This week I wrote an article
on one of the reasons I’m so bullish on Web3. We explore a brief background on network effects, and why crypto has the potential to put them on steroids.
Web2 systems struggle with valuing different contributions from nodes differently. If I use Google religiously if I leave reviews of every restaurant I visit, if I use Waze (Google-owned) to meticulously report every traffic incidence and pothole, my value to the Google ecosystem is far higher than your Grandpa — who uses google once a year to do some Christmas shopping.
Yet, and this is the completely backward thing about Web2 network effects — both your Grandpa and the power-user described both get the same reward from the network, free access to Google products. This is the same reward every node receives, because, from Google’s point of view, every node is equal.
Web3 unlocks the ability to treat nodes individually, this is because DAOs can decide through decentralised, on-chain mechanisms, what behaviour is desirable for a node, and choose to reward the node proportional to the extent of that good behaviour. One way this is achieved is through ownership as a reward…