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Web3.0 from one to many is now

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Web3 from zero to one has happened, from one to many is now.

There has been another evolution in the crypto asset space since our last report in December 2020, and this is the latest iteration of the industry.

The new report will be divided into four parts:

First, a brief introduction to where we are in the current Web3 0-N process;

Second, briefly describe the current development process of decentralized finance;

Third, comment on the token fundamentals and governance;

Fourth, for the current budding Web3 new plate to make comments.

As always, we expect this report series to be the first non-technical guide for anyone interested in this area.

As a Web3 network that can minimize frictional costs of value flow, its journey of the next 10-15 years has not only just begun, but also compared to the process of Internet, we are only in 1990-1995. In other words, Web3 from zero to one is behind us, and from one to N has just begun.

We believe that this budding ecology will gradually become multi-chain and multi-layer, and at the same time, it will not only become far away from bitcoin itself, but also give birth to a new business sector far beyond the current decentralized financial sector.

We believe that the user experience of the Web3 portal will soon encompass many categories and contribute to a "many-to-many" decentralized exchange ecosystem along with the upcoming multi-chain and multi-tiered ecosystem. In lending, the finer functions will be perfected, but the full system will emerge only when the upper real economy is more mature. The derivatives track is poised for explosive growth, while the insurance track should continue to expand towards B2B, automation, and integration with auditing.

We believe that the distribution of tokens, the screening of participants, and the licensing of their own value capture will become increasingly complex, and will gradually be linked to the user's own on-chain and off-chain history, context, and contributions. Token itself as an on-chain application and corporate financial data option (optionapty), we believe that its governance will increasingly resemble the familiar equity agreement and governance system, and indicators such as DuPont analysis and LTV/CAC will continue to emerge.

Games, non-standard tokens (NFT), and SaaS middleware and tools are now in a similar position to the decentralized finance sector in 2019, which has significant implications for the entire Web3 industry -- along with the decentralized finance sector, In the future, it will become an important part of Web3 similar to the STANDARD & Poor's 500 index.

If you missed your project in this report, it must be my poor coverage, but also be sure to contact us and advice! Finally, with the rapid development of the industry, it is impossible to cover by one person, and the help of excellent talents in the industry is also very needed.

Where are we today in Web3?

Web3, namely, "fully functional Internet", integrates information flow and value flow

We define Web 3.0 as a fully functional Internet with minimal friction, minimal cost, and minimal flow of information and value.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

This industry was Web2 Internet around 1995

While bitcoin's development is reaching an "early adoption" phase worldwide, the Web3 story is just beginning its prologue, resembling the 1990s, and Web1.0 is going through its "nascent innovation" phase.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Web3 goes left, Bitcoin goes right, and the two are about to decouple in the coming cycle

Web3 goes left, Bitcoin goes right, and the two are about to decouple in price and trajectory in the coming cycle.

While it hasn't happened yet, we expect the Web3 ecosystem to decouple from bitcoin price action over the next 36 months, with price action more in line with independent mid - and small-cap tech stocks.

For us, Web3 is not a user mind/wallet share story, but a real adoption/adoption/business cycle story. More and more sharp-eyed capital will bypass Bitcoin and invest directly in the Web3 ecosystem. We expect to be competing with the tech hedge fund track for the foreseeable future.

Note that when/if the Lightning /DLC/L2 ecosystem takes off, the BTC will be re-associated with the track.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Web3's move from zero to one has already happened, from one to many is now, and will face several exponential growth cycles

As the Web3 stack matures relatively in 2020-25, we expect to see the first wave of viable Web3

As infrastructure continues to improve, unforeseen new innovations are likely to emerge.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Past and current cycles (BTC 10-15, ETH 15-18, #DeFi + L1 competitors since 19 years) have produced 100-10,000 times returns for industry leaders. We judge that the Web3 + app + infrastructure story is likely to take off in this coming cycle.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Note: ROI is a multiple of the lowest price of the token.

Web3 ecology is on the eve of the outbreak, decentralized finance is just the beginning, four business blocks are about to take shape

Since the second half of 2020, the Web3 ecosystem has exploded with decentralized finance (DeFi

) elements, while the quality of infrastructure/data/tools has improved dramatically and helped the industry really open up real business applications beyond trying to speculate.

