Web3 tokens are digital assets that operate on decentralized networks and play a pivotal role in the ecosystem of Web3, the next generation of the internet built on blockchain technology. These tokens are not only a medium of exchange but also embody various rights and functions within their respective ecosystems. They can represent ownership, governance rights, access to specific features, or even participation in decentralized finance (DeFi) activities. Unlike traditional digital currencies, Web3 tokens are built on blockchain platforms, ensuring transparency, security, and resistance to censorship.
Web3 tokens are integral to decentralized applications (dApps), enabling a wide array of functionalities from simple transactions to complex smart contract executions. They can be categorized into various types, including utility tokens, governance tokens, security tokens, and non-fungible tokens (NFTs), each serving distinct purposes. Utility tokens grant users access to a service or app; governance tokens provide voting power on decisions affecting the platform’s future; security tokens are digital assets backed by real-world assets; and NFTs represent unique digital or real-world items.
Polkadot (DOT)
Polkadot is an open-source sharding multichain protocol that connects and secures specialized blockchain networks, facilitating cross-chain transfer of any type of data or assets, not just tokens, thereby enabling blockchains to interoperate with each other. Polkadot aims to provide a foundation for a decentralized blockchain internet, also referred to as Web3.
Polkadot is known as a Layer 0 meta-protocol because it underpins Layer 1 blockchain networks (called parachains) and describes a format. As a meta-protocol, Polkadot can autonomously update its codebase without forking, based on the desires of the token-holder community through on-chain governance.
Polkadot offers a foundation to support user-controlled decentralized networks and simplifies the creation of new applications, institutions, and services.
The Polkadot protocol can connect public and private chains, permissionless networks, oracles, and future technologies, allowing these independent blockchains to share information and transactions trustlessly through the Polkadot relay chain (which will be further explained).
Polkadot’s native DOT token serves three clear purposes: staking for operation and security, facilitating network governance, and bonding tokens to connect parachains.
Chainlink (LINK)
Founded in 2017, Chainlink is a blockchain abstraction layer that enables universally connected smart contracts. Through its decentralized oracle network, Chainlink allows blockchains to securely interact with external data feeds, events, and payment methods, providing the critical off-chain information needed for complex smart contracts to become the dominant form of digital agreement.
The Chainlink network is driven by a large open-source community of data providers, node operators, smart contract developers, researchers, security auditors, and more. The company is dedicated to ensuring that all node operators and users wishing to contribute to the network can do so in a decentralized manner.
As a decentralized network, Chainlink allows users to become node operators, earning income by running the critical data infrastructure required for blockchain success. Chainlink uses a large number of node operators to collectively support the decentralized oracle networks for Price Feeds currently securing billions of dollars in value for leading DeFi applications like Synthetix, Aave, and Compound.
Internet Computer (ICP)
Driven by cryptographic innovations, the Internet Computer blockchain has fundamentally rethought blockchain design. It offers the first “world computer” blockchain, capable of hosting virtually any online system or service, including demanding social media networks, without traditional IT services like cloud computing. Thus, it enables full end-to-end decentralization.
The goal of the Internet Computer blockchain is to add world computer functionality to the public internet. On the Internet Computer, developers can build decentralized online systems and services entirely on blockchain, without centralized traditional IT.
As a blockchain, developers use “smart contracts” software to build online systems and services. Using smart contracts in these applications offers game-changing advantages. For example, since smart contracts are tamper-proof, like the Bitcoin ledger, systems and services do not need to be protected by firewalls to prevent hacking attacks, addressing the growing problem of cyber attacks plaguing businesses and society. Another advantage is that web3 services built on the Internet Computer can handle tokens, creating new economic paradigms. For example, web3 could integrate social media with DeFi, resulting in SocialFi, like fully tokenized social networks.
Filecoin (FIL)
Filecoin is a decentralized storage system aimed at “storing humanity’s most important information.” The project raised $205 million in an ICO in 2017, initially planning to launch in mid-2019. However, the launch date of the Filecoin mainnet was postponed to block 148,888, expected in mid-October 2020.
