Web3 is the next evolution of the internet—one designed to be more decentralized, user-owned, and transparent. Coined by Ethereum co-founder Gavin Wood, the term refers to a blockchain-powered web where applications and platforms aren’t controlled by a central authority but instead operated collectively by users.
At its core, Web3 seeks to challenge the dominance of tech giants by shifting control and ownership back to individuals and communities. Unlike the current model (Web2), where companies govern content, data, and functionality, Web3 uses distributed ledgers and smart contracts to build trustless, interoperable systems that users can co-own and help govern.
Interest in Web3 has surged across industries since 2018—evident in rising investment, growing developer activity, and an expanding ecosystem. Financial services lead the charge, especially in decentralized finance (DeFi), where daily transaction volumes once exceeded $10 billion. Yet, despite the momentum, public understanding remains limited.
What are Web1 and Web2?
To understand Web3, it helps to look at what came before.
Web1 (Read Only)
Web1 (1990s–early 2000s) was the earliest version of the internet. It relied on open protocols like HTTP and HTML, with most users simply reading static content—think news sites or basic online directories. It offered limited interactivity but laid the foundation for global connectivity.
Web2 (Read and Write)
Web2 (mid-2000s–present) introduced user-generated content and social media platforms. Facebook, Twitter (now X), and Wikipedia allowed people to share, collaborate, and create online. However, this participation centralized power—data, content, and control became locked within closed platforms. Tech giants like Google, Meta, and Amazon aggregated user data, monetized behavior through targeted ads, and dictated platform rules without transparency. The web, once decentralized, grew dependent on corporate gatekeepers who owned the infrastructure, algorithms, and even the means of distribution.
Web 3 (Read, Write and Own)
Web3 (envisioned future) is the internet’s next envisioned phase—built on blockchains to cut out the middlemen. Instead of platforms owning your data and controlling the rules, power shifts to users: you own your digital identity, assets (like crypto or NFTs), and even get a say in how apps evolve. Think social media without Meta taking a cut, payments without banks, and communities running platforms collectively— just code and decentralized networks.
What Technologies Support Web3?
Web3 is powered by a suite of interconnected blockchain technologies that create decentralized, trustless, and programmable systems. These components work together to enable transparent, permissionless interactions—free from centralized gatekeepers.
Blockchain
A foundational layer of Web3: decentralized ledgers that record transactions across distributed networks. No single entity controls the system. Transparency, resilience, and integrity are ensured through consensus mechanisms.
The global blockchain market was valued at nearly $29 billion in 2024 and is projected to double in 2025.
Over 560 million people—about 4% of the world’s population—used blockchain in 2025, with adoption expanding rapidly from traditional finance to consumer use cases.
Smart Contracts
Self-executing scripts programmed into the blockchain, which automatically enforce agreements when predefined conditions are met. They eliminate trust intermediaries and enable decentralized applications (dApps).
The smart contract market is projected to grow to $2.69 billion in 2025, rising to over $12 billion by 2032.
Across Ethereum, 59% of contract transactions in 2024 involved multiple smart contracts, revealing complexity and real-world usage depth.
Digital Assets & Tokens
This includes cryptocurrencies (like BTC and ETH), stablecoins pegged to fiat, NFTs representing unique digital or physical assets, tokenized equity, or real-world assets (RWAs).
Tokenization market size has exploded: Real-world asset (RWA) tokens surged by 260% in H1 2025, reaching over $23 billion.
Forecasts suggest tokenized mutual funds, bonds, and equities could grow to $50 billion by year-end, and potentially be worth $2 trillion to $4 trillion by 2030.
Together, these innovations are transforming how value is created, shared, and secured. Web3 doesn’t simply recreate the internet—it reimagines it: a system where participants, not platforms, own the rails; where logic is enforced through code, not contracts; and where inclusivity and transparency form the new standard.
How is Web3 Different from Web2?
While the terms are often thrown around interchangeably, Web2 and Web3 represent fundamentally different ways of building and operating on the internet. Web2 is the internet as we’ve come to know it—social, mobile, centralized. Web3 reimagines that system with decentralization, trustless architecture, and user empowerment at its core. Here’s how the two stack up:
Centralization vs. Decentralization
The biggest philosophical shift between Web2 and Web3 is where control lies.
In Web2, tech giants and central servers mediate every interaction—from publishing content to verifying identity and managing payments. Web3 flips that model, using distributed blockchain networks to allow anyone to participate without going through a gatekeeper. Users interact with open protocols and community-governed platforms instead of corporations.
Ownership and Control of Data
Your data is currency—but who gets to spend it?