Web3 is particularly unique in that all/most of the applications in the blue square are directly accessible through a self-hosted wallet, and can be accessed and directly exchanged with each other. This composability will soon cover multiple chains and layers.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Note: The above items are not comprehensive and are not fully representative of the category. Also do you think some of the boxes can be combined? For a more comprehensive overview, see Electric Capital:https://airtable.com/shrjUmE0c4956of93/tbl8IffmsRKiktDsG

The border with the final consumer and the real world is slowly happening and accelerating. We see five key verticals as the most promising for business today.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

As the cost of capital in Web3 converges with the real world, the #DeFi stack for term structures, hedging and swaps matures, and physical certificate escolation + recourse grows, this space should generate heavyweight businesses and businesses.

Games and NFT have the best chance of becoming a big part of Web3 after #DeFi. Players will shift from being consumers to ecological participants, and the way the game itself captures value will shift from service and trafficking revenue to ecological rent-seeking revenue such as taxes and tolls.

While the physical/digital divide is still evident, with the rise of Web3, platforms that serve digitally native jobs such as programming will soon become big business.

Navigating a complex regulatory environment, ensuring fiduciary liability and insisting on high standards/investor recourse remain major obstacles that need to be addressed. But empowering people with domain expertise is one of the core features of the Web3 platform.

A combination of cultural relevance, utility (for example, composability of the game), and presentation (need to be able to show off) is needed to achieve wider adoption. Chain to chain integration is imperative.

A market sector similar to the S&P 500 is emerging in the Web3 industry - after financials, entertainment, consumer goods, technology, and business services are sprouted.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

We believe that Web3 will evolve beyond the financial sector and that the industry sector will increasingly resemble the s&p 500 sector. These sectors will begin to derive economic value from consumers, businesses, etc., resulting in real, sustainable cash flows that will eventually push the Web3 industry beyond its existing speculation-led ecology.

Finance ** : cross chain/cross layer #DeFi stack of over 100 protocols

Media & Entertainment + Consumer Products ** : Games, #NFT, social media forays.

Tech ** : Web3 native SaaS infrastructure and tools.

Business services ** : audit, governance and holder relationship services, etc.

Unlimited composability is powerful - within the emerging Web3 ecosystem, users interact freely with any of the following protocols as a single Web3 wallet. As the flywheel continues to spin, the industry will experience exponential growth.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

A multi-chain multi-layer ecosystem based on DeFi wealth effect is about to be born

The emerging multi-chain multi-layer ecosystem starts with building a native "Wall Street" and eventually produces local and multi-protocol winners.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

With BNB's rapid rise, then MATIC's, and now LUNA, SOL, and DOT, a new ecosystem will have access to a lot of talent, mobility, and attention when: Establishing a certain security threshold of game guarantee makes the cost and possibility of external attack become prohibitive. Introduce a significant wealth effect, a clear roadmap for protocol development and execution, and adequate VC funding.

Recreating the local financial street (e.g., replicating the entire #DeFi stack from Ethereum) with clever use of inflation + leverage can quickly lead and build an ecosystem that has considerable impact. And as the initial economic stimulus fades, sustaining growth and market share gains will depend on three things: the emergence of real business applications -- innovations outside the financial and Ethereum ecosystem. (e.g., local quality assets); Continuous improvement of "utility" infrastructure (wallets, development tools, portals, etc.); Continuous infusion of capital and talent.

One way competing ecosystems might beat Ethereum is to get ahead of Ethereum by identifying the next big business area outside of #DeFi, thereby bringing 5-10 times as many users and capital to their own ecosystem first. We believe that apps ultimately have no loyalty to any ecosystem and will only go where the money and users are concentrated. Application development path is limited by its internal resources, too slow will face the risk of being eliminated. We expect the relationship between the public chains to remain highly collaborative for now, with the local chain native app winners taking the lead.

About the next development of open finance sector

Lending - the segmentation function is about to be complete, but the areas related to maturity, fixed rates, inadequate mortgages, and strong credit require physical business activities

In the lending sector - segmentation is close at hand, but a better interest rate system will need to be supported by real commercial activity, underbalance mortgage lending will need more infrastructure, and non-standard asset lending will likely remain a niche market.

Feature improvements will become the de facto standard ** : In existing a floating interest rate and floating term loan market, some of the incremental function will become the industry standard, including but not limited to, the feedback mechanism between interest rate and utilization rate, the division of assets and assets that can be mortgaged loan, more and more clear white list process, and the integration with cross chain agreement, in order to realize more chain, overlapping layers of mortgage and so on. In the face of competition, the net interest rate (NIM) is not necessarily shrinking fast -- industry players should still be willing to pay for safety and capital abundance; And because the industry's own cost of capital remains high, users may not be particularly sensitive to loan rates at a few points.

