This year has been a particularly tumultuous one for the cryptocurrency market, with many decentralized and centralized entities failing or struggling to stay afloat. It feels like we are in the final stages of the bear market, with bad actors and practices being purged in a process that is both dramatic and necessary for the maturity of the entire system. Despite this, the Web3 technologies emerging from this crypto winter will change everything.

Web3 represents the next evolution of information sharing, with similarities to the transformation from a largely agricultural society to a more industrial one. It is a computing fabric that is designed to put humans at the center and prioritizes privacy. Blockchain technology will spawn a new way of interacting with the internet and will fundamentally change the way we relate to each other. As we head into the future, here are some predictions for what we can expect to see on the other side, in 2023.

1) Crypto VC funding will continue to decline during the first half of 2023, but that’s not necessarily a bad thing; rather, it is normalizing to a point that is rational. Investors don’t want to catch a falling knife, so they wait for things to bottom out while weighing broader macroeconomic concerns and the risk of a global recession. At the same time, new settlement protocols (layer 1s/2s), interoperability (layer 0/bridging), lending, and trading will continue to be funded to fill the gap resulting from changes resulting from recent hacks, treasury shortfalls, regulatory changes, and the exchange collapses.

Related: The Fed’s Pursuit of a “Reverse Wealth Effect” Is Undermining Crypto

2) In 2023, the initial anarchist spirit of Web3 that rejected the need for big brands will disappear. Participants will eventually realize that when there is no external money from big brands, all you have is a token whose only value comes from the dollars of users and speculators. Instead, the projects will encompass big brands and the advertising, marketing, and sponsorship dollars they bring in so that the dream of Web3 (token representing micro-equity) can be achieved by dividing significant external capital among actual users. Web2 brands such as Nike, Starbucks and Meta will continue to experiment on Web3, with a continued focus on non-fungible tokens (NFTs) as the preferred format, and with an emphasis on customer acquisition and engagement over monetization.

3) People will realize that the way many have been thinking about the community in Web3 is nonsense. “Community” was often just a lovely word used primarily to describe “a group of speculators on Discord who share a common dream of quick wealth who quit the project once the carousel of growth stops moving.” While we will continue to see exceptions to the rule, such as strong and engaged decentralized financial communities, as well as online and offline decentralized autonomous organizations like LinksDAO, what we will realize in 2023 is that the entire Web3 project ideal The adjustment of the community was often just the project/speculator fit. Therefore, we cannot afford to ignore the fundamentals of actual product/market fit.

4) As Web3 application development costs decrease and user acquisition costs increase, there will be an emphasis on quality and discovery. Web3 will have its App Store and AdMob moments, which will help developers and users find each other more efficiently. L1s and wallets will initially compete for this position, but a new player will likely take over. Breakout Web3 apps in 2023 will look more like the top-grossing, most-downloaded apps in the early days of mobile: simple user experience and graphics with intuitive yet innovative engagement and monetization mechanisms, like Angry Birds in 2009.

5) The current trend towards “stability” and “sustainability” in gaming, somewhat as a result of the Axie Infinity hits, will spawn a wave of products with stability built in but lacking the dynamic nature of boom and bust of most cryptographic speculations. This will create a flat, muted player experience, which feels like a copied version of existing Web2 video games. Over time, game developers will relearn that market speculation is part of the fun and will try to incorporate it in a healthy and responsible way.

6) Web3 will continue to offer a solid niche, with applications that are functional clones of existing businesses, but with some basic blockchain components. These apps will create a niche market of users who want the same traditional commodity offerings but have some affinity for Web3, similar to many early Internet companies (such as Amazon as a web bookstore) or mobile companies (such as Robinhood as a mobile store). broker). They will greatly differentiate themselves on marketing and experience rather than core product offerings. Some of them will bet on the moon on a paradigm-breaking innovation, Amazon-style.

7) To deal with compliance costs and overhead, blockchain applications will increasingly rely on existing large-cap tokens to power token-related mechanisms. Ethereum will continue to delay its 2023 roadmap, but once it finally sends sharding to lower gas fees, alt L1s will see a big drop in interest.

8) Stablecoins will find more use cases outside of the crypto capital markets, which will drive more mainstream adoption, primarily among businesses, and innovation within Web3. Governments and private blockchain research and development will continue, with some announcing centralized public infrastructure such as central bank digital currencies or marketplace infrastructure.

Related: The outcome of the SBF prosecution could determine how the IRS treats your FTX losses

9) The culture wars around cryptocurrencies will intensify towards the end of 2023, leading to the US election cycle. The booms and busts will continue, with accidental attacks (like Wormhole), overly aggressive risk exposure (like Terra), and outright fraud (like SafeMoon). More politicians will take strong stances on cryptocurrencies. However, the US government will remain indecisive in the regulation, to the detriment of the national industry. Any regulations that emerge will be patchwork and could still allow risky projects to slip by.

10) As builders thrive through the bear market, there will be a point in 2023 where new growth areas start to emerge beyond existing mainstream narratives, such as NFT profile picture projects, play-for-play projects win, alternate L1, etc. The new narratives will drive the next cycle and hopefully these new frameworks will drive utility and actual consumer adoption, bringing in several hundred million new cryptocurrency users/wallets.

The uncertainties of the future also represent opportunities, and those who are able to adapt quickly will benefit if significant changes occur.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.