The project was first described in 2014 as the incentive layer for the InterPlanetary File System (IPFS), a peer-to-peer storage network where users pay with FIL for data storage and distribution services. Filecoin is an open protocol, backed by a blockchain that records the commitments made by network participants, and transactions are conducted using the blockchain’s native currency, FIL. The blockchain is based on proof of replication and proof of spacetime.
Filecoin is open-source and decentralized, meaning governance lies in the hands of the community. On the Filecoin platform, developers have the opportunity to create cloud file storage services like Dropbox or iCloud. Anyone can join Filecoin and start storing their own data or earn money by providing space for others’ funds. The creators of Filecoin chose their blockchain technology to operate the network and token with its consensus.
FIL is Filecoin’s native currency, powering the entire network and all its processes. Customers pay transaction fees in FIL tokens. Miners post FIL as collateral, guaranteeing their services.
Render (RNDR)
Render (RNDR) is a distributed GPU rendering network built on the Ethereum blockchain, designed to connect artists and studios in need of GPU computing power with mining partners willing to rent out their GPU capabilities. Conceived by OTOY, Inc. in 2009, RNDR
was launched by CEO Jules Urbach in 2017, with an initial token sale in October of the same year, followed by a private sale period from January to May 2018, where a total of 117,843,239 RNDR tokens were sold at an equivalent of $0.25 each. During the private sale, early adopters joined the RNDR Beta testnet, testing with node operators and artists in collaboration with the RNDR team to build and test the network until its public release on April 27, 2020.
RNDR is an ERC-20 utility token used by artists on the network to exchange for GPU computing power from providers (node operators). RNDR utilizes a combination of manual and automated proof of work systems, or in this case, proof of rendering, to verify that all artworks have been successfully rendered before payment and release of the artwork. Leveraging the inherent security properties of the Ethereum blockchain, proprietary assets are hashed upon upload and sent individually to nodes for rendering. All RNDR payments are held in escrow during rendering and released to node operators after the commissioning artist manually verifies the successful works. To prevent malicious actors in both user groups, all assets rendered on the network are watermarked until payment is successfully made, at which point the unwatermarked render can be downloaded, and all payments are held in escrow until manually verified as correctly rendered.
Stacks (STX)
Stacks is the Bitcoin layer for smart contracts; it enables smart contracts and decentralized applications to use Bitcoin as an asset and settle transactions on the Bitcoin blockchain.
Bitcoin is the largest, most valuable, and most durable decentralized asset. The Stacks layer uses Bitcoin L1 for the settlement of decentralized applications, unlocking $500B of BTC capital.
With its proof of transfer consensus and Clarity language, Stacks understands the full state of Bitcoin, making it capable of reading Bitcoin at any time.
All transactions on the Stacks layer are automatically hashed and settled on Bitcoin L1. Stacks blocks are protected by 100% Bitcoin hashing power. To reorder Stacks blocks/transactions, an attacker would need to reorganize Bitcoin.
The Graph (GRT)
The Graph is an indexing protocol for querying data from networks like Ethereum and IPFS, supporting many applications in the DeFi and broader Web3 ecosystem. Anyone can build and publish open APIs (called subgraphs), and applications can query using GraphQL to retrieve blockchain data. There’s a hosted service in production that lets developers start building on The Graph easily, and a decentralized network will launch later this year. The Graph currently supports indexing data from Ethereum, IPFS, and POA, with more networks coming soon.
To date, thousands of developers have deployed over 3,000 subgraphs for DApps like Uniswap, Synthetix, Aragon, AAVE, Gnosis, Balancer, Livepeer, DAOstack, Decentraland, and others. In September 2020, Graph usage grew by over 50% month-over-month, with queries exceeding 7 billion.
As of October 2020, The Graph boasts a global community, including over 200 indexer nodes in the testnet and more than 2,000 curators in the curator program. To fund network development, The Graph raised funds from community members, strategic venture capitalists, and influential individuals in the blockchain, including Coinbase Ventures, DCG, Framework, ParaFi Capital, CoinFund, DTC, Multicoin, Reciprocal Ventures, SPC, Tally Capital, and more. The Graph Foundation also successfully completed a public GRT sale participated in by 99 countries (excluding the US). As of November 2020, The Graph had raised approximately $25 million.