Addressing the market convergence point (PMF) for term structures, fixed rates and interest rate derivatives lies at the heart of physical business activities ** : We believe that the underlying demand for these products comes primarily from actual business practices that need to match cash flow with funding needs. Since the main business activity in crypto is still speculation, this more complex interest rate play should be in the second half of the cycle. That said, we expect this vertical industry to become the main battleground behind cross-lending agreements as the true Web3 business flourishes, the hosting infrastructure matures, the industry fully accommodates on-chain/off-chain financing, and the direct alignment of on-chain revenue with off-chain customers and institutions. The crypto "yield curve" will appear soon.

Not full specified amount mortgage/unsecured loans will continue to be a thorny question * * : if you don't have enough collateral, the loan is involved in the reimbursement ability (cash flow) and the right of recourse, therefore requires a combination of (a) with the support of economic activity of speculative cash flow, (b) a kind of can recover the service mechanism of power, and/or chain native punishment mechanism. We think this issue will take another cycle to really resolve, but it won't prevent a "gentleman's agreement" between the protocol, the DAO, and the known entities. In the meantime, we think tokenizing defaulted debt and trading it on the open market would be an interesting temporary solution.

Non-standard assets as collateral is perhaps the most suitable for planning work * * : for low liquidity, no continuous price non-standard assets (and therefore do not redeem/clearing loan only), we now believe that its search costs and barriers to knowledge is very high, maybe more suitable for the professional management mode of trust investment, or one to one single point of service between the high value assets. We are looking forward to a similar "point-to-pool" solution to help funds quickly measure non-standard assets and quickly release funds based on this.

Next Capital entry ** : We believe that Web3's 3-4% overnight pBOR rates are very attractive to traditional capital and will push the industry to build the infrastructure to make this opportunity easily accessible to the average person. We believe that the current industry leaders will benefit the most from the construction of this technology facility and continue to acquire other teams to enrich their services while enjoying the industry dividends.

User experience - The battle of Web3 entry is about to start, look forward to a full set of integrated solutions

UI/UX domain - Web3 entry battle is about to start, look at the full integration of silky solutions.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

As the number of Web3 apps in multiple application verticals around the world moves from less than 5 million monthly live apps to 100 million monthly live apps, we believe that the direct-to-user "Web3 portal" will be the next competitive arena and expect some companies to emerge as winners with their integrated, smooth, and fully functional offerings:

For anyone who has experienced Web3 through Metamask, the value transfer experience of this cross-platform single sign-on should be self-evident. In our opinion, this Web3 portal experience should be even better. We think the best solution in the future should have better multi-chain, multi-tier support, better security, hosting and multi-signature options, better dashboards and display of all assets, and optional mobile + IM capabilities.

Metamask generates $150,000 - $200,000 a day in commissions through swap fees (87.5 basis points). This ability to monetize just by occupying user relationships is exactly the same as traffic thinking in the Web 2 world.

We expect players from multiple adjacent verticals to step in and try to combine features and provide a more comprehensive user experience. The full experience should include, for example, hosted multi-signature (Fireblocks) plus hardware wallet + Mobile app (Argent) as two additional authentication factors, the ability to sign transactions locally in the browser (Brave + Metamask), It comes with a Zapper/Instadapp watch board.

Another possible scenario is that existing Web2 companies with a large user base plus upfront acquisition costs will move into the entry end in a big way. But regulatory concerns should hold them back.

Decentralised exchanges and aggregators - a multi-chain, multi-tiered world will bring temporary many-to-many markets

Spot exchange & AMP; Aggregator space - a multi-chain and multi-tiered world will create a temporary "many-to-many" market pattern, temporarily benefiting 2C and aggregators.

Spot exchanges are still currently on a "fewer to fewer" pattern ** : currently, #1 DEX on a given chain/layer typically accounts for more than 50% of total trading volume and approximately 80% of users (e.g. Uni-eth, Cake-BSC, Quick-Matic, Ray-Sol, etc.), and the rest is carved up by a long list of aggregators and DEX. We believe that network effects have been reinforced so far for two reasons :(a) user habits and general perceptions/expectations of the best price and (b) liquidity stuck in the best risk-adjusted return market. In this world, aggregators' ability to charge 2C and liquidity tiers remains limited unless they move up the stack and face customers directly (e.g., matcha 0x).

"Many-to-many" fragmentation pattern, however, may soon be happened * * : dynamic range AMM + OTC/quote request the increase of the type of solution, as most of the top flow assets brings the possibility of other transactions, make these liquidity from pools, or directly on the chain, and direct the differentiation of the liquidity of the chain.

