Web3 ushers in a more open and decentralized internet, eliminating intermediaries and empowering users to engage with digital services directly. These characteristics enable you to build new businesses with the potential to disrupt many traditional Web2 industries, but you may be wondering what kind of Web3 ideas could become the great businesses of tomorrow.
While predicting the future is challenging, and many successful Web3 businesses will likely surprise us, here are a few ideas to get the gears turning.
Web3 Business Idea 1: DeFi Apps
DeFi (Decentralized Finance) is a new financial system built on Web3 that provides access to financial services without going through a centralized intermediary like a bank. DeFi apps use smart contracts to automate financial transactions between users. Some prominent examples of DeFi apps include Compound and Yearn Finance.
DeFi enables developers to build financial applications open to anyone with an internet connection, and users can benefit from DeFi applications by having more control over their financial assets. For example, Bitcoin DeFi unlocks ways for the Bitcoin community to put their BTC to work without storing their assets with a custodian.
Over the last few years, DeFi apps have exploded in popularity. The TVL (total value locked) across DeFi platforms is currently around $48.65 billion. Yet, despite this growth in TVL, we’ve only just begun to scratch the surface of what’s possible with DeFi, including early protocols for lending, insurance, and asset management. In contrast, the global insurance market alone was worth $5.94 trillion in 2022, and the global banking market was worth just over $8 trillion in Q3 2022.
For developers, there are massive opportunities to win market share as DeFi eats into traditional financial markets.
DeFi Business Ideas
- Insurance platforms: use oracles and smart contracts to manage automated claims and compensation across a range of products in Web3 and beyond.
- Lending platforms: enable investors to lend their Web3 assets, providing them with returns, while borrowers gain quicker access to funds.
- Prediction markets: enable users to speculate on the outcomes of events, such as elections, token prices, and sports events.
- Tokenized markets: facilitate fractional ownership and investment in various assets, ranging from real estate to commodities, to lower the barriers of entry and provide better pricing and transparency.
Web3 Business Idea 2: Decentralized Exchanges (DEXs)
Decentralized exchanges (DEXs) are a part of DeFi infrastructure, but it’s worth unpacking them in more detail here. DEXs allow users to trade crypto assets and access other DeFi instruments, such as liquidity mining or yield farming. DEXs provide users with decentralized P2P trading in which users control their assets and reduce counterparty custodial risk. DeFi products are composable, so users and developers can build sophisticated financial instruments by leveraging and building from multiple DeFi projects, and DEXs are the means by which users access liquidity for those instruments.
DEXs come in various types, including order book DEXs and automated market makers (AMMs).
- Order book exchanges enable users to place buy and sell orders, placing a desired price and quantity of the asset they want to trade. The exchange then matches buy and sell orders and executes trades based on those submitted prices.
- AMMs use liquidity pools and algorithms to enable users to trade immediately with the protocol itself; there is no need to wait for a buyer or seller on the other side of the trade. Users can separately deposit assets into an AMM to provide liquidity and earn fees from executed trades in the AMM, and prices on the AMM are determined based on the asset ratio of that submitted liquidity in the protocol.
DEXs have grown in popularity within the broader DeFi industry—the spot volume in DEXs currently stands at about $55.07 billion spread across 21 DEXs in April 2023. To put that number into context, the global equity markets were worth $105.07 trillion as of June 2022—there’s a lot of room for growth.
DEXs are a game changer in enabling access to financial instruments because their permissionless nature eliminates the geographical restrictions of traditional equity trading platforms. As the crypto market continues to gain mass adoption, it will be interesting to see whether a winner-take-all dynamic emerges. Early DEX volume today is dominated by a few players:
DEX Business Ideas
- DEX on Emerging Blockchains: build a DEX for an emerging blockchain ecosystem. DEXs are sticky: users gravitate towards where liquidity is, and if you can build one of the first DEXs, you can win significant marketshare in that ecosystem.
- DEX Aggregator: providing liquidity is a major challenge for any exchange. Develop a platform that aggregates liquidity from multiple DEXs, even across multiple blockchains, to provide a deeper market (which translates to better pricing).
- Portfolio Manager: a DEX is a tool for users to trade and build their portfolio. What if you built portfolio management tools on top of that market liquidity that enabled users to manage and rebalance their portfolios?
- Token Launchpad: a DEX also is a place of discovery for new assets. Establish a DEX that doubles as a token launchpad for new projects to conduct Initial DEX Offerings (IDOs) and provide a platform for other projects to reach their communities.
Web3 Business Idea 3: NFT Marketplaces
An NFT (non-fungible token) is a unique token representing a digital or physical asset on a blockchain. NFT marketplaces naturally are platforms where users can discover and trade those assets. Examples of some popular NFT marketplaces include Rarible, Blur and Gamma.
Since NFTs first debuted on the Ethereum network in 2017, they have become popular with traders, collectors, and creators. In 2022, the popularity of the Otherside Collection from Bored Ape Yacht Club jammed the Ethereum network for three hours, and one user paid $44,000 in transaction fees for an $11,500 NFT. The number of NFT traders on the Ethereum network alone has skyrocketed from 64.35K at the start of April 2018 to about 3.15M traders in May 2023.
