How to Invest in Web3 in 2024 – Top 10 Ways

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Kane Pepi

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Kane Pepi

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Kane Pepi is a financial, gambling and cryptocurrency writer with over 2,000 published works, including on platforms like InsideBitcoins and Motley Fool. He specializes in cryptocurrency guides,...

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August 30, 2024 08:54 EDT

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Web3 is the third and next phase of the World Wide Web. Focused on decentralization and inclusiveness, web3 incorporates emerging technologies and concepts, including blockchain, DeFi, AI, DePIN, metaverses, and gamification.

Read on to learn how to invest in Web3, which technological narratives have the greatest upside potential, and what risks to consider before getting started.

What Is Web3?

Web3 is an emerging concept related to the next generation of the Internet. Web1 was the first phase that began in the 1990s, covering the early days of online access—think 56k dial-up modems, bulky personal computers, and a read-only web. Web2, the existing phase, started in the 2010s and introduced us to user-generated content.

It took internet access to the next level, including Fibre Optic installation and 4G connections via smartphone devices. Web2 also encouraged the rise of social media and cloud networking. The next phase to come is Web3, which includes a wave of innovative technologies and concepts, all of which will inspire decentralized and inclusive Internet usage.

For example, blockchain technology aims to sit at the heart of Web3, ensuring transparency, distributed control, and the ability to transact globally. Blockchain runs alongside other technological advancements, such as artificial intelligence (AI), machine learning, and decentralized physical infrastructure networks (DePINs).

Web3 also extends to the trillion-dollar banking landscape, ensuring that everyday financial services are available to the masses. This covers decentralized finance (DeFi) products, such as lending, borrowing, and trading, as well as increased exposure to metaverses, non-fungible tokens (NFTs), and play-to-earn (P2E) gaming.

Each subsector of Web3 offers an exciting change to the current Internet landscape, which is largely controlled by centralized entities. A simple example of Web3 is decentralized internet services via independent nodes, meaning anyone can share their data usage and earn tokenized rewards.

Another Web3 example is decentralized social media, where posts and opinions can’t be censored or manipulated by Big Tech. Then there’s the Internet of Things (IoT), which ensures individual applications connect seamlessly. This could include anything from smart cities, wearables, and augmented reality (AR) glasses to driverless cars and home security.

The Top Ways to Invest in Web3 – A Detailed Breakdown

The more Web3 transforms the crypto world, the more investment opportunities arise. In this section, we will dig deep into the top ways you can invest in Web3. Understanding these investment strategies is important for you to capitalize on the growth potential of Web3 technologies.

Whether you’re a seasoned investor or new to web3, this breakdown will help you make informed decisions and strategically position yourself for future gains.

1. Buy Web3 Cryptocurrencies

We mentioned that blockchain technology and smart contracts are the primary beneficiaries of the Web3 era. Each blockchain network has its native coin. For example, the Bitcoin blockchain is backed by BTC. Some blockchains have sub-tokens created by smart contracts. For instance, while Ethereum’s native coin is ETH, the blockchain is also home to thousands of ERC-20 tokens.

Each token represents an individual Web3 project. Therefore, a great starting point when investing in Web3 is to build a portfolio of coins and tokens. This should cover a broad range of crypto narratives, which we examine in in the following sections. Nonetheless, one great example is P2E gaming – which is expected to generate revenues of over $6.3 billion by 2031.

One of the best Web3 coins from the P2E niche is Pepe Unchained. Put simply, Pepe Unchained is creating an engaging mobile game that combines nostalgic elements with innovative gameplay. Players interact with a dynamic virtual environment and earn tokenized rewards as they progress through the game.

Not only is Pepe Unchained in a high-growth market, but it’s currently running a presale campaign. Similar to a stock IPO, the presale allows investors to acquire PEPE tokens before they start trading on public exchanges. This provides a first-mover advantage, a discounted entry price, and a potentially attractive market capitalization.

If you’re new to Web3 presales, the investment process is straightforward, decentralized, and inclusive. Simply visit the Pepe Unchained website, connect a wallet, and swap an established coin (e.g., ETH or USDT) for PEPE. That said, Pepe Unchained is just one Web3 project in presale. Explore our comprehensive analysis of the best crypto presales to build a diversified portfolio.

