Why is blockchain the core vehicle to carry the organizational evolution and benefit distribution of Web 3.0 applications?

The organizational form of Web3.0 projects will change, and the distribution of benefits is closely related to the organizational form, is there any tool that can support the new organizational form architecture of Web3.0?

This article is the second in the Web 3.0 Explorer series, the first of which was: “A Compendium of Web 3.0 Concepts”. This article will also continue to explore the ideas from the previous article. Due to the author’s limited level and the fact that the industry is still in the enlightenment stage of development, many parts of this article are only mentioned briefly and not in depth.

Let’s briefly review the core ideas of the previous article.

Web 3.0 is a set of open protocol clusters. Based on open protocols, it can stimulate the powerful innovation of all parties.

The core problem that Web3.0 solves is the distribution of the benefits of the platform. Web3.0 will still have (big) platforms, but they will be jointly owned by the community.

Why is blockchain the core vehicle to carry the organizational evolution and benefit distribution of Web 3.0 applications?

Web 2.0 platforms are owned by companies and Web 3.0 platforms are owned by communities.

A refinement of this philosophy is illustrated below.

币世界-区块链为什么是承载 Web3.0 应用组织演化和利益分配的核心载体?Web2.0 Platform Illustration

币世界-区块链为什么是承载 Web3.0 应用组织演化和利益分配的核心载体?Web3.0 Platform Illustration

Compared to the Web 2.0 platform, the core part of the Web 3.0 platform has some parties involved as follows.

Community Validators/Nodes: maintainers of the platform network, runners of the underlying blockchain nodes, validators. Used to provide service security.

Community Contributors: Includes community developers, advocates, etc. Direct contributors to the project.

All other value contributors: Includes but not limited to platform content contributors. Value contributors also cover end-consumers.

In other words, the Web3.0 platform is no longer owned by a single company, as opposed to the Web2.0 platform, which has an organizational evolution.

Evolution of Organization
For platforms, the organizational evolution is comprehensive: there is both an internal organizational evolution and an organizational evolution in relation to external relationships. The terms we mention below: Project, Platform, Application, Web3.0 App, all of them, unless otherwise specified, mean the same thing by default.

Let’s start with the evolution of the organization within the project.

The project will maintain a lean team size, containing only the most necessary components.

The core management team

Core R&D staff

Core developer community operations staff

Core marketing staff

Core design staff

Other staff as necessary

In addition to the core staff mentioned above, all positions can be opened to the community. This means that the community can work together to advance the project. For example.

Since it is open source code, community developers can contribute code, fix bugs, etc. For these developers, there can be bounty support as appropriate.

Community developers can participate in claiming and implementing the whole block of features. The project team can issue issues and give them to the community developers in the form of grants.

Some community KOLs can be established on the periphery of the core team to help run the whole community. There can be some incentives as appropriate.

All the nodes involved in the validator can spontaneously help to promote the project, and the validator itself has incentives, so no additional incentives are needed.

Using this form of joint collaboration with the community can change the traditional corporate approach to R&D and marketing. That is, the corporate format could be impacted.

We have done some analysis of the cost of the project.

Keeping only the core team can greatly reduce human resource costs.

Even not needing a centralized office, or keeping only a very small office, can save costs.

Having active community participation early in the project can gather more people’s needs, make better product design, and reduce design costs.

Strong collaboration with the community can greatly save the cost of marketing and public testing in the early stages of the project.

Strong collaboration with the community and good interaction can improve the efficiency of bug fixing and feature upgrade iterations, and reduce R&D costs.

As long as the product meets or is close to the expected goal, strong community participation will make each user spontaneously spread the word, which will easily form a positive network effect and reduce marketing costs.

These saved costs can be allocated to the real value creators on the platform.

Then speaking of the changing relationship between projects and users.

In Web3.0 platform, users contribute content or data on the platform, creating value to the platform. As for how much this value is, quantitative metrics can be done to assess it (but it is impossible to be completely accurate), and this assessment will generally not be real-time, or pre-defined. The revenue generated by this value will eventually be distributed to users in some form.

Such quantitative metrics and accompanying calculation methods will be clearly and accurately recorded in a completely open form, and executed in a reliable and trustworthy form.

