On-chain data: The gold mine of Web3

Recently, I shared some views on on-chain data on social media, which sparked quite a discussion. This article is a further exploration and整理 of this topic. It has been half a year since my last post, and I hope to update more frequently in the future.

In short:

• In Web 2.0, your data is valuable, but it does not belong to you, and you cannot share in its value.
• On-chain data is a gold mine; the more applications there are, the richer the data, and the larger the gold mine becomes.
• In Web3.0, your valuable actions will ultimately be rewarded, and the carrier of value is the data you own.

In the Web 2.0 era, users' data and value are tightly controlled by various platforms. For example, if you become a master in one game, you still have to start from scratch in other games; the fans and content you accumulate on one platform cannot be easily migrated to another platform; transferring funds between different payment tools is also quite troublesome. Every time you use a new product, you have to go through a cumbersome registration process again, and for products that are not frequently used, you often need to recover your password.

Web 2.0 applications are striving to lock in users, increase stickiness and retention rates, and build a data moat to maximize value. As users, although we can use the products, we actually own nothing, and all data can disappear at any time. Once-popular blog communities, social websites, and even large online games can shut down their services overnight. Essentially, users' behaviors and data are creating value for companies, while the agreements users consent to upon registration are often extremely unfair.

Therefore, in Web 2.0, while your data is valuable, it neither belongs to you nor can you share in its value.

Web 3.0 is taking a step forward based on blockchain technology. The blockchain is essentially a public database where all applications read and write data. Due to current performance limitations and high interaction costs, applications tend to only record "high-value actions" on-chain, and this behavioral data is a goldmine.

Four years ago, it was still an era of competition between ICOs and public chains, with on-chain transaction types being very singular, mostly token transfers. Over the past four years, the application layer has witnessed an explosion in multiple fields such as DeFi, NFTs, and GameFi, with thousands of applications recording diverse data on-chain. The analysis and processing of this data can give rise to countless scenarios, from capturing trading opportunities to precise user targeting, and forming on-chain identities and social relationships, each direction containing enormous business opportunities.

On the blockchain, the complete picture of an address is hidden within each on-chain interaction. Anyone can piece together a user profile without permission, and some projects are organizing and presenting users' on-chain portraits and behaviors in different ways.

In Web3.0, your value actions will ultimately be rewarded. Even if a project does not provide the expected returns, there will be other projects that recognize your value. For example, a recent case where a certain DAO airdropped tokens to users of a certain NFT trading platform is an interesting example. In the future, more and more projects will reward users for their high-value actions through airdrops and other means.

On-chain data can form traceable and proof-free identity value. Your footprint on the blockchain is real and verifiable, unlike traditional resumes that are easily manipulated. This data not only reflects a person's on-chain history and identity but also inherently establishes social and group relationships. Community tools based on wallet address login can automatically manage membership and permissions based on on-chain data, creating a more transparent and efficient community.

In addition, on-chain data contains enormous analytical value. Every day, tens of billions of dollars in token and NFT transactions are public, with countless Alpha opportunities to be mined. Some data analysis products have already achieved significant results in this direction.

In the future, we will also see widespread applications of credit scoring based on on-chain data and decentralized identities in the metaverse, as well as more data products that create value for users from a specific angle. In the foreseeable future, when you use any application in Web3.0, you will carry your address profile and labels, rather than starting from scratch. Your data is both a carrier of value and belongs to you.

This is just the tip of the iceberg of the on-chain data goldmine, and there are more exciting possibilities waiting for us to explore in the future. As investors, we are very optimistic about the entire track derived from data, which is an important investment theme in the Web 3.0 field. We welcome friends who are starting businesses in this track to communicate and discuss.