Coinbase: a simple guide to the Web3 stack

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Source: coinbase blog

Original title: a simple guide to the Web3 stack

Compiled by: Hu Tao

The industry has put forward many definitions of Web3, but in coinbase, we usually think that Web3 is an untrusted, unlicensed and decentralized Internet using blockchain technology.

The defining feature of web 3 is ownership. The first iteration of the commercial Internet (web1) is read-only for most users, while web2 allows users to read and write on centralized platforms (twitter, Facebook, youtube, etc.), while Web3 gives users full ownership of their content, and data and assets pass through the blockchain. It enables users to read and write independently.

When a third party like Facebook owns your identity and data in web2, your identity in Web3 can move smoothly between platforms, and your data will not be captured and monetized by service providers. Although web2 applications are centrally controlled, tokens in Web3 give users the right to help manage the services they use, which represents a form of ownership of the platform itself.

Considering this framework, what is the Web3 stack like?

Web 3 stack

The Web3 stack is still new and fragmented, but with a lot of innovation over the years, it has begun to become the focus. The following content is neither mutually exclusive nor completely detailed. On the contrary, it is a framework for thinking about this situation in the process of continuous development.

Let's start from the bottom up.


protocol layer


At the bottom of the stack, we have a protocol layer. This is composed of the underlying blockchain architecture on which everything else is built.

Bitcoin is their ancestor. Although it does not play an important role in today's Web3, it pioneered the ability to let someone have scarce digital assets by using public-private key cryptography. Following bitcoin, a series of layer 1 smart contract platforms have emerged, such as Ethereum, Solana, avalanche, cosmos, etc., which are the basis of many Web3 applications in current production.

Bitcoin and Ethereum have additional protocols built on them. Bitcoin has networks such as lightning network (for fast and cheap payments) and stacks (for smart contracts). In order to reduce its capacity limit, several layer 2 extension protocols are built on Ethereum.

With the rise of many layer 1 and layer 2 networks, bridges need to be built between them. Input acts as a cross chain bridge for the highway, allowing users to transfer value from one chain to another (useful cross chain dashboards can be found here and} here).


Infrastructure layer


The infrastructure layer is above the protocol layer and consists of interoperable building blocks that are very reliable when performing specific tasks.

This is a dense and diversified layer. The project builds everything from smart contract audit software, data storage, communication protocol, data analysis platform, Dao governance tools, identity solutions, financial primitives and so on.

For example, uniswap supports the exchange of one asset for another. Arweave enables data to be stored in a decentralized manner. The ENS domain name can be used as a user identity in the Web3 world. Users cannot do too much for each individual application. However, when combined, these category primitives are like Lego building blocks that web 3 developers can use to build applications.


Use case layer


Above the protocol layer and infrastructure layer is the use case layer, all of which come together.

Take a blockchain based game like axie infinity as an example. It uses Ethereum token and NFT to bridge to a low-cost / high-throughput side chain called ronin. Players often use uniswap to exchange eth for tokens needed to play games. Similarly, the decentralized blog platform mirror uses the storage protocol arweave to store data. At the same time, it uses Ethereum to get publishers paid with cryptocurrency, usually by directing tokens to their ENS} address.

You will notice that uniswap appears in our infrastructure and use cases section. This is because although the core of uniswap is only a series of smart contracts, it also provides a front end with which users can interact directly. In other words, it acts as an infrastructure for both a stand-alone user oriented application and other web 3 applications such as axie infinity.


Access layer


At the top of the stack is the access layer -- the application that serves as the entry point for various web 3 activities.

Want to play axie infinity on mirror or pay for your content? You first need a wallet, which is the main entry point for most web 3 applications. Users need legal currency entrances such as moonpay and Wyre, or cryptocurrency exchanges such as coinbase to get started.

Through some cryptocurrencies in the wallet, users can go to aggregators such as dapprad to browse and connect to various Web3 applications in one place. Other projects such as rabbit hole help users discover and learn how to use various web 3 applications. There are aggregators like zapper, zerion, and debank that help users track all their activities and assets in various applications.

Finally, we are close to a future in which web2 platforms that have gathered the encryption community, such as reddit and twitter, will become the entry point of Web3. Reddit's long-awaited encryption program will enable some communities to tokenize and reward actively participating users with tokens and possible NFT. Twitter already has integration with the bitcoin lightning network, allowing users to tip others in BTC.


Evolving stack


The protocols, infrastructure, user applications and access points mentioned above constitute the new but growing world of Web3: a user owned Internet. In addition to ownership, Web3's strength lies in its modularity and interoperability. In essence, this means that the above stacks can be combined in countless ways to create new and interesting use cases - we expect this feature to lead to the explosive growth of new, world changing applications during the Cambrian period.

Although the framework and level we emphasize may remain unchanged, we expect the projects and opportunities to change dramatically in the coming years.


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