Give the Internet back to users

An In-depth Study of the User-Owned Internet

Original author: Arcane

原文编译：Block unicorn

For some, Web3 is the metasverse. To others, it's confusing and abstract, entangled in complex cryptographic systems that can seem overwhelming to novices. This article is the first in a series that will explain what Web3 is -- and why you should care.

We are currently seeing a generational shift from the Internet to encryption -- from online to on-chain. As investment themes and use cases evolve, people are increasingly resonating with how cryptocurrencies are transforming traditional asset classes. There is no "one size fits all" model. Instead, we've seen several revolutions coincide with bitcoin's monetary revolution.    

Web3 is the user-controlled Internet (network). A decentralized network model in which the participants:

1.  You can interact without an agency.

2.  Full control over core aspects of their digital identity, including their underlying encryption keys.

3.  Control how their credentials and personal data are shared/used.  

The Internet democratizes information sharing, but it tends to centralize power like any complex socio-technological system. Centred on the cloud infrastructure of technology monopolists such as Amazon, Google, Microsoft and Facebook, the companies that own the network have unilateral power over who gets access to it, the functions it supports and how to protect user data.

So far, we've accepted the platform-owned model because it's the only viable option. Most users cannot store their data, user accounts and social relationships themselves. In return, the tech giants demand access to our data. Suddenly, a few big companies have all the data about everyone and everything that happens online. This raises the question of trust, can I trust the people and institutions that store and manage my data to prevent any form of abuse (internal or external, intentional or accidental)?

The great promise of Web3 can be summed up in one concept: user control. A decentralized successor to the current Internet is in the works. After decades of trading trust for convenience, people are finally seeing a future in which control of data can be wrested from companies and institutions. At the heart of this utopian dream is the use of tokens to co-ordinate the global digital community. Freed from the rule of tech conglomerates, blockchain promises to give power back to the people.

The Web3 environment

The overview below highlights just a fraction of what Web3 has to offer, covering everything from career platforms to collaborative music platforms to decentralized credentials and reimagined versions of social media. I'll delve into all of these areas in subsequent articles.    

Current context: The rise of digital asset communities

Over the past 20 months, two successive waves of Web3 adoption have led to consolidation in the token-holder community. DeFi Summer 2020 revolves around the idea of governance tokens managing decentralized protocols through decentralized autonomous Organizations (DAOs). In layman's terms, a DAO is an entity that replaces centralized leadership with a community organized around a set of rules enforced on a blockchain. This requires participants to buy tokens in exchange for voting rights to ensure they act in the best interests of the community.

Loan Agreement Compound started this trend in June 2020, when it used tokens to incentivise early lenders and borrowers by offering participation incentives in the form of COMP tokens. When the program was launched in 2020, the total value locked up in Compound jumped from about $100 million to about $600 million. Mobile agriculture quickly became a broad approach for DeFi protocols to jump-start their adoption by incentivizing use. Token holders have a common goal of increasing the use of protocols and work together to identify the actions necessary to achieve this goal.

The Web3The second wave comes from the NFT boom of 2021. Well-known NFT programs like CryptoPunks and CryptoKitties have been around since 2017 (the average price of CryptoPunk was $20 in 2018 compared to $209,000 in August 2021), But the current NFT wave stems from a market ecosystem that has enabled a new generation to join crypto enthusiasts. New and major NFT projects like Pudgy Penguins and Bored Ape Yacht Club have found staying power by becoming local digital brands with loyal fans.

These two waves illustrate how digital assets organize communities. Shared ownership of the project through tokens strengthens the bond between the holders, and acquiring tokens opens the door to new communities. From the first bitcoin holder to the recent NFT drop, token holders have made connections.

However, ownership was also the first promise of the ICO era, and its narrative was so powerful that it inspired some of the largest crowdfunding campaigns in history. While the market has acknowledged this to some extent in the latest iteration of incentive design, with more consistent vesting periods and airdrops, this does not fully address many projects that are overfunded and lack incentives.  

The charm of Web3

The Web3 protocol can power communities in ways that Web2 companies cannot. Communities are often unable to scale because the rules they rely on can be difficult to define and even harder to enforce. Protocols can make communities stronger and expand faster by codifying and enforcing rules to properly manage shared resources. More specifically, agreements can align the goals of communities, define boundaries, and create transparency.

Incentives also change in the presence of shared network effects. Sharing data makes builds based on existing products more accessible than ever before, so entrepreneurs can create better products faster. For users, switching costs between applications drop dramatically because the data comes with them. This means that building useful applications will be more economically valuable than building a large, dedicated user base for their network effects.

But Web3 is not just about technology. This is a cultural movement. Many of these applications can be built on top of existing technologies with little impact on the end user. What makes the Web3 movement so fascinating is the beliefs, ideals, memes and emotions that underlie it. Community and shared values are at the heart of every human society and movement. This is also why mass movements led by technological savages spread so quickly through our culture.  

While not everything will move to the Web3 technology stack, consumers will increasingly expect products and services to behave more like the principles in Web3. In the second part of this series, I'll explore what this means in practice, and the Web3 use cases will become clearer.

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