Web2 services often require users to trade personal data in exchange for functionality, which is then monetized through ads or resold. In contrast, Web3 gives users cryptographic control over their data. Through wallets, decentralized identifiers (DIDs), and privacy-preserving tech, users can choose how their data is used and monetized—if at all.
Trust Through Code, Not Institutions
Traditional systems require trusted third parties to verify identities and enforce agreements.
Web3 eliminates that dependency by embedding rules and logic into code. Smart contracts automatically execute transactions when conditions are met, and blockchain consensus ensures data accuracy without needing a central arbiter. That means fewer delays, less fraud, and no need to trust the platform—you trust the protocol.
Crypto’s Rollercoaster Ride: What It Means for Web3
The crypto market has weathered extreme volatility, with Bitcoin and Ethereum surging in 2024—only to face another correction in early 2025. Despite this, Web3’s underlying infrastructure has kept growing, proving its resilience beyond price swings. As of August 2025, BTC broke All-Time High (ATH) prices multiple times and ETH is nearing its ATH. This signals the high level of confidence in digital assets
Market Turbulence vs. Web3’s Steady Growth
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Crypto’s Wild Swings: After Bitcoin’s 2024 rally (topping $70K) and Ethereum’s ETF approvals, markets dipped and recovered in 2025—yet Web3 adoption kept climbing.
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Regulation & Recovery: Post-FTX, stricter oversight (MiCA in the EU, clearer U.S. guidelines) helped stabilize the industry, filtering out weak projects.
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Institutional Moves: BlackRock, Fidelity, and others doubled down on Bitcoin ETFs, while Visa and PayPal expanded stablecoin integrations—legitimizing crypto’s role in finance.
Web3’s Quiet (But Solid) Progress
DeFi & Real-World Assets (RWAs)
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DeFi TVL surged past $100B in 2024, with RWAs (tokenized real estate, bonds) growing 40% as TradFi embraced blockchain.
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Institutions now use DeFi for treasury management (e.g., MakerDAO’s $1B+ in U.S. bonds).
Web3 Gaming & Social
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Games like Illuvium and Big Time hit 1M+ players, while Farcaster and Lens gained traction as decentralized Twitter alternatives.
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Daily active Web3 wallets hit 8M+ in 2025, showing steady user retention.
Infrastructure & Scaling
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Ethereum’s Dencun upgrade (March 2024) slashed L2 fees by 90%, boosting adoption.
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Solana’s comeback and new chains like Berachain proved scalability isn’t just an Ethereum story.
The Big Picture: Web3 Isn’t Just Crypto
The disconnect between crypto’s price swings and Web3’s steady growth underscores a fundamental shift: blockchain is evolving into critical infrastructure, not just a speculative asset class. While traders obsess over Bitcoin’s next rally, real-world adoption is quietly accelerating. Major players like Stripe have relaunched crypto payments—this time with stablecoins at the core—signaling that businesses now see blockchain as a viable payment rail.
Meanwhile, Telegram’s integration of the TON blockchain has brought crypto wallets and decentralized apps to its 800 million users, proving that mass adoption doesn’t require hype—just seamless utility. Even central banks, including the European Central Bank (ECB), are experimenting with wholesale CBDCs on Ethereum, demonstrating that the technology is being taken seriously at the highest levels of finance.
What’s Next for Web3?
AI and Web3 are converging through projects like Bittensor (decentralized AI) and Ocean Protocol (blockchain data markets), while privacy tech like zero-knowledge proofs powers Worldcoin and Aztec—enabling secure, private transactions.
Institutional adoption is accelerating, with Microsoft, Siemens, and JPMorgan moving blockchain pilots into production. From supply chain tracking, secure data sharing, or tokenized assets, Web3 is becoming infrastructure for a more open, efficient internet.
What Are Some Examples of Web3 in the Real World?
Decentralized internet technologies aren’t just theoretical—major global institutions are already deploying them for finance, access expansion, and customer engagement.
Decentralized Social Media – Farcaster
Farcaster hit 5M+ users in 2025 as the leading Web3 social network, running on Ethereum with Optimism scaling. Its “Frames” turn posts into interactive apps, while user-owned profiles and direct monetization replace ads and algorithms. This proves decentralized social can rival traditional platforms while giving users control.
Web3 Gaming – Illuvium
With 1.2M monthly players, this Immutable X RPG shows AAA gaming works on blockchain. Players truly own interoperable NFT assets, and skill-based rewards replace grind-heavy models. It’s setting the standard for next-gen gaming economies.