Although capital is in some ways inefficient and ill-suited to scale trading, the XY = K model AMM, which aggregates liquidity, remains the most elegant model today for long-tail small-cap assets. But the rise of NFT is increasing the size of the market for long-tail, illiquid/on-demand assets. We believe that a P2P + OTC based exchange closely integrated with social interaction is likely to emerge and challenge DEX for the niche market of ERC20.

The mid-term future will see a massive explosion of cross-chain, cross-layer solutions. ** Assuming that end users are interested in multi-platform assets, the "largest local" market share of a single DEX will become "one of the global" market share, a new paradigm conducive to the formation of a "many-to-many" pattern. Good for aggregators and client-facing applications.

As shown on the previous page, we expect the Web3 portal wars to heat up as users flood in. This dynamic moves users further away from the aggregation and fluidity layers below. In addition, we do not expect a dominant Web3 portal to emerge any time soon, so the market landscape should not return to the "fewer to fewer" situation of the past for the time being. In general, we believe that as the industry expands, end users are less likely to seek liquidity on their own, and the perception of the underlying protocols should become more blurred.

As a result, we see a many-to-many market pattern emerging in this space over the next 12-36 months, which should be positive for the leading cross-chain aggregators/smart routing protocols, especially for the leading 2C applications.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Derivatives - Long term growth, product side innovation and cross margin should be prerequisites for explosive growth

Derivatives - still half a cycle away, industry consensus bullish. There are six important factors for further development. Futures led by options + complex derivatives.

There is no clear winner ** : The decentralized futures derivatives market has attracted a lot of investment in the past six months, with 5-10 competing projects in the Ethereum network alone. Volumes on the market are still a fraction of DEX's spot volume. 5%), but the corresponding proportion of the centralized market is about the same. The project itself has a lot of room for improvement in user experience + a lack of depth that discourages less sophisticated retail investors (who might be keen to put 10-100x soHA long leverage on their coins) and institutions. Given the nascent market, market share today is meaningless for the time being, especially in options/structured products.

Even so, the consensus is that the industry should enjoy unabated long-term growth in 6-24 months ** :

(1) The regulatory pressure of centralised exchanges forces avid leveraged traders to look for alternatives.

(2) Infrastructure improvements (whether L2 or alternative L1 with side chain/belt Bridges).

(3) Significant improvements to the Web3 entry experience.

(4) Solid prime brokerage/aggregator layer, which can improve capital depth, achieve better cross margin trading, etc.

(5) Due to the derivative demand of Web3 business, natural supply and demand emerge outside of speculation.

(6) This is an assumption, but an important one - users can participate in interesting products that are not available on centralized exchanges. As the centralized exchange can not satisfy users for the long tail ERC20s/NFTs + complex spot mining + cross-pledge gameplay.

Given the homogeneity of the product (the main token) and the temporary absence of the industry leader, we expect competitive products to subsidize users aggressively and many proprietary platforms/market makers to arbitrage through spreads and financing. We believe that current leadership in the space is often difficult to achieve and maintain unless one or two of the top projects have a much better user experience than the competition, provide particularly top-notch UIUX + cross margin + clean clearing, and spawn trades beyond existing centralized exchanges.

We think options and complex derivatives markets are heavily dependent on futures markets, and the former won't really take off until futures markets are developed (incidentally, we think it's natural for futures agreements to move into options and more complex derivatives markets as well).

Others - The insurance industry will move to automation, B2B, and deep integration with the audit side. It takes time for the asset management side to develop

Other #DeFi verticals - Expect insurance to become more orchestrated and automated in the case of consolidated audits. Passive investment strategy is a competitive field, given that talent works alone, and active strategy is still in its very infancy.

Insurance - With the consolidation of audit and insurance workflows, it is expected that there will be real attempts at carefully collected and/or automated insurance.

We're now seeing projects in the market move beyond direct-to-user, vote-driven projects. What's new to the industry, either through more carefully collected projects like Cozy (where the team will both contract with the agreement while integrating it natively into the website) and Sherlock (which sells commercial insurance to the agreement and then the counterparty directly to the user with an FDIC /FDIC like service), or through more automated claims assessment models, Examples include Risk Harbor (automated payments based on smart contract status) and OpenZepppn's Forta (which is not exactly insurance per se, but more like a smart contract monitoring and warning tool, though allowing users to directly pledge funds toward Risk Harbor doesn't seem difficult).

