Kyle Samani, co-founder of Multicoin Capital, has declared that the era of Web3 is effectively over, arguing that only two sectors – decentralized finance (DeFi) and decentralized physical infrastructure (DePIN) – remain relevant in the current cryptocurrency landscape. His statements add a prominent voice to the growing debate over the industry’s direction and identity.
Honest assessment from a leading investor
Speaking publicly, Al-Samani stated that the broad, ambitious vision of Web3 – often characterized by decentralized applications, social networks and user-owned internet services – had failed to gain meaningful traction. He asserts that the market has narrowed to focus on tangible, utility-based sectors: decentralized finance, which provides financial services without intermediaries, and DePIN, which uses blockchain technology to coordinate physical infrastructure such as wireless networks and power grids.
Samani’s comments come at a time when venture capital funding for Web3 startups has declined significantly from its peak in 2021-2022, while investment in DeFi and DePIN protocols has remained relatively stable. His company, Multicoin Capital, has been a prominent investor in both sectors, including projects like Helium (DePIN) and various DeFi protocols.
Crypto identity crisis
Samani’s assessment follows a similar, albeit more nuanced, observation from Starknet co-founder Elie Ben-Sasson, who recently stated that the cryptocurrency industry is facing an identity crisis. Ben Sasson highlighted a paradox: industry leaders and long-time OG developers are leaving the space, while institutional investors and traditional finance (TradFi) entities are showing increasing interest.
This shift represents a reversal of the original spirit of the industry, which positioned itself as an alternative to centralized financial systems. The increasing involvement of TradFi – including banks, asset managers and payment giants – has created a tension between the founding principles of decentralization and the practical realities of mainstream adoption.
What does this mean for the broader market
For investors and developers, the narrowing focus on DeFi and DePIN indicates the maturity of the cryptocurrency market. Rather than pursuing broad, speculative narratives, capital and talent focus on applications with clear revenue models and real-world use cases. DeFi continues to generate billions in trading volume and revenue, while DePIN projects deploy physical hardware and generate measurable utility.
However, Web3’s exclusion raises questions about the future of decentralized applications in areas such as gaming, social media, and identity. While some projects in these sectors continue to evolve, they face significant hurdles in user adoption and scalability compared to centralized alternatives.
conclusion
Samani and Ben Sasson’s statements reflect a critical inflection point for the cryptocurrency industry. The vision of a completely decentralized Internet may be fading, but the practical application of blockchain technology in finance and physical infrastructure appears to be gaining ground. For market participants, the focus shifts from ideological ambition to functional utility.
Frequently asked questions
Q1: What exactly is Web3, and why has it been declared dead?
Web3 refers to a vision of a decentralized Internet built on blockchain technology, where users own their data and digital assets. The service has been declared dead by some industry leaders because many of its core applications – such as decentralized social networking and gaming – have failed to achieve mainstream adoption, while capital and attention have shifted to more utility-based sectors such as DeFi and DePIN.
Q2: What is DePIN and why is it a surviving sector?
DePIN stands for Decentralized Physical Infrastructure Networks. It uses blockchain tokens to incentivize the deployment and maintenance of real-world physical infrastructure, such as wireless hotspots, solar panels, or sensor networks. It is considered a surviving sector because it offers a clear value proposition and has demonstrated real-world penetration and use.
Q3: How does the cryptocurrency identity crisis affect investors?
The identity crisis, characterized by the departure of regulatory organizations and incoming TradFi institutions, creates uncertainty about the long-term direction of the industry. For investors, this means the need to distinguish between projects that build sustainable, compliant, utility-based products, versus those that rely on ideological narratives. This also indicates that regulatory clarity and institutional level infrastructure will become increasingly important.