Visit Pepe Unchained

2. Invest in Quality DePIN Projects

During our expert analysis of the best DePIN coins, we identified that DePIN is one of the most undervalued Web3 niches right now. This industry uses smart contracts and blockchain to cover decentralized physical infrastructure networks, such as internet access, data privacy, computational storage, navigation, and energy. Put otherwise, these markets are currently controlled by centralized entities, whether that’s government agencies or large conglomerates.

Let’s take mobile internet services as an example. In New Zealand – which has a population of over 5 million people, there are just three network providers. Limited market competition means one thing – ever-increasing prices and a reduction in quality service and investment. In contrast, DePIN projects like Helium are decentralizing internet access on a global scale.

Here’s how it works:

• Anyone can order a Helium hotspot and place it in their desired location (e.g., at home).
• Alternatively, users can order a Hemium sim card for their mobile device.
• Either way, users share their internet hotspots. Anyone connecting to the hotspot pays fees.
• This earns Helium users rewards – paid in MOBILE tokens.

So, it’s a win-win outcome for both parties, which helps boost the value of Helium. Those sharing internet data earn money, while those paying for data can access the internet without using a centralized provider. This is just one example of how DePIN will play a major role in the Web3 era. According to CoinMarketCap, there are 140 DePIN projects currently in the market.

This represents a total market capitalization of just $26 billion, meaning the DePIN market is heavily undervalued and primed for rapid growth.

3. Gain Exposure to DeFi Initiatives

We mentioned earlier that DeFi will play a central role in the Web3 ecosystem. DeFi provides everyday financial services while cutting out the middleman – such as banks, credit unions, and brokers. Not only does this mean a more inclusive and fair financial landscape – but lower fees, more competitive interest rates, and higher yields.

For example, consider an average consumer who wants to borrow $10,000. The standard process is to apply for a loan with a traditional lender, which requires a long and cumbersome application procedure. The consumer must provide personal and financial information, including existing credit agreements, annual income, and previous residential addresses.

They might also be asked to upload verification documents, such as a government-issued ID, bank statement, and payroll slips. The lender will then run a credit check to ensure affordability and determine interest rates. Now consider the same process with a DeFi lending platform.

Instead of borrowing funds from a centralized lender – loans are executed on a peer-to-peer basis. What’s more, loans can be funded by anyone with some spare digital assets. For example, Aave – a leading DeFi lending platform – allows users to borrow USDT at an APR of 6.74%. Those funding loans with USDT earn an APY of 8.79%.

Crucially, no personal information or credit checks are needed. The only requirement is that the borrower put up some collateral. This keeps the ecosystem safe and protects investors from potential defaults. Nonetheless, this means that people from around the world – no matter their creditworthiness, age, or financial background – can access much-needed financing.

DeFi revolutionizes not only loans but also traditional savings accounts. For instance, you can deposit ETH or SOL into a staking pool and earn a competitive rate of interest or provide liquidity to a decentralized exchange and earn a share of the trading fees generated. The DeFi possibilities are endless.

• Rather than buying individual DeFi coins, a great alternative is eToro’s smart portfolio – DeFiPortfolio.
• This offers a diversified approach to DeFi across 10 different projects.
• In addition to Aave, this includes UniSwap (decentralized exchange), Chainlink (smart contract oracles), Basic Attention Token (decentralized internet browsing), and Ethereum (layer-1 blockchain to DeFi projects).
• DeFiPortfolio is professionally managed by eToro, so it’s regularly rebalanced based on market conditions.

Note: US-based customers using eToro can trade only 3 cryptos – Bitcoin, Bitcoin Cash, and Ethereum.

Visit eToro

4. Diversify into VR, AR, and Metaverse Ecosystems

The Web3 era aims to facilitate immersive experiences. This covers virtual reality (VR) and AR systems. While devices currently exist – such as Meta Quest and Apple Vision Pro, the technology will grow to new heights in the coming years. According to a Precedence Research study, the VR/AR market was worth $6.78 billion in 2022.

