1 Take đ¶ïž
Itâs time for the term âweb3â to be retired.
Wait, what? Karthik, is the bear market giving you second thoughts about crypto?
No â but âweb3â is causing us to lose focus on building things that matter to real users.
Intentionally or not, web3 inherently implies that itâs an upgrade on all things web2: a new paradigm of technology thatâs clearly better than what exists today. And as a marketing strategy, itâs been insanely effective. Three separate crypto venture firms have raised $1B+ funds in the past 6 months, including a16z announcing a $4.5B raise. The chart below shows how this $$ has trickled down to higher valuations for web3 startups compared to others.
While the hype is largely a positive byproduct of âweb3â (more $$ invested = more experimentation = more progress), thereâs a serious and under-discussed negative side-effect: tribalism. Web3 creates a cult-like âus vs. themâ mentality which:
Needlessly antagonizes people who work in web2 and have built amazing businesses & experiences for users at true Internet scale
Assumes web3 will inevitably win and every user becomes crypto-native. This can cause builders to make focus too narrowly on their user base or how users will want to use their product. For example, ask yourself why literally every web3 product has a âConnect Walletâ button at the top of their pageâŠ
So, where do we go from here?
You know what? Iâm just gonna defer to my former boss JeffB on this:
We need to move away from thinking about âweb3â as some new-age paradigm and instead view crypto as providing net-new capabilities to the builderâs toolbox. The important piece: these capabilities by themselves donât matter to users. Users arenât clamoring for digital ownership, composability, or censorship resistance. Thatâs just the web3 echo-chamber many of us live in. Rather, we need to create better experiences that are able to compete and win over user mindshare. The same way that users donât care if your product is powered by AWS or Azure, they wonât care if it uses a centralized database or blockchain.
Whatâs next
IMO, the best way to move forward is to focus investment on âmiddlewareâ solutions which make it simple for any application to plug-in crypto capabilities & features to support non-crypto-native users & use cases. Here are a few areas Iâm excited to see continued progress in:
Abstraction of wallets â Enable applications (including gaming) to provide users with the benefits of digital ownership without relying on users to directly interact or self-custody wallets. This probably looks like some sort of hybrid multi-sig solution that provides ways for users to self-custody if they choose but allow to be restored by the application (similar to what Casa does for BTC holders).
Better on/off-ramps between TradFi and crypto - Despite the benefits of earning higher yield (e.g. DeFi) or send $$ instantly, itâs painful to get money in and out of crypto rails. Imagine if it was simple for a mom & pop vendor to receive instant payments 24/7 via stablecoin instead of waiting 14-30 days for debit card payments to clear, or for people to earn 5-6% yield by pooling money to finance lending, mortgage or insurance products (vs. keeping it in a bank earning <1%).
Governance - One of the biggest flaws of democratic institutions IMO is elected representatives, who often donât have the peopleâs best interests at heart. Iâd love to see experiments using mobile voting and on-chain governance to get constituents directly involved on issues. For example, instead of a school board, what would happen if we place it with families who could easily and securely vote on proposals?
Bear markets bring out the crypto-haters in full-force. Instead of debating them, we need to BUIDL better experiences for users and empirically showcase the power of what crypto capabilities bring to the table. The future of crypto depends on it.
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Always be learning,
Karthik