How should DApps treat and deliver functional decentralized identification solutions once we have them? Despite the lack of a clear response, some are already providing proposals, such as Origin’s demo built with ERC-725 and 735.


In Dimension 3, I aimed to summarize the modifications Web 3 brings to the architecture of applications and what developers should know when starting to build Web 3 apps. A great resource for beginners is Crypto-zombies, which is a fun workshop teaching anyone how to create their first Web 3 app.

Although the way to build Web 3 apps will change in many ways as the infrastructure around it evolves, what’s key is that apps are being built today. It’s the wild west of the web as we know it and a lot of really smart teams are starting to tackle the challenges and opportunities made available.

This concludes our three dimensions on Understanding Web 3

Miss Sonalika Roy (Sr. Operations Analyst)