Ever since Ethereum co-founder Gavin Wood coined the term “Web 3.0” back in 2014, it has served as a sort of sponge, absorbing the hopes and dreams of blockchain enthusiasts, entrepreneurs and futurists worldwide. The concept behind Web3, to be honest, is still somewhat loosely defined, this however is also true for Web1 and 2, which correspond more to “epochs” in the development of the World Wide Web, than to hard technological principals.
To better understand what Web3 may emerge to be, and how ReSource strives to play a pivotal role in its development, we need to first understand what’s meant by Web2, and what Web3 proponents hope to change within its inner workings.
Web 2.0 is the Internet as we know it today, dominated by privately owned platforms that mostly aggregate, curate and distribute user-generated content. If Web 1.0 was a pretty boring Internet with a very small number of creators and content producers, catering to a very large audience of passive users, on Web 2.0 we are all prosumers of content. We constantly upload posts, images and videos, react, generate data, and feed algorithms that move content around in ways no one can really fathom.
This constant and multilateral movement of information has granted the operators of these platforms, which are essentially the pipelines through which user generated content flows, an incredible, and probably unprecedented privileged market position. The only thing that comes even close to the status of the Mark Zuckerbergs and Larry Pages of this world is maybe that of railway owners in the US Gilded Age, or that of medieval feudal lords, who wielded their power thanks to controlling the land on which other people toiled.
“Can the data-pipelines sustaining the Internet be organized around the same principles as the user-generated content that flows within them?“
Nevertheless, before anyone gets their digital pitchforks ready to storm the cyber Bastille, one thing should be taken into account: Facebook, Google, Reddit, Youtube, and the rest of the Web2 pillars, manage to be what they are and hold the power they do, because they’re offering services without which our modern world be inconceivable. In this context, the question the Web3 movement poses is: can the data-pipelines sustaining the Internet be organized around the same principles as the user-generated content that flows within them? Can the development and maintenance of Internet platforms be as decentralized as the content creation that happens on them?
The Bitcoin whitepaper, as it was first introduced in 2008, describes a system that does just that. Instead of one company building a platform that facilitates transactions of otherwise uninvolved users, Bitcoin was introduced as a system that is maintained by the very same people who use it. Technically, anyone could run a bitcoin node, and this seems to have been Nakamoto’s original game plan - have all, or at least most Bitcoin users function as miners with somewhat equal stakes in it, and by doing so grant them access to the fruits of its success.
We’ve come a long way since then, with giant conglomerates dominating most of the mining market, but the core principle still holds. Now, imagine being able to run a Facebook node that helps to store data and run algorithms, or Youtube hosted on a hyper-efficient version of IPFS, with built in economics that make it worthwhile for users and node operators to play their part - and you’re starting to get a glimpse of what kind of Internet Web3 proponents are envisioning.
“Imagine being able to run a Facebook node that helps to store data and run algorithms, or Youtube hosted on a hyper-efficient version of IPFS, with built in economics that make it worthwhile for users and node operators to play their part”
Web3 is an Internet on which decentralized open-source protocols replace the function Big Tech plays today and on which tokenized DAOs replace corporations traded on wall street. It is, in many ways, the final divorce between the Internet and Meatspace, much like John Perry Barlow envisioned it in the “Declaration of the Independence of Cyberspace”.
What turns these protocols and DAOs into such an idiosyncratic phenomenon is the fact that they’re essentially constructs made mostly out of Game Theoretical and economic principles that are held together by relatively simple open source code. The true innovation of Bitcoin is not its source code - but the engenius incentive mechanism that lures strangers from the Internet into providing the resources necessary to maintain it, while making attacks so costly and irrational that they are practically impossible.
“What turns these protocols and DAOs into such an idiosyncratic phenomenon is the fact that they’re essentially constructs made mostly out of Game Theoretical and economic principles”
Following this logic, Web3 will probably be a dynamic interplay of various such protocols, which use each other, feed into each other and stack new ones on top of old ones to replace more and more Web2 functions with decentralized alternatives.
This dynamic interplay is in itself economic in nature. DLT protocols pay those who maintain them and charge those who use them, this is the foundation of what has become known as Tokenomics. From this we can deduce that the success and agility of Web3 as a movement will in many ways be dependent on the efficiency of its “Meta Tokenomics” - How efficiently can various protocols be interconnected to create new products and services.
“The success and agility of Web3 as a movement will in many ways be dependent on the efficiency of its ‘Meta Tokenomics’”
Since almost all truly decentralized DLT protocols are tokenized, meaning using tokens to facilitate their internal economic logic, Web3 will entail voluminous movement of tokens between protocols that use each other’s functions.
This vision however has a catch - The price of tokens can be extremely volatile. Sudden, unpredictable changes in the value of tokens in relation to each other could at times severely disrupt the harmonious interplay between protocols that we all hope to see. If this indeed comes to play, the internet itself could be exposed to the same black swan events and market failures that from time to time torment traditional financial markets. This is no trivial affair; imagine not being able to send an email for days or weeks because token markets have temporarily locked themselves in a speculative quagmire.
“Imagine not being able to send an email for days or weeks because token markets have temporarily locked themselves in a speculative quagmire.”
This is where ReSource sees an opportunity for Mutual Credit to shine. As we have shown in chapter 5 of our ReSource Fundamentals series, Mutual Credit can be a very efficient method to optimize the flow of value through supply chains and align the interests of otherwise competing entities. This is especially true for DLT protocols, operated by DAOs.
DLT protocols forming a Mutual Credit trading network could access each other’s Resources, while paying in kind. These resource trades would be facilitated by a non-volatile stable credit which stitches the various protocols together within a meta economic framework. Within this framework, prices will be solely determined by the supply and demand of services, almost entirely bypassing the influence of speculators.
While users, token holders and the rest of the market would still use various tokens to access the different protocols, as it is the case today, the protocols themselves would essentially barter with each other, using the trading network’s stable credit as a form of “Meta-Token”. This meta-token wouldn’t be tradable on exchanges and DEXs but would only live within the context of an inter-protocol marketplace, the same way RSD functions on the ReSource Network today.
“While users, token holders and the rest of the market would still use various tokens to access the different protocols, as it is the case today, the protocols themselves would essentially barter with each other, using the trading network’s stable credit as a form of ‘Meta-Token’.”
Token markets would obviously still be volatile, but compound products, composed of the interoperation of various protocols would remain stable and unaffected by market crashes. Say about Web 2.0 whatever you want, and there’s a lot to be said, it is ridiculously stable and reliable. Web 3.0, if guided correctly, could achieve the same degree of stability, while adding countless dimensions of robustness as it eliminates central points of failure. We at ReSource aim to play our part in this exciting generational project.