Is web3’s innovative explosion constraining user adoption?

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In the decade since Ethereum co-founder Gavin Wood first coined the term “web3,” we’ve seen the promise of a new digital empire come to life. Cryptocurrency has become a trillion-dollar mainstay of the global economy; NFTs have established themselves in high-stakes art and investment trading; blockchain-based financial services have gone from novelty to normal.

For all of the above, we can thank the dreamers and developers who took it upon themselves to create solutions that consumers didn’t even know they needed. It’s no exaggeration to say that their creative determination built our fledgling web3 empire; today, the ecosystem encompasses tens of thousands of dApps and a wide variety of defi services.

The question is: will the same creativity topple it too?

In theory, web3’s innovation boom should accelerate user adoption. As offerings proliferate and diversify, the ecosystem naturally becomes more engaging. However, while user adoption has been respectable enough in recent years, the rates we see today are far out of proportion to web3’s distinct value proposition.

Why? We have a chain fragmentation problem. According to a report from CoinPaper, there were over 1,000 different blockchains in operation as of January 2024. The Ethereum ecosystem has over 50 L2s today, with over 50 more expected to launch soon, all competing for users and liquidity.

This fragmentation has a huge impact on the experience. Users often have to manually switch between networks within their wallets or interfaces, which can be confusing and lead to frustrating (even costly) errors. The proliferation of L2, L2, and L3 chains forces users to keep their existing assets and gas tokens in their wallets if they want to try out new applications built on these chains. And when they do, they face a learning curve: each blockchain comes with its own rules, transaction fees, and functionality.

Given these challenges, is it any wonder that mainstream consumers are hesitant to jump into web3? To drive widespread user adoption among mainstream consumers, we must deliver more seamless, intuitive user experiences.

The intuitive answer seems to be to encourage developers to improve cross-chain compatibility and interoperability. However, relying on individual developers to ensure global interoperability is like asking someone to empty the ocean with a bucket: the scale of the challenge makes the request ridiculous.

Today, the web3 ecosystem has a thousand active blockchains; we could see ten times as many in five years. Blockchains are becoming exponentially more widespread as innovators build chains that appeal to specific industries, interests, or business use cases, and given the early success and adoption of the blockchain modularity thesis, this fragmentation is likely to intensify.

But even if chain propagation weren’t as rapid as it is today, developers would never be able to keep up. Unlike web2, where innovators could build once and attract users across the internet with few limitations, web3 developers often need to deploy instances of their applications across multiple chains to chase users and liquidity. As a result, developers must spend their time building insecure, inefficient, and inelegant cross-chain messaging solutions instead of improving their core value proposition.

To return to our imperial metaphor: instead of expanding the reach and resources of the Web3, architects and builders are content to patch cracks and dig connecting tunnels between sections of the city, exhausting themselves with work that most residents will never see or appreciate.

So how do we alleviate web3’s user experience issues and give developers more time for value-added innovation? The answer lies in the chain abstraction.

Imagine a world where our fragmented chains are abstracted. Developers can build a single instance of their application on the chain of their choice and attract users without any on-chain downtime or disruption; users don’t need to know what chain the application was built on or worry about whether their assets and gas tokens are compatible.

To create this functionally abstracted ecosystem, web3 advocates need to meet several requirements. First, user balances need to be consolidated, aggregated, and accountable across all chains to ensure users can seamlessly spend their balances and prevent intentional or accidental overdrafts. Additionally, developers do not need to add complex integrations to their solutions to facilitate cross-chain accessibility.

Like Rome, an abstract web3 empire won’t be built in a day—but there’s little doubt that we need to start building today. Without an ecosystem-wide effort to prioritize abstraction, we won’t have the opportunity to unlock mainstream adoption. We owe it to web3 architects and innovators to ensure their visionary work gets the recognition, appreciation, and use it deserves.

Mayur Relekar

Mayur Relekar is the co-founder of Arcana. A former chief product officer at Wow Labz, Mayur founded Arcana to simplify blockchain complexities and improve user experience. The company is backed by leading industry funds and angel investors including Balaji Srinivasan, Polygon Ventures, Republic Crypto, and Woodstock Fund.