It’s easy to dunk on web3 right now.
It’s the target du jour. I understand why, with recent dramatic price declines, high-profile bankruptcies/frauds, and noise around long-term viable use cases.
Much of the negativity is deserved.
Beyond expensive jpegs and business models that rely on ponzi-nomic-type structures, there hasn’t been a killer use case for web3. That has to change.
However, I still believe it’s early, and we will see those killer use cases. So what’s next?
To find out, let’s look to the past.
Enter Hype Cycles
The hype cycle has become a tangible illustration of the journey that most major technological breakthrough seems to take before they find mass market adoption.
On its y-axis, we have “Expectations,” and on the x-axis, “Time.” The Hype Cycle is meant to visualize the five stages of technology maturity, including the peaks and valleys along the way.
The stages include:
- Innovation Trigger: The aha moment
- Early proof-of-concept ideas start to take shape, and people begin to pay attention
- Peak of Inflated Expectations: This is going to be amazing
- Early success drives more people to the space, and there is early traction
- Trough of Disillusionment: The oh shit moment
- We start to see a few high-profile failures, and the “I told you so” chorus starts to gain momentum
- Slope of Enlightenment: Hmm, maybe this will work
- Better use cases start to take shape, and we learn from the past failures on how to build better, more functional applications for the technology
- Plateau of Productivity: Ah, product market fit
- Mainstream adoption occurs, and the use cases of the technology are clearly defined – the technology becomes part of our everyday lives
Think about the illustration below for a minute. I’m sure you can recall several technological breakthroughs that follow the cycle below. For example, computer chips, the internet, cloud computing, the gig economy, and so many more.
The web3 hype cycle
My take is that we are in the “Trough of Disillusionment.” Everything in web3 has a component on FUD right now. Negativity abounds, certainty is scarce, and use cases are few.
We started our journey up the hype cycle with the advent of the blockchain, Bitcoin, and Ethereum.
All game-changing technologies.
Then came NFTs and their meteoric rise and subsequent fall.
Along the way, we saw promise in token-driven models with STEPN, Helium, and others. We also gained new blockchains like Solana, which promise increased transaction speed and reduced costs compared to other L1 blockchains.
The subsequent “crypto is a scam” voices grow louder. And so, we sink deeper into disillusionment.
How do we get out of the valley?
It comes down to utility.
Utility is defined as practical use cases beyond speculation.
What does utility look like?
Web3 and its underlying technologies are plumbing. It’s what’s built on top of them that provides utility.
In the same way, faster computer chips increased the usage of computers. Just as smartphones on better bandwidth networks spawned a new generation of apps like Instagram, Uber, and YouTube. We need applications to sit on top of the technology that drives mass adoption.
Until then, we will continue to be at the whims of the hype cycle, slowly climbing our way up the slope of enlightenment.