Both of these directions should encounter engineering intensity and timeliness/complexity challenges, but seem to be manageable with a strong team. It is easier, after all, to rely on teams to push or approve projects on the ground than to try to persuade retail investors to buy insurance for three days of mining. We believe that putting the insurance purchase action at the end remains a significant challenge, so embedded costs may be a better solution.

We believe that the smart contract audit business model should be integrated into the insurance business model -- whether it is audit firms deploying proprietary capital or decentralizing audit work to crowdsourcing on platforms such as Code 423N4.

One idea is that an adverse state change is just a mirror image of a positive state change (e.g., KPI condition being triggered), and perhaps insurance platforms can also help teams solve incentive/expense issues.

We believe that the 2C terminal should be able to directly insure its users after it has sufficient capital and liquidity ability. Metamask, for example, could have relied on its cash to underwrite premium users using plug-ins.

Asset Management - Passive strategy vs. individual strategy in the platform. As Web3 grows, active strategy will emerge.

We generally believe that algorithmic strategy is a platform/incentive design game, and the protocol is well-positioned with assets and touchpoints of sufficient size to go into the B2C channel, as well as excellent business development /API documentation, It can motivate/attract talent for strategic deployment - the same principle applies to borrowing/lending (income) and market making. For example, we believe YFI is well placed to underwrite Uni V3 AMM strategy.

That said, the counter argument is that any good programmer is willing to go it alone and can easily raise/issue tokens at a substantial market value and provide sufficient liquidity to mine.

The breadth and depth of Web3's expansion often benefits alpha projects with domain expertise, thereby facilitating asset selection and commissioning cases that support underlying infrastructure growth. The issue of track record and trust remains a difficult nut to crack.

Some of the directions in which the open financial sector currently attracts us

A long tail exchange designed to address illiquid, homogeneous and non-standard tokens. Going beyond point-to-point agar-type models and xy=k models may require some special solutions.

One-stop routing and aggregation across chains and layers. But to be fair, cross-chain/cross-layer solutions are in their infancy and there are significant smart contract risks.

SaaS tools that allow on-chain/off-chain collaboration on capital deployment and investment. The two direct use cases are (a) angel investment club and VC-DAO and (b) credit SPV for direct lending.

An overall attempt to merge auditing and insurance, and extend the scope of services to SaaS tools and always-on monitoring services.

Using the above two points, daOS are actively entering the fields of insurance underwriting, term loans, unsecured loans and non-standard asset loans.

Prime brokerage agreements, which enable clean cross margin, pave the way for complex derivatives.

Liquidity agreements, which can pull liquidity from CEX to DEX/ derivatives and vice versa.

First-class 2C solutions; This is more infrastructure/tools.

Financialization of MEV.

A view about token economy and governance

Coin issuance is a new paradigm similar to the SaaS growth model of 2000. Publishing, user acquisition, and value capture will improve

Similar to the way SaaS investment frameworks are gaining widespread acceptance, the token distribution and profit-sharing model is in the early stages of iteration.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

In the case of Internet core utilities (SaaS software), the falling cost of capital over the past two decades has led to lower leasing costs for businesses.

The best way for SaaS companies to expand was written 15-20 years ago: capture customers and Upsell with low customer churn, continue to spend heavily on Upsell, invest heavily in R&D, and give talent incentives such as 2-3% equity per year to keep enterprise software at the top of the game. This break-even/loss-running logic was definitely not common sense for "value investors" at the time.

Today, the above p&L curve and business logic have become common sense, and the SaaS investment market has become quite efficient as a result.

We think token inflation paid for usage and liquidity is just another form of user acquisition cost, but instead of being paid to "salespeople" in cash and company stock, it is paid to customers/stakeholders in contract tokens.

For token design that can bring long-term advantages to the project side, we think the following points may be required:

Minimizing freeloaders: Token recipients should need to continue "contributing" to enjoy token value capture. A user's contribution to the project side is not the same in different periods, and it is easy to mismatch the amount of tokens it holds. There is currently no solution to this issue.

Encourage long-term interest ** Loyalty to the project should result in some form of bonus/benefit for the user.

Limited and well-defined currency requirements ** : This is debatable, but we generally agree that most coin holders are busy, lazy and apathetic, and unless they are given some very clear guidelines and limited options, it is not practical to expect them to work as a group.

Both old and new believers should be rewarded ** : if early inflation rewards are too aggressive, new entrants can often feel "left out of the loop".

We continue to believe that a well-designed coin-east mechanism will have unmatched power. It's much easier for participants to generate explosive viral growth when they can profit from the company's growth than when they simply enjoy a free or cheap service.

