What is the key metrics for the rapidly expanding Web3 ecosystem?

Web3 is a dynamic ecosystem that aligns founders, token holders, developers, and users to create a decentralized, user-owned Internet. In just a few short years, it’s gone from basic infrastructure and a vision for a better Internet to enabling exciting new use cases across verticals as diverse as finance, art, and supply chain management such as automated asset management, parametric insurance, and tokenized real estate

In this article, we start by discussing why the metrics we use to measure Web3 are evolving and how a more robust set of metrics can benefit the ecosystem. We then explore specific metrics that help measure the adoption of individual protocols, compare the growth of developer ecosystems, assess user adoption, and provide estimates for the value Web3 is enabling. Ultimately, the emergence of new metrics reflects a larger trend toward building a Web3 economy increasingly interconnected with the real world. 

Highlights

  • If the current rate of adoption continues, Web3 could reach a billion users by 2031. 
  • It’s estimated that the Web3 system could disrupt $827T USD worth of value.
  • Crypto user fees and transaction value enabled (TVE) are emerging as advanced metrics that provide greater insight into the Web3 ecosystem.

How Web3 Metrics are Evolving

While established Web3 metrics have proved valuable in tracking the growth of the ecosystem, participants can become over reliant on them. As markets began rewarding projects for growing established metrics like total value locked (TVL), projects were incentivized to optimize for these metrics rather than focusing on product-market fit and real-world adoption. This created the need for a more robust set of metrics—such as dApp revenue, daily active users, and transaction value enabled (TVE)—that better measure the fundamental value of a protocol.

New metrics are emerging to provide a more robust view of the dynamic Web3 ecosystem and its diverse array of participants. Capturing Web3’s multifaceted growth requires an array of different metrics that cover capital investment, developers, users, and the broader ecosystem. 

Some of the underlying trends contributing to the evolution of Web3 metrics include: 

  • Capital—A more mature Web3 ecosystem and rising interest rates are prompting capital allocators to shift their focus toward economic sustainability around revenue generation, cost-efficiency, and overall value capture. 
  • Developers—Developer tooling has been built to better enable existing Web2 developers to connect with the Web3 ecosystem. 
  • Users—Scalability solutions are reaching a tipping point where transaction fees are becoming affordable enough to be competitive with many more Web2 services.
  • Ecosystem—Core Web3 infrastructure like Chainlink is connecting the Web3 ecosystem with external systems and real-world assets. 

An Emerging Web3 Economy

The evolution of Web3 has seen projects kickstart their growth through various incentivization models that attract developers, enable them to build next-generation applications, bring in users, and ultimately capture more value. Through this virtuous cycle of growth, the Web3 ecosystem continues to grow. More broadly, the growth of Web3 has followed a path similar to that of nation-state emerging economies. The industry attracted capital which enabled it to build core infrastructure and develop productive capacity. Now it’s ready to rapidly expand into new markets. 

Chainlink decentralized oracle networks are playing a key role in this growth as they seamlessly and securely connect smart contracts with the real world, enabling Web3 ecosystems to transact with mature industries in developed markets across the globe. As Chainlink trust-minimized services underpin so much of the Web3 economy, Chainlink’s Transaction Value Enabled (TVE) will be a key Web3 metric that helps provide an insight into the overall impact of Web3 across the world economy.

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