The eve of the Web3 industry explosion: Data value and innovative applications become investment hotspots.

The Web3 user base continues to grow, with the number of independent addresses for Ethereum Name Service exceeding 500,000 by the end of July this year. Since 2017, Web3 infrastructure has gradually improved, evolving from the early "muddy path" to the current "asphalt road." However, the prosperity of the industry ecosystem is still highly related to market cycles, the value of on-chain data remains to be further explored, and new application scenarios and user interaction mechanisms still need to be explored. The Web3 industry is still on the eve of an explosion.

Recently, a capital partner shared observations on the development of the Web3 industry, investment layout, and the entrepreneurial ecosystem. He has over 7 years of experience in entrepreneurship and investment in the internet and blockchain fields, focusing on investments in blockchain infrastructure, middleware, and application layers.

Core viewpoint:

1. Composability and standardized databases are the greatest value of blockchain technology.

2. Web3 reshapes the value of data, how to develop this data gold mine that contains immense innovative potential.

3. Value creation at the application layer stems from new mechanisms and interaction methods, rather than simply transforming traditional Web2 products.

4. Web3 is still in its early stages, and startup teams should focus on finding real product demands and target users.

As an entrepreneur, he witnessed the development of the Web3 industry from the "desolate" state in 2017 to the gradual improvement of infrastructure today. He believes that the core value brought by blockchain technology lies in composability and a unified database. Composability enables cross-application asset interoperability and permissionless code invocation. The unified database breaks the data silos of the Web2 era, providing new possibilities for data analysis and mining.

Based on this, he proposed two important investment themes:

1. Data analysis and application. On-chain data is a "gold mine" for comprehensive user behavior analysis. From underlying data sources, to data cleaning and analysis, and then to data-based protocols and applications, each layer contains immense opportunities.

2. Innovative Applications. The killer application of Web3 is not simply the addition of wallet logins, but rather the creation of entirely new interaction methods that leverage blockchain characteristics in specific scenarios. The AMM mechanism in the DeFi space is a successful case.

For Web3 entrepreneurs, he suggests:

1. Reserve enough funds to cope with a possible long-term bear market.

2. Focus on finding real product demand and target users in a bear market.

3. First become a believer in the industry, then become a builder. Without enough belief, it is difficult to get through tough times.

4. Set aside historical burdens and determine the direction of your startup after gaining a deep understanding of the current industry situation.

He believes that the characteristics of Web3 investment are the difficulty of due diligence and the complexity of the investor structure. Currently, he is more focused on infrastructure, middleware, and application projects with innovative mechanisms. He hopes to see entrepreneurs who genuinely care about and understand the industry, with innovative ideas, rather than simply replicating existing models.

Finally, he reminds entrepreneurs to face the gap between the current state of the industry and external perceptions, suggesting that they should delve into the industry for a while before deciding on their entrepreneurial direction. In addition to funding, investment institutions can also provide entrepreneurs with product direction suggestions, resource connections, and other forms of support.