Injective (INJ)
Injective is a blockchain built for finance. It’s an open, interoperable Layer 1 blockchain, supporting the next generation of DeFi applications, including decentralized spot and derivatives exchanges, prediction markets, lending protocols, and more.
Injective uniquely provides powerful core financial infrastructure primitives that applications can leverage, including a fully decentralized, MEV-resistant on-chain order book. Additionally, various forms of financial markets, including spot, perpetuals, futures, options, and more, are fully on-chain. Decentralized cross-chain bridging infrastructure is compatible with Ethereum, IBC-enabled blockchains, and non-EVM chains like Solana.
Injective also offers a next-generation, highly interoperable smart contract platform based on CosmWasm, with advanced interchain capabilities. Injective is custom-built using the Cosmos SDK and leverages a Tendermint-based proof-of-stake consensus mechanism, providing instant transaction finality and maintaining lightning-fast performance (10,000+ TPS).
The Injective ecosystem includes over 100 projects and a global community of more than 150,000 members. Injective is supported by a cohort of prominent investors, including Binance, Pantera Capital, Jump Crypto, and Mark Cuban.
Injective’s core trading module offers state-of-the-art features, including an advanced on
-chain order book and matching engine for spot, perpetual, futures, and options markets, resisting miner extractable value (MEV) through frequent batch auction order matching, with zero gas fees for users.
Theta Network (THETA)
Theta is a Layer 1 blockchain and decentralized infrastructure for video, artificial intelligence, and entertainment use cases.
Theta is a “dual network” consisting of two complementary subsystems, the Theta blockchain, and the Theta Edge Network. The Theta proof-of-stake blockchain provides payment, rewards, staking, and smart contract functionalities, while the Edge Network handles storage and delivery of computation, video streaming, artificial intelligence tasks, and other scientific, simulation, and financial modeling use cases. There are two native cryptocurrencies on the Theta blockchain: THETA (staking and governance token) and TFUEL (used for all transactions and on-chain smart contract interactions). The next-generation edge network, Theta EdgeCloud, is the first hybrid cloud computing platform built on a fully distributed architecture, set to launch later in 2024.
Theta’s Web3 infrastructure enables media companies to drive incremental revenue, user engagement, and new Web3 business models. Theta Video API and Theta Web3 Theater are turnkey decentralized video APIs offered to developers, supported by patented digital rights management technology, significantly reducing the costs of video transcoding, storage, and content delivery.
The Theta blockchain also partners with leading brands like Katy Perry, Samsung, Sony, American Idol, The Price is Right, Taste of Home, and others aiming to disrupt the digital collectibles industry, supporting the ThetaDrop NFT marketplace.
Theta Network’s enterprise validators and governance council are led by Google, Samsung, Sony, Creative Artists Agency (CAA), Binance, blockchain venture capital firms, and other global leaders. Strategic corporate investors include Samsung NEXT, Sony Innovation Fund, Bertelsmann Digital Media Investments (BDMI), and CAA. Theta is advised by YouTube co-founder Steve Chen and Twitch co-founder Justin Kan.
Arweave (AR)
Arweave is a decentralized storage network designed to provide a platform for the indefinite storage of data. The network describes itself as “a collectively owned hard drive that never forgets,” primarily hosting the “permaweb”—a permanent, decentralized web hosting many community-driven applications and platforms.
The Arweave network uses its native cryptocurrency, AR, to pay “miners” for indefinitely storing network information.
The project was initially announced in August 2017 as Archain, later renamed to Arweave in February 2018, and officially launched in June 2018.
Bottom Line
The advent of Web3 tokens represents a significant shift towards a more decentralized and democratized internet, where users have greater control over their online experiences, data, and assets. By leveraging blockchain technology, Web3 tokens facilitate a trustless and permissionless environment, fostering innovation and new economic models within the digital realm.
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