Top 5 Real-World Web3 Use Cases in 2024

Web3 is emerging as the next iteration of the World Wide Web with the promise of decentralization at its core. As we progress towards 2024 and beyond, Web3 use cases are expected to revolutionize different industries by empowering users and enabling trustless interactions. This article explores the top 5 use cases of Web3 in detail that have the potential to disrupt the status quo.

What is Web3?

Web3, sometimes known as the third generation of the internet, denotes an evolution from the traditional client-server model of web1 to the social and interactive web2 towards a more decentralized web3 framework. Powered by technologies like blockchain, peer-to-peer networking, distributed databases, and cryptography, Web3 offers several benefits like decentralization, security, transparency, and user empowerment.

How Does Web3 Differ From Web2?

While web1 referred to initial static HTML websites and web2 enabled dynamic and user-generated content, web3 brought about a fundamental shift with its decentralized architecture. Web2 is largely centralized, and most online activities happen through intermediaries like Google, Facebook, etc., who have control over users' data. 

On the other hand, web3 architecture is decentralized with no single point of control using blockchain technology and distributed ledgers that store data across a network of computers. This ensures high security and control over user data and digital assets, with users owning and controlling their data through self-sovereign identity. 

Transparent transactions, tokenization, and monetization are additional benefits of web3 over the intermediary-dependent web2 model. In summary, while web2 enhanced interactivity, web3 aims to decentralize control and empower users.

5 Real-World Web3 Use Cases

1. Decentralized Finance (DeFi) 

DeFi or decentralized finance refers to financial services facilitated through smart contracts on a blockchain network without any central intermediary involvement. Some key web3 use cases of DeFi include:

• Decentralized exchanges (DEX): DEXs like Uniswap allow peer-to-peer cryptocurrency trading without relying on centralized exchanges. Transactions are facilitated by liquidity pools comprising crypto assets deposited by users.
• Lending and borrowing: DeFi platforms like Aave enable users to lend or take loans in crypto by depositing or borrowing crypto assets. Loans are issued by smart contracts with interest rates determined algorithmically.
• Yield farming: By providing liquidity in DeFi money markets, users can earn fees and additional rewards on protocols like Yearn and Compound. This has increased circulating supply and user engagement on DeFi platforms.
• Stablecoins: Algorithmic stablecoins such as DAI aim to maintain price stability, making them suitable for payments, loans, and general transactions.
• Derivatives: Decentralized derivatives allow trading options, futures, and other crypto derivatives to be traded in a non-custodial manner on platforms like dYdX.

By eliminating middlemen and offering 24/7 peer-to-peer access, DeFi has the potential to become the infrastructure for an open financial system. However, risks persist around hacks, volatility, and lack of regulations. Continued innovation in security, infrastructure, and regulation will determine DeFi's success.

2. Non-Fungible Tokens (NFTs)

NFTs or non-fungible tokens are blockchain-based cryptographic assets that represent a unique identifiable digital or physical item like collectibles, artworks, trading cards, etc. Some prominent web3 use cases of NFTs include:

• Digital art: NFTs have enabled individuals to sell digital creations like images, video clips, animations, etc., as one-of-a-kind assets with verifiable ownership and provenance. The most expensive NFT sale so far has been Beeple's artwork for $69.3 million.
• Collectibles: Trading card platforms like NBA Top Shot sell exclusive NFT versions of video highlights and individual moments from games as collectible cards that fans can own, buy, and sell.
• Gaming: Many online games are implementing NFTs to enable true ownership of virtual items, characters, land, etc., which can be utilized across games. Axie Infinity uses NFT Pokémon-like characters that can be bred and battled.
• Virtual real estate: Decentraland and Sandbox have attracted million-dollar property sales by allowing users to purchase and resell NFT parcels of land in virtual worlds.
• Event tickets: NFT tickets ensure authenticity and prevent counterfeiting while enabling the resale of tickets on a secondary market as NFTs.

