Introduction

Web3 has established an economic paradigm and cultural system that is entirely different from the off-chain world through blockchain technology. This paradigm shift showcases its immense potential but also brings compatibility issues with Web2. For mass adoption, Web2 users often possess entirely different means of production and property. We envision that if the assets currently held by Web2 users can be re-onboarded onto the chain, it can not only inject more momentum into the on-chain economic ecosystem but also allow users to obtain greater economic value. At the same time, this brings a richer category of off-chain assets to on-chain applications, promoting the diversified development of the on-chain ecosystem.

On one hand, WiFi万能钥匙 (WiFi Master Key) is a typical case. Established in 2012 during China's transition from 3G to 4G, when internet data fees were high, WiFi Master Key solved the pain points of lacking public networks and expensive private networks through network sharing. Its main business model was to open users' home WiFi, creating a shared WiFi ecosystem. At its peak, WiFi Master Key had 900 million users and 370 million MAU. It rode the wave of the time but declined due to changing circumstances. On one hand, China's data fees have rapidly decreased, and many operators have started offering low-cost home WiFi and unlimited mobile data, while public WiFi facilities have gradually been improved. On the other hand, its product relied on cracking others' WiFi passwords for sharing, leading to higher data fees and network lags, which gradually caused user dissatisfaction, ultimately resulting in a loss of market advantage.

Through this example, we can see that WiFi Master Key built a reusable shared network using existing massive WiFi infrastructure, reaching nearly 1 billion users through near-free network infrastructure. Web2 users possess some substantial assets that are naturally incompatible with the asset properties of Web3, preventing these massive assets from realizing more value.

We also recognize that many existing infrastructures in Web2 can further unleash their potential through the global liquidity, shared open economy, verifiable consensus blockchain, DeFi, and other features of Web3. We refer to this model as ReFi (Repurpose Fi).

ReFi is fundamentally different from current DePIN projects. Depin devices often require hardware purchases; however, the scalability of this hardware is generally poor. To achieve true success, it is necessary to establish sales networks and supply chains in various locations. However, for products that meet urgent needs, simply 'making money' is not enough; the product's competitiveness must sufficiently meet user demands. Many teams lack funding and the ability to build a complete ecosystem, instead tending to rely on KOLs and large sales agents to promote mining machines, ultimately becoming simple 'Ponzi schemes.'

In contrast, ReFi leverages the existing market of 8 billion users globally without the need for additional hardware production and sales, significantly lowering the entry barrier.

We will list some significant gains that could arise from putting Web2 assets on-chain, providing the community with entrepreneurial insights. This model directly avoids the 'show-off' business model currently dependent on hardware production and sales in DePIN, broadly onboarding existing Web2 assets to support entrepreneurs' success.

Case Study

WiFi

When Tokenomics combines with WiFi, we find that if the existing scale of WiFi infrastructure can be directly opened to third-party users, users can earn income through both renting and sharing WiFi. The project can incentivize this through the distribution of Tokenomics.

This model primarily targets users seeking free, fast outdoor WiFi, who typically need to stay in one place for a long time. The providers of free WiFi are households with existing WiFi infrastructure. With the sharp decline in data fees, slow internet speeds, and stuttering as a cost, providing free networks often fails to incentivize them. However, the introduction of Tokenomics can significantly motivate these users to reopen network resources for value exchange and revenue sharing.

In 2023, the global Wi-Fi market was valued at $14.5 billion and is expected to reach $39.4 billion by 2028, with a compound annual growth rate (CAGR) of 22.2%. In 2024, mobile data market revenue is projected to reach $0.6 trillion. The annual growth rate (CAGR) from 2024 to 2029 is expected to be 4.30%, with the market size reaching $0.8 trillion by 2029. These figures suggest that WiFi sharing models combined with Tokenomics are likely to find a place in this rapidly growing market.

Bandwidth

Grass is a successful example of ReFi. Grass aims to directly contribute unused internet bandwidth and receive corresponding rewards. In the current market, large companies use residential proxy networks to access via the local bandwidth of millions of users, allowing servers to recognize it as genuine user access, avoiding a single-node DDOS denial for large companies. Residential proxies have wide applications in web scraping, data analysis, market research, social media management, electronic ticketing, and more.


For the consumer group, this market is currently small, with global residential proxy service sales approximately $620 million in 2023, expected to reach $840 million by 2030, with a compound annual growth rate (CAGR) of 4.6%.