The industry is expected to generate revenues of $124.5 billion by 2032, representing a CAGR of 35.6%. There are several ways to invest in VR and AR, including individual stocks and ETFs. However, those looking for a pure-play investment might consider some Web3 tokens.

5th Scape is a new blockchain project with a native VR/AR headset. It connects with the 5th Scape gaming ecosystem, which covers sports, combat, and other genres. 5th Scape has a native Web3 token – 5THSCAPE, which is currently in presale. Over $6.6 million has been raised so far, and presale investors are paying just $0.00376 per token.

After the presale, 5THSCAPE will be listed on public exchanges at $0.01 – which is 165% above the current price. Many other blockchain projects are active in this space – check out our analysis of the best VR crypto tokens for inspiration. In addition to virtual reality and augmented reality, immersive experiences will extend to metaverse ecosystems.

The metaverse is a virtual world that allows users to explore, socialize, play games, and even invest in virtual real estate. One of the best metaverse coins is Decentraland, which enables users to buy virtual plots of land and build their dream homes. Land is backed by non-fungible tokens, meaning ownership is secured on the blockchain.

Visit 5th Scape

5. Invest in AI Crypto Projects

AI should also be considered when exploring how to invest in Web3. This is one of the fastest-growing and most innovative technology innovations, with AI expected to replace many, if not most, jobs in the coming years. Financial experts believe that AI investments could pay significant dividends, so now is the time to begin building exposure.

The easiest way to enter this market is via quality AI crypto projects. There are many to choose from, each covering a different product or service within the AI sector. One of the best AI crypto coins for performance and upside potential is Render. It allows anyone to contribute their unused graphics processing power (GPU) to the Render network.

In turn, this GPU power can be rented by AI stakeholders. These entities require excess rendering power for graphics, visualizations, and other high-demand outputs. The ecosystem system token is RNDR, which is the payment currency when renting GPU power. Those providing power receive RNDR as tokenized rewards.

This keeps the network functional and sustainable. Render is a well-established player in its space, though it has recently experienced a market correction. NEAR Protocol is another option to consider, as it provides a layer-1 infrastructure for other AI projects.

Both Render and NEAR Protocol are already worth several billion dollars. Those looking for a much higher upside potential might consider a new AI project.

6. Play and Invest in Web3 Games With P2E Rewards

Gamification in the Web3 era will be huge – especially in games that adopt the P2E concept. In the current Web2 landscape, games are controlled by centralized developers. Many gaming titles allow players to purchase in-game assets and add-ons. For example, Candy Crush Saga – the popular mobile game, allows players to progress to the next level for a fee.

Players can also buy boosters and extra lives. Similarly, FIFA games – which operate on PlayStation, Xbox, and PC, allow users to purchase player packs and virtual coins. However, like all traditional games, players don’t own any of the digital products they buy. Nor can they sell or trade their purchases outside of the respective ecosystem.

Now, compare this to P2E games that operate on the blockchain. Not only do users own their in-game assets but they can easily sell them to other players. For example, we mentioned Pepe Unchained earlier—a new P2E game that features an engaging virtual environment. Players earn rewards in PEPE tokens as they progress through the game. Once launched, PEPE tokens will be available for trading on public exchanges.

Another example is Axie Infinity, a web3 game based on virtual monsters – known as ‘Axies.’ Players earn ASX tokens by entering their pet monsters into battles. Not only that but each Axie is backed by a unique NFT. This secures ownership on the blockchain and enables players to sell their Axies on NFT marketplaces.

With this in mind, Web3 games offer an excellent opportunity for growth investors. Simply choose a web3 ecosystem and purchase its native token. Alternatively, you can gain exposure without risking any funds. This is because the top Web3 games are free to play. Meaning – you can still earn tokens by progressing through the respective game.

7. Invest in NFTs and Real-World Asset Tokens

NFTs and other Real-World Asset (RWA) tokens also offer exposure to the Web3 era. Unlike conventional crypto assets – such as Bitcoin and Ethereum, each NFT is unique. This means that NFTs can represent unique items – whether they’re tangible or intangible. The use cases for NFTs are unlimited.

