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State of Web3

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As the web is advancing towards its third iteration, there is a growing a buzz around Web3 use cases and the emerging Web3 applications. This article talks about the various aspects of Web3 at length. It explains the history of Web3, its current state along with its layers and their maturity, applications, use cases and possible areas of improvement for the future.

Evolution of Web

Web 1.0

Introduced in 1989, Web 1.0 is the original version of WWW developed by Tim Berners-Lee and is also known as the read-only Web. It contained static content, mostly informational and connected primarily through hyperlinks, and it lasted until 2004.

Web 2.0

Web 2.0 is the prevalent Web of our era that emerged in 2004 and is also known as the read-write Web, offering dynamic and active websites where users can produce content and connect through several platforms. It contributed to developing applications that extended to mobile devices and provided wide opportunities like e-commerce.

Web 3.0

Web 3.0 is an extension of the World Wide Web and is also known as the Semantic Web that aims to make the internet smarter by managing information through machine readability. The goal of web 3.0 is to connect everything on the internet at the data level so that any modifications of information within a specific platform can be reflected simultaneously on other platforms as well. If, for instance, you want to change your job and edit it on LinkedIn, it will be updated over other platforms like Facebook.

What is Web3?

Unlike the centralized Web 3.0, Web3 is a decentralized network built on the blockchain, allowing users to own their data. The data within a Web3 ecosystem is not under the control of any central authority. Instead, several distributed nodes of the network keep a copy of the data, offering transparency.

Ethereum co-founder Gavin Wood coined Web3 in 2014 to reclaim data ownership from Web 2.0 giants and return it to the users using decentralized storage and self-sovereign identity.

Though many consider Web3 and Web 3.0 as similar, both are fundamentally different. If you are interested in finding more about Web3 vs. Web 3.0 and how both are different, please refer to this article.

Layers of Web3

Web3 has three layers, each of which is divided into sub-layers. Let us go through each layer in-depth.

Layer 1

Foundational Layer

The foundational layer is the basic and most fundamental, consisting of various blockchain protocols, cryptocurrencies, storage networks and identity managers.

  • Protocols – Blockchain protocols like Ethereum, Stellar or Klaytn have updated and evolved, becoming more user-convenient.
  • Cryptos – The tokenomics that exist today is also a far cry from what it was in its nascent stage, where cryptocurrencies were just a peer-to-peer cash system.
  • Storage – With the emergence of newer blockchain protocols, storage networks like Filecoin or StorJ have been introduced, offering a decentralized infrastructure for secure storage of your data and files.
  • Identity Managers – Tools for identity management, like Civic and Indy, are also growing that aim to solve the existing issues in the identity management solutions.

Improvable areas – Although many cross-chain platforms exist today, more maturity is required. There are chances of interconnected protocols, eventually unlocking interoperability to its fullest potential where protocols can interact with each other and assets can be transferred from one protocol to another.

Currently, available distributed storages need numerous improvements, so you may not always save something in the public domain. A solution where you have access control on storage is also a necessity. Moreover, new standards around other utilities like gaming or the exchange of information, which have more real-life applications, will be created other than Ethereum’s ERC standards or Tezos’ TZIP standards.

A foundational decentralized internet has been established over the past few years and has reached a level of maturity by now, thanks to the growing use cases and users as well as the numerous investments of stakeholders.

Transactional Layer

This layer contains the transactional activities within the foundational layers and includes exchanges, custodians, payments and Wallets. The foundational layer paved the way for the development of the following:

  • Exchanges – Cryptocurrency exchange companies like Binance, FTX or Kraken facilitate the exchange of different crypto assets.
  • Custodians – Cryptocurrency custodian services like Prime Trust, OSL or Genesis are necessary to safeguard the crypto assets by securely storing them.
  • Payments – Payment gateways such as BitGo, CoinsPaid and Bitpay offer simple alternatives to send and receive crypto payments for purchases and other services.
  • Wallets – Crypto wallets like Metamask or Coinbase enables safe storage of public and private keys, required to buy and trade cryptocurrencies and offer digital signatures to authorize each transaction.

Improvable areas – Although the transactional layer has huge maturity, the opportunities around this layer will rise as time progresses. For instance, a full-fledged payment automation system has not yet been implemented, even though many experiments have been conducted, and this needs a hybrid solution rather than on-chain ones.

Moreover, solutions for identity exchange from one chain to another should be available. Likewise, solutions for IP exchange should also be developed so that when NFTs are traded, the IPFS can also be transferred from one wallet to another.

Once different countries develop and implement their CBDCs (Central Bank Digital Currency), the digital form of a country’s fiat currency, there will be mass adoption of Web3 and solutions for on-ramp and off-ramp CBDCs developed.

Embark on your web3 journey with our future-ready web3 solutions.