Data

The data contribution from Web2 users also represents a significant breakthrough potential, especially given the current challenges of LLMs and AI Agents regarding computing power and quality data. Scale AI has been particularly outstanding in this area, with its slogan 'Empower AI with your data.'

Scale AI Business Model, source: Scale AI

Scale AI's main business model connects user data to a task platform that connects cost-effective Southeast Asian data workers, who then label the data uploaded by users and input it into large models, while also scoring the results of these large models. Data holds immense value for training LLMs or Specific Models, and some have likened Scale AI to the sellers of shovels. The average hourly wage for data labelers is $1-2, and this low-cost labor model supports Scale AI in achieving efficient and scalable operations.

For Web3 projects, we can incentivize workers through tokens, significantly increasing their hourly wage. We note that Vana, invested by Paradigm, resembles this Data DAO model. Although it has a complete business model, it may face certain challenges in the attention-driven investment environment of Web3. The reason is its limited outreach, as it connects to Data DAOs, leading to low user awareness of the product, which may result in insufficient buying pressure for the token price.

A relatively positive example is Aggregate, which directly targets retailers by uploading ChatGPT conversation content to Aggregata for further training of other models. Aggregate has currently received investment support from Binance Labs. We believe that through the distribution of tokens, data providers and data labelers can be effectively incentivized, with most profits flowing to business participants rather than just the platform.

Currently, the data labeling market is valued at $838.2 million in 2024 and is expected to reach $10.3462 billion by 2033, with a compound annual growth rate (CAGR) of 32.2%.

Energy

Daylight is another successful example, with the slogan 'repurpose your surplus energy becoming a new revenue.' The company has secured two rounds of funding led by A16Z and Lattice Fund, totaling $13.2 million. Daylight manages and generates the grid at the network edge, incentivizing people to install various electronic devices at home, such as solar panels and water heaters, through tokenization, allowing control of these devices via mobile phones while earning token incentives. By adopting token incentives, Daylight promotes the widespread use of clean energy and balances the transmission load of centralized grids.

This model is closer to DePin, but if we can improve upon existing clean energy devices without purchasing new electronic equipment, using tokenization to achieve improvement goals, this would be easier because essentially Daylight is selling clean energy devices, whereas the core of ReFi is to repurpose the existing broad asset base. If a system or any specification interface standards could be built in cooperation with existing manufacturers, allowing those who use clean energy devices to directly earn token incentives on-chain, that could also be a viable business model. We look forward to teams innovating in this field.

According to reports, the global power generation equipment market was valued at $110.4 billion in 2022 and is expected to reach $173.1 billion by 2032, with a compound annual growth rate (CAGR) of 4.8% from 2023 to 2032.

Conclusion

In this article, we have identified a natural incompatibility between Web3 and Web2 users, particularly on the Web2 asset side. To address this, we propose a new direction called ReFi (Repurpose Finance), utilizing the existing vast infrastructure and user assets of Web2, and guiding these assets onto the chain through blockchain technology and token economics to further develop their potential.

The core of ReFi lies in tapping into all widely used resources existing in the world, including home GPUs, WiFi networks, secondary utilization of bandwidth, data, energy, etc., all of which can be upgraded based on the large existing scale. The concept of ReFi has been around for a long time, and its biggest difference from Depin is that it does not require new hardware purchases, but instead seeks new directions for secondary utilization using token economics in the massive existing market.

However, it is also necessary to consider real demand and efficiency. Some Repurpose directions may not be ideal, such as Grass's bandwidth used for residential proxy networks, which has a small market size but low efficiency demands. In contrast, contributing bandwidth for data transmission to assist AI or contributing GPUs for LLM training seems unrealistic, as these require high bandwidth and GPU, and scenarios prioritizing efficiency are often difficult to achieve commercially under current technological conditions.

We look forward to seeing more application scenarios for ReFi, which will help entrepreneurs directly utilize the existing assets of the global 8 billion Web2 users, leveraging the global liquidity, distributed state storage, token economics, and other advantages of blockchain to integrate Web2 assets into the Web3 world, ushering in a new era of value creation and resource utilization.

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About Gate Ventures

Gate Ventures is the venture capital arm of Gate.io, focusing on investments in decentralized infrastructure, ecosystems, and applications that will reshape the world in the Web 3.0 era. Gate Ventures collaborates with global industry leaders to empower teams and startups with innovative thinking and capabilities, redefining the interaction between society and finance.