Written on February 9, 2022.
Tags: organization, platfoms, systems, decentralized
Table of contents
In previous post, I tried to make the point that platforms provide a structure to organize interconnected complex systems. I had then in mind the traditional ‘web2.0’ platforms. Web2.0 is dominated by platforms – user-created content or users being the product but they are on one-side…
Will ‘web3’ provide a substrate to build a new generation of platforms, less integrated and more modular? Let’s explore this idea.
Platform governance
In [Platform Ecosystems, Aligning Architecture, Governance and Strategy, Amrit Tiwana, p. 117], the author explores how platform governance which he defines as – rephrased by myself:
- ‘decision right partitioning’ between the participants (platform owner, producers, consumers);
- the mechanisms by which the platform owner exerce ‘control’ on the participants;
- the decisions regarding the pricing and how the proceeds will be distributed; decides how an ecosystem will be orchestrated.
Without entering into too much details, each dimension as it own objective(s), tradeoffs and a gradation of mechanisms – the book is great, you should read it.
Why does this matter? Because web3 allows us to envision a world where these can be ‘modularized’ as in made: ‘specifiable’, ‘verifiable’, and ‘predictable’. And this is what enables a wave of innovative disruption (at least according to Christensen).
What to expect?
More platforms, more modularization, more innovation
Platforms have demonstrated to be an effective way of organizing the world in clearly recognizing different roles in a transaction: the producer, the consumer and the intermediary and defining mechanisms to balance their respective incentives in order to make these transactions happen. This will not go away.
What might change – and that what I’m exploring here, is HOW it will be done and possibly WHO will do that. Web3 offers a couple of selling points that I believe will provide enough opportunities to affect how things are.
Here are the benefits what I think web3 can bring.
Availability of data and code
These two are fundational to the opensource:
- Persistence and immutability as a way to future proof investment – what is there now will remain there forever.
- Code can be forked and new contract deployed.
Combined together they offer a mechanism to take opportunities that nobody else want or fork an initiative and rally supporters to address irreconcilable divergences.
A permission-less platform to innovate
The compute and storage is provided by the chain. Better than that’s mechanisms to fund its growth are backed in the design - or will have to be :)
The chain IS A PLATFORM: users on one side, apps on the other. And it is one with no gatekeepers to ‘slow innovation’. Granted we have to say on its ability for the users and the apps to ‘transact’ but that’s the topic of the second part of this post. Patience!
Everything is code
More than code, the execution can be monetized and used to build incentive and decision mechanisms.
Are we there yet?
There are numerous attempts as DEX (Decentralized EXchanges) or DAOs (Decentralized Autonomous Organizations), but overall not quite. This is a vision in formation.
What needs to be addressed? I’m sure the list is actually much longer but here is mine:
Scalability
This is the most obvious problem chains like Ethereum are facing today. Current plans go in the ~10k tps. Sure things can be done with this, and maybe we don’t need everything to be ‘on-chain’ yet but that would be at the cost of the modularisation – what doesn’t exist on-chain will not be subject to the mechanisms implemented on-chain. As a reference point, Cloudflare served over 25M HTTP requests per second on 2021 Q2.
Front-running
Front-running is a major problem that has to be solved to. Having someone that can preempt any of your transactions just because they have the ability to make some money out of it and share it with the miners is a huge obstacle in getting users to transact repeatedly with the platform - building ‘trust’. Note that some solutions can be built on-top of what exists today e.g. https://hackingdistributed.com/2017/08/28/submarine-sends/.
‘Code is law’
If the source of innovation – and economical gain, comes from the modularity offered by being able to specify complex governance mechanisms (decision, control, pricing) with CODE ONLY: ‘code is law’. This is what defines the permitted behaviors of the system – and its participants. Let’s pretend signing an EULA before calling a method of contract is not a desirable option.
So now on the other side: Code contains bugs, many bugs! coralogix reports 70 bugs per 1000LOC on average. Smart contracts are no different as headlines of millions of dollars that vanished remind everyone on a regular basis.
IANAL but the case for the misuse of a defective program which is presented as the ‘law’ seems delicate.
Solution for this? More tooling, more TESTS!, more patterns (to upgrade, to control the blast radius, to insure…), languages designed to avoid mistakes (a la Golang versus C) – see The Ethernaut by OpenZepplin it’s pretty fun and gives an opportunity to see how Solidity is not helping the developers.
Sure everything could also be turned into a ‘permissioned’ kingdom guarded by ‘terms and conditions’ and 40+ pages long EULA but that doesn’t seem very ‘web3’.
Mechanisms to limit information disclosure
The Internet already taught us that when something has been published once it is there forever but with web{1.0,2.0} at least there is someone to ask to remove things – this might work or not, but you have someone to talk to.
Blocks on the chain will persist forever. You might want to control what you write there, have the tools to choose your audience.
‘Apeing’
Extreme financialization and speculation force most new projects in the ‘trough of disillusionment’ within a couple of days after issuing governance tokens – the jury is still out on which projects are pure scam and which are honest experimentations that went out of control or got looted. Evolutionary economics at work?
Do governance tokens need to be transferrable and have a direct monetary value? Couple of EIPs on non-tradable tokens: EIP-1238: Non-transferrable Non-Fungible Tokens (NTT) EIP-4671: Badge Standard EIP-1261: Membership Verification Token
Ergonomy
Well, it kind of sucks! Even by web1.0 standards :)
I thought that passwords were finally on they way out and now have to manage keys that can litteraly bankrupt and impersonate me with browser plugins that want to the permission to modify the pages I’m visiting!??! Maman au secours !
Not to mention fees, transaction congestion, and bugs…
Is this all dead?
“A vaincre sans péril, on triomphe sans gloire.” (In conquering without danger we triumph without glory). ― Pierre Corneille, Le Cid
Nah, but there is to do. Potential upsides too, and no gatekeepers: things will happen.
This post has more pros&cons.
DISRUPTIONS COMING - but maybe not tomorrow!
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