For example, NFTs can be used to fractionize the real estate investment process. This will make real estate investments more affordable and inclusive. For instance, consider a London property that’s on the market for $600,000. The property could be fractionalized into 600 units, each backed by a unique NFT.

This means the property’s value of $600,000 is split into $1,000 units. Anyone can own a slice of that property by purchasing an NFT. That NFT is secured on the blockchain, so it’s easily stored and transferred. For example, suppose a few years have passed and the London property is now valued at $780,000 – an increase of 30%.

Each NFT – which was originally worth $1,000, is now valued at $1,300. An investor could sell their share of the property via an NFT marketplace – with the transfer process taking seconds. Real estate is just one use case for NFTs. Some of the best NFTs might also include fine art, luxury cars, antiques, digital collectibles, commodities, and startups.

8. Earn Passive Income via Staking Pools

Staking is also one of the best Web3 investment opportunities. This concept enables investors to earn passive income – simply for buying and holding ‘staking’ coins. These are cryptocurrencies that operate on a proof-of-stake blockchain like Ethereum, Solana, Algorand, or Cardano.

Here’s how it works. First, users deposit the native coin into the blockchain’s staking pool. This means the coins will be locked for a minimum number of days. The locked coins help keep the network secure and sustainable. Once the locked period is over, the user receives their original deposit – plus interest. The APY varies depending on the network.

Crucially, sub-network tokens can also offer staking rewards to holders. Unlike ecosystem coins – such as ETH or SOL, tokens can choose the APY they offer. This often means high APYs – especially for early investors. Those investing in the Pepe Unchained presale are seeing significant returns.

For example, if you deposited 10,000 PEPE tokens into the Pepe Unchained staking pool, and the APY remains high, you could earn substantial additional tokens over time. After one year, assuming a strong APY, your balance could grow significantly, adding a substantial amount to your original deposit. Staking pools not only provide passive income but also offer the potential for price appreciation.

Since the best cryptocurrencies to stake trade on public exchanges, the value of staked tokens will increase if the market price rises. Conversely, if the token price declines, the value of the staked balance will also decrease.

9. Build a Portfolio of Web3 Stocks

Beginners learning how to invest in Web3 might not feel comfortable buying crypto coins or NFTs. The good news is that there are other, more traditional ways to gain exposure to the Web3 era. This includes stocks that are directly or indirectly involved in Web3 technologies.

For instance, one of the best Web3 stocks to buy for a pure-play investment is Coinbase. Coinbase is one of the largest crypto exchanges globally – with a regulated and licensed position in the US market. It enables beginners and institutional investors alike to buy and sell cryptocurrencies. Coinbase makes money from trading commissions, just like a traditional stockbroker.

Coinbase – which trades on the NASDAQ, has a market capitalization of just under $58 billion. The stock has increased by over 313% in the past year. Even so, many analysts believe that Coinbase is heavily undervalued, considering it’s a key gatekeeper for crypto investors – especially those in the US and Europe.

While not a pure-play like Coinbase, Nvidia is also one of the top Web3 companies to invest in. Nvidia makes chips for graphics cards, electronics, and automatic technologies. Crucially, its GPUs are a core necessity for AI hardware. This includes deep learning, machine learning, and global data centers.

Nvidia has been one of the best-performing stocks in recent years. Now valued at over $3 trillion, Nvidia stock has increased by over 209% in the past 12 months. This increases to almost 3,500% on a 5-year basis. Although Nvidia also offers a dividend, the running yield is currently just 0.03%.

These are just two examples of Web3 stocks. It’s wise to build a diversified portfolio that covers a wide range of Web3 narratives, including blockchain, AI, machine learning, big data, quantum computing, and telecommunications. You might also consider dollar-cost averaging – investing what you can afford each month to average out the cost basis of each stock.

Visit eToro

10. Invest in ETFs That Track Web3 Companies

The final Web3 investment to consider is exchange-traded funds (ETFs). This means you’ll be investing in funds that track companies actively engaged in Web3. The ETF manager will build a diversified portfolio on behalf of investors. The portfolio is regularly reweighted and rebalanced, typically every three months. This ensures the ETF aligns with the wider Web3 market.

