Paradigm of Web3 Consumer Applications and Investment Theoretical Reflections

Web3 consumer applications refer to software applications aimed at consumers that possess Web3 characteristics. Based on observations of the market, there are currently three common paradigms of Web3 consumer applications:

1. Optimize issues present in certain traditional consumer applications by leveraging the technical characteristics of Web3 infrastructure. This mainly includes two aspects:

   • Ultimate privacy protection and data sovereignty
   • Low-cost global 24/7 trusted execution environment

2. Utilize encrypted assets to design new marketing strategies, user loyalty programs, or business models:

   • Reduce customer acquisition costs through token-based marketing activities such as Airdrop.
   • User loyalty program based on X to Earn
   • Directly monetize the financial attributes of tokens

3. Fully serve the native Web3 users and address the unique pain points of this group of users:

   • Construct new narratives, focusing on certain untapped value elements of Web3 native users for monetization design, creating new asset classes.
   • By providing new tool-based products, serving the unmet needs of Web3 native users in the market participation process.

The investment evaluation for Web3 consumer applications mainly starts from two aspects:

1. Product Operation Data Analysis:

   • User Data: Active Users, User Growth Rate, User Retention Rate, etc.
   • Conversion data: AUM, User spend, etc.

2. Team Evaluation:

   • Technical Strength
   • Market Sensitivity and Openness
   • Team Resources

The definition of a successful Web3 consumer application depends on the investment horizon. Short-term investments focus more on token prices, while long-term value investments pay more attention to revenue performance and sustainability.

The "application factory model" may be a more deterministic business strategy for Web3 consumer applications. By continuous trial and error, developing a large number of different types of products, the market chooses the successful direction and continues to invest resources.

In the next cycle, successful Web3 consumer applications may emerge in the following three paradigms:

1. Leverage KOL influence to achieve a cold start
2. Starting from the real needs of Web3 users, directly winning the market through product strength.
3. Business model innovation, such as the application of "sharing economy" thinking.

The categories of Web3 consumer applications that are likely to find PMF most easily may include:

• Web3 social applications
• On-chain trading tool applications
• Payment applications
• DeFi applications