Web3 Architecture and Tech Stack

Web3 technology is being touted as the next big game-changer, the next big revolution that will massively change the Web experience for all netizens around the globe. Web3 is no longer just a futuristic buzzword. Today it has gained significant prominence among users and developers, with multiple Web3 hackathons occurring in India and all over the world, year after year, offering huge monetary rewards.

What is Web3?

Web3 is the successor to Web2.0 (also referred to as Web2, aka the version of the World Wide Web currently used worldwide).

1. It is built on a decentralized model powered by blockchain technology, that gives more ownership of the online content to its owner(s) and not to tech giants, like in Web2.
2. The term Web3 was first used in 2014 by Gavin Wood, founder of Ethereum (a blockchain company), and has gained significant attention since then.

Features of Web3

1. Mode of Operation

Web3 operates in a decentralized mode, giving less power and ownership to tech giants over user-generated content. This mode will solve the legal battles between newspaper publishers and search engine giants like Google over the ownership of the news content.

2. Content Ownership

Provides ownership to users over their generated content, which ensures the users don't lose access to their content irrespective of changes in the platforms' rules and regulations, terms and conditions.

3. Transactions

Transactions are powered by blockchain and the smart contracts created before the transaction holds both parties accountable to all the rules and regulations stipulated, negating the need of any third party to supervise the transaction.

4. Architecture

Built on Peer-To-Peer (P2P) model, which involves data transfer and device communication occurring on a peer-to-peer basis between devices, eliminating the need of central servers.

5. User-base

As per a report on DataReportal, ~300 million netizens worldwide own cryptocurrencies (a Web3 product), but not all of them interact directly with Web3 apps and services. The user base is expected to rise tremendously in the next 3-7 years.

6. Mainstream

Web3 is expected to become the mainstream version of the World Wide Web (WWW) used all over the world by around 2027 - 2031.

7. Regulations

Web3 users are the king of their content irrespective of the terms and conditions, rules and regulations of the Web3 website/app, marking a sea change from that of Web2, wherein changes in the site/app policies can not only result in the user's content being removed from the website/app, but also from their own account.

8. Hosting

Web3 websites and applications are hosted globally on decentralized networks and blockchain nodes, with smart contracts, an inbuilt feature of blockchain, negating the need for server-side logic.

9. Deployment

Uses smart contracts in blockchain networks for conformity to the stipulated terms by all the parties/individuals involved.

10. Security Mechanisms

Web3 employs multiple security mechanisms: Cryptography, decentralized user identity and wallet authentication for giving users a secure, trusted and inclusive web experience.

Understanding the Web3 Architecture

Web3 Architecture is made up of several layers:

1. Infrastructure Layer

Blockchain Layer

1. Blockchain essentially means blocks of information chained (linked) together. It involves distributed ledgers (history of records) for transparency amongst all the users involved.
2. Blockchain is popularly used today for trading digital assets, like digital artwork. Blockchain enables financial inclusion by allowing participants with a public key to interact and transact anonymously or pseudo-anonymously.
3. Multiple data miners work all across the world to ensure the veracity and authenticity of transactions on blockchain, in exchange of monetary rewards.

Networking Protocols

1. IPFS (Inter Planetary File System) protocol is used for decentralized storage of the data to be transmitted and stored.
2. Libp2p protocol is used for peer-to-peer networking of the devices connected to Web3.

2. Protocol Layer

Consensus Mechanisms

1. Refers to mechanisms which control transaction validation and addition of new blocks to the chain of the blockchian.
2. Examples include Proof Of Work, Proof Of State, Delegated Proof Of State.

Smart Contract Platforms

1. Platforms which are built specially to facilitate creations and execution of smart contracts
2. Examples include Ethereum, Binance Smart Chain, Polkadot.

3. Service Layer

Smart Contract Layer

1. Directly connected to the Blockchain Layer.
2. Consists of smart contracts, which are tools that ensure that both parties involved in the transaction adhere to the stipulated rules and regulations, terms and conditions.

Identity and Access Layer

1. Decentralized identity verification procedures are present to stop unauthorized users from accessing the application or website's sensitive modules.
2. Provides authentication and authorization services
3. Examples include uPort, Civic, Sovrin.

4. Application Layer

This layer has code of the application's frontend.

dApps (Decentralized Applications)

1. Apps that run on decentralized networks and use smart contracts on their backend.
2. Examples include Uniswap, Aave, CryptoKitties.

UIs

1. Frontend User Interfaces which interact with dApps and the blockchain present in their backend.
2. Examples include Browsers with Web3 support like MetaMask.

5. Interaction Layer

Is the intermediary between the end-user and the application's services.

Wallets

1. Refers to digital wallets to store cryptocurrencies.
2. Examples include MetaMask, Trust Wallet, Ledger.
3. Cryptocurrency gained huge popularity in 2021, after the Covid-19 lockdown. It refers to virtual or digital currency which uses cryptography for security. Examples: Bitcoin, Ethereum.
4. Tokens are the virtual assets or utilities on a blockchain. The most famous token is the NFT (Non Fungible Token), which are unique tokens to represent ownership.
5. Some other types of tokens are Governance Tokens (allows participation in governance aka decision-making), Utility Tokens (provides access to a utility, aka a product or a service) and Security Tokens (represent ownership of assets).

Bridges

1. Facilitates transfer of assets and data between different blockchains.
2. Are cross-chain tools and works on the concept of interoperability.
3. Examples include Polkadot's Interoperability Bridge, Cosmos Inter-Blockchain Communication Protocol.

6. Governance Layer

This layer contains tools to manage decentralized decision making

DAO (Decentralized Autonomous Organizations)

1. Companies which are governed by the decisions of token-holders and by smart contracts, are termed DAOs.
2. Examples include MakerDAO, Aragon.

Voting Mechanisms

1. Mechanisms used for decentralized voting among a DAO company's stakeholders for decision-making.
2. Examples include Snapshot, Tally.

Comparison between Web3 and Web2

The Web3 Tech Stack Conclusion

The usage of blockchain decreases situations which would traditionally need a lawyer, as smart contracts ensure neutrally that all terms & conditions are adhered to by both parties, making it a better cost-effective option. Blockchain unfortunately uses a lot of energy, so it needs to optimize its carbon footprint in order for Web3 to become more environment-friendly, particularly at a time when power costs keep rising due to dependence on fossil fuels and underutilization of renewable resources. The Web3 tech stack cumulatively aims to create an open and equitable digital economy with empowered users.