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In the decade since Ethereum co-founder Gavin Wood first coined the term “web3,” we have seen the promise of a new digital empire become a reality. Cryptocurrency has become a mainstay of the global economy; NFTs have entrenched themselves in high-stakes art and investment transactions; Blockchain-based financial services have gone from novelty to normal.
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For all of the above, we can thank the dreamers and developers who took it upon themselves to create solutions that consumers didn’t even know they needed. It’s not a stretch to say that their creative determination built our burgeoning web3 empire; Today, the ecosystem includes tens of thousands of dApps and an extensive variety of defi services.
The question is: will that same creativity also topple it?
In theory, web3’s innovative explosion should accelerate user adoption. As offerings multiply and diversify, the ecosystem naturally becomes more intriguing. While user adoption has been respectable enough in recent years, the numbers we see today are far out of proportion to web3’s apparent value proposition.
Why? We have a chain fragmentation problem. According to a report from CoinPaper, there were more than 1,000 different blockchains operational as of January 2024. The Ethereum ecosystem boasts more than 50 L2s today, with another 50 expected to go live soon, all competing for users and liquidity.
This fragmentation has an intense impact on the experience. Users often have to manually switch between networks within their wallets or interfaces, which can be confusing and lead to frustrating (or even costly) errors. The proliferation of L2, L2, and L3 chains forces users to keep their available assets and gas tokens in their wallets if they want to try out emerging applications built on those chains. And when they do, they face a learning curve: each blockchain has its own rules, transaction costs and functionalities.
Given these challenges, is it any wonder that mainstream consumers have hesitated to get on board with web3? To enable widespread user adoption among mainstream consumers, we must deliver more seamless, intuitive user experiences.
The intuitive answer seems to be to encourage developers to improve cross-chain compatibility and interoperability. But relying on individual developers to provide global interoperability is a bit like asking someone to empty the ocean with a bucket: the scale of the challenge makes the request laughable.
Today, the web3 ecosystem has a thousand active blockchains; we could see ten times more in five years. Blockchains are proliferating at an exponential rate as innovators build chains that target specific industries, interests, or business use cases – and given the early success and adoption of the blockchain modularity thesis, this fragmentation is likely to increase.
But even if chain proliferation were one-tenth as fast as it is now, developers would never be able to keep up. Unlike web2, where innovators can build once and attract users from all over the internet with few restrictions, web3 developers typically need to deploy instances of their apps on multiple chains to chase users and liquidity. As a result, developers must spend their time building insecure, inefficient, and inelegant cross-chain messaging solutions instead of taking their core value proposition to the next level.
To return to the metaphor of our empire: instead of expanding the reach and resources of web3, architects and builders are limited to patching cracks and digging connecting tunnels between parts of the city, exhausting themselves with work that most residents will never see or appreciate.
How can we alleviate web3’s user experience issues and give developers more time for value-added innovation? The answer lies in chain abstraction.
Imagine a world where our fragmented chains were taken away. Developers can build a single instance of their app on the chain of their choice and attract users to each chain without disruption or inconvenience; users don’t need to know which chain the app is built on or worry about whether their assets and gas tokens are compatible.
To build this functionally abstracted ecosystem, web3 proponents would need to meet several requirements. First, user funds should be uniform, aggregated and accountable across all chains to ensure that users can spend their funds freely and without hassle, while preventing intentional or accidental overdrafts. Furthermore, developers would not have to include complex integrations in their solutions to facilitate cross-chain accessibility.
Like Rome, an abstracted Web3 empire won’t be built in a day, but there’s little doubt that we need to start building today. Unless there is an ecosystem-wide effort to prioritize abstraction, we won’t have the chance to unlock mainstream adoption. We owe it to Web3 architects and innovators to ensure that their visionary work receives the acclaim, appreciation and exploitation it deserves.
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Mayur Relekar
Mayur Relekar is the co-founder of Arcana. Mayur, former Chief Products Officer at Wow Labz, co-founded Arcana to simplify blockchain complexity and improve user experience. The company is backed by top industry funds and angels including Balaji Srinivasan, Polygon Ventures, Republic Crypto and Woodstock Fund.