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Layer 2


This layer offers the most opportunities by addressing the changes associated with layer-1 solutions. It includes:

  • Polygon – It is a sidechain scaling solution aiming to solve huge gas fees issues of Ethereum through bulk minting and speedy transaction submission
  • Alchemy – It is a blockchain development platform that offers a suite of developer tools, enhanced APIs and node infrastructure to streamline the development and running of Web3 applications.
  • – It is a security auditing platform that ascertains the security and detects vulnerabilities of a blockchain protocol or crypto project using high-end Artificial Intelligence.
  • Parachain – Parachains are custom, project-specific blockchains integrated within the Polkadot (DOT) and Kusama (KSM) networks that can be customized for any use case and feed into the main blockchain, called the Relay Chain.
  • – It monitors blockchains to reveal the origins of any NFT and offers the most up-to-date and comprehensive NFT dataset to prevent fraudulent activities and inspire authentic collaboration.
  • – It is a rating and review platform for developers that scores various blockchain protocols and monitors ecosystem tools using specific parameters.

Improvable areas – This layer is still not matured enough, and numerous improvements can be made. Solutions for recovering lost private keys, speedy and reliable content delivery solutions, bridges to bring data like education records from centralized to a decentralized network, staking for tokens and NFT validation solutions are some of the solutions that need to be introduced integrated into the current Web3 ecosystem. Implementing such solutions and services can solve numerous downwards of the existing Web3 infrastructure and build users’ trust.


Vitamins consist of various utilities and tools for seamless integration of Web3 applications. It includes:

  • Bionic – It is a user-experience(UX) improvement tool for blockchain.
  • OpenZeppelin – It is an open-source platform for creating safe dApps that offers the necessary resources for building and managing Web3 applications.
  • Mirror.XYZ – It is a cutting-edge writing platform that uses blockchain and cryptocurrency technology to convert different types of creative writing into NFTs.
  • Snapshot – Based on the IPFS decentralized storage system, Snapshot is a DAO governance tool for voting that is used by several cryptocurrency projects to access, assess, and investigate their user bases through polling and surveying.
  • Chain Analytics – It is a blockchain data analytics system that upholds reliable data about assets, activities, people, and organizations.
  • DYDX – It is a decentralized exchange (DEX) that offers perpetual contract trading, margin trading, spot trading, lending, and borrowing services using smart contracts on the Ethereum (ETH) blockchain.

Improvable areas – Web 2.0 has a huge amount of utility collection, which is unavailable in the decentralized network. Solutions for identity management, extension to protocols, frameworks to audit new Web3 products and several Web3-focused infrastructural services need to be introduced. Moreover, the existing protocols that live in the public domain also need to participate in enterprise consensus. So, more hybrid solutions need to be implemented where you will run some consensus in a private protected environment and then submit things to the public. These are some utility adapters that need to be built in this layer.

Additionally, a huge gap needs to be filled in gaming areas. The massive economy of Web 2.0 games needs to be brought to the Web3 ecosystem.


Unlike the preceding layers that contain more automation and software development, services involve manual efforts. It consists of the following:

  • Mattereum: It is the first smart contract ecosystem to go on sale, and it fully supports the sale, leasing, and transfer of property rights.
  • Binance: It is a cryptocurrency exchange platform that enables the trading of various cryptocurrencies and facilitates Web3 crowdfunding.
  • Electroneum: It is a cryptocurrency that aims to make international money transfers less complicated and cost-effective, similar to a simpler cryptocurrency version of PayPal.
  • Anchorage: Through its first federally licensed crypto bank, Anchorage, a globally regulated crypto platform, offers institutions complete financial services and infrastructure solutions for digital assets.
  • Talos: It is an institutional trading platform that lowers the hurdles to widespread cryptocurrency adoption by giving service providers and buy-side institutions the technology infrastructure needed to support the whole deal lifecycle.

Improvable areas – The rise of Web3 compatible services and the associated new digital economy requires a proper legal framework to operate to its fullest potential. Eventually, proper legal and compliance solutions will be implemented in most countries as Web3 takes over Web 2.0 and becomes mainstream. Moreover, solutions like NFT physical vaults and nodes as a service also need to be executed to improve the existing Web3 ecosystem by leaps and bounds.

Layer 3


NFTs have become a major use case of the blockchain, and various NFT marketplaces are thriving. This layer includes:

  • NFTinger – It is an easy-to-use portal for NFT marketplace development that supports multiple blockchains and enables enterprises, brands, creators, and influencers to launch their own NFT store without technical knowledge.
  • Anchor NFT Staking – Staking NFT tokens in a smart contract allows you to earn an incentive, returns from which depend on variables such as inflation, the number of participants in the staking, and the duration of the staking period.
  • NFT Service Providers – Recently, NFT service providers such as white-label marketplace solution providers have been emerging.
  • OpenSea – It is a marketplace for NFTs that makes it simple for artists and content producers to upload their creations and turn them into NFTs so collectors can purchase them.

