Web3 Technology Stack Explained: How Decentralized Apps Really Work
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Most people think Web3 is just about crypto wallets and NFTs. But underneath all the hype, there’s a real architecture holding it all together - a Web3 technology stack that’s completely different from the internet you use every day. If you’ve ever wondered how a dApp like Uniswap or OpenSea actually runs without a company in control, this is how.
The Web3 Stack Isn’t One Thing - It’s Five Layers
Forget the idea that Web3 is just blockchain. That’s like saying the internet is just TCP/IP. The Web3 stack is built in layers, each handling a different job. Think of it like a building: you need foundations, walls, plumbing, wiring, and then furniture. Each layer has its own tools and rules.The first layer is Layer 0 - the physical and networking foundation. This includes the hardware, internet connections, and peer-to-peer protocols that let nodes talk to each other. It’s not glamorous, but without it, nothing else works. Nodes spread across the globe sync data using protocols like libp2p, which handles discovery, messaging, and transport. This layer is what makes Web3 resistant to censorship - no single data center can shut it down.
Layer 1 is where the blockchain itself lives. This is the core ledger. Ethereum is the most used, but Solana, Polygon, and Avalanche are also major players. Each has trade-offs. Ethereum uses Proof of Stake (PoS) now, which cuts energy use by over 99% compared to its old Proof of Work model. Solana can process 65,000 transactions per second, but its network has crashed during high traffic. Polygon offers lower fees by using Ethereum as a security layer. You don’t pick one and stick with it - most dApps use multiple Layer 1s depending on cost, speed, and security needs.
Layer 2 solves the big problem: scalability. Layer 1 blockchains are slow and expensive. Layer 2s like Arbitrum, Optimism, and zkSync handle transactions off-chain and then batch them back to Ethereum. Think of them as express lanes. A transaction that costs $5 on Ethereum might cost $0.02 on Arbitrum. These aren’t sidechains - they inherit Ethereum’s security. That’s why they’re called rollups. zkSync uses zero-knowledge proofs to verify transactions without revealing data. Optimism uses something called optimistic rollups, which assume transactions are valid unless challenged. Both work, but they’re different engineering solutions to the same problem.
Layer 3 is where the real apps are built. This layer includes smart contracts, decentralized storage, identity systems, and APIs. Smart contracts - code that runs automatically when conditions are met - live here. Written mostly in Solidity (for Ethereum) or Rust (for Solana), they handle everything from swapping tokens to voting in DAOs. But smart contracts don’t store files. That’s where IPFS and Arweave come in. IPFS stores files across a network of nodes using content addresses. If you upload a photo, you don’t get a URL like “example.com/photo.jpg.” You get a hash like “QmXoypizjW3WknFiJnKLwHCnL72vedxjQkDDP1mXWo6uco.” Even if one node goes down, others still have it. Arweave goes further - it pays miners once to store data forever. That’s how NFTs keep their images alive for decades.
Layer 4 is what you see: the user interface. This is the dApp frontend - the website or mobile app you interact with. But unlike traditional apps, it doesn’t talk to a server. Instead, it connects directly to the blockchain using tools like Web3.js or Ethers.js. Your wallet - MetaMask, Phantom, or Coinbase Wallet - becomes your login. There’s no password. You sign transactions with your private key. That’s why losing your seed phrase means losing everything. No customer support can recover it.
What You Need to Build on Web3
If you’re a developer used to building websites with React and Node.js, Web3 feels strange at first. Here’s what you actually need to learn:- Blockchain nodes: You can’t just call an API. You need to connect to a node. Services like Infura, Alchemy, and QuickNode give you access to Ethereum and other chains without running your own server. They’re the equivalent of AWS for Web3.
- Smart contract development: Solidity is the most common language. It looks like JavaScript but has strict rules. A single bug can cost millions - like the 2016 DAO hack that lost $60 million. Tools like Hardhat and Foundry help you test contracts before deploying them.
