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January 22, 2022
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A simple guide to the Web3 stack

Web3 is the newest buzzword to see an uptick in curiosity in latest months — What does it really imply?

Around the Block from Coinbase Ventures sheds gentle on key developments in crypto. Written by Connor Dempsey Angie Wang & Justin Mart.

A lot of definitions have been thrown round, however at Coinbase, we typically consider Web3 as a trustless, permissionless, and decentralized web that leverages blockchain know-how.

Web3’s defining characteristic is possession. Whereas the first iteration of the industrial web (Web1) was read-only for many customers, and Web2 allowed customers to each learn & write on centralized platforms (Twitter, Facebook, YouTube, and so on), Web3 provides customers full possession over their content material, information, and belongings through blockchains. It empowers customers to read-write-own.

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Where a 3rd occasion like Facebook owns your id and information in Web2, your id in Web3 can transfer fluidly between platforms with out your information being captured and monetized by service suppliers. While Web2 apps are centrally managed, tokens in Web3 grant customers the proper to assist govern the companies they use, representing a type of possession in the platforms themselves.

With that framing in thoughts, what does the Web3 stack look like?

The Web 3 stack

The Web3 stack remains to be nascent and fragmented, however with a lot innovation over the years, it’s starting to come into focus. What follows shouldn’t be a mutually unique nor utterly exhaustive lay of the land. Rather, it’s a framework for interested by this panorama because it continues to evolve.

Let’s begin from the backside up.

Protocol Layer

At the backside of the stack, now we have the protocol layer. This is made up of the underlying blockchain structure on prime of which all the pieces else will get constructed.

Bitcoin is the granddaddy of all of them, and whereas it doesn’t play a significant position in Web3 in the present day, it pioneered the potential for somebody to personal a scarce digital asset via the use of public-private key cryptography. Following Bitcoin, got here a spread of layer 1 sensible contract platforms like Ethereum, Solana, Avalanche, Cosmos, and so on, that function the basis for a lot of of the Web3 purposes at present in manufacturing.

Bitcoin and Ethereum every have extra protocols constructed on prime of them. Bitcoin has networks like the Lightning Network (for quick and low cost funds) and Stacks (for sensible contracts), amongst others. To alleviate its capability limitations, a number of layer 2 scaling protocols have been constructed on prime of Ethereum.

With the rise of many layer 1 and layer 2 networks got here the want to bridge worth between them. Enter cross-chain bridges that function highways that permit customers transfer worth from one chain to one other (helpful cross-chain dashboards may be discovered here and here).

Infrastructure / Category Primitives

The infrastructure layer sits on prime of the protocol layer and consists of interoperable constructing blocks (what we’re calling “category primitives”) which can be extremely dependable at doing a selected activity.

This is a dense and various layer, with tasks constructing all the pieces from sensible contract auditing software program, information storage, communication protocols, information analytics platforms, DAO governance tooling, id options, monetary primitives, and extra.

For instance, Uniswap permits the swapping of 1 asset for one more. Arweave permits information to be saved in a decentralized method. ENS domains can function a person’s id in the world of Web3. A person can’t do a lot with every standalone software. However, when mixed, these class primitives act like lego bricks {that a} Web3 developer can use to assemble an app.

Use Case Layer

Atop the protocol and infrastructure layers sit the use case layer, the place all of it comes collectively.

Take a blockchain based mostly recreation like Axie Infinity, which makes use of Ethereum tokens and NFTs that may be bridged to a low-cost/excessive throughput sidechain known as Ronin. Players usually use Uniswap to swap ETH for the tokens wanted to play the recreation. Similarly, decentralized running a blog platform Mirror makes use of the storage protocol Arweave to retailer information. Meanwhile, it leverages Ethereum to let publishers receives a commission in crypto, usually by directing tokens to their ENS deal with.

You’ll discover that Uniswap seems each in our infrastructure and use case sections. This is as a result of, whereas at its core Uniswap is just a sequence of sensible contracts, it additionally offers a frontend that customers can work together with instantly. Put otherwise, it concurrently serves as a standalone user-facing app in addition to infrastructure for different Web3 apps like Axie Infinity.

Access Layer

At the tippy prime of the stack sits the entry layer — purposes that function the entry level for all method of Web3 actions.

Want to play Axie Infinity or receives a commission in your content material on Mirror? First factor you’ll want is a pockets, which serves as the principal level of entry for many Web3 purposes. Fiat onramps like Moonpay, Wyre, or exchanges like Coinbase assist customers commerce their fiat cash for crypto so as to get began.

With some crypto in a pockets, customers can head to an aggregator like DappRadar to flick thru and join to all types of Web3 purposes in a single place. Other tasks like Rabbithole assist customers uncover and learn the way to use numerous Web3 purposes. There are additionally aggregators like Zapper, Zerion, and Debank that assist customers monitor all of their actions and belongings throughout numerous apps.

Lastly, we’re shut to a future during which Web2 platforms the place cryptonative communities already collect, like Reddit and Twitter, function an entry level for Web3. Reddit’s long-awaited crypto initiative will let sure communities tokenize, rewarding customers with tokens and sure NFTs for energetic participation. Twitter already boasts an integration with Bitcoin’s Lightning Network to let customers tip others in BTC.

The ever-evolving stack

The protocols, infrastructure, person purposes, and entry factors named above make up the nascent, but evolving world of Web3: an web owned by its customers. Beyond possession, the energy of Web3 lies in its modularity and interoperability. Essentially, which means there are infinite ways in which the above stack may be mixed to create new and fascinating use instances — a characteristic that we count on will lead to a Cambrian explosion of latest, world-changing purposes.

While the framework and layers we highlighted will doubtless keep unchanged, we count on the tasks and alternatives inside them to evolve dramatically in the coming years.

Web3 Reads

Web3 Tweets

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Disclaimer: The opinions expressed on this web site are these of the authors who could also be related individuals of Coinbase, Inc., or its associates (“Coinbase”) and who don’t characterize the views, opinions and positions of Coinbase. Information is offered for basic academic functions solely and isn’t supposed to represent funding or different recommendation on monetary merchandise. Coinbase makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any data on this web site and won’t be accountable for any errors, omissions, or delays on this data or any losses, accidents, or damages arising from its show or use. Unless in any other case famous, all pictures offered herein are the property of Coinbase. This web site accommodates hyperlinks to third-party web sites or different content material for data functions solely. Third-party web sites are usually not below the management of Coinbase, and Coinbase shouldn’t be accountable for their contents. The inclusion of any hyperlink doesn’t suggest endorsement, approval or suggestion by Coinbase of the website or any affiliation with its operators.

A simple guide to the Web3 stack was initially printed in The Coinbase Blog on Medium, the place individuals are persevering with the dialog by highlighting and responding to this story.

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