We expect the token inflation rewards to protocol participants to be smarter than the simple allocation model at DeFi in summer 2020. This change may be more beneficial to the general public.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

The fundamental analysis of the token itself, such as DuPont analysis and LTV/CAC, will soon become the norm in the industry

The Basic Framework of Token Project Valuation -- "Dupont Equation/Dupont Formpa"

We believe that there should be a rigorous framework for valuing tokens. Special thanks to the Token Terminal team for iterating ideas with us:

A token valuation similar to the dupont equation:

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Total Revenue / TVL cane be further broken down, such as [Trading volume / TVL * Total revenue / Trading Volume] for exchanges, effectively the concept of GMV / Asset * Accounting revenue / GMV for e-commerce.

This equation allows the general public to compare and dissect a protocol's business model across protocols: (a) companies in the same vertical industry may optimize for different metrics, (b) whether and how business models can lead to meaningful improvements in certain metrics, and (c) track these metrics over time to identify weaknesses + realistically predict the likely impact of catalytic events.

It goes without saying that the protocol team's ethical code is extremely important in these kinds of metrics -- otherwise none of these metrics ultimately translate into returns for the holder.

Note that this is not a bad thing for the holder if the agreement does not take a commission on the token and is committed to long-term value building, but then you need to track the funding of the agreement to ensure good capital allocation.

The basic framework for token project valuation -- the "lifetime value of users/cost of acquisition ratio" of the proposed valuation

(LTV/CAC Ratio)

We believe that there should be a rigorous framework for valuing tokens. Special thanks to the Token Terminal team for iterating ideas with us:

Calculation of token distribution efficiency similar to "LTV/CAC ratio" :

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

Obviously, LTV/CAC is not directly comparable to the ratio we create here -- inflation does not fully account for acquisition costs, and here both annual recurring revenue (ARR) and customer churn (LTV usually = ARR/churn) are ill-defined, Current agreements are generally pro-cyclical and capital light, so there may be significant time and cycle mismatches.

That said, at its core, this metric is better suited to answer the question: "For every dollar of inflation issued under the current agreement, how many dollars of enterprise value does it really deliver, assuming that the valuation of a particular KPI remains constant?"

A project that has low to negative inflation but delivers meaningful KPI growth (whether TVL, total revenue or agreement revenue) will have a very high ratio (or negative) indicating that its product-powered engine is more or less healthy, organic, and has a chance to be sustainable.

One of the obvious challenges in designing such an indicator is that periodic token inflation data are largely unprogrammed and may require a lot of manual work.

LTV/CAC indicator case -- Assuming that valuations remain constant, when the KPI growth rate exceeds the token inflation rate in circulation, it means that the token may appreciate

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

The figure above shows a framework for token valuation: holding valuation constant, if the key KPI growth exceeds the inflation growth of circulating tokens, then all else being equal, token prices should appreciate. KPI can be anything related, such as transaction volume, agreement revenue, etc.

Depending on the time period, such as next week/month /3 month /6 month/year inflation rate, may be more helpful.

Predictions of future KPI growth may be more useful than historical KPI growth rates. After all, the market for some catalyst and positive expectations, will let the market price reflected more quickly.

The framework fails to account for periodicity and customer stickiness of business models.

A valuation metric, market cap/key Performance, should change as the Bull and Bear cycle and the team itself proves its strength.

Token rights and governance boundaries need to be iterated to achieve accountability and business development efficiencies

We generally treat tokens that do not guarantee network security (such as ERC20) as options on the financial items of the project. These tokens are an extension of the typical equity agreements that have existed since the 1600s and are now largely gentlemen's agreements between holders and agreements on governance and other matters.

Given that the code is still in its infancy and the regulatory structure is uncertain, the problem with tokens is obvious:

Lax founder obligations ** : Founders and coin holders are not necessarily contractually binding, so today's coin holders rely on equity holders' recourse and penalties based on repeated repetition (screw me once, don't get any more money from me). We believe the first key to token speculation is the ethics of the founding team.

Loose governance practices ** : Similar to the previous point, the founding team is not bound by any claim action and only implements/pushes protocol updates based on the "governance vote".

Conflicts are likely to arise when the interests of the majority coin-holder conflict with those of the team/equity holders.

Vague and confusing boundaries of "rights" ** : Technically, the holder appears to have governance over all "significant" decisions of the agreement, control over the agreement vault, and discretion over value capture. In practice, this boundary is usually not held accountable by the token community.

Tokens vs. Equity ** : Typically, equity holders own a significant portion of the market value of the outstanding tokens through token subscription warrants. Although the interests of the coin holder and the equity holder are usually the same, when the coin holder directly affects the equity value through the decision, we wonder where the team will go.

