Web3, the next evolution of the internet built on decentralized blockchains, is increasingly being recognized not just as a passing trend, but as a serious player poised to revolutionize finance on a global scale. For investors in India, it’s essential to grasp which projects have solid fundamentals, realistic growth potential, and a clear understanding of regulations and taxes. Here are five Web3 projects that are definitely worth keeping an eye on, along with insights on potential gains and tips on how and when to invest from India.
1. Ethereum (ETH)
What it does: Think of it as the main hub for smart contracts, DeFi, DeFi tokens, NFTs, and more. It serves as the backbone for a multitude of Web3 applications.
Why it matters: Ethereum has already established itself with a robust scale, a thriving developer community, numerous layer-2 solutions, and staking rewards. It often leads the way in emerging markets.
Potential Gains:
- Current forecasts suggest that ETH could see an increase of 5-20% in the near future (over the next 6-12 months), depending on market trends.
- Looking further ahead (3-5 years), if the adoption of DeFi, NFTs, layer-2 solutions (like roll-ups), and scaling enhancements continue, some predictions indicate that ETH could reach significantly higher values (potentially several times its current price).
2. Polygon (POL / MATIC)
What it does: This is a layer-2 scaling solution for Ethereum that helps lower fees and boost speed. In India, we’ve even seen collaborations (like with Jio) to integrate Web3 features using Polygon.
Potential Gains:
- In the medium term (2-3 years), expectations are that Polygon could see growth as Ethereum faces increasing scalability challenges. Some forecasts estimate that the average price of POL could hit around USD 3 by 2030 (up from its current lower levels).
- If these projections hold true, investors entering at the right price points might see returns of 2x-5x, though it’s important to remember that there are risks involved.
3. Aave (AAVE)
What it does: A decentralized finance (DeFi) protocol that focuses on lending, borrowing, and staking. It’s one of the frontrunners in the DeFi space.
Potential Gains:
- Over the past year, it has already surged by 100% (essentially doubling) from its previous low.
- Looking ahead to 2025-2030, forecasts indicate there could be even more growth: depending on significant macroeconomic and regulatory changes, AAVE might see a potential increase of 3-6 times from certain entry points. But keep in mind, it’s quite volatile.
4. The Graph (GRT)
What it does: This is a blockchain indexing and querying protocol that helps developers efficiently access on-chain data. It’s compatible with multiple networks, including Ethereum and Solana.
Potential Gains:
- Infrastructure projects like The Graph tend to grow more gradually but steadily. If the demand for data, analytics, and Subgraphs rises, GRT could experience moderate yet solid gains (potentially doubling or more over a few years).
- Given its high utility, the downside risk might be lower compared to more speculative altcoins.
5. India’s Digital Rupee (e₹-Retail / e₹-Wholesale)
What it does: This is a Central Bank Digital Currency (CBDC) being rolled out by the Reserve Bank of India. The retail pilot has kicked off, and wholesale use is already underway.
Why it matters: This represents a significant shift in how digital money and payments function in India. It could lower transaction costs, enhance transparency, and reduce friction. For the financial sector, it’s an innovative step backed by the government, closely related to Web3.
Potential Gains:
- While it may not see token price gains in the same speculative manner, the benefits lie more in cost savings, improved usability, and reduced remittance fees.
- For investors or businesses, this could translate to lower transaction costs, quicker settlements, better cross-border payments, and possibly new financial products emerging on top of CBDCs in the future.
Estimated Gains: A Sample Scenario
| Project | Entry Price Assumed (USD) | 1-Year Forecast Gain | 3-Year Forecast Gain* |
|---|---|---|---|
| Ethereum | $3,000 | 10-20% ⇒ $3,300-3,600 | 2-4× under bullish adoption |
| Polygon | $1.50 | 30-100% | 3-5× if scaling demand high |
| Aave | $300 | 25-60% | 2-5× depending on DeFi growth |
| The Graph | $0.10-0.15 | 50-100% | 2-4× if indexing demand increases |
| Digital Rupee | - | - | Gains are non-price based; institutional advantage etc. |
* The “3-Year Forecast” assumes a friendly regulatory environment, solid adoption, and no major unexpected events.
Best Time & Strategy to Earn / Invest from India
1. Invest Early in Market Dips: The best times to jump in are often during corrections or bear markets. These phases can be prime entry points, especially when global economic signals are shaky (like rate hikes or inflation). After these dips, as sentiment improves, the potential for gains can be significant.
2. Watch Regulatory Clarity: In India, the rules surrounding Virtual Digital Assets (VDAs) have been changing. Since Budget 2022, there’s a flat 30% tax on crypto gains, plus a 1% TDS on crypto transfers.
- Also, staking rewards or income from DeFi might be taxed as “income from other sources.”
- The ideal time to invest is when regulations become clearer and more predictable.
3. Use Dollar-Cost Averaging (DCA): Given the market's ups and downs, spreading out your purchases over time can help minimize risk.
4. Staking / Earning: Some projects let you stake or earn from their native tokens (like ETH staking or through layer-2 solutions). Earnings from staking can offer a nice passive income. Just be aware of the tax implications: in India, staking rewards are taxable both when you receive them and when you transfer or sell.
5. Long Term Preference: Web3 infrastructure and layer-1 / layer-2 projects typically require a multi-year investment horizon. While speculative gains can happen in shorter time frames, the risks are generally higher.
Tax & Regulation Notes for Indian Investors
- When it comes to profits from selling, swapping, or spending crypto assets (also known as VDAs), you’ll be looking at a flat tax rate of 30% under section 115BBH.
- Additionally, there’s a 1% TDS that applies to certain transactions, like crypto transfers or sales.
- It’s important to note that if you incur losses from VDAs, you can’t offset those against other income sources or even other VDAs unless they come from the same source.
- As for staking rewards or yields from DeFi, these are taxed either as “income from other sources” or according to slab rates.
Risks to Be Aware Of
- Be mindful that regulatory changes can happen unexpectedly—think sudden tax adjustments, bans, or restrictions on exchanges.
- There’s also the risk of smart-contract bugs and hacks, especially with newer projects that haven’t been thoroughly audited.
- Market volatility and broader economic challenges can impact your investments too.
- Liquidity risk is another factor; sometimes, tokens don’t trade very actively.
- Lastly, keep an eye on currency risk—fluctuations between USD and INR can affect your returns when you convert.