Is Web3 too Fragmented?

Web3 has an issue. It is not the person expertise, the dearth of regulation, and even the prevalence of bots and scammers attempting to steal folks’s crypto and NFTs. It is the fragmentation. As soon as upon a time, there was bitcoin, the world’s first digital foreign money. Issues had been easier, in the event you needed to personal a real, native digital asset, you purchased bitcoin. Within the subsequent years, some bitcoin alternate options emerged, however actually there was simply bitcoin and never a lot else.

Consolidation wants to come back sooner somewhat than later to fulfil the potential of web3

Half a decade later, one thing new got here alongside a model new blockchain, which was a lot greater than a digital foreign money. It was a massively decentralised pc. Named Ethereum, it was a decentralised software platform. With the facility of sensible contracts, it enabled you not simply to create your personal new digital property, however completely new sorts of monetary functions in addition to methods utilizing a brand new decentralised governance mannequin. 

Each Bitcoin and Ethereum thrived within the years following their launch, with proponents and customers of those networks embracing their narratives of digital money and decentralised computation respectively. 

These supporters focussed their energies on constructing communities and invaluable merchandise and functions utilising these platforms. Others focussed on creating new abstractions to simplify their adoption, thus offering higher utility for his or her present customers and serving to to onboard new customers. 

While the recognition of those applied sciences has grown, some felt that these platforms offered too many shortcomings and that they might create a superior platform. This resulted in quite a few new blockchain networks rising within the years following bitcoin and Ethereum, all with a view to offering a sooner/extra scalable/and so on various. This has been significantly acute with respect to Ethereum. The bitcoin opponents have typically been derivatives of bitcoin, with a couple of adjustments made by their creators. 

Whereas within the case of the decentralised functions platforms, you’ve got quite a few various layer one networks (alt-layer1s) attempting to place themselves as superior to Ethereum. This consists of Binance Good Chain, Cardano, Polkadot and Solana. 

There are a selection of nice minds engaged on these alt-layer1 platforms, and they’re very real with their intentions. The problem is the way it fragments the web3 panorama, with the potential to decelerate the general adoption of blockchain and associated applied sciences, and in some instances tarnish society’s broader notion of web3. 

In hindsight, it was extremely lucky that the U.S. Authorities created the Web. Initially focussed on linking navy and educational networks within the Seventies. By the point it was made accessible for personal sector and public consumption, there was a community in place with confirmed applied sciences similar to TCP/IP and DNS serving as its spine. The limitations to entry for creating an alternative choice to the web had been too excessive, so entrepreneurs and companies labored with this as their platform for innovation, which resulted within the creation of the world huge internet, and all the subsequent improvements and companies that had been constructed on high of it. 

Previously couple of many years, we have seen software program consuming the world, with virtually limitless funding for corporations from well-capitalised VCs. These funds have been used to create new internet-scale software program platforms servicing an ever-increasing variety of customers and companies (AWS, Google, and so on). 

What this has meant is within the context of web3, when a brand new founding staff comes alongside and says they imagine they’ll construct a superior community to Ethereum, there are many buyers prepared to throw cash within the ring as a result of:

The founding staff has a novel angle and monitor report

Their enterprise mannequin is predicated on taking bets — they settle for that solely 7.5% of their investments will truly repay

They see it as a chance to generate a possible 100-1000x return primarily based on the return early crypto buyers had

Because of this, we’re now in an setting the place there are a number of public blockchain networks all vying for customers, the place equal infrastructure is being ported or rebuilt on all of those totally different networks.

Interoperability can also be restricted, the place the switch of property between totally different platforms is clunky and comes with quite a few dangers — most of the main exploits in web3 have been by way of bridges between blockchains, which will be thought-about the Achilles heel of a lot of the general public infrastructure. 

We see it time and time once more in software program with technologists reinventing software program frameworks, so this behaviour is just not unusual. However given the work required to create and run a public blockchain community efficiently, plus the community impact required for it to succeed. The pragmatist inside me believes that we might be higher served by groups focussing on the layers and abstractions that may be created on high of an present base community as a substitute of making alternate options. 

This may allow web3 to evolve far sooner than it’s at current. So many sources are being spent investing in alternate options and attempting to bridge totally different platforms, that the notion of many onlookers is just that web3 has turn out to be too fragmented to double down on one platform.

This harms innovation, because it leaves many watching from the sidelines to conclude that they need to wait till the panorama consolidates earlier than doubling down on one community or expertise. 

We’re lucky that Ethereum’s Digital Machine has turn out to be standardised throughout a lot of web3, which is fostering numerous innovation within the house. However this isn’t sufficient. Think about if when the web was created as a substitute of a single international community, you had a number of personal entities competing to create their very own international networks, every of them positioning themselves as superior to what had come earlier than. 

As a substitute of personal enterprise focussing on constructing browsers and search engines like google, we would have been caught within the trenches with all of them creating their very own model of TCP/IP, or HTML and HTTP, with a scarcity of interoperability plaguing the broader adoptions of the expertise.

That is the purpose it looks as if we’re in web3. There’s an inevitability that we’ll see higher consolidation of platforms and protocols over time. Maybe it is too optimistic to imagine that we might standardise on only one public blockchain community with Ethereum as the first settlement layer for web3, and Bitcoin retaining its place as digital gold. 

This may permit different networks to stay in existence as layer two networks, that inherit the safety ensures of Ethereum. This strategy could be helpful for customers of web3 who would have a constant base platform throughout the board, and be certain that the first focus of the layers that exist on high is so as to add ever-increasing capabilities and worth for its customers. Thus servicing the top person much better than we do presently, and serving to web3 evolve sooner to succeed in its true potential. 

Historical past is suffering from examples of the place the very best expertise did not win, and we have to attain a degree the place we decide to constructing on high of what we have. In spite of everything, what is the level in regularly optimising one thing that has but to succeed in its full potential?