For these reasons and many others (the holders are too busy, too uninformed, too short, too trivial to propose things, etc.), governance participation is generally low, resulting in some project delivery bogged down, some projects with a complete lack of oversight, and a general failure to hold the protocol management team to account. Nonetheless, we are optimistic that best practices will emerge over the next 12-24 months.

Other things being equal, better governance should result in a premium valuation for the project. Specific governance may involve KPI-based rewards, clear delegation of responsibilities, and drawing equity/token power boundaries.

While we don't think we have real insights on this issue, we do have some insights on token governance. All else being equal, we firmly believe that agreements with good corporate governance should command a valuation premium (and vice versa), driving the industry towards best practice (which may result in some agreements moving out of some countries).

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

It is expected that token inflation will (a) be co-planned with expected potential growth, and (b) increasingly distributed among more consistent participants to manage market values and market expectations.

Expect continued, uncapped inflation incentives for contributors to become the norm (away from hard caps).

Rewards will increasingly be based on equity-like restricted stock (RSU)/equity incentive (SBC) models linked to quantifiable KPIs.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

We generally believe that modern entrust represents the model works well, and will increasingly adopt (scrip holders to vote for the board of directors, board of directors select executives to daily operations, to speed up the decision-making and execution speed), and "best practice" script will appear, in some form permanent on the chain of "scrip holders agreement" will appear.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

We generally believe that the shareholder rights of the founding team entity should be explicitly limited. One design is to limit the value capture of the equity to X% of the agreement revenue, and draw money from the agreement vault only on a "top-up" basis. The remaining agreement revenue flows to the project Treasury and can be distributed at the discretion of the executive/Board/token holder.

About the birth and development of Web3 new business section

User portrait will be a series of its own, for the differentiation of services and community to create further

User profiles and decentralized IDS - The abundance of on-chain and off-chain data allows user profiles to become a whole, creating a further step for differentiated services and communities.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

By quickly identifying user profiles and clean on-chain + off-chain data sets, projects should be able to differentiate services for their users.

Examples include credit scores (Spectral, ARCx), user tracking of the user as a trader/investor (PrysM.XYZ), etc.

Unlike Dune/Nansen, the management and cleansing of on-chain user data is a slightly different vertical, where high-fidelity filters, pull new, and whitelists are necessary for on-chain data to be used for user analytics and service differentiation.

Examples: NFT/Achievement Systems as a Service (Galaxy.eco), User Portrait Building (Rabbithole).

It is clear to us that as long as the user is willing to disclose, multi-chain and multi-layer + sub-chain data can be used to create an overall user background identity to maximize his/her privileges in the Web3 world.

For this, a cross-platform toolkit + decentralized storage protocol like Spruce is a great solution.

In addition, Kyve on Arweave also works on reading fidelity data.

Assuming we can continue to preserve state-based data richness (or partially through transactional hashing + off-chain access), the maturing app ecosystem will be able to take full advantage of the emerging (and powerful) vertical ecosystem of user profiles + decentralized ids.

Encapsulated, filtered on-chain + off-chain history as on-chain NFT for quick query/access "achievement system".

Differentiated protocol treatment based on on-chain + off-chain history + conditional access.

With data analytics help agreement with low or unsecured customer + and can migrate user profiles across chains and layers.

Software-as-a-service middleware and tools will mature rapidly as the decentralized community grows

Software-as-a-service middleware and tools - Web 3 will facilitate the explosion of decentralized organizations, leading to the creation of SaaS tools and middleware projects of a certain scale.

As sovereign individuals come together to digitally and collectively manage resources across Web3 segments, we expect an entire industry chain of SaaS tools to emerge to serve these increasingly large and numerous decentralized organizations. While the market size and profit pool for these tools may remain too small for the foreseeable future, there should be some self-sustaining SaaS businesses in the industry over the next 36-60 months. Our optimism stems from the following basic beliefs:

Value networks will minimize the marginal cost of capital collaboration, and because capital can now move seamlessly around for returns, individual domain expertise can be leveraged significantly more than Web2,

Due to the composability and originality of the value transfer, the cost of registering to use SaaS services will be negligible.

The combination of these factors is conducive to the explosion of the number of customers and the final commercial realization of these customers.

PleasrDao, for example, is a unique investment collective founded in March 2021 by DeFi leaders, early NFT collectors and digital artists to acquire culturally significant works from various sources and to work through philanthropy. This organization will benefit greatly from the creation of a series of tools to manage coffers, partners, investments, and members.