- Decentralized storage: You can’t host images on AWS. Use IPFS via Pinata or Cloudflare’s IPFS gateway. For permanent storage, Arweave’s one-time payment model is growing fast.
- Wallet integration: MetaMask is the standard. But you need to handle user onboarding. Most users don’t understand gas fees or private keys. Good dApps guide them step by step.
- Decentralized identity: Instead of email logins, Web3 uses wallet addresses. But that’s not user-friendly. Projects like ENS (Ethereum Name Service) let you use “yourname.eth” instead of “0x742d35Cc6634C0532925a3b844Bc454e4438f44e.” Civic and Polygon ID are working on verifiable credentials you can prove without revealing your full identity.
How It’s Different From Web2
In Web2, you log in with Google. Your data lives on Facebook’s servers. If Facebook shuts down your account, you lose access. If they sell your data, you have no say.In Web3, you own your identity. Your wallet is your login. Your data lives on IPFS or Arweave. You control who sees it. Apps can’t steal your data because they never touch it - they just read from the blockchain.
Web2 apps rely on centralized APIs. If Twitter goes down, your feed disappears. Web3 apps use decentralized nodes. Even if 90% of nodes fail, the remaining 10% keep the chain running. That’s resilience.
And payments? In Web2, you pay Stripe or PayPal. In Web3, you pay directly in crypto. No middleman. No chargebacks. No frozen accounts. That’s why creators use NFTs to sell digital art - they get paid instantly, globally, and directly.
Real-World Examples
- Uniswap: A decentralized exchange. No company runs it. Smart contracts match buyers and sellers. Anyone can add liquidity and earn fees. It’s open-source. You can even fork the code and build your own version.
- OpenSea: The biggest NFT marketplace. But it doesn’t store your NFTs. It points to them on IPFS. If OpenSea shuts down, your NFT still exists. You can still sell it on another platform.
- Aave: A lending protocol. You deposit crypto, earn interest. Someone else borrows it, pays interest. All automated by smart contracts. No bank. No credit check.
These aren’t startups. They’re infrastructure. They run 24/7, unchanged since launch. No updates. No CEO decisions. Just code.
What’s Still Broken
Web3 isn’t perfect. User experience is still clunky. Gas fees spike during hype cycles. Wallets are confusing for non-tech users. Most people still don’t understand private keys.Interoperability is another issue. Moving assets between Ethereum and Solana is hard. Cross-chain bridges have been hacked for billions. Projects like Cosmos and Polkadot are trying to fix this with interoperability protocols, but it’s early.
And regulation? Unclear. Some countries ban crypto. Others embrace it. The SEC is watching. That uncertainty scares off big players.
Where It’s Headed
The next big push is usability. Wallets are getting smarter. Some now let you log in with email and recover keys via social recovery. Layer 2s are becoming seamless - users won’t even know they’re on a rollup.AI is starting to integrate. Smart contracts could auto-adjust based on real-world data. Imagine a rental contract that pays rent automatically when your job deposit hits your wallet.
And the real shift? It’s not about tech. It’s about ownership. In Web3, you own your digital life - your money, your art, your identity. No middleman. No gatekeeper. That’s why it matters.
Is Web3 just blockchain?
No. Blockchain is just the foundation. Web3 includes smart contracts, decentralized storage (like IPFS), wallet systems, identity tools, and user interfaces. Together, these layers make up the full stack. You can’t have a dApp without all of them.
Do I need to learn Solidity to use Web3?
No. Most users interact with Web3 through apps like MetaMask or OpenSea - no coding needed. But if you want to build dApps, yes - Solidity is the most common language for Ethereum-based projects. Other chains use different languages like Rust or Move.
What’s the difference between Layer 1 and Layer 2?
