Web3 Infra Brief: Decentralizing the Web Proxy Market

The web proxy market is a largely unexplored part of the Web3 infrastructure stack. While sharing similarities with VPNs, web proxies differ in that they change a user's IP address without encrypting web traffic. This limits their ability to provide complete anonymity, but they are valuable for various purposes, particularly for companies conducting market research and data collection across the internet.

• Web Scraping: Web proxies facilitate the extraction of large volumes of data from a wide range of websites. This can be useful for performing data analysis and training machine learning and AI algorithms.
• Competitive Analysis: Web proxies provide access to localized content and pricing information from competitors, enabling comprehensive market research.

Residential proxies represent a high-demand segment of the proxy market. By offering access to residential IP addresses, they enable companies to experience the internet from the perspective of end users in multiple geographic locations. The content that is accessible via these IPs ultimately serves as endpoints for data science pipelines as users can view and scrape large amounts of data to perform competitive analysis and train AI/ML models, among other purposes.

The Supply Side of the Traditional Residential Proxy Market

Traditional providers such as Oxylabs and BrightData route user traffic through a diverse range of residential IP addresses and charge upwards of $11/GB of bandwidth for this service. But residential proxies are difficult to acquire, and providers require access to millions of residential internet-enabled devices to offer a robust service. This has resulted in largely unethical practices to acquire residential bandwidth, often by leveraging unrelated applications downloaded on a user’s device.