Web3 Investment Barometer: Mining On-Chain Data Value to Layout Innovative Application Ecosystem

The Web3 industry is undergoing a transformation from "muddy paths" to "asphalt roads." As of the end of July this year, the number of independent addresses for Ethereum Name Service has surpassed 500,000, indicating that the Web3 user base is expanding. However, the prosperity of the industry ecosystem is still closely related to market cycles, the value of on-chain data has not yet been fully realized, and new application scenarios and user interaction mechanisms still need to be developed. The Web3 industry is still on the eve of an explosion.

Recently, a partner from Cloud Nine Capital participated in a salon event discussing Web3 investment and entrepreneurial opportunities, where they explored the current development status of the Web3 industry, investment layout ideas, and observations on the entrepreneurial ecosystem with other investors. The following are the main points of the shared content:

The greatest value brought by blockchain technology lies in composability and a unified database. Composability means that code and digital assets can interoperate across applications without permission. A unified database connects the backend data of massive Web2 applications.

Based on this, there are two important investment themes worth paying attention to: first, data. On-chain data is a "gold mine" that allows for comprehensive analysis and tagging of addresses, breaking down data silos. Second, the application layer. The next 3-4 years may be a phase of large-scale explosion in the application layer, which needs to combine blockchain characteristics to unlock new ways of user interaction through innovative mechanisms and gameplay.

For entrepreneurs, it is essential to reserve enough funds to survive a potentially long bear market. During the bear market, the focus should be on finding real product demand and target users, rather than blindly chasing trends. New entrants should first become believers in the industry before becoming builders. At the same time, it is necessary to shed historical burdens and reflect on entrepreneurial directions after immersing in the industry for a period of time.

In Web3 investments, traditional due diligence becomes more challenging due to project teams often being dispersed around the globe. The investor structure is also more complex, with dozens of institutions often participating in a single round of financing. Currently, the market is not lacking in funds, but rather in quality projects.

When choosing an investment direction, infrastructure and middleware remain the focus, as the underlying development environment is still not mature enough. The application layer pays more attention to innovative gameplay and mechanism design. For entrepreneurial teams, in addition to technical strength, a deeper understanding of the industry and innovative ideas are more valued.

A major challenge currently facing the industry is user retention, as many projects struggle to attract truly active users. This reflects multiple factors such as the inadequacy of industry infrastructure and products not meeting the essential needs of users. Entrepreneurs need to fully understand the current state of the industry rather than being blindly optimistic.

In addition to financial support, investment institutions can also provide various forms of assistance for startup projects, including business guidance, product strategy, economic model design, resource connection, and more. The key is to deeply understand the project direction and help it reach a broader market.