Layer 1 is the main blockchain - like Ethereum or Solana. It’s secure but slow and expensive. Layer 2s like Arbitrum or zkSync run on top of Layer 1 to handle more transactions faster and cheaper. They use the security of Layer 1 but reduce costs and speed up processing. Think of Layer 2 as a highway built on top of a busy road.
Can Web3 apps be shut down?
The code running on the blockchain can’t be shut down. If a dApp’s frontend website goes down, you can still access it through another interface - like a different website or app that connects to the same smart contract. The backend is decentralized, so no single company controls it.
Is Web3 better than Web2?
It’s not about better - it’s about different. Web2 is faster and easier for most users. Web3 gives you ownership and control, but it’s more complex. If you care about privacy, censorship resistance, and owning your data, Web3 wins. If you just want to post cat videos, Web2 still works fine.
What happens if I lose my private key?
You lose access permanently. There’s no password reset. No customer service. That’s why security is so critical. Use a hardware wallet like Ledger or Trezor for large amounts. For smaller amounts, use wallet recovery options like social recovery (e.g., Argent Wallet) that let trusted friends help you regain access.
Are Web3 apps really decentralized?
Some are, some aren’t. Many dApps still rely on centralized services - like hosting their frontend on AWS or using Infura to connect to Ethereum. True decentralization means the whole stack is distributed: frontend, backend, storage, and node access. Projects like Arweave and Filecoin are pushing for full decentralization, but most dApps today are still partially centralized.
Kirsten McCallum
Web3 isn't innovation. It's just capitalism with more steps and worse UX.
People think ownership means freedom. It just means you're responsible when you lose everything.
And no, I don't care about your ‘decentralized’ NFTs.
They’re just JPEGs with a blockchain tattoo.
Henry Gómez Lascarro
Let me break this down for the 12th time because people keep confusing infrastructure with magic.
Layer 1 isn't a ‘blockchain’-it's a Byzantine fault-tolerant distributed ledger with economic incentives baked into consensus mechanics.
Layer 2 isn't a ‘sidechain’-it's a validity or optimism-based state commitment protocol that leverages the security model of its parent chain while offloading computation.
IPFS isn't ‘cloud storage’-it's a content-addressed peer-to-peer hypermedia protocol that uses merkle DAGs for immutable, verifiable data distribution.
And no, Arweave isn't ‘pay once, store forever’-it's a proof-of-access blockchain with a permanent storage endowment model that uses block rewards to incentivize long-term data retention.
Most people think Web3 is about crypto wallets because they’ve never read a whitepaper, and now they’re building startups on top of misunderstandings.
When you say ‘decentralized app,’ you’re not talking about a frontend hosted on IPFS-you’re talking about a trust-minimized, permissionless, composable system where state transitions are cryptographically verified across a globally distributed network.
And if you’re using Infura, you’re not decentralized-you’re just renting a centralized API from a company that could be subpoenaed tomorrow.
Real decentralization means running your own node, self-custodying your keys, and understanding that gas fees aren’t a bug-they’re a feature of economic scarcity.
And don’t get me started on ENS-those are just DNS aliases with a crypto tax.
True identity isn’t ‘yourname.eth’-it’s a verifiable credential anchored to your wallet, signed by a decentralized identity provider, and interoperable across chains.
And AI integrating with smart contracts? That’s not ‘the future’-that’s a regulatory nightmare waiting to happen.
You can’t have an AI agent executing financial transactions on-chain without legal liability, and no one’s figured out how to assign responsibility when the contract auto-executes a bad trade.
And yes, I’ve audited 17 smart contracts. Two of them had reentrancy bugs. One lost $80M.
Web3 isn’t broken because it’s new-it’s broken because people treat it like a toy and not a financial system.
Until we fix the UX, the security model, and the legal gray zones, this is just crypto bros with better marketing.
Will Barnwell
Yeah sure, Layer 2s are great. But have you seen the gas fees on Optimism during a meme coin dump?
And IPFS? I uploaded a 500MB video once. Took 4 hours. Half the nodes were dead.
