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A easy information to the Web3 stack


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

A number of definitions have been thrown round, however at Coinbase, we usually consider Web3 as a trustless, permissionless, and decentralized web that leverages blockchain expertise.

Web3’s defining characteristic is possession. Whereas the primary iteration of the business web (Web1) was read-only for many customers, and Web2 allowed customers to each learn & write on centralized platforms (Twitter, Fb, YouTube, and so forth), Web3 offers customers full possession over their content material, knowledge, and property by way of blockchains. It empowers customers to read-write-own.

The place a 3rd social gathering like Fb owns your id and knowledge in Web2, your id in Web3 can transfer fluidly between platforms with out your knowledge being captured and monetized by service suppliers. Whereas Web2 apps are centrally managed, tokens in Web3 grant customers the correct to assist govern the providers they use, representing a type of possession within the platforms themselves.

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

The Net 3 stack

The Web3 stack remains to be nascent and fragmented, however with a lot innovation through the years, it’s starting to come back into focus. What follows isn't a mutually unique nor utterly exhaustive lay of the land. Quite, it’s a framework for fascinated about this panorama because it continues to evolve.

Let’s begin from the underside up.

Protocol Layer

On the backside of the stack, we've got the protocol layer. That is made up of the underlying blockchain structure on high of which the whole lot else will get constructed.

Bitcoin is the granddaddy of all of them, and whereas it doesn’t play a serious function in Web3 immediately, it pioneered the power for somebody to personal a scarce digital asset by means of using public-private key cryptography. Following Bitcoin, got here a variety of layer 1 good contract platforms like Ethereum, Solana, Avalanche, Cosmos, and so forth, that function the inspiration for most of the Web3 functions at the moment in manufacturing.

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

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

Infrastructure / Class Primitives

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

It is a dense and numerous layer, with initiatives constructing the whole lot from good contract auditing software program, knowledge storage, communication protocols, knowledge 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 knowledge to be saved in a decentralized method. ENS domains can function a consumer’s id on this planet of Web3. A consumer can’t do a lot with every standalone software. Nevertheless, 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 primarily based recreation like Axie Infinity, which makes use of Ethereum tokens and NFTs that may be bridged to a low-cost/excessive throughput sidechain referred to as Ronin. Gamers usually use Uniswap to swap ETH for the tokens wanted to play the sport. Equally, decentralized running a blog platform Mirror makes use of the storage protocol Arweave to retailer knowledge. In the meantime, it leverages Ethereum to let publishers receives a commission in crypto, usually by directing tokens to their ENS handle.

You’ll discover that Uniswap seems each in our infrastructure and use case sections. It's because, whereas at its core Uniswap is solely a collection of good contracts, it additionally offers a frontend that customers can work together with immediately. Put in another way, it concurrently serves as a standalone user-facing app in addition to infrastructure for different Web3 apps like Axie Infinity.

Entry Layer

On the tippy high of the stack sits the entry layer — functions that function the entry level for all method of Web3 actions.

Wish to play Axie Infinity or receives a commission on your content material on Mirror? Very first thing you’ll want is a pockets, which serves as the primary level of entry for many Web3 functions. Fiat onramps like Moonpay, Wyre, or exchanges like Coinbase assist customers commerce their fiat cash for crypto to be able to get began.

With some crypto in a pockets, customers can head to an aggregator like DappRadar to flick through and connect with every kind of Web3 functions in a single place. Different initiatives like Rabbithole assist customers uncover and learn to use varied Web3 functions. There are additionally aggregators like Zapper, Zerion, and Debank that assist customers monitor all of their actions and property throughout varied apps.

Lastly, we’re near a future by 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 certain NFTs for lively participation. Twitter already boasts an integration with Bitcoin’s Lightning Community to let customers tip others in BTC.

The ever-evolving stack

The protocols, infrastructure, consumer functions, and entry factors named above make up the nascent, but evolving world of Web3: an web owned by its customers. Past possession, the ability of Web3 lies in its modularity and interoperability. Primarily, because of this there are countless ways in which the above stack will be mixed to create new and fascinating use circumstances — a characteristic that we anticipate will result in a Cambrian explosion of latest, world-changing functions.

Whereas the framework and layers we highlighted will probably keep unchanged, we anticipate the initiatives and alternatives inside them to evolve dramatically within the coming years.

Web3 Reads

  • A considerate critique on Web3, by Moxie Marlinspike
  • A rebuttal to Moxie, from Vitalik Buterin
  • Are we doomed to repeat web2 historical past? by Sarah Guo
  • The Structure of a Net 3.0 software, by Preethi Kasireddy
  • Web3 in a nutshell, by Eshita
  • The Web3 World, by Grace Isford
  • The Web3 Renaissance: a Golden Age for Content material, by Li Jin & Katie Parrott

Web3 Tweets

  • What's Web3, from Luke Youngblood
  • A information to creating the soar from Web2 to Web3, from obheda12
  • The one web3 stack that can survive the take a look at of time, from The Graph
  • Why everybody will want Web3, from Balaji Srinivasan
  • What's Web3? from Dan Khomenko

Earlier editions of Round The Block

  • DAOs: Social networks that may rewire the world
  • Scaling Ethereum & crypto for a billion customers
  • Coinbase Ventures 2021-Q3 exercise and takeaways
  • The Coinbase Ventures Information to NFTs
  • Loot Challenge: the primary group owned NFT gaming platform
  • Axie Infinity, Yield Guild Video games & the play-to-earn financial system

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A easy information to the Web3 stack was initially revealed in The Coinbase Weblog on Medium, the place individuals are persevering with the dialog by highlighting and responding to this story.