Original link: https://www.hellobtc.com/kp/du/06/3953.html
Author: Jad Esber and Scott Duke Komin / Source: Vernacular Blockchain
Author | Jad Esber and Scott Duke Kominers
Produced | Vernacular Blockchain (ID: helloBTC)
The Internet today is undergoing major changes. While today’s mainstream media hold onto their treasure trove of user data and use the Internet effect to maintain a considerable advantage, under the “Web3” model advocated today, new-born companies are proposing a whole new way of surfing.
01
Web2 vs Web3
Today’s dominant internet platforms are built on user aggregation and user data . As these platforms have grown, so has their ability to deliver value and are far ahead – thanks to the power of network effects (the power of web 2.0).
For example, Facebook’s (now renamed Meta) user behavior data helps it fine-tune its algorithms so that its feeds and ad targeting to users are significantly better than other platforms. At the same time, Amazon has used its granular insights into customer needs to optimize its delivery services and develop its own product line. YouTube has built a huge library of videos from many creators, enabling it to deliver content to its viewers on almost any topic.
In these business models, targeting users’ attention and their data is a key source of competitive advantage . As a result, traditional internet platforms often do not share data, and even simple data aggregation is difficult for users to export, let alone their social graph and other content. Therefore, even if users are not satisfied with a particular platform, they will not easily give up using them.
But all that is slowly changing. While it’s hard for upstarts to challenge giant “Web 2.0” companies like Meta on their own, under the “Web 3.0” model, they are making a novel value proposition. Although there has been a lot of public discussion around the metaverse and various Defi and NFT projects, for web 3.0, many developers agree that this is fundamentally different from other topics. The premise of its development is that to establish an open platform that directly shares value with users, in addition to making profits for the platform, it should also create more value for everyone, not just allowing the platform to use users to obtain data to make money.
02
Why Web3 is unstoppable
In Web3, any content users create (such as posts or videos) and digital objects they purchase (such as NFTs) are entirely owned by the users themselves rather than the platform that controls the underlying data. Additionally, these digital assets are often created according to interoperability standards on public blockchains, rather than being hosted privately on a company’s servers. This makes their assets “portable”. In principle, users can leave any particular platform at any time, users can exit from that application along with their data and move to another platform.
This is a major shift. It will have the potential to fundamentally change the way digital companies operate: the ability of users to transfer data to the platform creates a new source of competitive pressure that could force these established giants to update their business strategies . Because if a platform doesn’t create enough value for its users, they can just turn around and leave. In fact, in Web3, these newcomers have begun to blatantly attract big V users to turn to them – for example, the recently launched NFT platform LooksRare, through “vampire attack (vampire attack)” to give people door rewards to attract OpenSea users Switch to them.
But at the same time, Web3 is less of a zero-sum game, which means that the overall value creation opportunity for a platform can be greater. Because they are built on an interoperable infrastructure layer, platforms can easily link to other content networks, thereby expanding the scale and type of value services they can offer users. For example, the Web3 Art Gallery could allow users to create artwork on an existing blockchain, rather than requiring them to upload artwork directly to the platform.
Even for established giant platforms, this is a valuable method of content expansion. Twitter recently launched a feature where users can display NFTs they own on their profiles; Instagram is working on something similar. For new platforms, gaining momentum early on can be challenging due to a lack of content at the initial stage, and the ability to integrate existing digital assets is critical to solving the so-called “cold-start problem.”
Furthermore, the refinement of the infrastructure layer means that the costs associated with creating trust with users are much lower in Web3 . Managing digital assets on a public ledger provides a clearer picture of what assets are and who owns what, which was previously a conundrum on the web. For example, if a digital artist claims that a new artwork is limited to 489 versions, potential owners can verify this directly on the blockchain without having to verify trust in the artist himself, and without a gallery or other intermediary Institutions provide such guarantees.
This trust framework extends the software running into the Web3 platform: key operations can be encoded in auditable and immutable “smart contracts” on the blockchain. This allows platform creators to pre-implement certain design features, such as pricing rules, royalty agreements, and user reward mechanisms.
