Originally published on The Voyage newsletter on March 29, 2022.
I began drafting this piece a few weeks ago. It’s amazing how fast things move in the Web3 space. There are some changes over this short-time worth noting that I won’t be going into details about.
Recently OpenSea, the largest NFT marketplace, removed users from Iran and other U.S. Sanctioned countries from its platform. The artists and collectors from these nations were left scrambling to find new places to post their works. I don’t know if this has been rectified in any way, the most recent articles I’m finding on this are from three weeks ago. But it’s important to understand where Web3 companies are headquartered. They still need to comply with local laws and since there is a financial aspect to Web3, the laws will be more stringent.
The NFT community has also rallied to support The Ukraine in the current war both through sending cryptocurrencies and purchasing NFTs from Ukrainian artists and also through sending cryptocurrencies.
Lastly, one of the biggest power moves took place a couple week in the Web3 space. Yuga Labs, the creators of Bored Ape Yacht Club, purchased IP rights to CryptoPunks and a few other NFT rights from Larva Labs. This makes Yuga Labs the holders of the IP for the two highest valued NFT projects. On top of that, they launched their own cryptocurrency called ApeCoin.
Each of these moments are a huge splash in Web3 and give us some insight into the future. That said, let’s get into it.
Composability — How Web3 Advances the Promise of an Open Internet
Composability is an open decentralized model of creation that is flourishing in Web3. Instead of protecting works through IP laws, the value of work increases as more people build on top of it. In a sense, the stronger the meme, the more valuable the original becomes.
This concept is discussed at length in an episode of the Tim Ferriss Show featuring Chris Dixon and Naval Ravikant.
To truly understand this, it’s important to understand that the backbone of the current internet is open source. Software like the Linux operating system are used by 90% of data servers and tons of libraries used by developers and tech companies everyday are freely available. It’s common for companies to base their full product off of open source software, modify it, put it behind a wall, and file for patents to protect their IP. Not to discount all the work these companies do and the value they provide, but this is the model that has made sense in the current structure of the internet.
In Web3 that code continues to live on as open source because Web3 has a financial infrastructure with tokens (fungible and non-fungible) and coins.
Open code of all major software means apps and websites will not be protected through Intellectual Property Laws. Instead the value of the software or project is maintained by the community of stakeholders. Not only that, Web3 users can be onboarded instantaneously from one platform to another because they connect through public wallets.
An organization can easily have an account set up and waiting for you to sign in. They can include incentives in the account just waiting for you, whether or not you choose to use it. However, this can be done both innocuously and maliciously. I’ll share more on that later in this newsletter.
Since code is generally open in Web3, new software can plug directly into existing software instead of having access to only limited APIs that companies decide to expose. Developers can freely fork the code and build a new platform with their own modifications.
This ability to remix and reuse software without intellectual property protections opens up a whole new type of ecosystem that’s hyper-innovative. Blockchain tokens allow ownership to be distributed amongst the users and developers instead of limiting that value ownership to tech companies.
Think of the Marvel Cinematic Universe. Imagine if anyone could add a storyline to Iron Man or develop a whole cast of characters that are plugged into that universe without violating intellectual property agreements. And instead of a central company controlling what gets created, the community votes on it.
Web3 is Evolving Fast. Here are Some Podcasts to Stay Plugged In.
Podcasts are a great way to stay plugged in to what’s happening in Web3.
Kevin Rose, a form tech entrepreneur and successful tech Venture Capitalist has jumped with full zeal into Web3. He has two podcasts worth giving a listen — Proof which focuses on artists and NFT projects in the space and Modern Finance, which as you guessed, focuses on the financial aspect of Web3.
Unchained is another great podcast that’s been around for a few years. It’s hosted by Laura Shin, a journalist who claims to be the first mainstream report to cover crypto and blockchain full-time.
Seed Club DAO Podcast is a wonderful way to learn about the community building and community leadership side of Web3. Since the value of a Web3 project is essentially upheld by the faith of the community, it’s not hard to understand why this aspect is essential to the whole space.
Vampire Attack — The Freedom to Steal Users in Web3
As I mentioned earlier, there are malicious activities that can also happen with this new open internet structure. One technique new Web3 companies are using has become known as a vampire attack. To be fair, these are not necessarily harmful to users, but they are method used to take users from an existing user base of another platform.
Essentially, when launching a new platform, an organization will look at the most engaged users on their competitors platform and establish accounts for these users and include free incentives usually in form of tokens. Recently, a new NFT marketplace called LooksRare did exactly this to attract the top users from OpenSea to their platform.
This tactic has been around for a while and was commonly used by blockchain protocols to attract users. They would fork the code for Bitcoin or Ethereum, modify the code, and send free tokens to those existing wallets eliminating a critical friction point and incentivizing participation.