Founder of Hash Global: Building Web3 Business Applications

Author: KK, founder of Hash Global Source: substack

We believe that Web3 is not just Bitcoin and crypto finance, it is Web3, the Internet of Value, and the evolution and upgrade of Web2. Because it is an innovation in the underlying data storage method and payment method, the arrival of Web3 will not be as clear and visible as the upgrade from PC Internet to mobile Internet, but will "sneak into the night with the wind, moistening things silently." What is this "wind"? We believe that it is the user's data and data assets that are beginning to be created on the chain in large quantities, because the super user experience of Web3 is to revolve around the user's data.

The core of Web3 is Own-. For Web3 to become Web3, not just crypto finance, it must allow users to own data assets, not just financial assets. Users own their own data, which is the basis for users to get better service experience and different users to get different services. The Internet has evolved from meeting needs to thousands of faces for thousands of people, and then to thousands of services for thousands of people. AI gives us the productivity of thousands of services, and the large-scale value collaboration of thousands of services can only be supported by Web3.

I listened to Professor Zeng Ming's lecture on the judgment of AI development stage in the early stage, and gained a lot (Zeng Ming Academy's video public account has it). The professor told me that the same framework can also be used to judge the development of Web3, which inspired me. Our observations and practices in the past few years, the confusion we encountered, and the corresponding investment strategies can all be verified and form a thinking framework after we have a clear judgment on the development stage, so we are no longer so anxious.

The professor also gave a definition of a native application (Killer App):

1. Make full use of the unique technical advantages of new technologies;

2. Bring about great innovation in user experience;

3. Explore a new business model;

4. Bring about a super 2C service with exponential growth in massive users.

Based on this standard, Yahoo, which went public in 1996, is the first generation of Internet native applications, while Web3 has not yet reached the stage of native applications. Why is it difficult for other types of applications to come out except for financial native applications? The reason may be very simple. We do not have enough non-financial Web3 users. None of the early native applications of the Internet came out of nowhere. They all went through a long period of popularization, or even ground promotion, before becoming killer apps. Without AOL's promotion of Internet users for many years, there would be no Yahoo; Alibaba, Tencent, and Ctrip have also experienced a long process of user accumulation.

We believe that the development stage of Web3 has two phases: the vanguard of Web3 - crypto finance is running much faster, and the active addresses have reached about 600 million, which is equivalent to the number of Internet users in 1999, so we have seen financial native applications such as USDT, wallets, and Defi; but the body of Web3 - the next generation of the Internet, is far from being popularized by users. Only when a large number of user data assets and services around these data assets appear on the chain, users will actively choose to use wallets to interact with the Internet and use Internet products, and Web3 will come.

For any technology to be integrated into the mainstream economic system, it must use commercial applications as a carrier. At the current development stage of Web3, we need commercial applications in various industries. For our own business purposes, we need to grasp the core technical characteristics of Web3, create and issue a large number of data assets for users on the chain, and use this to develop our own new Internet business model. In this process, they will create huge commercial value and become the first generation of native applications of Web3.

All Internet businesses are based on data, whether centralized or decentralized. Web3's commercial applications are data-decentralized dAPPs. The data assets mentioned here refer to the user's identity, membership level, movie premiere tickets, concert tickets, musical highlights, the first batch of crowdfunding cards when a singer debuted, the 5,000th like in the world for Mr. Aoi's photo, the real-time distribution of "Fan Xian's Smile" when a certain episode is played in Joy of Life, and various types of check-in vouchers. They will all use NFT as the data carrier, and the original content of the data can be stored on decentralized storage infrastructure such as Greenfield.

We have sorted out five core technical features of Web3: 1) Unified ID for the entire network; 2) Value Internet: The Internet and the banking network are combined into one network; 3) Everything can be assetized: finance and data; 4) Ability to establish complete "live data" across regions and platforms; 5) Ability to directly reach users at both the information and value levels.

Web3 commercial applications built by grasping these technical features will have the following five characteristics:

• Global data: Own cross-platform and cross-regional data. Data can be assetized, tradable and authorized to AI models, enabling intelligent services for users. The operation of on-chain data will become very important.

• The good can be given to the right: content and product producers and consumers are directly linked, and differentiated experience and pricing can be achieved.

• Value direct connection: embedded financial network, value can be transmitted point-to-point like information. Clearing and settlement are integrated. Automatic and timely distribution can be carried out through smart contracts.

• Effective incentives: On the premise of healthy and sustainable business model, projects can issue NFTs and ecological tokens to complete the cold start of the project and accelerate the development of the ecosystem.

• New organization: The interests of entrepreneurial teams, shareholders, upstream and downstream industries, users and fans can be unified through tokens, reshaping the organizational form of various industries, and the company organizational structure is no longer the only choice.

We believe that such Web3 business applications are truly valuable Web3 applications that are in line with the current development stage. The current overseas expansion of China's Internet business and content actually gives the Web3 business application team the best time. If Hong Kong is used as a base, there is also a geographical advantage. Web3 is the best infrastructure for global business. Web3 technology outputs standards, and it also embeds finance and is self-contained.