Web3 ETFs trade on stock exchanges, so they’re easy to buy and sell. ETF prices rise and fall based on the stocks they hold. Moreover, you’ll be entitled to any dividend payments received by the ETF. One example is the Bitwise Web3 ETF (BWEB), which trades on the NYSE Arca.

This ETF has 40 holdings at various weights. This includes Coinbase, Meta Platforms, Roblox, Equinix, Shopify, and Electronic Arts. BWEB also offers exposure to Block, Cloudflare, Robinhood, and Nvidia. This means ETF investors have exposure to multiple niches, including AI, crypto, cloud computing, gaming, metaverses, and the gig economy.

Another option is to invest in ETFs that track specific Web3 sub-sectors. For example, the Simplify Volt Robocar Disruption and Tech ETF (VCAR) tracks disruptive companies involved in autonomous driving. Alternatively, consider the Global X Artificial Intelligence & Technology ETF (AIQ).

This ETF has invested in 85 market leaders from the AI and big data spaces, including Nvidia, Qualcomm, Broadcom, and Tencent. Ultimately, ETFs are one of the best Web3 investments for beginners. There’s no requirement to pick individual stocks or research the markets; everything is taken care of by the ETF manager.

Top Web3 Investment Tools

Beginners should know the main tools that support Web3 investments:

• Decentralized Finance Platforms: Allows you to invest in DeFi products, such as lending, borrowing, staking, and yield farming. These platforms are ideal for earning yields on idle funds.
• Crypto Exchanges: You’ll need to use a crypto exchange when buying and selling Web3 coins. Some of the best crypto exchanges are eToro, MEXC, and Binance. You might also consider decentralized exchanges when investing in new Web3 projects – such as Uniswap or PancakeSwap.
• NFT Marketplaces: Another tool is NFT marketplaces, which enable users to buy and sell NFTs from various categories. Some NFT marketplaces have an auction system, allowing you to place bids within your Web3 budget.
• Presales: Crypto presales enable investors to buy brand-new Web3 tokens before they launch on exchanges. Presales offer the highest upside potential, as you’re investing at a small valuation. However, the risks are also much higher, as projects are often pre-development.
• Wallets: Don’t forget about crypto wallets, which are needed to store your digital Web3 investments. This includes crypto coins and NFTs. Wallets also enable you to send and receive digital assets. Opt for a self-custody wallet, which ensures you retain full control of your investments.
• Brokerage Account: Web3 investors also need a traditional brokerage account. This will enable you to buy Web3 stocks and ETFs. Consider eToro, a regulated brokerage that offers 0% commission on thousands of investments. eToro also offers smart portfolios, which offer a passive Web3 investing experience.
• Analytics and Research: Learning how to invest in Web3 is just as much about research. This will ensure you find the best investments based on trends, narratives, and adoption. Consider a platform like Dune, which provides Web3 analytics, data, and other useful information.

Advantages of Web3 Investments

We’ll now take a closer look at the advantages of investing in Web3.

Early Adoption Advantage

Those investing in Web3 today will secure a first-mover advantage. After all, we’re still firmly in the Web2 era. Many Web3 technologies and concepts – whether that’s decentralization, blockchain technology, or DeFi – are nascent. This means you can invest before the respective markets blow up.

Put otherwise, suppose you invested in internet companies in the 1990s. Or mobile technology companies in the 2000s. These concepts were unproven back then, meaning the risk-reward spectrum was high. Taking a chance on Web3 now could be a smart move – especially if you’re well-diversified.

Multiple Asset Classes

Another advantage of investing in Web3 is that there are multiple asset classes to choose from. This makes it simple to create a well-balanced and risk-averse portfolio. Moreover, you choose investments that align with your risk appetite and financial goals.

For example, those with a low tolerance for risk might prefer a Web3 ETF that covers dozens of market leaders. Or, some blue-chip stocks that aren’t overly exposed to Web3, meaning they also operate in other markets. For example, while Nvidia is a popular Web3 stock to buy, it’s already a dominant force in the GPU industry.

