So I challenged myself to understand web3 a bit more in depth, described in the former post. I also felt a need to ponder a bit around the financial and/or business model parts. Please enjoy.
Money or currency, in the meaning of being a representative for a certain value, is based on trust. If not trust for the actual currency can be reached, the value [of the currency] can’t be persistent. There is a reason that currency in the form we know and have defined it, is centralistic by nature since it is mostly structures in the form of regimes (nation states and central administrations) that has been (able to) guaranteeing the currency’s value by promising law and order, personal security and much more.
We do have plenty of reasons to dive into history to see if there are traces of not centrally guaranteed currencies and to see what has been their trust attributes. Maybe I put this up on my todo list, but it feel like research best made by somebody with better knowledge in this
What you need to manage in order to get DAO/Dapp adaption to broaden, stay and become a new norm
Our current economic paradigm that is driving towards eternal growth, has also paved the way for centralistic and linear value creation for a very long time. The model of legal entities with limited liability as ownership model has the centralistic approach as a foundation: a possibly scattered association of owners put the entire responsibility for growth (=success) on one single role: the CEO, or Chief Executive Officer, if everything is done correctly according to the model. The owners are only to put requirements on return of the investment made.
The limitation of liability in turn has its own limitations: the requirements are unavoidably to be formulated by the board, which is populated by the owners of the biggest shares of the company. This makes the owning more of a passive expectation (and belief or hope) on returns for the owners of small shares = less attractive from an impact possibility perspective. With all trust for success put on one role – the CEO – the risk for failure is bigger. On the other hand, with the right CEO in charge, the capability to achieve success increases largely.
The conclusion is obvious: the centralistic nature och the Ltd company is unbalanced, which is its biggest strength as well as its weakness since the economic paradigm we have made the norm for centuries is based on growth of invested capital being the only thing that matters in the end.
This is as I see it the biggest challenge for a DAO, at least as long as the DAO need to exist and justify its existence in a paradigm based on returns of investments.
A fully decentralized DAO is also risking to be slowed down by the need for consensus, especially if the decisions to be made that are put in the ledger are on a very detailed and operative level. Here it is super important to find a decent balance between deciding and doing, so that momentum always is assured.
Ways to keep DAO’s secured from intervention from big web2 enterprises is another area to explore since the web2 traditional entities have no interest in DAO’s if they don’t add on to capitalization of the web2 company in question. Ways to prevent web2 companies hijacking of DAO’s and Dapp’s and other web3 artefacts are essential as this is already ongoing.
Reaching a critical mass of real web3 adoption in the real world is the only way to get things to happen and the ultimate questions to ask are:
- How should the incentives look like in order to get people to invest in web3 so that perseverance is reached as well as real competition to the traditional growth modell?
- How should web3 applications survive on their own means as long as the traditional growth model is the norm?
- How should an alternative economic model look like that can act as an alternative so attractive, that it in long term outperforms the traditional growth model, so the traditional growth model becomes obsolete? I have seen numbers around 70 years for a new economic model to replace an existent.
There is an obvious risk that web3 becomes a vision entrapped in the large-scale enterprises of tech companies that harbor blockchain architecture in their cloud service infrastructure – would this then become a ”real” decentralized architecture, or is it just web3 running on web2, and is this even a problem? I would say it can be.
Maybe an alternative, decentralized-native infrastructure is the future. (One of) the big question(s) is how this will be payed for, and who would take the challenge, and risk, to invest in it?