For much of the last decade, Web3 has been defined by narratives.
From the initial coin offering boom (Bitcoin and Ethereum ICO booms from 2017-2018) to the rise of decentralised finance, the explosion of NFTs and the countless token-driven stories that followed, many of them shallow and ill thought-out, market attention has often gravitated towards whichever trend happened to be generating the greatest excitement at the time. Those periods undoubtedly brought investment, innovation and new participants into the Web3 ecosystem, but they also contributed to a persistent misconception that Web3 is little more than a speculative exercise.
Having spent years investing across emerging technologies and Web3, Varun Datta, CEO of VC investment firm Truth Ventures, believes that characterisation has overlooked where some of the most meaningful progress has been taking place and the amazing infrastructure that is being built to change the world.
In this op-ed, Varun Datta explains that beneath the noise of market cycles, ambitious Web3 founders have been quietly building the infrastructure that could underpin the next generation of digital services. Varun states that is where Truth Ventures’ attention is focused. Not because speculation has disappeared entirely, but because the industry’s priorities and capabilities are beginning to mature, and we have known this for a while.
Varun states that the conversation is now shifting towards what is creating lasting utility and value for our next society.
Traditional finance institutions are now paying attention
“That shift is evident not only among intelligent investors and ambitious founders within Web3, many of whom I will discuss shortly, but also among the financial institutions that historically approached the sector with considerable caution” says Varun Datta.
Varun Datta explains in depth: “Early engagement from traditional finance tended to centre around exposure to the digital assets themselves. The introduction of spot Bitcoin and Ethereum products provided a degree of familiarity for institutions looking to understand the asset class without necessarily engaging with the underlying technology. Over the last eighteen months, however, I have observed a growing interest in the digital decentralised infrastructure that sits beneath these markets, as widely reported in global media.
“BlackRock has publicly discussed the opportunities presented by tokenisation and the efficiencies that could emerge through more advanced and modern settlement systems. BNP Paribas has explored how blockchain technologies might support institutional financial services. More recently, Intercontinental Exchange, the parent company of the New York Stock Exchange, confirmed it was exploring a potential partnership with Hyperliquid. ICE CEO Jeff Sprecher even described the decentralised trading platform as “bigger than Nasdaq”. That is not at all in line with the sort of language traditionally associated with decentralised finance in years prior. I genuinely feel there has been a real change in sentiment, interest and imminent investment.
“For years, many established institutions viewed Web3 primarily through the lens of volatility, distrust and regulatory uncertainty. While those considerations remain important, the discussion has broadened considerably. The focus is now increasingly centred on whether elements of decentralised infrastructure can enhance efficiency, reduce friction and unlock new capabilities within existing systems for traditional financial institutions.
“When I talk about Web3 infrastructure, I am referring to the technologies that enable decentralised systems to operate effectively and dynamically at scale. These are the layers that support security, coordination, interoperability and execution, and the companies behind them are helping transform the fabric and methods of life as we know it. They are rarely the most visible businesses within the ecosystem, but they are often among the most important, underpinning forward-facing consumer brands.”
Varun Datta states that at Truth Ventures, the firm’s investment activity has consistently reflected this philosophy and focus on Web3 infrastructure.
Varun Datta further explains: “For example, one of the reasons we invested in Bittensor was because it challenges assumptions about how machine intelligence can be coordinated and rewarded. As artificial intelligence becomes increasingly central to the global economy, questions around access to compute resources and the concentration of such power within a small number of organisations will only become more relevant. Bittensor explores whether decentralised networks can participate in solving those challenges.
“Similarly, StarkNet, a company we proudly invested in, addresses one of blockchain’s longstanding constraints: genuine scalability. If decentralised applications are to support meaningful adoption among the masses, users cannot be expected to tolerate slow transactions and prohibitively high fees. Improving execution environments is therefore fundamental to creating products that people actually want to use.
“Elsewhere in our portfolio, peaq is developing decentralised physical infrastructure networks that enable real-world assets and devices, such as robots, to participate in shared digital ecosystems. Ternoa is focused on privacy and secure data management, areas that are so crucial and increasingly important as blockchain applications intersect with more sensitive use cases. Within wider decentralised finance, 1inch has really established itself by solving a practical problem around fragmented liquidity.
