Big Futures Small Beginnings
Large language models are confined to writing code and learning new things one knows a little about, while crypto is focused on sending money and gambling—at least for now. But I believe they're the foundations of the future. The internet started with emails, and Netflix was just DVDs. Things start small, but (sometimes) they don’t stay small.
Since the dot-com boom, which newly funded companies have reached a trillion-dollar valuation? Airbnb and DoorDash were the largest IPOs in the past two decades, yet none came close to that mark ($150B combined). But the protocols running cryptocurrencies did, with a $2.39 trillion (Oct 2024) market cap.
Traditionally, VCs invested in startups- could protocols be the next frontier? No clue.
Internet’s Flaws
Below is Chris Dixon's argument on why web3 is compelling: Corporate networks (Meta, Apple, etc) suck the ecosystem dry of money. When you own 90% of the market share (Google Search), why interoperate? This stifles innovation. Nobody is being malicious—it’s just the name of the game. Companies attract people and then extract value; if they don’t, competitors will, and they’ll die.
Is there a better way? Possibly.
Web3 lets you own the digital platforms you use. Instead of centralized platforms extracting value, you reap the rewards of your contributions. This personal stake drives innovation—you want the system to succeed because you benefit directly.
Another accelerator is composability: decentralized apps connect and build on each other effortlessly.
Compound interest is for finance, compostability is for software; like Lego blocks, each innovation builds on top of the previous, and amplifies the next.
This combination of 1) ownership and 2) composability fuels competition and cuts platform take rates (0.35% in web3 from 30% in web2), freeing users and developers from gatekeepers and driving innovation.
Definitions: Web1 (1990-2005): Read. Content flowed from a few publishers to many readers. Protocol-based and open, but one-way. Web2 (mid-2000s): Read-Write. Users became creators, but big tech centralized control, holding users’ data and monetizing it. Web3: Read-Write-Own. Blockchain shifts control to users through token ownership, decentralizing power and restoring user equity in the network.Ground Up Innovation
Web3 isn’t just a sector—it’s all sectors. Composability functions like Darwinism within a meritocracy of execution, where the best ideas evolve, adapt, and prove themselves through time, leading to stronger, more innovative solutions. Let’s look at two concrete examples: product development and science.
In product development, a handful of product managers typically decide what’s built for billions of users. But what if we adopted a grassroots, bottom-up approach?
Take the Twitter example: imagine a shared backend/knowledge graph where people can build upon and fork the codebase. What would Twitter look like with 100 different front ends?
In science and academia, the focus should be on independent replication, not just prestigious citations. By putting data on-chain and generating papers directly from code, anyone can independently and cheaply audit and fork research.
Bounded Worlds
In a game like World of Warcraft, there are entities and rules introduced by the developers. What is the problem with that? It’s a bounded game world.
In the status quo, apps function in isolation. They utilize fragmented databases, authentication systems, and governance structures. While APIs might exist, the overseeing company sets access rules and terms. It’s analogous to only developers being able to write canonical events into the game—they have root access.
Blockchains present a novel kind of world. Here, rules are encoded in the protocol—like the speed of light in our universe. If you agree to play, people can’t screw you over later. Google’s slogan of “Don’t be evil” literally becomes “Can’t be evil.”
An Autonomous World is a self-contained digital realm where code is law and everything inside persists independently, with blockchain consensus making its rules and entities as real and unchangeable as physical objects.
Why dApps
Decentralized applications (dApps) are built on a foundational protocol. You can have a bunch of apps on that protocol that all follow the same laws, enabling them to interoperate and compose seamlessly. This fosters collaboration, expansion, and innovation within a unified ecosystem. Instead of diverging or “forking,” dApps coexist, interact, and enhance each other.
Going back to the game example, in this version, you can be in the creator system where it’s not arbitrary—the developers haven’t just decided to expose a very limited facet of the original creation so you can modify it (like APIs). Instead, you have unlimited and permissionless freedom. You are now a participant rather than a bystander.