Web2 is owned by the few; web3 is owned by everyone.
The fundraising lifecycle of a web2 company is quite hilarious when you really break it down. A startup raises funds via a pre-seed or seed round, then it goes onto to do Series A through to Series whatever and then, when the valuation of the company is high enough, it will eventually go public. In no part of this journey is the community ever involved in any of the fundraises – that is reserved for the privileged few who meet the accredited investor requirement and who have special access to these deals.
Now we can look at web3 – yes it’s still filled with private investment rounds and yes much of it is currently centralized, but the projects that actually care about decentralizing tend to reserve 50%+ of the token supply for the community (usually it goes into a token-controlled treasury). On top of this, many projects will simply give away a large chunk of the token supply as an airdrop to previous users and the users get to decide whether to sell or use them in governance. Contrast this with web2 companies that give their users absolutely nothing while their earliest investors enjoy a return of anywhere from 100x to 1000x or more and their users have no say in how the platform is governed.
Of course, it’s not only the financial side of things here – it’s the actual ownership of the product/service that makes web3 special. Let’s take a big web2 company, Twitter, as a counter-example to web3 ownership. A bank is the largest shareholder in Twitter with an 8.59% stake in the company followed by a bunch of financial institutions that have stakes almost as large – this is the very opposite of community ownership. Now let’s look at ENS – one of the most popular web3 apps on Ethereum. Their token was airdropped to 100’s of thousands of addresses, they raised no money from VCs/funds, 50% of the supply went to the community treasury and 25% was kept for the core team that worked on the protocol for many years. On top of this, anyone is able to participate in ENS’ governance process or delegate their tokens to someone they trust to act on their behalf.
Finally it’s worth mentioning what the business model is for most of the web2 world today – advertising. The record profits of companies such as Google, Twitter and Facebook come from serving up ads that are hyper-targeted based on harvesting everyone’s personal details. I mean, these apps/services probably know more about you than you know about yourself – and they use this information to get you to buy as many things as possible. Contrast this with web3 where there are many different business models at play and pretty much none of them rely on harvesting user information in order to make a profit.
I think that all of the people rallying against the web3 future are going to be looked back upon as the Paul Krugman’s of the 2020’s – and this is not something you want to be remembered as. On top of this, these people are going to continue missing out on this once-in-a-generation opportunity for wealth creation, changing the status quo, and improving the world in a grand way. I believe that these people will eventually come around but it may be many years down the track when web3 is mainstream and it’s web2 that is slowly fading away.
Have a great day everyone,
Credit: Anthony Sassano