While NFT sales surpassed $17 billion in 2021, their long-term success depends on user-friendliness, environmental impact, and identification of tangible utility beyond speculation.

3. Decentralized Autonomous Organizations (DAOs)

DAOs, or decentralized autonomous organizations, operate without any central control using mechanisms of decentralization, transparency, and community participation. Some use cases:

• Collaborative funding: DAOs like Gitcoin enable thematically aligned contributors to pool and govern funds for open-source projects, coordinate work, and vote on proposals.
• Collaborative governance: Aragon is an open-source platform to set up DAOs for trade associations, non-profits, etc., allowing members globally to participate in governance.
• Investing DAOs: Cartesian coordinates investments in web3 startups democratically by token holders. DAOs like Nexus Mutual provide decentralized/collaborative insurance.
• Decentralized marketplaces: OpenSea uses a DAO governance model where contributors govern the protocol and manage funds to pay for dev work, marketing, etc.
• Project acceleration: Moloch DAO was an experiment for decentralized funding/acceleration of public goods Ethereum infrastructure projects through community participation.

While DAOs democratize decision-making, challenges lie around preventing collusion, addressing participant coordination, and addressing regulatory uncertainties around new organizational models. Their success depends on overcoming governance difficulties at scale.

4. Web3 and Internet of Things (IoT)

IoT and web3 are revolutionizing interconnected devices and machine-to-machine communication with use cases including:

• Device identity and data sharing: IoT devices can have a self-sovereign digital identity on a blockchain, allowing secure authentication, data sharing, and monetization with user consent.
• Distributed data markets: By leveraging blockchain, IoT data can be securely monetized through distributed data-sharing systems, with data providers retaining ownership and earning benefits.
• Predictive maintenance: Data collected from industrial equipment sensors can be recorded on the blockchain, enabling predictive equipment maintenance through analysis of usage patterns.
• Supply chain traceability: Adding IoT sensors and NFTs to physical items allows tracing them through the entire supply chain in a secure, immutable record.
• Smart manufacturing: Integration of IoT sensors, edge computing, and blockchain-distributed ledgers improves plant automation and parts tracking and enables real-time data-driven decision-making.

Challenges include developing trustless communication between devices/systems and solving technical hurdles around the scalability and interoperability of diverse IoT frameworks and networks built on different protocols. When addressed, IoT and web3 convergence can revolutionize industries.

5. Blockchain Identity Management

Traditional identity systems are prone to hacks and data breaches and lack user control over personal data. Blockchain's decentralized security model offers a solution with use cases that include:

• Self-sovereign identity: Blockchain platforms like Civic enable individuals to own and manage identity attributes through verified decentralized identifiers (DIDs). Users control the authorization of attributes/credentials sharing.
• Digital wallet/passport solutions: Platforms like ID2020 combine self-sovereign identities with digital wallets for secure, private, and convenient access to varied online/offline services.
• Government ID programs: Countries are exploring national digital ID programs on a blockchain to reduce fraud, make IDs portable across borders, and give residents complete control over IDs and attribute sharing.
• Private data storage: Personally identifiable information is stored independently by the user instead of centralized repositories, guarding against data leaks while allowing selective sharing through blockchain.
• Single sign-on access: With self-sovereign identity on the blockchain, users can securely log in/sign in to varied applications, pay bills, open bank accounts, and more using a single globally portable digital identifier.

While identity management is a complex challenge, blockchain solutions deliver better privacy and trust if adopted responsibly and with people's consent.

Final thoughts

So, Web3 represents the next phase of the internet that will revolutionize how users and systems interact through decentralized, trustless applications. Many nascent use cases discussed here have the potential to transform industries if technical challenges are addressed. Web3's success depends on coordinated efforts by technologists, entrepreneurs, policymakers, and researchers to advance the right tools and governance for a user-empowering decentralized future.