The platform and the users are really integrated into one, the users are happy to create value for the platform, and the platform is clear and reliable to return the revenue to the users.

Then talk about the changing relationship between projects and capitalists.

The traditional route of angel round, seed round, ABCDEFG IPO will no longer be effective in the Web3.0 platform. Generally speaking, the new form of project is enough to achieve up to B round.

The proportion of investors in the project will not be too large. The exact value will vary from project to project.

The percentage of core team shares in the project will not be too large. The specific value will vary from project to project.

The proportion of the project’s benefit distribution will be allocated to the value-creating parties in the platform as much as possible.

In other words, after the platform reaches a stable and mature stage, the primary service target of the platform itself is the value creator of the platform, and no longer the investors and major shareholders in Web2.0. In the end, only the impact investments will survive.

See “Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism”.

Here’s a caveat. The community-owned platform we are talking about here is not about breaking up the team completely and using the community completely to decentralize the project’s operations and maintenance. The share of the founding team does not need to be too large, but the role is still very important. The overall ability of the founding team is still the primary factor in the success of a Web 3.0 project. It plays the role of core propulsion and core decision making in the whole project development process. Completely decentralized on-chain governance is not desirable and extremely inefficient. We cannot jump from one extreme to the other. Human society would not be so complex if it could solve everything with voting.

We can even call this form of organizational governance weakly centralized governance.

We have already mentioned that the organization of Web 3.0 projects (compared to Web 2.0 projects) will change a bit. The distribution of benefits is closely related to the form of organization. Are there any tools that can support this new organizational structure? The new model calls for new solutions.

Blockchain on the scene
Blockchain actually offers two core capabilities.

Fairer and more open participation, i.e. openness in the form of organization.

Assets are contractually settled and reliably circulate without barriers.

These two capabilities are based on the various basic features of blockchain, and since we are talking about a higher level concept here, the basic features will not be elaborated.

In other words, making blockchain as an underlying benefit distribution system, on top of blockchain, can

Support the openness of the organization form.

Let the participating parties trust the allocation method unconditionally and reach consensus on the allocation method.

It can ensure the reliable execution of benefit distribution.

Let’s talk about these three points separately.

Support the openness of the organization
The blockchain itself is open in nature.

Whether it is a PoW consensus protocol or a consensus protocol such as PoS, the underlying design is open, not exclusive.

The open source software development model gives the entire community the opportunity to participate in contributing to the project at low cost.

The open source software development model makes the project content/algorithm open to audit and verification by various agencies.

An open source software development model allows project decisions to be openly scrutinized and participated by all.

Therefore, the Web 3.0 system with blockchain as the infrastructure embraces openness at the genetic level. On top of the blockchain system, an effective new form of open organization adapted to the characteristics of Web 3.0 can be established.

Let the participating parties trust the distribution method unconditionally and reach a consensus on the distribution method
Due to the openness of the protocol (code), the content of the protocol can be unconditionally verified by all parties. The allocation method is part of the overall agreement and is therefore also unconditionally trusted by all parties. The content of the agreement is governed to be changeable, and each change is openly and clearly presented in the agreement. The allocation method will remain stable for a certain period of time and will not change particularly frequently. All parties trust the agreement, and a consensus is reached.

Reliable implementation of benefit distribution can be guaranteed
Once the allocation rules are clearly defined, they will be implemented into the on-chain code. The basic feature of blockchain ensures that the on-chain code is executed safely and securely at each node. If there is a change in the allocation rules, it will also be updated on the chain, each node upgrades the agreement, and the consensus agreement between nodes ensures that the new upgrade is executed safely and securely.

In summary, blockchain is crucial to Web3.0 and is a necessary infrastructure for Web3.0 applications.

It should be noted that blockchain technology itself, may have other uses in other areas, but these are not the subject of this discussion.

The Web3.0 Token System
As discussed earlier, the blockchain is the infrastructure for organizing and distributing the benefits of Web3.0 application platforms, which in fact implies two basic elements.