Web3 Infrastructure – EigenLayer
The $15B restaking protocol lets new chains rent Ethereum’s security instead of building their own. Major L1s like Solana now use it, slashing launch costs. This “AWS for blockchains” is accelerating ecosystem growth.
Tokenization – BlackRock BUIDL
The $12B tokenized treasury fund brings TradFi onto Ethereum with 24/7 settlements. Investors get automated yield paid to crypto wallets like MetaMask. This bridge between worlds is reshaping finance.
Institutional Adoption – JPMorgan Onyx
Processing $1B daily, this permissioned Ethereum network handles bonds, gold and private credit. Partnering with Singapore’s MAS on CBDCs, it meets strict compliance needs. Wall Street’s embrace of blockchain is here.
Crypto Payments – Stripe
Stripe relaunched crypto payments in 2024 with stablecoin settlements, now processing millions in daily transactions for Shopify, Discord, and other major platforms. By automatically converting crypto to fiat, businesses avoid volatility while accessing faster, cheaper global payments. Stripe’s adoption signals that crypto payments are ready for everyday commerce at scale.
Is Web3 the Same as the Metaverse?
No, although the two concepts are often mentioned in the same breath, Web3 and the metaverse refer to fundamentally different technologies and visions for the future of digital interaction.
Web3 is focused on rebuilding internet infrastructure using blockchain technology. Its core objective is to decentralize ownership, control, and value exchange.
Key characteristics include:
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Decentralized infrastructure (blockchains)
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User-owned data and identities
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Token-based incentives
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Smart contract automation
Applications (dApps) that operate without central servers
Think of Web3 as the invisible scaffolding that allows users to interact, transact, and govern digital spaces without relying on Big Tech gatekeepers.
A DeFi protocol built on Ethereum lets users trade tokens or lend money without any central bank or broker.
The metaverse, on the other hand, refers to persistent, immersive, 3D virtual environments where users can interact via avatars—often in real time. These spaces are designed to be experiential and social, blending gaming, entertainment, work, and commerce. Decentraland and The Sandbox offer metaverse worlds where users can buy virtual land, attend concerts, or explore branded experiences.
While Web3 is infrastructure, the metaverse is experience. The two intersect when blockchain-based systems are used to:
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Own metaverse assets (e.g., land, clothing, tools) via NFTs
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Exchange value in metaverse economies using crypto
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Govern virtual platforms through DAOs and token voting
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Maintain identity through decentralised digital wallets or on-chain credentials
For example, in The Sandbox, users buy virtual land as NFTs, pay with $SAND (a crypto token), and use smart contracts to rent, sell, or develop spaces—powered by Web3 rails.
What Are Some Concerns Around Web3?
While Web3 has already proven its real-world utility in finance—regulatory clarity, user experience, and security must evolve to support mass adoption remain:
Regulatory Uncertainty
Global regulators struggle to apply KYC, AML, and securities laws to decentralized systems, creating legal risks. While frameworks like the EU’s MiCA establish foundational rules, the unique nature of DeFi and cross-border transactions requires ongoing consideration for effective enforcement.
UX Complexity
Managing wallets, seed phrases, and gas fees still alienates non-technical users. Despite improved wallets (MetaMask, Phantom), mainstream adoption requires simpler, Web2-like interfaces.
Security & Trust Gaps
Hacks, rug pulls, and irreversible smart contract exploits remain rampant. With no central recourse (as seen in FTX/Terra collapses), consumer protection lags behind Web2 standards.
The foundation of Web3, however, is already here. Web3 isn’t a speculative future; it’s a functional present being scaled. JPMorgan processes $1B daily in tokenized asset trades, BlackRock’s $12B tokenized treasury fund runs on Ethereum, and stablecoins now settle trillions in cross-border payments. These aren’t experiments; they’re production-grade systems solving real inefficiencies in global finance.The question is no longer if it works, but how fast it can mature to meet broader demand.
The Web3 Revolution: Why It’s Just Getting Started
Web3 represents more than just decentralization—it’s the foundation for a more open, user-owned internet where value flows directly to creators and participants. From tokenized finance to decentralized social media, this shift is redefining how we exchange assets, verify identity, and collaborate online.
While still early, the growth of Web3 signals a shift in how we think about trust, identity, and collaboration online.The future of Web3 will be shaped by emerging technologies such as zero-knowledge proofs for privacy, AI-powered smart contracts, and institutional-grade blockchain infrastructure. Staying ahead means understanding these trends early, identifying opportunities, and navigating risks in real time.
For those looking to explore how crypto infrastructure enables Web3 innovation—from scalable, compliant trading infrastructure, MPC wallets to Compliance-as-a-Service—connect with ChainUp to build your next-generation digital venture.
