3 Scaling Barriers Facing Web3 Startups

The future of the internet lies in web3, but there’s so much development needed before it attracts significant mainstream adoption. Given web3’s infancy, there are several barriers facing startups, which have the potential to prevent them from scaling. With this in mind, we take a look at these barriers and suggest ways to mitigate these issues. 

Vendor Lock-In

A lot of web3 development relies on putting trust in third-party vendors, which supply services like node running, OATH, wallet management, encryption, storage, and any other use case you can think of. The availability of services is fantastic, but it becomes a hindrance when they lock startups into lengthy contracts. Naturally, if you’re tied to one vendor for the long term, your options for scaling are limited. 

To get around this problem, you need to make sure that you don’t enter into long contracts. Always carry out research before signing on the dotted line – you need the flexibility to explore different vendors. For example, if you’re using a web3 payment solution that only supplies your local territory, you may wish to transfer to a different one, like Topper by Uphold.

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Managing Decentralization

Startups approach launching projects differently. Some worry about proving their use case or about decentralizing later and others feel the need to perfect their business before going public. The key to success is striking a balance, which can be difficult because of the overwhelming nature of decentralization; knowing who to trust is challenging. For example, you have to decide on a consensus algorithm, source nodes, and on validators. 

There are many ways to do this including speaking with successful peers and muddling through mountains of research. However, a great way to enter the decentralized space is using a web3 accelerator, which will provide your business with the resources it needs to succeed. 

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Gas Fees

Gas fees are an essential part of a functional blockchain, as they’re used to pay validators. However, gas fees are tied to demand, meaning they fluctuate heavily. At the minute, Ethereum gas fees are fairly high, and the cost of a transaction can total more than the product itself. Unfortunately, gas fee volatility makes it difficult to plan and scale a business. 

The typical way to manage gas fees as a startup is by setting a budget and hitting the breaks when it’s reached. However, this isn’t practical because you’ll be a constant prisoner of fluctuating gas fees. Luckily, Ethereum and other gas fee blockchains aren’t the only way to build a web3 project. for example, Kaleido.io promises to support developers while they build on a blockchain with zero gas fees. The benefit of turning away from blockchains like Ethereum is a competitive edge, as you can provide users with a guarantee of low to no network fees. 

This article presents a simple introduction to the barriers facing web3 business growth. Other issues include interoperability and customer experiences. Even though there are clear hurdles to climb, suitable solutions are emerging. Eventually, the blockchain space will have evolved enough to the point that these issues are a distant memory.