Perspective Chapter: The Web 3.0 – Brief Literature Considerations, Use Cases, Sustainability and Risks

Abstract

This chapter explores some general definitions about Web 3 and blockchain technology, along with some applications. Moreover, it mentions definitions of related terms like DAOs. Additionally, this chapter presents some use cases, risks, and sustainability of Web 3. Final considerations and future perspectives are presented at the end.

1. Introduction

Before we go directly into the field of Web 3, it is important to mention some definitions that are related to and from the fundament Web3 applications. It is important to bring definitions of blockchain, decentralized autonomous organizations (DAOs), and decentralized applications (DApps).

2. Blockchain

Since 2008, Bitcoin brought along with it the concept of blockchain, the technology that supports cryptocurrency but is not limited to it. Blockchain enables a decentralized economy and applications. It can be understood as a distributed system that deals with information. This system has many features. Blockchain is a type of Distributed Ledger Technology (DLT). This one is a system that records a ledger of transactions or a history of changes to the system state. [1]. Examples of blockchain are Bitcoin, Ethereum, Hyperledger Fabric, and IOTA. According to CoinDesk [2], the annual revenue of blockchain-based enterprise applications (globally) will reach almost $20 billion by the year 2025 [2].

According to Tabatabaei et al. [1], there are five findings (or definitions) that altogether support the meaning for the term blockchain. Table 1 below brings these findings.

Findings	Details
Finding 1	Blockchain is a system utilizing the data structure of bitcoin but extends the functionality.
Finding 2	Blockchain is a system that maintains a chain of blocks. This definition allows for generalization of Definition 1: it allows data structures other than those used in bitcoin. For example, Ethereum and Hyperledger match these points.
Finding 3	Blockchain is a system that maintains a ledger of all transactions. The blockchain does not need to be stored as a chain of blocks; however, IOTA is an example of a system that follows this definition.
Finding 4	Blockchain is a system with distributed non-trusting parties collaborating without a trusted intermediary.
Finding 5	Blockchain is a system that provides support for smart contracts. Ethereum is the first one to support them along with Ethereum Virtual Machines (EVMs).

Table 1.

Blockchain definitions.

Source: Adapted from Ref. Tabatabaei et al. [1].

3. Decentralized applications (DApps)

Decentralized applications (DApps) can be defined as software applications that are able to run on decentralized computer networks. These applications are based on the blockchain. Hence, data are stored and executed across many distributed networks of nodes, which also helps them more resistant to Fraud. Some examples of DApps are decentralized finance (DeFi), decentralized exchanges (DEXs), blockchain-based games, and social media platforms. Decentralized applications (DApps) have some main features: they are decentralization (there is no need for central authority or intermediaries); transparency (recorded on Public Blockchains); security (decentralization helps to be less susceptible to attacks); autonomy (using smart contracts and consensus mechanisms); and open source (Developers can contribute toward improvements). Table 2 below brings some opportunities and challenges for decentralized applications.

Opportunities of decentralized applications	Challenges of decentralized applications
Greater financial inclusion Lower transaction costs Greater transparency and accountability Enhanced privacy and security Increased innovation and competition	Regulatory uncertainty Lack of user adoption Technical limitations Energy consumption Cybersecurity risks

Table 2.

Opportunities & challenges of decentralized applications.

Source: Based on Ref. [3].

4. Decentralized autonomous organizations (DAOs)

According to Wang et al. [4], there is no single definition of DAO. The authors point out that, to them, DAO stands for a blockchain-based organization that can run independently without any central authority or hierarchy. In a DAO, all the management and operational rules are recorded on the blockchain in the form of smart contracts, and the distributed consensus protocols and token economy incentives are consumed into the organization itself [4]. According to Wang et al. [4], there are three main features of a DAO. They are listed on Table 3.

DAO characteristics	Details
Distributed and decentralized	There is no central authority and hierarchical architecture in DAO; there is coordination and cooperation among distributed network nodes. Interactions among nodes follow the principles of equality, voluntariness, reciprocity, and mutual benefit.
Autonomous and automated	In a DAO, the code is supposed to be law, the organization is distributed, power is decentralized, and management is based on community autonomy. As DAOs are expected to have agreement among stakeholders, consensus and trust within a DAO are also expected to be less costly.
Organized and ordered	As DAOs use smart contracts, their operational rules, participants’ responsibility and authority, and the rewards and penalties terms are open and transparent. Through efficient governance rules, the rights and interests of participants are differentiated and dimensioned, that is, individuals who pay, contribute, and assume responsibility are aligned with corresponding powers and benefits to promote the division of labor and the unification of power. This works as a mean of coordination and transparency.

