Promising opportunities for Web3 investment in 2023

The Web3 landscape is equal parts complex and exciting — to help make sense of it, our team of analysts and researchers shortlisted the top most promising areas for development in blockchain-based tech according to our vision of the industry evolution. Most importantly, regulation will be a key trend that will play a crucial role in shaping the okwhole industry. There is sound evidence of the market moving out of a grey area toward more legitimacy and transparency, and the projects that will thrive in the next bull run are the ones that put in the effort to align with up-and-coming stringent regulatory criteria.

1. Modular blockchain solutions

If implemented correctly, these kinds of projects could improve upon a lot of the existing drawbacks of L1 and L2 blockchains. Modular solutions could boost both network through-put and safety. A great example in this category is Eclipse, a customized roll-up for modular architecture that works with multiple networks. The project recently raised 15M during pre-seed and seed rounds.

2. Indexing

Data and indexing platforms could rival the existing oracle approach: the latter often becomes unreliable and leads to enormous losses if oracles get manipulated. New infrastructure aims to provide data in real time or on request, which enables better interactions between dapps. A good example of an upcoming project in the sector is Nxyz, which recently raised $40M in a Series A funding round led by Paradigm, Coinbase Ventures, Sequoia Capital and Greylock

3. Ethereum L2, ZK/OR-rollups

Regardless of which one is closer to you, the demand for the tech is very likely to continue to rise. Vitalik Buterin dedicates a significant amount of his research and social media presence to the topic, which sends a clear signal to the community to join him on the quest. Additionally, with the growing censorship of Ethereum mainnet, there is a need for L2 privacy-oriented infrastructure. Interesting examples of projects in this category include StarkNet, zkSynk.

4. Cross-chain and cross-platform infrastructure

Current bridge-based solutions are often hacked; this makes it difficult for developers to make any project dependent on shaky cross-chain interaction. There is a lot of room for improvement here. On top of that, Metaverse and NFT infrastructure will enable advanced trading features like collective ownership, dividends payouts and lending of the virtual world items and land. ChainSafe and LayerZero are excellent examples of advances in the sector. And, last but not least, users still don’t have a trustworthy and convenient search engine for the Web3 world — cross-chain and cross-platform infrastructure is necessary to develop this kind of a project.

5. DeFi

Huge potential here, given that user-count of the industry is still relatively small, and TVL is sitting on the lows after the previous cycle’s end. A lot of new users may come into the sector via mobile apps with fiat gateways, however, these are still both uncommon and inconvenient. Tons of new ideas emerge in understanding liquidity provision, from concentrated liquidity and ReFi to cross-chain liquidity and single-token liquidity provision. Alongside with privacy oriented DeFi, there is a vector of projects aimed at on-ramping institutional money to DeFi. Both of the mentioned would continue developing and shaping the market. Interesting examples of the projects are: 1Inch, Uniswap, Fireblocks Permissioned DeFi and others.

6. Digital Identity

As of now, all of the networks have their own identity solutions, which are most of the time incompatible with the others. Possible solutions could range from a cross-chain identity covering the most popular networks to a web2 resembling solution.

7. DAO

During the previous bull market, DAOs started unfolding their potential and left a lot of promising ideas and developments on the table. DAOs can be more flexible and better adapt to changes than their overcentralized analogs. All the projects need contributors and active communities; DAOs may become the new way of organizing the two in a more mutually beneficial and productive way. Contributors’ DAOs seem to demonstrate the most potential to unlock value. Interesting and diverse examples of DAO projects are: MatchboxDAO, aimed at enriching the gaming ecosystem of StarkNet, DAO Research Collective, providing product research and recommendations, Friends with Benefits, a collaboration of fine artists with strong emphasis on NFT minting.

Cryptomeria Capital is open to dialogue with all the up-and-coming projects in these categories. E-mail us at contact@cryptomeriacapital.com and let us know what your teams are up to!

Cryptomeria Capital is a crypto fund backed by blockchain industry experts. The focus is exclusively on ventures, tokens, and projects related to blockchain technology and crypto assets. The firm has a corporate partnership with Axon Partners Group, an international consulting and investment firm that has backed over 50 companies and trades on the BME Growth Market under the ticker “APG”.

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