Also, who’s paying for Arweave? I thought it was ‘permanent’ but now I hear they’re running out of funds.
And don’t get me started on MetaMask-every update breaks something.
Web3 is a glorified beta.
And yes, I’ve lost two wallets.
Worth it? Nah.
Lawrence rajini
THIS IS WHY I LOVE WEB3 😍
Imagine a world where YOU own your data, your art, your identity 💪
No gatekeepers. No middlemen. Just code and community 🌐
Even if it’s messy right now, we’re building the future together 🚀
Keep going, devs. We see you. ❤️
Matt Zara
There’s real potential here, but we’re still in the wild west phase.
Some of the tech is brilliant-IPFS, rollups, ENS-but the onboarding? Painful.
Most people don’t need to understand merkle trees to use a dApp.
We need better abstractions-not more jargon.
And maybe stop calling every wallet ‘self-custody’ when 90% of users use custodial exchanges anyway.
Let’s build for humans, not just engineers.
It’s possible.
I’ve seen it.
Jean Manel
Another Web3 evangelist with a PowerPoint deck.
You think decentralization means freedom?
It means 18-year-olds losing $20k on a token they bought because a Discord mod said ‘moon.’
And ‘ownership’? You own a hash.
Good luck proving you ‘own’ that NFT when OpenSea shuts down and the IPFS gateway dies.
Web3 isn’t innovation.
It’s a Ponzi scheme with better branding.
And you’re the sucker buying the hype.
William P. Barrett
There’s something poetic about this stack.
Layer 0: the invisible infrastructure, like air.
Layer 1: the foundation, like soil.
Layer 2: the architecture, like bones.
Layer 3: the organs, like heart and lungs.
Layer 4: the skin, the face we show the world.
It’s not just technology.
It’s a new way of being digital.
Not owned. Not leased.
But held.
Like a song you wrote and sang into the wind.
And someone else heard it.
And kept it.
And sang it back.
That’s the beauty.
Even if the world doesn’t get it yet.
Cory Munoz
I’ve been watching this space for years.
It’s messy. It’s confusing.
But I’ve met people who’ve used Web3 to send money home without fees.
Artists who got paid instantly for their work.
Communities that made decisions together without a CEO.
That’s real.
And it’s not about tech.
It’s about dignity.
Let’s not lose sight of that.
Even if the UX sucks.
Even if the hype is loud.
It’s worth protecting.
Jasmine Neo
Web3? More like Web3.0: American tech bros exporting their financial delusions to the world.
Layer 2? More like Layer 2: your money gets stuck in a rollup while you wait 12 hours for a $0.03 transaction.
IPFS? Ha. I tried to load an NFT image once. Got a 404.
And Arweave? They’re running on donations from idiots who think ‘permanent’ means ‘forever’.
Meanwhile, China banned crypto, the EU is regulating it into submission, and the SEC is treating every dev like a criminal.
Web3 isn’t the future.
It’s a failed experiment with a PR team.
And you’re all just cheering for the wrong side.
Ron Murphy
Interesting breakdown.
But you missed one thing: the social layer.
Web3 isn’t just code-it’s culture.
Discord servers, Twitter threads, DAO voting wars, Reddit r/ethtrader drama.
That’s where the real power is.
Not in the smart contracts.
But in the conversations.
And the memes.
And the rage.
That’s the glue.
Even if the tech is broken, the community keeps it alive.
That’s the real innovation.
Prateek Kumar Mondal
Web3 is not for everyone but it is for those who want true ownership no middlemen no control simple and powerful
Nick Cooney
Wow. So much jargon.
And yet you still didn’t explain why I can’t just use Google to log in.
And why my wallet keeps asking for signatures like it’s a horror movie.
And why I have to pay $12 to swap two tokens.
And why ‘decentralized’ means ‘no one can fix it when it breaks.’
Also, your ‘layer 4’ is just a React app calling Infura.