Table 3.

DAOs’ characteristics.

Source: Adapted from Ref. Wang et al. [4].

5. Metaverse

The metaverse considers advanced human-computer interface (HCI) technologies, allowing users to stablish interactions. The Web 3 is the internet of the Metaverse [5]. According to Zhang et al. [6], it is possible to integrate Web 3 with Artificial Intelligence (AI), along with blockchain and the metaverse. Moreover, this complex architecture can provide a ubiquitous immersive experience to users during real-time interaction with digital avatars in the metaverse. The architecture involves two parallel worlds (physical and virtual ones) [6].

6. The Web 3

Web 3 stands for a decentralized architecture based on blockchain technology offering democracy and ownership to its users. Although Web 3 has many potential applications, it is still necessary to explore more about scalability, compliance, sustainability, among other topics. Web 3 is user-centered and offers the possibility of multiple connections. The Web 3 can integrate developers, entrepreneurs, and individual users to work together to shape the future of the Internet. Web 3 can bring about innovation in many sectors, from finance and governance to data privacy and digital identity management. Web 3 expects to be equitable, secure, and interconnected. The metaverse will also be associated with Web 3 for some solutions [3].

Since the year 2020, Web 3 (or Web 3.0) has made connection with crypto markets once this new version of Web is based on cryptocurrency networks (Weyl et al. [7] and Consensys [8]. According to the concept proposed by Wood [9], the Web 3 may provide distributed internet services without trusted third parties (TTP), in this scenario, users have control over their data. Users are not controlled by centralized agents. Web 3 can be seen as a broader term used to describe the next generation of internet services including many components and infrastructure. Web 3 applications are deployed on decentralized networks, such as blockchain platforms or related distributed systems hosted by many peer-to-peer (P2P) servers [10].

Web 3 transforms the static, consumer-oriented Web 1.0 and the dynamic producer and platform-oriented Web 2.0 into a decentralized web ecosystem. Web 3 can be implemented in terms of decentralized autonomous organizations (DAOs) and other Distributed Ledger Technologies (DLT) that enable the exchange of digital assets. Once Web 3 is a decentralized ecosystem, it is supposed to reduce or solve problems like over-centralization, improve security and information usage and trade, along with remuneration to the users [11].

According to Wang et al. [10], Web 3 brings some benefits that can be listed (i) open, as data are stored in an open network developed by public communities; (ii) trustless: a user can make connections and exchange assets with an unknown user without the reliance of a trusted third party; (iii) permissionless: not pending on central authorities neither on identity validation; (iv) anonymous: users can have some anonymity and pseudonyms or off-chain storage; (v) high availability: Web 3 provides a high availability architecture; and (vi) compatibility: deployed services and applications are not limited to a specific blockchain network. Users only need to connect the wallet to their targeted sites [10].

Regarding governance, users from the Web 3 space can expose much personal data which users can freely browse the internet as well as perceive their data without compromising its privacy. According to Ethereum [12], the Ethereum foundation makes much more progress by drafting an RFP for defining a formal specification. By controlling data and assets, an individual can make profits through incentive mechanisms. This helps in reaching a sustainable ecosystem [10].

According to Gilbert [13], the majority of the existing Web 3 projects fit into one of the following three categories: (1) decentralized Finance (DeFi) – peer-to-peer, blockchain-based financial services including savings, borrowing, payments, and credit scoring. (2) Digital services – decentralized internet service provision, cloud storage, web infrastructure, data analytics, and identity management. (3) Collectibles – digital artwork, sports memorabilia, and virtual goods [13]. The author also points out some examples of Web 3 unicorns (companies valued at more than one billion USD). They are:

• Ripple (international payments provider).

• Aave (protocol for borrowing and lending crypto assets that runs on Ethereum).

• Chainalysis (data analytics platform for compliance, risk management, and cybercrime investigations).

• Forte (gaming infrastructure platform).

• OpenSea (digital collectibles marketplace).

• Sorare (Ethereum-based fantasy football game in which virtual player cards can be bought and traded).