Account system

Token System

The account is used to distinguish the participating parties, and the Web3.0 App Token is a mapping of traditional options/stocks. As a means of encouraging community participation, each Web3.0 App blockchain can have its own Token, and in particular, obtaining a Web3.0 App Native Token is almost a necessary incentive for verifying node participants.

In an open protocol, it is costly for these node participants to attract other nodes to do verification and provide security services. There must be some mechanism to incentivize them and guarantee a certain amount of profit to keep the open system running smoothly. In this sense, local Token is a must for Web3.0 App.

Similar to traditional sovereign currencies, there are exchange rates between different Web3 App Tokens. By and large, exchange rates can be converted in a stable dollar basis.

Similar to the traditional Web2.0 enterprise payroll plus options, Web3.0 local Token corresponds to options, and accordingly there should be a Stable Coin for the daily operation of the project. This Stable Coin should be the industry’s common USDT, USDC and other stable coins, not the Native Stable Coin issued by the project itself, and the project owner should not issue a Stable Coin that cannot be used universally.

Stable Coin in Web3.0 App projects can only be obtained through one of the following forms.

Investment by investors

Donations from donors


Income from external economic activity of the project

Expenses for Stable Coin in the project include, but are not limited to, the following forms.

Project R&D expenses

Project promotion expenses

Project operating expenses

Project source material supplier expenses

Community project support expenses


Each Web3.0 App should design its own economic system (this sentence is a bit redundant, the actual each Web2.0 App also need to design their own economic system, commonly known as business model. (Generating electricity with love is not sustainable, after all). In other words, the economic system is part of the underlying mechanism of a project. Web3.0 App with blockchain as its infrastructure can design its own economic system more flexibly, and can stimulate more innovation in this field.

However, blockchain is not a panacea either.

Limitations of Blockchain
Blockchain, from the beginning of its birth, has another name – distributed ledger. The so-called ledger is also a book that records information about transactions (economic activities). In that case, is it possible to give a statement that blockchain should only deal with matters related to economic activities.

If you look at the history of blockchain development (since 2008), you will find that almost all effective innovations belong to the economic and financial fields. There are so many attempts to expand blockchain to other fields, but the results are lacking. You can think carefully about whether there is an internal logic behind it at work.

Applying blockchain to other fields will encounter some principle limitations.

One of the limitations: low computational efficiency (energy consumption ratio) of multi-node repetitive computing and extremely high redundancy of multi-node storage
Suppose our blockchain has 100 nodes, compared with the traditional centralized service, each logical computation needs to compute 100 copies, which consumes 100 times more energy (more than) than the centralized service, and if there are more nodes, the energy consumed will be more. The same is true for storage. For a traditional centralized database, with disaster recovery and backup services, 5 copies are counted. For blockchain storage, 100 nodes are 100 copies, which is as much as 20 times more than traditional centralized database storage. If more nodes are involved, the multiplier is even greater.

The second limitation: storage space is not efficient. Due to encryption and the requirement of Proof, blockchain state storage adopts a structure such as MPT, which occupies a large storage space and is not economically efficient.
The third limitation: query efficiency is not high or even very weak. Transactions are stored as a chain in the form of blocks, and the state is stored in the form of MPT structured KV database. Unlike the traditional SQL database, the blockchain storage is weak and inefficient in terms of query capability. The traditional SQL database has done a lot of work for the optimization of structured data storage and query, and has reached a very mature stage after decades of development. New advances are also making a lot of innovations in areas such as distributed scaling, which ensure the simplicity, consistency and efficiency of query while achieving seamless scaling. The RPC interface generally provided by blockchain by default, on the other hand, can only achieve the simplest query functions.
Due to the above several limitations, it is impractical to intend to use blockchain as a distributed database in a general sense.

