What Are Web3 Infrastructure Protocols?

Think of Web3 infrastructure protocols mainly as business-to-business services that power decentralized applications.

They provide the "technical stuff" that runs in the background, similar to cloud computing platforms like Amazon Web Services (AWS), but decentralized.

So what does Web3 infrastructure look like?

It Runs in the Background

The "technical stuff" mentioned above are the services you don't even realize you are interacting with. Still, they help store and move data on the blockchain, process transactions, and even fetch pricing for your favorite cryptocurrencies.

These projects and protocols that run in the background help make other projects run or become more efficient. Together, they make up the foundation of the cryptoverse.

New infrastructure solutions launch every month. However, some Web3 infrastructure projects highlighted below have the first-mover advantage and are part of other top protocols and projects.

So let's break down some of the Web3 infrastructures categories and examples from each.

Storage Infrastructure

With storage infrastructure, a network of computers stores and displays files stored on the blockchain. Examples of storage include Filecoin and Arweave.

Filecoin (FIL)

Filecoin is an innovative way to store files online. It combines with the InterPlanetary File System (IPFS), a decentralized file-sharing system, to create a more efficient and secure internet.

The Filecoin network is structured with many decentralized storage providers and developers, creating a robust, reliable service that scales.

Arweave (AR)

Arweave is a type of storage that backs data with perpetual and sustainable endowments, allowing developers and users to store data forever.

It is essentially a collectively owned hard drive that never forgets. It indefinitely allows the remembrance and preservation of valuable information, apps, and history.

Data Infrastructure

Data infra­structure is a digital system for promoting, sharing, and consuming data. It resembles physical structures, including roads, bridges, buildings, or tunnels.

That physical infrastructure is required for the operation of a city and the services or facilities necessary to support an economic system. Data works in much of the same way. Examples of data-based Web3 infrastructure include Pocket Network and The Graph protocol.

Pocket Network (POKT)

Pocket Network is a decentralized RPC network governed by a DAO with a contributor-based ecosystem. dApps need to provide blockchain data for end users, but developers don't want to deal with the hassle of running their own nodes.

The Pocket Network protocol incentivizes a decentralized network of remote procedure call (RPC) nodes to relay data from Pocket-supported blockchains to the dApp users who need it.

Then, dApps send their RPC requests to Pocket's global network of nodes, which relay the requested blockchain data back to those dApps. Node operators also earn rewards for providing this decentralized service.

The Graph (GRT)

The Graph is a protocol for querying and indexing data from blockchains. Developers build applications with open APIs called subgraphs to easily access on-chain data indexed by a network of node operators.

Subgraphs are open source, so anyone can use the APIs to build decentralized applications. Many applications on Ethereum, for example, have already made subgraphs and use them today, including ENS, Audius, Uniswap, Opyn, DAOstack, Synthetix, and more.

Oracle Infrastructure

One could make the case that oracles could be classified under data infrastructure, but oracles are so crucial - we believe they stand out as a category to themselves. Oracles have to be fast and accurate.

Oracles provide the framework for smart contracts to fetch data not contained in the blockchain and help connect off-chain external data, for example, the price of a stock or supporting other open-source blockchains.

Chainlink (LINK)

Chainlink is a decentralized oracle network that provides tamper-proof inputs, outputs, and computations to support smart contracts on a blockchain.

It expands the capabilities of smart contracts by enabling access to real-world data and off-chain computation while maintaining the security and reliability guarantees inherent to blockchains.

Augur (REP)

Augur also functions as a decentralized oracle by verifying real word events and encoding the outcomes on-chain.

Filecoin and Pocket Network Are Prominent

Filecoin and Pocket Network accounted for 91% of the overall Web3 Infrastructure sector revenue of projects evaluated in a recent report from Messari.

The report also includes Arweave, Storj, Livepeer, The Graph, Helium, Sia, and Akash.

Expect More Infrastructure Protocols To Enter the Ecosystem

With the pace of technological development, expect more Web3 protocols to enter the ecosystem. For investors, the great news is that more infrastructure protocols mean more investment opportunities that can help push Web3 forward.