Improvable areas – Similar to various Oracles around cryptocurrencies and tokens and bridges built for tokens, NFTs should also have oracles and bridges. Moreover, only a limited number of token standards like ERC-721 exist specifically for NFTs. As a result, there is a need for more standards to be developed that can acknowledge the growing NFT use cases. Mainstreaming fractional NFTs can generate more revenue as real-world assets, or even a company’s equity can be converted into fractional NFTs.


  • Decentraland – It is a virtual reality platform that uses the Ethereum blockchain to power content creation, user experience, and revenue generation.
  • Spatial – It allows users to organize and participate in virtual exhibitions of NFTs arts, gatherings, and live events by creating their 3D locations in the Metaverse.
  • Metavesal It is a 3D immersive virtual reality platform that enables users to host live events, conduct online meetings, organize virtual social events and book metaverse spaces for a product launch or e-commerce.

Improvable areas – Metaverse unlocks various opportunities for several businesses and industries. Although the existing metaverse projects are in their infancy stage, a full-fledged metaverse will be unveiled in the future, offering many services like advertisement, live events, promotions, sponsorships, analytics, b2c interactions and much more. Many interconnected and interoperable metaverses will be built over the upcoming years. Metaverse for NFTs and Metaverse-specific SaaS products shall also be in full bloom.


  • XMTP – For Web3, XMTP is a secure messaging protocol and decentralized communication network that is not under any organization’s control, ownership, or observation.
  • EPNS – Ethereum Push Notification Service or EPNS is a notification protocol that enables users to get notifications. Any smart contract service can deliver notifications to users using this protocol in a platform-neutral manner.
  • Matrix – Matrix is an open-source, decentralized, secure instant messaging network for transferring various data types from many sources. Users can call and message one another using Matrix without carrying about the program they are using.

Improvable areas – More innovations are likely to happen in the current wallets that can enable wallet-to-wallet communication. Moreover, Enterprise communication tools require innovations compatible with the growing Web3 ecosystem.

Services Gaming

  • Gala Games – It is a blockchain-based gaming platform that enables users to gain non-fungible tokens (NFTs) and cryptocurrencies through games.
  • Axie Infinity – It is an NFT-based gaming platform where users can earn tokens via gameplay and valuable contributions to the ecosystem.

Improvable areas – The gaming space in Web3 provides numerous opportunities for gamers, developers and businesses. Thus, it needs improvement in many areas. Bridges for Web 2.0 games are to be implemented to connect to the Web3 ecosystem. Additionally, asset marketplace, single identity for multiple games and escrow smart contracts can be integrated into Web3 gaming to make it more user-friendly.

Social Media

A decentralized social network seems to need time because of the rising issues of data leakage, malware and security issues and associated cyber crimes.

Web3 social media includes decentralized social networking apps like Minds, Aether, Mastodon, LBRY, Pixelfed and Peertube.

Improvable areas – The existing social media platforms need to be brought into the Web3 infrastructure, and privacy frameworks should be enabled so that end users may not feel invaded. The decentralized social network going to be established in the future is likely to be linked with persistent Metaverse and might be embedded in social networking.

Embark on your web3 journey with our future-ready web3 solutions.

Launch your Web3 project with LeewayHertz


Say you have invested in a blockchain protocol and therefore, you need to know how much it has progressed over time and how many upgrades have been done on it so far. You will rely on numerous sources and websites to gather accurate insights, which is time-consuming and costly. So, what’s the alternative to this? That’s where scortik comes into play.

Scortik helps developers and businesses interested in building Web3 applications to find the right blockchain protocol for their project-specific needs. It rates blockchain protocols and scores them based on eight parameters: ecosystem, performance, foundation tools, grant program, documentation, third-party services, add-ons and developer community. It also points out the improvable areas of each protocol, popular protocols, live monitoring updates and much more.


With the Web3 ecosystem achieving mainstream popularity, enterprises have been building innovative decentralized applications on top of Web3 infrastructure. As each layer on Web3 architecture evolves to the next, developers shift to the new layer to build more reliable and futuristic decentralized solutions.
With this advancement towards the next layer, the intrinsic details prevalent in the core layers tend to be forgotten.

For instance, as people mint NFTs, many do not consider the protocol details, the working of the consensus algorithm, how the node distribution mechanism works etc. Thus, each layer matures, advances further and moves to the next layer. Even though Layers 1 and 2 of Web3 are yet to undergo several modifications, Web3 innovations are advancing further in the third layer, highlighting how it has grown by leaps and bounds within the past decade.

If you are looking to develop a Web3 application, learn about our Web3 development services.

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What is Chainlink VRF

Author’s Bio


Akash Takyar

Akash Takyar LinkedIn
CEO LeewayHertz
Akash Takyar is the founder and CEO of LeewayHertz. With a proven track record of conceptualizing and architecting 100+ user-centric and scalable solutions for startups and enterprises, he brings a deep understanding of both technical and user experience aspects.
Akash's ability to build enterprise-grade technology solutions has garnered the trust of over 30 Fortune 500 companies, including Siemens, 3M, P&G, and Hershey's. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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