According to leading venture capital firm Andreessen Horowitz, Web3 could reach 1 billion users by 2031.
Andreessen Horowitz (a16z), a leading crypto VC firm, has released an annual report on the current trends and state of the crypto industry. The paper reiterated the firm’s bullish views on Web3, projecting long-term growth for the sector, and commented on Ethereum’s claimed dominant position among layer-one blockchains.
“Web3 is Fairer”
a16z condensed the report into a few observations, focusing primarily on the state of Web3 and Ethereum. The VC behemoth attributed the recent market selloff to a possible seasonal downturn, while claiming that the crypto-powered Web3 could be one of the best opportunities of the decade.
The company claimed that Web3 has much better economic terms than Web2 behemoths like Meta. According to its data, primary sales of Ethereum-based NFTs plus royalties paid to creators from secondary sales on OpenSea totaled $3.9 billion in 2021 – four times what Meta has rewarded its creators through 2022.
Although YouTube and Spotify paid out $15 billion and $7 billion to their creators, respectively, as of 2021, the report stated that each artist on Spotify and each channel on YouTube received only $636 and $2.47. In contrast, the firm stated that by categorizing NFT collections as Web3 creators, there are a total of 22,400 Web3 creators, and “web3 paid out $174,000 per creator.”
a16z identified blockchain projects like Flowcarbon, Helium, and Spruce as strong candidates for solving significant real-world issues by leveraging the DLT strengths in privacy, transparency, and decentralization, in addition to crediting DeFi as a disruptor to the traditional finance industry.
Ethereum Maintains Dominance Despite Challenges
Another notable factor highlighted in the report is Ethereum’s lead over other layer-one blockchains such as Solana, Fantom, and others. The second-largest blockchain by market cap has nearly 4,000 monthly active developers, far outnumbering its primary competitor Solana, which has only around 1,000.
However, the report noted that Ethereum’s emphasis on decentralization over scaling has made other networks more appealing to users, with lower fees and better performance enticing them.
“It’s Still Early“
a16z compared Web3 to early commercial Internet use by analyzing the current size of such users, which ranges from 7 million to 50 million. It reads:
“The internet reached 1 billion users by 2005 – incidentally, right around the time web2 started taking shape amid the founding of future giants such as Facebook and YouTube.”
The firm sees blockchain as a “hit product,” similar to PCs and broadband in the 1990s and 2000s, and mobile phones in the last decade, and predicts “multiple winners” in the race.