Alternatively, some Web3 investors will target much higher growth potential. This means taking on more risk. For instance, this might include Web3 coins, NFTs, staking pools, and metaverses.

Control and Transparency

One of the core pillars of Web3 is decentralization and transparency. This extends to Web3 investments – especially those associated with blockchain technology. For example, suppose you own some Web3 coins – such as Render, Helium, and NEAR Protocol. Keeping these coins in a self-custody wallet means you control the investments 100%.

This means you don’t need to trust third-party custodians, such as brokers or crypto exchanges. Moreover, you can sell those Web3 investments without needing approval. Web3 coins and NFTs operate on the blockchain ledger – which is accessible to the public. This ensures Web3 projects are accountable to their investors.

Drawbacks and Risks of Web3 Investments

Web3 isn’t a surefire way to make money. We’ll now discuss some of the main risks to consider.

Speculative Investments

Many Web3 investments are purely speculative. While Web3 projects might have grandiose ideas, concepts, and roadmap targets – there’s no guarantee they’ll come to fruition. Web3 projects can also fail if they don’t achieve mass adoption. For example, we mentioned earlier that Helium is decentralizing internet access.

Anyone can order a Helium hotspot, share their connection, and earn tokenized rewards. However, this system only works when adoption is global. Not only in terms of available hotspots but paying customers. Therefore, never assume a Web3 project will be successful – you’re often investing in unproven business models.

Early-Stage Projects

Many Web3 investments are early-stage projects. Once again, this means you’re investing in ideas rather than anything tangible. This is similar to investing in startups – which often raise significant capital without generating a single dollar in revenue.

However, these risks are built into the upside potential. Especially when investing in Web3 presales. After all, the presale tokens will have a small market capitalization. So, if the project blows up, the growth trajectory could be huge.

Web3 is Fragmented

In its current form, the Web3 space is overly fragmented. Many projects operate in the same markets and niches, making it difficult to know which ones will be successful. This also means that end users are fragmented into multiple ecosystems.

For instance, many AI projects offer peer-to-peer GPU storage. As such, participants are spread across several protocols, meaning GPU availability can be limited.

Similarly, some Web3 crypto coins are built on Ethereum, while others have opted for Solana. There’s only so much capital and liquidity available, so fragmentation can restrict projects from realizing their true potential.

Conclusion

In summary, Web3 investments offer exposure to a huge growth market. Best of all, Web3 is still an early concept, so investing today offers a first-mover advantage. Diversification is the best approach, especially considering how many Web3 sub-sectors exist.

This includes everything from AI and DePIN to metaverses, NFTs, and DeFi. Investors are advised to research thoroughly when choosing Web3 investments – this marketplace doesn’t offer any guarantees.

Ready to dive into Web3? Consider exploring Pepe Unchained, a rapidly growing project that blends the power of decentralized networks with real utility. Join the movement and be part of the next big wave in crypto.

Visit Pepe Unchained

FAQs

Can you invest in Web3?

Yes, you can invest in Web3 digital assets, such as blockchain ecosystems, crypto coins, NFTs, and decentralized physical infrastructure networks. You can also invest in companies that are actively involved in key Web3 products and services.

How do I start investing in Web3?

Many investors are already building Web3 portfolios, including crypto coins from exchanges and NFTs from decentralized marketplaces. You can also invest in Web3 stocks and ETFs via traditional brokers.

Is Web3 profitable?

Web3 is still a nascent and unproven market, although it has unprecedented growth potential. AI and DePIN coins, for example, have witnessed significant gains in recent months.

What is the best way to invest in Web3 for beginners?

Beginners are best suited for Web3 stocks and ETFs, as these assets can be bought and sold on regulated brokerage platforms. Focus on companies operating in high-growth markets like AI, machine learning, blockchain, and GPUs.

References

1. What is Web3? (NY Times)
2. Play-to-Earn NFT Games Market Size, Share, Growth, And Industry Analysis (Business Research Insights)
3. Decentralised Finance – a New Unregulated Non-Bank System? (European Central Bank)
4. AR and VR Headsets Market Size to Reach USD 142.5 Bn by 2032 (Precedence Research)