The internet qualifies as one of the most prominent technological trends, which changed the way we visualize technology. Communication became easier, and the world witnessed the rise of e-commerce and social media with the arrival of internet. Interestingly, the internet has been developing at a rapid pace, and if you look closely, users can access more functionalities than in the earlier stages of the internet.
For example, web 1.0 allowed read-only websites, which only displayed information. Subsequently, web 2.0 introduced ‘read-write’ functionalities with user-generated content. Now, the decentralized web3 has emerged as the ‘intelligent’ version of the internet, which entrusts control in the hands of users. Web3 utilizes blockchain technology and smart contracts to ensure that users have control over ownership and use of their data.
The growth of any new web3 platform depends on the creation of an extensive developer ecosystem. You can find the answers to ‘What is the ecosystem of web3?’ in the example of Ethereum ecosystem. It has shown how a well-developed web3 ecosystem could contribute to the development of web3 platforms.
You can notice how Ethereum has attracted developers with the facility of grant funding and a wide range of powerful development tools. Let us learn more about the importance of web3 ecosystems and their core elements before finding the best practices to build decentralized web3 ecosystem.
Importance of Web3 Ecosystems
The most crucial feature of web3 refers to decentralization, and it utilizes different technologies for empowering innovation. Experts have painted web3 as the next step in the evolution of the internet with a wide variety of technologies. The review of ‘How does web3 work’ would help you understand how web3 is defined as the semantic web.
In addition, it also utilizes technologies such as AI and Natural Language Processing to create a more intuitive internet ecosystem. Web3 focuses on developing personalized user experiences by unlocking the intent and context underlying user interactions on the web. It aims at developing a connected web that ensures data sharing and accessibility throughout different applications and platforms.
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What are the Important Components of Web3 Ecosystems?
Most of the discussions about web3 would draw references to questions like ‘What is decentralized in web3?’ and the importance of decentralization. It is one of the vital features of web3 and opens up the doors for innovation with reduced bureaucracy risks. Decentralization also encourages improved accountability and autonomy alongside improving responsiveness to user requirements and market conditions.
The value advantages of these traits could help in creating an ecosystem that could adapt to emerging demands. Most important of all, a web3 ecosystem could facilitate better opportunities for fostering creativity. Here are some of the core components you would find in a web3 ecosystem.
Blockchain is the core component that empowers the web3 ecosystem. The best way to build decentralized web3 ecosystem would involve a clear understanding of how blockchain technology works. The foundations of blockchain involve decentralized networks, which help in storing and exchanging data. Blockchain provides a new data structure on a distributed ledger, where you don’t have to worry about the intervention of centralized entities. It helps in creating a secure ecosystem for developing, distributing, and trading digital assets.
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Crypto assets are digital assets that utilize decentralization of blockchain for executing secure digital transactions. The crypto assets such as tokens and cryptocurrencies are native currencies for dApps and could help in participating in web3 governance.
Another important requirement in the web3 ecosystem would point to smart contracts. You can build web3 app by using the programmability of smart contracts. Smart contracts work as self-executing computer programs that run digital transactions upon fulfillment of pre-determined conditions. Smart contracts offer the opportunity to create innovative dApps that power the web3 landscape.
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Web3 could offer a combination of interactive experiences and decentralization for developing a new internet model that does not require intermediaries. Decentralized apps or dApps help users in buying or selling NFTs, trade in crypto, and offer access to DeFi solutions.
The components of a decentralized web3 ecosystem also include interoperability, which helps users communicate and use their digital assets throughout different platforms. Users could have complete control of their data in the domain of web3 as compared to web2, where data is under the centralized control of companies.
How Can You Build a Web3 Ecosystem?
The detailed understanding of responses for ‘What is the ecosystem of web3?” would have helped you understand the important requirements for web3 ecosystems. Here are some of the notable steps you would come across in development of a web3 ecosystem.
Design an Attractive Developer Experience
The foremost requirement for boosting your web3 ecosystem points to the design of an attractive developer experience. In addition, the facility of support could also help in gaining trust of early adopters who could use the platform. Satisfied users could help in driving referrals for the web3 platform through word of mouth.
The journey to build decentralized web3 ecosystem requires a detailed understanding of the responsibilities in designing the developer experience. The processes involved in creating a developer experience for web3 ecosystem include providing answers to developer questions. Some of the other steps in creating developer experience include creation of code templates and developer tools.
The team working on developer experience could deliver different services, including maintenance of developer FAQs. In addition, they could also create a developer site that helps in finding documentation and template code. The developer experience team could also offer code reviews for partners working on large-scale blockchain projects in the web3 ecosystem.
Development of a high availability developer support channel on platforms such as Telegram and Discord alongside using community moderators can also improve the developer experience. The developer site could serve as the first point for developers to ensure organic growth for the community. It is also important to remember that you should improve the developer experience roadmap and resolve the unique issues.