“These businesses operate across different Web3 sectors, yet they share an important characteristic. They are attempting to solve persistent problems through exceptional Web3 engineering rather than capitalise on temporary narratives and fleeting coin and NFT speculation. That distinction has become increasingly important to investors, and that’s where Truth Ventures’ attention is focused.”
Varun Datta on what Web3 infrastructure is building
Varun Datta explains that “One observation that repeatedly emerges across multiple market cycles is that attention and value rarely move in perfect alignment. Businesses generating the most excitement at any given moment do not necessarily become the most enduring, as they are often chasing short-term profits. In contrast, companies focused on building or improving Web3 infrastructure often develop away from the spotlight before ultimately becoming indispensable to the ecosystems and brands they support.
“When explaining this, I feel the internet offers a great example. Many of the most valuable companies created during previous technological shifts were not necessarily those consumers interacted with directly. Instead, they built the payment systems, cloud infrastructure, developer tools and enterprise software that enabled entire industries to flourish. Without those foundations, the applications that captured public imagination would have struggled to exist at all. I’m talking about the likes of PayPal and Stripe for payment infrastructure, Amazon Web Services (AWS) for cloud computing infrastructure that powers millions of websites, and Salesforce, one of the earliest large cloud platforms providing CRM solutions.
“I suspect Web3 may follow a similar trajectory, whilst not suggesting that Web3 infrastructure investing is straightforward. Every emerging sector attracts businesses eager to position themselves as essential components of future growth, often through fear of missing out. Investors still need to exercise discipline and distinguish between genuine utility and what is simply compelling storytelling” asserts Datta.
From speculation to practical utility
Varun Datta further discusses the growing VC investment into Web3. “For myself and Truth Ventures, we tend to start by asking important questions. Does the technology address a meaningful problem that is likely to persist regardless of market conditions? Can the solution demonstrably improve efficiency, expand capability or reduce friction within existing systems? Other questions include whether users would continue to rely on the product if speculative interest declined. Such questions provide a useful framework for evaluating opportunities and investment frameworks.
“Another factor that gives me real confidence in the Web3 sector is the gradual improvement in user experience. Early decentralised applications often required participants to accept considerable compromises and, in many cases, confusion. Onboarding processes were sometimes difficult, with interfaces that were far from ideal. The Web3 ecosystem also demanded a degree of technical confidence that limited broader adoption, creating mistrust and reluctance among those considering investing their hard-earned money into these platforms.
“Again, I feel this is changing. Many decentralised products now offer experiences that compare favourably with their centralised counterparts. The growing popularity of platforms such as Uniswap, dYdX and Aave illustrates that users are increasingly willing to embrace decentralised alternatives when those alternatives combine transparency and self-custody with performance that meets modern expectations. Ultimately, people want control, trust and enjoyment.
“The desire for greater visibility over owned assets and reduced reliance on intermediaries extends far beyond cryptocurrency markets. While decentralisation may not be the appropriate solution in every circumstance, it clearly resonates in areas where trust, ownership and accessibility matter, which is exactly what Web3 infrastructure is helping to pave the way for”, said Varun Datta.
The emergence of a hybrid financial future
Varun Datta rounds up by further explaining “I do not believe traditional financial institutions will disappear, nor do I think decentralised systems will replace every aspect of the existing financial architecture. The future will see an increasing convergence of the two, as the signs are already showing.
“Banks and asset managers will continue evolving, and I believe many will incorporate tokenised products into treasury functions. Likewise, large companies will explore decentralised settlement mechanisms, enhanced privacy frameworks and alternative approaches to data sharing and collaboration. That is why Truth Ventures is investing in the technologies enabling those developments, technologies that are being created by infrastructure businesses operating within the Web3 ecosystem today. Truth Ventures is aligning itself with the sector’s long-term prospects because they reflect tomorrow’s world.
“The market will almost certainly experience further periods of exuberance and uncomfortable moments. I expect that new narratives will emerge, and some will inevitably capture disproportionate attention. Yet the underlying trend is clear to many forward-thinking investors, founders and institutions. Exceptional Web3 infrastructure with genuine adoption matters more than attention. Solving persistent problems matters more than chasing temporary enthusiasm, as this is what will help build our next digital world.
“If Web3 is ultimately going to fulfil its potential, and I believe it will, the businesses that shape its future may not be the ones attracting the loudest headlines. They may instead be the companies quietly building the infrastructure that allows the next digital economy to function.”
Click here for information on Truth Ventures.
Varun Datta
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any finance decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.
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