That’s not decentralized.
That’s a website with a crypto button.
And you call that innovation?
LOL.
Clarice Coelho Marlière Arruda
okay so like… layer 2 is just… faster ethereum?
and ipfs is like… google drive but… not owned by google?
and i lose my key = i lose my cat pic?
ok i’m confused but also kinda excited 😅
Brian Collett
Wait-so if OpenSea shuts down, I can still sell my NFT on another site?
That’s wild.
So it’s like… my NFT is a file on the internet that no one owns?
That’s the future.
Can we get this on Instagram?
Imagine posting a photo and owning it forever.
That’s insane.
And yes, I’m still trying to figure out how to connect my wallet.
Allison Andrews
It’s fascinating how this stack mirrors human systems.
Layer 0 = infrastructure of society.
Layer 1 = laws and constitutions.
Layer 2 = courts and arbitration.
Layer 3 = institutions and contracts.
Layer 4 = culture and expression.
Web3 isn’t just code.
It’s a new social contract.
And we’re still writing the preamble.
Wayne Overton
You think you own your NFT? Nah. You own a hash. The image is on a server. That server is owned by someone. You’re just delusional.
Alisa Rosner
OMG YES!! 🙌
Layer 2 = cheaper gas 💸
IPFS = no more broken links 🖼️
Wallet = your new ID 🔑
And if you lose your key? 😱
Then you lose EVERYTHING.
So write it down. On paper. In a safe.
And tell ONE person you trust.
Don’t screenshot it.
Don’t email it.
Don’t store it on your phone.
YOU HAVE BEEN WARNED.
And yes, it’s scary.
But it’s also FREE.
And that’s worth it.
Trust me. I’ve been through it.
MICHELLE SANTOYO
Web3 is the new religion.
And the prophets? They’re selling NFTs.
And the flock? They’re buying them.
And the temple? It’s hosted on AWS.
And the holy text? A whitepaper written in 2017.
And the miracle? You can’t recover your keys.
So if you die without telling someone? Your digital soul is gone.
And everyone just says ‘hodl.’
That’s not innovation.
That’s a cult with better graphics.
Lena Novikova
You overcomplicated it. Layer 1 = blockchain. Layer 2 = faster version. Layer 3 = smart contracts. Layer 4 = app. Wallet = login. Done. Stop talking like a textbook.
Olav Hans-Ols
Honestly? I don’t care if it’s decentralized.
I care if it works.
Can I send $5 to my cousin in Nigeria without paying $4 in fees?
Can I sell my art and get paid in 30 seconds?
Can I use it without reading a 10-page guide?
If yes? I’m in.
If no? I’ll stick with PayPal.
Web3 has to earn my trust.
Not my hype.
Kevin Johnston
This is the future. 🚀🔥
Own your stuff. No middlemen. No ads.
Just code. Just freedom.
Let’s go!
Dr. Monica Ellis-Blied
While the technical architecture is commendable, the sociotechnical implications remain profoundly underexamined.
Decentralization without governance leads to fragmentation.
Ownership without accountability leads to exploitation.
And cryptographic sovereignty without user education leads to systemic vulnerability.
One must not conflate technological novelty with social progress.
The real challenge is not building the stack.
But ensuring it serves humanity-not merely the technically literate.
Therefore, we must prioritize accessibility, literacy, and ethical design.
Otherwise, Web3 will replicate the very hierarchies it claims to dismantle.
With intentionality, it can transcend them.
Herbert Ruiz
You didn’t mention that 90% of dApps still use centralized APIs. So it’s not decentralized. It’s just a marketing term. Stop pretending.
Kirsten McCallum
And yet, people still think losing a key is like forgetting a password.
It’s not.
It’s like burning your house down and saying ‘oops.’
And then blaming the builder.
Web3 doesn’t care if you’re sorry.
It just executes.
That’s the point.
But most users don’t get it.
And that’s why it’s doomed.