Observations At the Four Year Mark of a Web3 Protocol Build

If you build it, will they come?

Authors and implementers behind blockchain based protocols tend to receive a lot of early validation of their idea — often buoyed by speculative interest in the underlying token that powers the protocol. The token hopefully has a very sound role to play in the bootstrapping of the supply side of the network, and so this validation and the resulting participation in order to acquire it can result in a jumpstart to overcoming the chicken and the egg problem. This is very powerful, and when combined with impressive sounding value propositions like dramatic cost-reductions, open access, near infinite scalability, and self-sovereignty, one might think that users would come running. But this early supply-side validation and theoretical promise of the value props should not be confused with proof of product-market fit on the demand side of the marketplace.

Who has the token?

When a token design is sound it should make its way into the hands of the users who value it the most, and ideally those would be the same users who can use it to participate in the various ways that optimally help the network. In a PoW network this begins with the miners, earning the token for providing security, and it makes its way to users who value it for their own purpose at a market price. In a work-token network, ideally a large amount of it is earned by those providing valuable work and acquired by those looking to enter and compete with these users to provide additional services for which there is demand or substandard geographic coverage.

The criticality of decentralized governance

A complex protocol needs to evolve over time in order to achieve resilience, security, and find product market fit. However with a bootstrapped supply side stakeholder base, who have made economic decisions to enter, participate in, and exit the network under a certain set of rules and assumptions, these evolutions present risk and uncertainty. If these evolutions are handed down by a single central authority on what may appear to be a whim, this risk and uncertainty can be too much to bear.

Meeting existing industry where they are while also building for the web3 enabled future

Finally, I’d like to share some perspective on building for existing industry versus building exclusively for web3.

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Doug Petkanics

Doug Petkanics

1.97K Followers

Building live streaming on the blockchain at Livepeer. Previously Founder, VP Eng at Wildcard and Hyperpublic (acquired by Groupon).