We envision a growth path for Web3 commercial applications that aim to enter the global market:

1. Use Web3 to build a globally unified and fully functional user or fan account system.

2. Use NFT and tokens as business carriers to conduct business, and NFT can be used as various data tags.

3. Make full use of public domain traffic, use Web3 tools and various Web2/Web3 wallets to carry and build a private domain system.

4. Quickly establish complete and constantly updated private domain data, and better develop business based on data analysis and feedback.

5. The cross-industry and same-industry investment of data is realized on the chain, which is cheap and accurate.

6. Users obtain personalized and intelligent services for their data assets, and obtain product experience far beyond Web2.

7. The stickiness of the product is improved and good dissemination and retention are obtained, forming a self-closed loop of data growth.

The above path is particularly suitable for industries such as performance ticketing, film and television culture, entertainment creation and IP co-construction. Without the member fan system of Web3, the content economy and IP economy cannot be effectively carried out: helping creators maximize the functional value, generating a large amount of emotional value and asset value for fans, supporting the incubation and co-construction of IP, and the value distribution on the entire chain, these are where Web3 can best play its capabilities. We have begun to actively invest in these areas. We also invest in Web3 business supporting facilities necessary for application development, including data chains, smart tokens, payments, stablecoins, human resources and global payroll services. We hope that excellent entrepreneurial teams will come to us. You only need to manage your business logic, and we can find technical teams to support the rest. At the moment when technology development leads applications, it is the most imaginative and opportunity-rich stage for entrepreneurship in the business field. When discussing this path with CZ, CZ said that another key is the team's execution. Therefore, we attach great importance to the team's past background and capabilities. We especially hope to cooperate with Web2's resource parties and winners to jointly promote the landing of Web3 business.

We think with the project team: the core of all Internet business is data. Whoever helps users create more data will have the moat of future business. Why are Alibaba, ByteDance, and Tencent so profitable? If ByteDance and Tencent open up their user data and traffic, how can we conduct business? The criteria we use to evaluate Web3 commercial application projects are:

1. Have you thought clearly about why you want to help users create on-chain data assets? How does on-chain empower the business itself?

2. How many data assets can be created?

3. How to apply and analyze data to give users a more attractive experience (such as retention and upgrade desire)?

4. How to realize the value of data? How to connect to AI models? How to reduce costs and increase efficiency?

Web2 can no longer scale, and we need better and cheaper data traffic. Since Web3 data is open on-chain, application teams can share data in a co-construction manner to jointly promote business growth. We encourage and strive to promote all project parties to work together. Open Data, Open Business!

Web3 commercial applications are not the chain reform of a few years ago, nor are they simply industries plus Web3. Instead, they will be the first generation of Web3 native applications that truly revolve around on-chain data assets. I have not yet talked about the core of the chain reform back then - token incentives, because I think tokens have been overused by us. Token incentives seem to be free, but what is issued must be returned. There is no free lunch in the business world. Just like the formation of Didi's business model, it was finally coordinated and stopped by the project party and VC. The lag of Web3 crypto-financial regulatory policies, the overuse of token economy, and the accelerated maturity of value have diverted the industry's attention; industry talents and capital have been excessively attracted and consumed in various real and fake financial innovations. Web3 needs to return to the origin of value and the most basic business logic. Can it make money? Can it bring a better experience to Internet users? When a Web3 commercial application has real product users and wallet addresses, then we will promote the token economy, and the token holders will not all be speculators and wool parties. With a strong business foundation, the killer weapon of Web3 - token economy can run. It will be healthier to have data assets first and then financial assets. I told CZ that I hope the tokens of every commercial application have a solid value foundation and necessity like BNB in ​​the exchange industry.

Web3's infrastructure has developed to support applications and Web2 to compete in obtaining user data. If Web3 is to eventually replace Web2, it must have more user data than Web2. Geoffrey, the founder of Datadance Chain, said, "The aggregation of content assets online has produced killer apps for PC and mobile Internet; and data assets are created on the chain, which can produce key users for Web3 native applications." The Internet is moving from online aggregation of content assets to the issuance of data assets on the chain.

Mr. Liang Xinjun asked me why AI has developed faster than Web3 in recent years. I gave my answer: Web3 has its own finance, and the entrepreneurial team seems to be starting a business in Wall Street and Vegas, with many temptations and easy distractions; while AI is like starting a business on campus, which is focused enough. Mr. Liang said that Web3 and AI are actually one and the same, and Web3 must also grasp business logic and solve business problems. I agree with him. Now AI is ahead, and Web3 must keep up. If the data assets generated by AI are issued on the chain instead of entering the data islands and information cocoons of Web2, they can form a self-closed loop of commercial value growth. The digital economy based on Web3 and AI in the future is exciting. The smart business proposed by Professor Zeng that will explode in the next ten years is the combination of Web3, AI and XR.

Web3 is to Internet business as Bitcoin is to finance. Ethereum has been around for almost a decade, and Web3 business is just starting up. The opportunity to participate in building Web3 business is comparable to buying $100 worth of Bitcoin. If you are interested in Web3 business, whether you are a startup team or a resource provider, please contact us. Web3, the soul of business, needs to keep up with the body of AI, and we need your support and participation.

The article is based on materials from the HG Web3 business closed-door exchange meeting