About tokens in the Web 3, there are several different types, including utility tokens, which grant rights of access to a product or service, and governance tokens, which grant voting rights on decisions [13]. Currently, the Web 3 is an application of blockchain, which is having a profound impact on society and the global economy. The potential impact of Web 3 technologies (based on blockchain) is still not fully estimated. Web 3 applications are related to decentralized finance (DeFi), law (data privacy), research (data sharing), new forms of ownership (NFTs), and education, among many possible unlisted applications [14].

Web 3 applications may commonly be related to decentralized autonomous organizations (DAOs). DAOs can be governed by a community and through smart contracts use. In Web 3, users have more control over their data. Web 3 tools can provide interoperability that is immutable and trustless. DAOs are also understood as participatory governance structures in which rules can be mediated by software code [14].

Ray [3] listed some potential applications and context for Web 3, and these are listed on Table 4 below.

Web 3 application/solution	Details
Interoperability and cross-chain solutions	Decentralization in Web 3 is encouraged by the interoperability between blockchains, allowing them to communicate. Cross-chain solutions, such as Polkadot, Cosmos, and Avalanche, are designed to connect different blockchain networks, enabling transfers among them. Interoperability allows multi-chain applications, providing users with the possibility of customized services.
Digital identity and privacy	Web 3 decentralized applications foster user identity solutions, giving them control over their personal data. Decentralized identity solutions can improve privacy once it reduce centralized data storage. Web 3 also allows for the use of secure and interoperable identity management tools. These decentralized identity solutions can allow users to monetize their data and connect in data-sharing agreements, fostering a user-centric digital ecosystem.
The role of governance In Web 3	The decentralized governance in Web 3 can make users share and allocate resources collectively. This governance can be based on DAO ecosystem and rely on smart contracts. Governance in Web 3 can address many points, such as security, scalability, interoperability, and user-centered, through collaboration, innovation, and consensus-based solutions.
The role of Web3 in the metaverse	The metaverse considers many digital environments, such as social media, gaming, and virtual reality. Web3, along with the Metaverse can enable interoperable and decentralized digital experiences, being user-centered and promoting monetization appropriately to all users.
The potential of Web3 for decentralized healthcare	Web 3 applications can also foster Decentralized Healthcare (DeH) solutions, once these are guided by the same user’s principles and rights in Web 3. DeH platforms allow innovation, collaboration, and patient-centered care.

Table 4.

Web 3 applications and solutions.

Source: Based on Ref. [3].

Web 3 is about to result more user-centralization over their data and remuneration, resulting in the democratization and ownership to users. In Table 5, there are listed the main use cases (so far) for the Web 3:

Field of application	Description
Decentralized Finance (DeFi)	Smart contracts-based solutions (like Ethereum) are used to enable decentralized economic systems.
Decentralized Applications (DApps)	Used to ensure transparency and create decentralized networks & applications.
Blockchain-based identity	Avoid centralized identity management. Helps users have control over their data and transparency.
Tokenization of assets	Helps to prove ownership over assets.
Data ownership and privacy	Users can have the ability to share and monetize their assets.
Interoperability	Efforts have been made here. The topic is not fully solved.
Content monetization	Using microtransactions and cryptocurrencies.

Table 5.

Main use cases for web 3.

Source: Authors.

The main topics that are related to some risks of the use and adoption of Web 3 are mentioned on Table 6. The related risks are not impeditive factors once effective controls are adopted to solve and or reduce them.

Main topics related to possible risks	General comments
Scalability	There are many blockchain protocols that still suffer from scalability issues.
Interoperability	This is still a big issue once Web 3 transacts data among many networks.
User experience	Users still need to have better experiences when dealing with Decentralized Applications (Dapps).
Regulatory uncertainty	The regulatory guidelines for both crypto and Web 3 are still under development and consideration.
Security	Security approaches must always be considered constantly when dealing with new technologies and their new governance mechanisms.
Energy consumption	It is still a sustainability challenge once blockchains (mainly the ones that use Proof-of-Work (PoW)) consume a great amount oof energy.
Legal and ethical issues	Topics regarding smart contracts, local regulations, and compliance overall need to be addressed in every use case.
Adoption and education	As Web 3 is a technology relatively new, under adoption and use, users need to be well educated.
Privacy concerns	Like a risk management culture, privacy concerns should always be controlled and assisted.
Governance	Governance should guarantee that it is indeed decentralized and transparent to all users.
Not observing homogeneous or full levels of decentralization toward: Economic Power. Governance & Decision Making. Implementation (i.e. Development)	For all these aspects (Economic Power, Governance & Decision-Making, and Implementation) it should be observed a considerable (reasonable) level of decentralization. Once the technology does exist to promote decentralized governance and user-centered features/rights. Protocols’ design and adoption should avoid economic concentration, promote inclusive and democratic decision-making processes, and decentralized implementation. Hence, if we observe these features, it will not be expected to see hybrids forms of governance (when there are expressive levels of centralization in the network).