While there are a lot of large NFT marketplaces out there, recent market entrant Blur, which has rapidly won market share, has shown that there is still room for innovation, and that the race isn’t over yet. Entrepreneurs can also explore opportunities to build NFT marketplaces that capture a unique business. For example, Sorare has built a successful fantasy sports business model on top of an NFT marketplace.
NFTs are one of the practical applications of blockchain technology that cut across a wide range of industries, from arts to finance and everything in between. As NFTs continue to gain mainstream adoption, NFT marketplaces will become even more dominant players in the Web3 space. Developers who build such marketplaces stand to get a slice of the projected $231 billion market opportunity in NFTs by 2030.
NFT Marketplace Business Ideas
- Improved NFT Marketplaces: there is still room to win market share as a NFT marketplace by being better than the competition. Create a platform that aggregates NFTs from multiple blockchains, add new and better features, such as auction-style bidding, collection sweeping, and NFT swaps, and innovate faster than the competition.
- Target Niche Markets: establish an NFT marketplace focused on a specific industry or vertical, similar to how Sorare gamified fantasy sports. What kind of business could you build on top of creating liquidity for audio file NFTs? Or NFTs that correspond to real world assets?
- Fractional/Collective Ownership: NFTs can also signify ownership in a project. What businesses can be built around the concept of community marketplaces?
Web3 Business Idea 4: Web3 Games
Web3 games are traditional video games that are either built on blockchain networks or integrate Web3 assets. Popular Web3 games include Aurory and The Sandbox. Web3 gaming enables a transparent and user-centric economy for in-game assets and transactions. Players can enjoy true ownership of their in-game assets and make peer-to-peer transactions, and developers can monetize their games through new revenue streams including tokenization and transaction fees.
Traditional gaming is a growing sector: PwC estimates the global gaming industry will be worth $321 billion by 2026. There’s an opportunity for Web3 games to become a core part of the global gaming industry because of the key innovations that the underlying Web3 technology enables. For example, Web3 gaming can improve the economics around in-game microtransactions and player rewards. Because the data lives on-chain and all assets are owned by the end user, both developers and players are empowered with greater transparency and ownership to create a fairer market dynamic between creators and consumers.
Despite that potential, Web3 gaming has yet to scratch the surface of mainstream adoption; 81% of gamers play “regularly, but use crypto sporadically or not at all.” But as the broader Web3 industry continues to go mainstream, the Web3 gaming segment will grow. Today, Web3 gaming currently accounts for 45.6% of unique active wallet activity in the Web3 industry.
Web3 Gaming Business Ideas
- Web3 Game Publishers: establish a game publishing company that provides funding, marketing, distribution, and community-building services to game developers.
- Indie Studios for Web3 Games: create an indie game development studio that builds Web3 games.
- Web3 Graphics Engine & Development Tools: build and develop graphics engines and other game development tools designed explicitly for Web3 gaming.
- Web3 Game Stores and Review Aggregators: create a Web3 game store and review platform that showcases, reviews, or sells Web3 games.
Web3 Business Idea 5: DAOs
DAOs (Decentralized Autonomous Organizations) are digital collective entities that operate on a blockchain, allowing individuals to organize and govern themselves using smart contracts. The success of DAOs such as MakerDAO and BitDAO has shown that organizations can sometimes be decentralized. DAOs also enable greater stakeholder participation and ownership, creating a more democratic and inclusive decision-making process.
Building a DAO allows you to organize people around a common goal. You can create different types of DAOs, such as investment, social, company, collector, media, and many more. Today almost 7 million governance token holders participate in 12,866 DAOs, with more than $21 billion in their treasuries.
Analysts at PwC note that DAOs present traditional organizations with “opportunities to transform parts of their operations – including streamlining decision-making, automating processes and decentralising governance.” Another VC says that DAOs can potentially have AUM (assets under management) of $1 trillion by 2032.
DAO Business Ideas
- DAO Incubators: develop a DAO incubator program that provides resources, mentorship, and funding to emerging DAO projects.
- DAO Tooling: it is still hard to build a DAO. Offer a platform and tools to make it easier for other entrepreneurs to launch DAOs of their own and communicate with their communities.
- Investment DAOs: there are many already, but there’s room for more. Launch an investment DAO where the collective sources deals and votes on which projects to actually invest in.
- Decentralize Your Business: any business can have a DAO. Would your project benefit from having decentralized governance? It can help build a stickier community, but it may slow down your ability to act quickly.
Bring Your Web3 Business Idea to Life
We’ve explored new Web3 business ideas and their potential to become billion-dollar businesses as Web3 continues to gain mainstream adoption. However, having a solid foundation in Web3 development is crucial to turn these ideas into reality.
If you’re looking to get started in Web3, check out our free guide to Web3 development to pick up some of your first skills to build a Web3 app. Start your Web3 development journey today and become a part of the next generation of disruptors.