All of this means that, in theory at least, it will be much easier to roll out products in Web3. Even an unknown entrepreneur can build a product that plugs into an existing network without the permission of a particular platform. In fact, in Web3, users sometimes don’t need to trust the company (or person) behind the project. Instead, they just need to trust the code itself. For example, some recent fundraising events in support of humanitarian aid efforts in Ukraine are conducted through smart contracts that automatically transfer all funds received to the Ukrainian government or related charities; this means that even if the event organizers are completely anonymous, Donors can also trust that their funds will be put to good use.
Of course, given Web3’s early financial use cases and high volume of transactions, many bad actors use the hype to orchestrate scams. Many of today’s Web3 experiences are designed for tech-savvy power users, while the average user may have limited knowledge of what an application or platform actually does, let alone review the source code to verify that it functions as described. For now, Web3 technology has a long way to go before it is secure and available to the average consumer.
Also, plugging into an existing network in practice doesn’t mean you automatically unlock the engaged user base you want to stay. As in all startups, building a product that meets real user needs is critical. However, once you address user needs, leveraging established networks through Web3 makes it easier to deploy and scale commerce.
This leaves the platform backend open and interoperable, enabling compound innovation and incentivizing builders to invest directly in the infrastructure layer . For example, koodos—a Web3 service that lets people create collections of things they like from the Internet—is building a shared infrastructure that any network can plug into and improve upon. (PS: Esber co-founded koodos and Kominers to advise the company on market design.)
Shared infrastructure means that applications can focus on building great experiences, putting more emphasis on platform design as a great source of competitive advantage. An application’s understanding of its market is reflected in its user experience and interface – so even in Web3, user insight remains an important measure of how good a product is.
The Web3 platform also has the potential for a novel and particularly powerful form of network effect to unlock social cohesion through community engagement. The ownership of digital assets cultivates a psychological sense of ownership, which can also be understood as a psychological sense of belonging, which can form strong user stickiness and motivate users to maintain the platform and their own digital assets. Users of the platform actually become “fans” who form bonds through shared experiences on the platform, similar to how fans of a sports team or an obscure band see themselves as one community.
Adam Bomb Squad NFT owned by one of the authors (Kominers)
For example, popular streetwear brand The Hundreds recently sold NFTs featuring their mascot, “Adam Bombs.” Holding one of these NFTs gives access to community events and exclusive merchandise, providing a way for brand fans to meet and interact, fueling their enthusiasm. The Hundreds has also spontaneously announced that it will pay royalties (in the form of store credits) to owners of Adam Bombs-related NFTs used in certain clothing lines. This allows users to take partial ownership of the Ralph Lauren logo, and each new line of polo shirts that uses the logo gives users a dividend. The value of the brand is decentralized in this way, but The Hundreds community members are more attached to the IP and go to great lengths to promote it – so much so that some community members even get Adam Bombs tattoos.
Another example is SushiSwap, which is a “fork” of the decentralized finance platform Uniswap — meaning that the underlying algorithm of SushiSwap is a clone of the code released by Uniswap. The main difference is that SushiSwap has built a strong brand and community while providing users with a positive and ongoing reward system that drives higher user engagement and positive sentiment towards the platform; this has quickly made Uniswap a success competitor.
More to the point, shared ownership allows for more alignment of incentives between a product and its derivatives, incentivizing everyone to be builders and contributors. The underlying technology standards also enable every Web3 company to build on top of it. This means that the community around the platform can co-create in a way that is far less adversarial and more derivatives circulating than in the past, making the platform ecosystem even stronger.
In the short term, this model cedes some of the consumer surplus to the builder or creator. But because builders get more, they are more strongly incentivized to invest and increase the total pie for everyone. This means that Web3 should also increase consumer surplus in the long run.
03
summary
In summary: Web3 has the potential to unlock a more valuable internet for everyone. It is easier for a new company to build a community around its brand and product concept on the Web3 infrastructure than in previous iterations of the web. Even established platforms can harness these powers by plugging into blockchain-based content networks and giving their users some ownership over their data. All of this means that the next era of the web may look very different from the one we live in today, and much more open.
Original title | Why Build in Web3
English original link | https://ift.tt/fXDihQj
Author | Jad Esber and Scott Duke Kominers
Compile | Fire
This article is reprinted from: https://www.hellobtc.com/kp/du/06/3953.html
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