Table 6.

Main topics and related risks about web 3.

Source: Authors.

According to the website Skyquestt [15], the Web 3.0 Blockchain Market size was valued at around USD 1.86 Billion in 2021 and is expected to reach a value of USD 15.9 Billion by 2030. In nine years, the market is expected to grow more than eight times its size from 2021. The website also says that the growth can be associated to the increasing demand for data privacy through Web 3.0’s decentralized identity and the growth of the technologies based on internet, along with cryptocurrencies and 5G/6G. Web 3 can support the growth of whole blockchain industry, along with crypto transactions [15]. Figure 1 shows the global Web 3 Blockchain Market in size ($ USD Bn) for the years of 2021 and 2030 (forecast).

Figure 1.

Global Web 3 blockchain market in size ($ USD Bn). Source: Authors based on Ref. Skyquestt [15].

7. Web 3 and sustainability

The emergence of Web 3.0 has called attention to its potential implications for sustainability. However, the literature about this is still limited. Sustainability encompasses various fields that together preserve or contribute to the natural environment, human health, and ecosystem balance along with the creation of innovation. The circular economy concept may also walk together with sustainability [16].

Web3.0 is related to sustainability as these last principles can be applied to environmental, economic, technological, and social fields. By being based on decentralized technologies, Web 3 fosters sustainability. However, there are only a few industry reports and research papers in the literature that have discussed sustainability issues related to Web 3.0. Web 3.0 allows to advance sustainability objectives through various mechanisms, including transparency, energy optimization, promotion of trust, innovation, and inclusivity [16]. According to Rathor et al. [16], there are some Web 3.0 and blockchain applications that help achieve sustainability goals. They are listed on Table 7 (these are just some samples, and there are others existent).

Web 3/blockchain project - sustainability	Description
World Food Programme (WFP)	Provides food assistance, and leverages decentralized financial (DeFi) applications to enhance distribution efficiency and enable secure money transfers, empowering refugees.
Chinese blockchain-based carbon asset markets	Allow the efficient generation of carbon assets in alignment with China’s Carbon Emissions Reduction goals for the Paris Agreement.
Blockchain-based peer-to-peer energy systems	Tends to reduce energy waste by eliminating the need for long-distance transmission and energy storage, while various blockchain-powered platforms such as Echchain, ElectricChain, and Suncontract aim to optimize supply chain efficiency in the energy sector.
Open earth foundation	Leverages Web 3.0 technologies to build an advanced carbon pricing mechanism.
The social plastic project	There are collection centers in developing nations to convert plastic waste into currency, services, or goods, with the goal of addressing plastic pollution and poverty and is currently developing a blockchain-powered app for exchanging plastic for cryptographic tokens.
Green world campaign	Uses cryptocurrencies and a hybrid smart contract application. This project aims to start a global campaign to restore degraded land, raise living standards increasing healthcare and living standards in rural areas, replenishing soil, and mitigating climate change.

Table 7.

Web 3 and blockchain projects that foster sustainability.

Source: Based on Ref. [16].

8. Final considerations and future research

According to what has been shown in this chapter, it is possible to claim that the adoption of Web 3 is something already in use, with an expressive market capitalization. Web 3 has been applied to many industries, although it is also based on crypto-economics networks, it is not only applied to the financial industry, going beyond such as healthcare solutions. In the future, it is expected that the use of Web 3 will be even more expressive and related to many processes. Moreover, the market capitalization tends to be even more significant by the year of 2030 (nearly USD 16 billion). We have also seen in this chapter that there are many projects already in use that consider Web 3 and blockchain solutions to reach sustainability (Table 7).

This chapter also lists the use cases and applications of Web 3 (Tables 4 and 5) along with some risks or challenges (Table 6). It is necessary to mention that these challenges (or related risks) do not mean that we should avoid using Web 3 solutions. It does mean that some controls or appropriated actions must be considered and taken toward them. For future research, we suggest that researchers and industry players consider thinking about better practices to use the Web 3 as an inclusive, sustainable, decentralized, and inclusive approach. The Web 3 is indeed promising for the upcoming years.