In the crypto world, Web3 is often just a buzzword that is used to create hype and make a project appear to be revolutionary. However, Web3 technology has been around for nearly a decade, and it will not change the web as we know it.

Instead, Web3 can be viewed more of an addition to the web, as it opens up new products for people, especially those who are seeking more privacy and want to move away from mainstream digital products that lack privacy. There are many Web3 products and cryptos people use already. For example, a decentralized crypto exchange is a Web3 product, such as Uniswap (UNI-USD), and its token would be considered a Web3 crypto.

As the use cases of smart contracts grow, we are seeking more products that appeal to the average Joe. Render Token (RNDR-USD) allows its users to rent their GPU power to others through the blockchain, while Film.io is a blockchain-based filmmaking platform. Many projects like these are popping up, and I believe buying up a small position in the up-and-coming ones can lead to juicy returns down the line.

I’m most optimistic about next year, as the highly-anticipated Bitcoin (BTC-USD) halving is about to coincide with a likely batch of rate cuts. This could potentially drive altcoins much higher, make small positions quickly turn into much bigger ones. Of course, these are very speculative investments, and I would expect you to only throw in some fun money, if you do decide to invest in the first place. 

As a final note of caution, most small-cap cryptos are outright shady, and I strongly recommend you do your own research and dig deep before you invest. With that in mind, let’s dive in!

ScPrime (SCP-USD)

I have featured cloud storage cryptos like Storj (STORJ-USD) and Filecoin (FIL-USD) in the past, as I believe the data storage boom is likely to spill over into the crypto market in the next few years as demand for data soars. Another candidate, albeit smaller, is ScPrime (SCP-USD), which offers decentralized cloud storage.

Similar to most cloud storage cryptos, users earn SCP by renting spare disk space. Considering cloud spending is nearing $600 billion this year, it’s a huge end market for these cryptos, if blockchain models gain adoption as well. ScPrime has an edge here, with its storage competitively-priced at $6.99 monthly per TB.

Of course, the big caveat is that it is not very well known right now, at least compared to STORJ and FIL. Reaching customers is still hard without big corporate backers. But by proving itself over time, ScPrime will see gradual traction, in my view.

Crypto Asset Governance Alliance (CAGA-USD)

Crypto Asset Governance Alliance (CAGA-USD) launched earlier this month. The project constitutes a new DeFi protocol, prioritizing transparency and community ownership. Beyond good staking yields, CAGA lets token holders shape proposals. This gives it more say than shareholders may have in the world of traditional finance. Engagement bonuses and investment returns also make it stand out from other competing staking platforms, due to its dual-reward structure.

Now, will decentralization create real financial change? Nothing is guaranteed. However, CAGA aligns its incentives with collective decision rights. This presents an opportunity to shift wealth and governance dynamics at scale.

The decentralized autonomous organization (DAO) driven project has seen massive growth in recent weeks and is up almost 9,600% in the past 16 days, according to CoinMarketCap. Even then, the market capitalization with this token is quite small. But if the momentum continues, I believe it can squeeze out multi-bagger gains by next year.

MetaTrace (TRC-USD)

MetaTrace (TRC-USD) is a project that fuses entertainment with crypto innovations. It provides Web3 mini-games and quests with real-world tie-ins. If you’ve heard of projects like Axie Infinity (AXS-USD), you’d know what I’m talking about. This is a free play-to-earn game with a world map that runs on Polygon (MATIC-USD). It’s more than just a world map, though, since branded quests, SocialFi mechanics, mini-games, and Trace Ads are in the ecosystem.

In September, the number of users who joined the Trace Quest exceeded 1,000,000 and is now close to 2,000,000 registered users. MetaTrace also launched TraceAds in November, a new product where crypto platforms can place advertisements that users will be incentivized to view for rewards.

In my opinion, with over one million users achieved already, MetaTrace shows play-to-earn’s appeal among casual users in growth markets. Once the metaverse gains traction, or play-to-earn games run hot again in the next rally, this is another crypto I think can deliver outsized gains. The project’s CertiK audit also makes it safer than other penny crypto competitors.

On Low-Capitalization and Low-Volume Cryptocurrencies: InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: How to Avoid Popular Cryptocurrency Scams

On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.