Fopus Ventures：身处从 1 到 N 前夜，展望 Web3.0 未来

The game will be Web3 ecology first born similar to the real economy of the plate, but also the industry's most exciting track

As game players become productive participants with ownership of assets and responsibility for profits and losses, the game business model will become more prone to government-like rent-seeking within the game economy, which itself will have boom/bust cycles.

We think gaming is probably the best opportunity to be the first to offer real economic activity in the Web3 space. For online games with Web 3 value network characteristics, players now have (a) digital property rights to the native economy within the game, and (b) the human right to directly and legally participate in the exchange of value and directly cash out economic value from the game. The power given to players by these two blockchains has had a profound impact on the gaming industry as a whole:

Game business models may be more 'government' than 'service' ** : While the sale of in-game items remains a potential major revenue source, we expect game companies themselves to diversify their revenue streams, such as' owning 'key parts of in-game usability and taxing the in-game economy. The game companies themselves will act as central banks, central governments, and sovereign funds, regulating the functioning of the economy, providing support during recessions, addressing inequality, etc., and adjusting tax rates/taxes to boost/slow economic growth (e.g., more content, more users, etc.).

Transition from "consumers" to "productive players" : The establishment of property rights and actual participation in the in-game economy will lead to a higher percentage of pure gold players who extract economic value from the game and are driven by ROI. The wealth-transfer effect on emerging markets is similar to the global division of Labour that was created by the globalisation of the real economy-the pattern of American consumption, Chinese and South-east Asian production.

This dynamic to strengthen the "government" business model - how to impose a reasonable initial capital expenditure request (for example, the "business license"), to motivate the activity of the multiplier proceeds tax-free (for example, for some activities, as well as to the value of the extracted smart tax (for example, the exit tax, income tax, etc.), will be the economic mechanism design key points of the game.

Introducing explicit "boom/bust" cycles in the game industry ** : Composability with the Web3 ecosystem means that the liquidity in #DeFi will feed directly into the high ROI areas of the game and provide leverage. At the same time, the design of game ownership means that players will have a clear incentive to help the game get new in order to boost economic growth (and thus their own wealth). The combination of the two can easily create an extraordinary boom, or it can lead to an economic depression in the game as organic user growth slows and value extraction outstrips value inflow.

The relatively independent economy of the game allows it to develop its own decentralized finance and NFT system rather than relying on external agreements.

As the integration of different data standards, the evolution of non-standard token will go far beyond the single category of art

Non-standard tokens (NFT)- As a free encapsulation of non-standardized data, NFT carries meaning far beyond art and should bring about a new paradigm shift for Web3 in the same cycle as ICO eventually became #DeFi.

Similar to the push by ICOs for DeFi, we believe the current NFT wave represents the prologue to a larger story:

A deeper and richer exploration of metadata.

Make metadata pointing to robust, permanently decentralized storage and retrieval projects, as well as unlimited combinations with emerging digital native apps (games, music, social media) and #DeFi fields.

NFT as free are not standardized data encapsulation, its design essentially has very broad categories: of course it can be proven digital art works, but it can also represent a complex financial instruments, membership, access, and/or on behalf of some history, track record, do, or any general thing badges. We typically expect the following to happen over the next 6-12 months:

Financialization of NFT is now a reality: ** Due to the infinite combinability of the #DeFi protocol, segmentation of illiquid NFT, loans based on evaluation, P2P exchanges beyond the marketplace model, etc., will take place in this cycle. We believe the intersection of NFT and #DeFi is one of the most exciting next steps in #DeFi 2.0.

1 NFT, multiple rights over multiple protocols/layers/chains: ** While some of the value of NFT is intrinsic (i.e., binding to JPG/GIF, signer's proof, implicit ERC20 locking, etc.), we believe that many extrinsic values can also be attached to the same token, whether through privileged access, cross-protocol benefits, Commercial development and cash flow payments via #DeFi. At the same time, we think NFT will find a very clean way to finally show it to Web3 users in the public/community/community (in fact, we are surprised that existing projects have not yet made a good attempt at this).

Physical/digital boundaries will start to blurred: **Unisocks, Sake, etc are great attempts, but we are more excited about a metasomes that combines with real life where access to/exchange items can be granted by scanning various QR codes to prove NFT/token ownership. This may be niche at first (e.g., exclusive Web3-specific campaigns), but we think the B2C layer and user base may eventually reach critical mass for experimentation

We generally think the A16Z does an excellent job of summarizing what's happening in the field today and recommend it to interested readers.