Web3 Defined

At: 6/13/2022  |  Categories: Innovation

Introducing the 2022 web3 defined report 
by Brian Christie, Peter Williams (Brainsy, Inc.) 

Last month, venture capital firm Andreessen Horowitz (a16z) released its inaugural "State of Crypto" report, a 56-page deck that attempts to define web3 (it really doesn’t) and offer talking points for developments in related areas. 

When it came out, much of the crypto punditry and sycophantic tech press lauded their report. We commented that it seemed to offer a lot of self-referential BS on why the world should agree with their definition of Web3 -- and by extension, give them more money to manage. Shortly thereafter, they announced launch of a new $4.5 billion crypto fund. 

Under the traditional “2 and 20” VC business model, this new fund could give a16z up $90 million per year to pay staff, identify deals, lobby government, and pump out slick-looking decks about the wonderful (and speculative) world of crypto-based web3.   
  
But it’s a lot of misdirection. If there’s any broader movement behind web3, it has nothing to do with the various technologies that a16z lists in the report. Instead, it’s about pursuing principles and innovations that create an equitable web and that bypass the BigTech gatekeepers, not government regulators. 

Brainsy is working with numerous stakeholders to create online communities that compensate the creator class and that create new pathways to ownership for value-providers who live outside the clubby and insular world of traditional venture capital.   

We’d like to offer a simple definition for web3 as follows:  

“Web3 is an equitable version of the web built on the pursuit of three core principles including: direct rewards for participants, democratic governance, and shared ownership in an initiative or enterprise.” 
  
The discussion about web3 is an important one and it’s not only about the future direction of the tech industry and tech investments but also about how we organize ourselves more broadly in society.  

The A16z 56-page report is here: https://a16zcrypto.com/wp-content/uploads/2022/05/state-of-crypto-2022_a16z-crypto.pdf 

The more concise, 54-page alternative Brainsy report, is here: https://docsend.com/view/ppne7ybjjb8t3gpz

If you are working to advance web3 along the principles we’ve defined on behalf of a community or enterprise, let us know as we’d be happy to explore collaboration.  

Peace out -

The Brainsy Team 

Note: We’re not tech haters – to the contrary, we live in tech and love the potential of it. However, we see valuable, but limited, use-cases for some of the technologies referenced in the a16z report – and we don’t believe they match or justify the hype to date.

This is not financial or investment advice. This is not tax advice. This is not legal advice. The contents in here - and available on any associated distribution platforms and any public Brainsy Inc. (Brainsy)  online social media accounts, platforms, and sites (collectively, “content distribution outlets”) - should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. For a full list of disclosures, please read our report. 

Register for FREE to comment or continue reading this article. Already registered? Login here.

2   
Share

Comments

Manny Amadeo Manny Amadeo,  7/11/2022

Tomasz Tunguz (a VC) says there are four fundamental innovations of web3: permanent ownership, paying customers with “equity,” regulatory arbitrage, and new governance models (DAOs). He's clearly one of the few VCs that "get it," 

Brian P. Christie Brian P. Christie,  8/12/2022

Tomasz Tunguz has vision. 

Susan (Ecosystem Support) Susan (Ecosystem Support),  11/19/2022

Some extensive feedback from the folks at Notcentralised.com PS: For context, note that Brainsy report was written mid-June and within a month of the release of the a16z "State of Crypto" report and before events such as the ETH "big merge" had happened.  

 b...@...m  c...@...m n...@...m 

From an email to Brainsy ...
 
Hi guys, I applaud you for putting together a comprehensive publication showing your views on the web3 space. More people thinking critically about crypto is important. I just wanted to raise some points on the content, from our perspective at NotCentralised (web3 venture studio in Australia). Happy to talk about any of this.
 
Slide 7 = ZK proofs and eth moving to PoS refute your point about large energy consumption. In any event, all economic activity requires energy, so is that also bad for farming, or construction, or mining, or auto manufacturing? Finally, blockchain itself doesn't have uncertain regulations (it's software) - some tokens do.
 
Slide 16 - typo on "ER-721" you missed out the C.
 
Slide 20 - it's still centralised! What if Vodacom turns everything off? What if the credits are unilaterally devalued or withdrawn? Users are powerless to stop that AND they don't own anything around governance in this example. Still a single point of failure exists and so this is not a good example of your idea of web3.
 
Slides 21 - 23 - DAOs are a flawed concept in the purest form. For a start, hardly any countries recognise them as a legal personality. So they cannot enter contracts or be sued, for example. In addition, they become impractical at scale eg Sushi Swap, where the brains involved leave to pursue more nimble alternatives.
 
Slides 27 & 28 - this is outright misleading. You have failed to clarify UST was an algo stablecoin, not an asset backed coin. The large stables like USDC and Dai have been solid as a rock. Even Tether has held up well aside from a brief wobble from par (note - we're not Tether fanboys).
 
Slide 29 - the cost issues are disappearing quickly. ZK proofs hugely reduce costs, as does Eth moving to PoS from PoW.
 
Slides 32 and 33 - if token issuers follow requirements such that they issue "securities" there is no problem here. This is what we are building with Layer-C.
 
Slide 35 - so what? He's a VC operator, of course he has multiple interests. This neither supports nor refutes blockchain / crypto.
 
Slide 36 - just shows we are early, nothing more. How many software folk knew about the internet before it was launched? Very few.
 
Slide 40 - How do you propose your 3 goals of equitable web3 can be achieved without blockchain and tokens? If the answer involves centralised servers, you have missed the point I think. Indeed, there is no answer proposed in this document.
 
Slide 41 - why should playing about on social media deserve any compensation at all? You are assuming such playing around is adding value somehow. Some people play golf at the weekend for 4-5 hours and get no compensation. So what? Creating something or doing something does not, in and of itself, deserve compensation.
 
Slide 42 - you highlight web2 firms moving to sharing revenue. That's fine, but they remain as centralised as ever and thus have a single point of failure. The "micro-reward" you speak of would have huge counterparty risk too, as it would come from a single centralised entity. Like air miles are fine, until the airline goes bust and then you're screwed. Oh and Reddit issued NFTs which do need a blockchain, so there's that.
 
Slide 46 - if token issuers simply follow the rules required as those tokens are deemed to be securities, the problem of the Howey test goes away. Then you don't need crowdfunding as envisioned under Title III JOBS Act. Crowdfunding is not scalable capital. Another problem - the ability to issue is so small (eg Reg CF is just $5m per year) that those holders would rarely get any voting control over a listed company. So, there's no democratic governance. Plus, special founder voting shares would crap all over them anyway, like Meta with Zuck's shares, which you mention on your own slide 4.
 
Anyway thanks for reading this far.
Dividend-Rewards