Web3’s brand-new experience What can be achieved with on-chain applications?

Unlocking the Full Potential of Web3 with Revolutionary On-Chain Applications

Author: Alana Levin, translated by Shanoobar and LianGuai

Sometimes, people seem to have a disdain for embedding cryptographic elements into other more traditional consumer applications. After all, if millions of people are already buying movie tickets in the existing way, why make the tickets exist on the blockchain? Or so the logic goes.

This is short-term thinking.

The real value lies in the long-term capabilities built through aggregated data on the blockchain. Traditional-looking applications with select blockchain data or resources can see patterns of user behavior over time and across applications. These are new information networks that not only do not exist in Web2 but cannot exist.

• Web3 company has detected major security vulnerabilities in common smart contracts.
• Buy new, not old? Here’s a bullish list for the 2024 bull market.
• Unveiling the Achilles’ Heel Thirdweb Discovers Critical Weakness in Smart Contracts

My hypothesis is that these information networks, or “metagraphs,” will expand the design space to attract and inspire consumers.

Blockchain as a Metagraph

Imagining blockchain as a direct approach to an open, permissionless database. Users interact with applications through wallets, which sit on top of the layer of blockchain data. I have always thought of them as being akin to cars, transporting users from one destination to another (where each “destination” is an application). As such, wallets also provide identifiers for interactions between different blockchain-based applications.

The result is that the blockchain itself becomes an information network. By providing a unified identifier for cross-application user activities, developers can begin to build and leverage more comprehensive views of user behavior. These metagraphs are invaluable for segmenting customer behavior, identifying power users, and facilitating more meaningful connections.

An example might help put the value of these metagraphs into context. Consider the relationship between musicians and their two fans:

• Fan A: Listens to the artist’s music for five hours on Spotify every week, likes every Instagram photo, subscribes to their newsletter, collects vinyl records, buys their merchandise, and attends every concert. All in the same town – but the artist will never know it’s the same fan.
• Fan B: Listens to the artist’s music for 10 hours on Spotify every week but does nothing else.

Which fan seems more like a superfan? Based on the data the musician can see, they may inadvertently value the second fan more – after all, Fan B listens to their music twice as much as Fan A. This isn’t a real pain point, you say? Well, suppose the artist is Taylor Swift, and both Fan A and Fan B really want to be on a whitelist for early access to ticket sales for her next tour. Based solely on Spotify data, Fan B might get priority. That’s a painful outcome for Fan A and an unoptimized outcome for Taylor Swift.

Blockchain has changed this dynamic. Putting information and activities on the chain can expand the scope of application, creator, and consumer thought patterns. Many components in the musician example can easily involve (micro) on-chain elements:

• Subscribe to a newsletter through Mirror and provide the on-chain source for that subscription

• Like/collect social media posts on Lens (or maybe one day Farcaster?)

• Buy goods or vinyl records with on-chain digital twins

• Collect a record on Sound.xyz

• Each ticket itself can be an NFT

• Scan a QR code at a live concert to generate an NFT attendance proof

Individually, these may not seem like substantial improvements in consumer applications.

However, the aggregated metagraph is a new social mapping, and that’s where the meaningfulness lies. Building a new road that connects two towns, someone might think it’s meaningless. However, establishing a new highway system, where each new road may not bring significant incremental impact, but the system as a whole creates new connections, and you have built something powerful.

Expanding the Metagraph: Time as a New Element

If cross-application activities are a form of metagraph extension in context, then over time, user behavior is another form. Each operation on the chain has a timestamp, which means third-party developers can link things that happened on a specific date/time together, regardless of whether those actions occurred in their specific application.

This is a leap in functionality improvements for creating compelling products. References to personal history can create emotional connections between users and applications. But in web2, time as a dimension has been limited to existing applications: data is isolated, so applications can only reference behaviors that exist within their application.

These emotional bonds are powerful retention levers. For example, even though I haven’t sent a real Snapchat in years, I still use Snapchat because I like the “On This Day 5 years ago” type of reminders and the nostalgia they evoke. The longer an application exists, the stronger the ability to embed time into the product.

The problem is that new applications cannot leverage such a time element. So far, the only way to create “On This Day 5 years ago” type notifications is if the application has existed for at least 5 years. This is not a favorable environment for new applications, and it may be one of the reasons why we haven’t seen many new consumer applications take off in the past 5 years.

Web3 changes this dynamic. By encouraging on-chain activity, it democratizes information access.

The ability to leverage global background information expands the design space for builders to reassemble and reimagine consumer experiences at specific points in time. One of my favorite examples is an app built entirely around recreating the “vibe of 2015,” with an interface and content summaries tailored to the songs, writings, and media types that an individual consumed in 2015. It’s like browsing a nostalgic playlist on Spotify and then enriching the interface with other media relevant to that period, making the experience 10 times more immersive. And because this data isn’t controlled by extremely expensive APIs, app developers can build it at relatively low cost. In other words, this idea doesn’t require scale to deliver a delightful experience.

Why is this important?

In the short term, some breakthrough web3 applications are likely to look no different from web2 – the crypto elements are just hidden behind the scenes – and the real “aha” moment will come a few years later. It only takes a 3% tweak to create something entirely new. Putting the chosen elements on the blockchain may be that 3%: it creates selectivity for what can be built upon that data.

The challenge is that what these products or features are is rarely obvious, at least in the short term. As a result, some may overlook the benefits of fostering this open access. I think that’s a mistake. Open access to data promotes experimentation, which in turn creates a developer market for building with the widest range of ideas. Additionally, the most interesting metagame may rely on pattern recognition across many applications and time frames.

My guess is that at some point, the richness and breadth of on-chain data will reach a tipping point. So while some applications may look like just product-level innovations today because they only tweak a few layers of the product superficially, these three layers can completely change the long-term trajectory.

It should be noted that building on the crypto track has short-term benefits, more like individual games. Cryptocurrencies typically offer cheaper and better payment infrastructure, especially when the product’s user base is distributed globally. Creating secondary markets is relatively easy, meaning that areas that suffer traditional resource waste (e.g., unused plane tickets, reservations, etc.) can become more efficient and release net new value. Ownership and value allocation from sources may be easier to track and program on-chain.

But for each of these individual game examples, it’s crucial to note that the problems to be solved should never truly be seen as “crypto” problems. Instead, the framework should be the supporting technology for any industry the application is actually in – restaurants, entertainment, sports, content creation, etc. The most compelling short-term benefits are typically best described relative to the background of each industry. The blackbird’s flypaper is a good example. So, I’ll avoid getting too prescriptive here. I think this view of how crypto can specifically support various industries may be worth their own deep dives (hopefully conducted by true industry experts).

The main point of this piece is to highlight what can be achieved when the majority of a broader system is re-architected in an open and collaborative manner – because it may not be as obvious, but equally important. We are now at a stage where cryptocurrencies are becoming both simple and secure, using them behind the scenes almost at no additional cost and opening up a valuable call option for future product directions at least.

So if you’re building an application that utilizes crypto elements and someone asks, “Why does it have to be web3?” send them this piece. Because the question shouldn’t be whether blockchain is necessary, it should be whether blockchain is helpful. It’s like asking if you need a car to go 20 minutes away: it’s not necessary, but if the technology is safe and cheap enough, it may be the better choice. The same goes for blockchain: as long as the infrastructure continues to improve, the answer to “Is it helpful to leverage blockchain?” will become increasingly certain.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!