Develop the Infrastructure Ecosystem
The first choice to build web3 app would be Ethereum. It is a popular choice among developers due to the open-source tooling. You can find two development frameworks, such as Hardhat and Truffle, for programming, compiling, testing, and deploying blockchain applications at a faster rate. On top of it, you can rely on OpenZeppelin for accessing a collection of audited open-source primitives for Ethereum.
The answers to ‘What is decentralized in web3?’ would point towards the infrastructure layer, i.e., blockchain. You can explore other blockchains for building your web3 ecosystem. For example, Solana is one of the top choices among blockchain networks that utilize open-source frameworks for growing ecosystems.
The DeFi ecosystem of Solana has witnessed exponential growth with the introduction of an open-source framework for Solana. Some of the top DeFi projects in terms of TVL in the Solana ecosystem, such as Metaplex and Mango, were developed on Anchor. Anchor led to a formidable boost in productivity, which expanded the Solana DeFi ecosystem by massive margins in early 2022.
The blockchain infrastructure primarily emphasizes the backend functionalities required for dApps. The notable backend functionalities include node providers, smart contract programming languages, blockchain explorers, web3 APIs, wallets, and development frameworks. You must understand the different layers in the infrastructure of a web3 ecosystem. The base layer, or layer 1, includes the blockchain networks, layer 2 includes the node providers, layer 3 includes APIs, and the fourth layer includes web development tools.
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Mapping the Application Ecosystem
Once you have created the infrastructure or foundation for the web3 ecosystem, you have to map the application ecosystem. An understanding of how does web3 work would help you understand the importance of taking stock of the teams working currently within the ecosystem. It is important to look for any shortcomings which need improvement.
An effective web3 ecosystem team should have in-depth knowledge regarding the missing elements. In addition, they must work continuously to come up with new ideas to develop the web3 ecosystem. The ecosystem team must also provide active support to developers to help them translate their ideas into reality.
You can build decentralized web3 ecosystem by including different types of web3 applications in your decentralized ecosystem. The applications include decentralized finance, NFTs, metaverse, play-to-earn games, governance, identity and authentication, prediction markets, enterprise use cases, and social media.
With proper identification of gaps, you have to compile a list of ideas that can be shared with others. At the same time, the ecosystem must also ask for proposals with new ideas. Examples of such approaches include the ‘Request for Proposal’ by Ethereum Foundation and ‘Request for Startups’ by Y Combinator.
As you work on developing the decentralized web3 ecosystem, you must also map the teams with the required skillset for building particular prototypes. In addition, you should also offer requests for formal product specifications with milestones. If the team cannot raise funding, you could offer grants for developer products or tools without business models. In the case of decentralized protocols, a governance forum with effective UI could allow stakers to vote on governance proposals. On top of it, the UI should allow reviews of proposals for grant consideration or delegation.
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Define the Growth Strategy
The next step in the process of designing your web3 ecosystem focuses on growth. At this point, you know what you need in your web3 ecosystem and the requirements for building the same. Therefore, you should move beyond fundamental questions like “What is the ecosystem of web3?” and seek answers for growth of your web3 ecosystem.
The growth of web3 ecosystem would depend on the elements of business development, marketing, and community development. You can plan your growth strategy with appointment of early recruits to capture the voice of developers and sourcing from large networks.
The best growth hires for web3 ecosystem would point toward structured thinkers who pay attention to every detail. Most important of all, the growth hires could have a sense of empathy toward their customers. Team members must have tactical skills and ability to achieve better outreach alongside understanding the value proposition of the web3 platform.
The growth of a web3 ecosystem is directly related to the growth of third-party developers, as protocol teams could not follow the in-house approach for building everything. For example, Terraform Labs focused on smaller developer teams for building crypto-native infrastructure, as it was essential for developing large-scale applications. The web3 platform also interacted with developers through dedicated hacker events and hosting hackathons.
Upon reaching critical mass in the web3 ecosystem, you can welcome larger companies in e-commerce, gaming, and social media. Larger companies would be interested to build a web3 app with platforms that have proven infrastructure and turnkey solutions. On the other hand, it is important to note that bringing a big company into your web3 ecosystem can be a challenging task. However, you can leverage the benefits of their existing user base to drive volume to web3 ecosystem and bring brand value.
Establish a Clear Corporate Strategy
After you have established an ecosystem, you could work on developing a long-term strategy for securing the future of your web3 ecosystem. You should focus on the value proposition of the platform and the next priority for developers. Blockchain and web3 companies have started registering more profits alongside expanding their market presence. Different companies are working on new ideas and offering support through their internal teams to strengthen their corporate strategy.
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The process to build decentralized web3 ecosystem is similar to nurturing a project from scratch. You have to understand that a web3 ecosystem features multiple layers and offers a broad range of solutions. As the world embraces the concept of web3 technologies, it is important to use reliable training resources for learning web3.
First of all, you must understand how web3 work and reflect on examples of popular web3 ecosystems. For instance, you can review the DeFi ecosystem of Solana and how it attracts thousands of developers. Learn more about web3 fundamentals and the requirements for creating a sustainable web3 ecosystem right now.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. 101 Blockchains shall not be responsible for any loss sustained by any person who relies on this article. Do your own research!