Analyze it from another perspective. There are various levels of information in this world other than economic matters. Take a cup, for example. Its shape, size, color, weight, whether it is transparent, whether it has a lid, the ratio of the lid to the cup, the capacity of the cup, the material of the cup, whether it is glass, stainless steel, or plastic. Can it withstand high temperatures, and if it is stainless steel, is it 304? How much impurity, how the date of manufacture of the cup, from where it was sent, which courier company sent it, when it was received. What is the printing process on the cup, what words are printed, what color pattern, and who is the designer. What is the material of the rubber gasket between the cup and the lid, and how long is the expiration date. Is it used at home, or in the office, or in the car. Mainly used for drinking water, or coffee, or tea. Whether the cup is good for washing, drinking tea is easy to deposit tea scale. How thermal conductivity of the cup, whether with a thermal pad. Is it one of a set of cups, and if so, is there any difference between his brother cups and it, and if one is broken, is there a replacement measure. After adding hot water, what is the expansion rate of the cup. Not to mention, the molecular kinematic data in the wall of the cup after adding hot water. Blah, blah, blah, blah. Expanded from one thing, the information is endless at all levels.

This information is an inherent property, or intrinsic property, of things. They have nothing to do with economic matters; they are the information of the thing itself. The economy is an extrinsic, or social, property. The economy is a product of society.

Several limitations of blockchain lead to the fact that it cannot be used to store data on these endless inherent properties of things, but should only be used to store data related to economic transactions. This echoes the initial name of distributed ledger.

Web3.0 App System Architecture
If the complete information cannot be stored in the blockchain, then where does it exist? The industry has been exploring a lot in this area as well. The IPFS project, for example, aims at distributed storage; the Arweave project, for example, aims at permanent storage. They can both work with the blockchain, storing the hash value of an external data blob in the blockchain’s account and transaction data-related objects, and then be able to achieve data association and relationship binding. This model is currently adopted by a large number of projects. Below we refer to this type of infrastructure for storing large amounts of data collectively as Distributed Storage (DS).

But this model still has many details to face.

It has to be stable and persistent. Since it is associated with a Hash, the Hash value must be fixed and always valid. The DS projects have high requirements, requiring permanent data, constant Hash values, and no conflicting Hash.

Access efficiency should be high. These DS projects should be able to support the efficiency of data storage and access, and the latency should not be too high.

Access cost should not be too high. The cost of storing and accessing data should not be too high, otherwise it will not be really popular.

Access should be easy. Easy access will enable various projects to dock quickly and establish a DS service ecosystem quickly.

Many projects in the industry are working hard to explore these aspects, and I believe this is a reasonable direction.

This separation of data will bring changes in software architecture. Blockchain storage and on-chain logic processing should only be responsible for economic affairs related business, and other data and business, should be processed under the chain. The reasons are as follows.

Storing data to and getting data from DS is a network operation, which is an asynchronous request. The return time of such requests has a considerable degree of uncertainty and may vary by up to 2 or 3 orders of magnitude with respect to local requests. Therefore, such operations are not suitable to be put on the chain, but should be taken off-chain.

The computation and processing of a large amount of non-economic transaction data, which may take a lot of time, should be executed off-chain.

The results of off-chain processing, if related to economic transactions, should be submitted to the chain for subsequent processing. If it is not related to the economic transaction, it should be accessed directly to the DS.

Thus, there are now two logical processing engines: one on the chain and one off the chain. How these two engines can perfectly collaborate, maintain, and version upgrade is actually quite a big problem. We see that the industry is starting to come up with solutions for this. For example, the Off-Chain Worker (OCW) in Substrate aims to solve this integration and maintenance problem.

In a complete system, load balancing, caching layers, and other components may be required to improve the efficiency and stability of system execution.

In the following, we draw a comparison between the system architecture of Web2.0 App and that of Web3.0 App to help readers understand more clearly.

Why is blockchain the core vehicle to carry the organizational evolution and benefit distribution of Web 3.0 applications?

Web2.0 App architecture with database as the center. The operational flow is as follows.

User accesses the service address. DNS or IP locates to the gateway.

the request passes through the gateway and enters the service logic.

the service logic deals with the database to deposit, retrieve or update data.

The service logic returns the processing results to the gateway.

The gateway returns the results to the user.

In addition, directly based on the raw data from the DB, there can be another set of branching processes, i.e., analysis of big data, mining, AI training, etc.

Why is blockchain the core vehicle to carry the organizational evolution and benefit distribution of Web 3.0 applications?

Web3.0 App system architecture, centered on Blockchain and Distributed Storage. The operational flow is as follows.

Users access the service address. Distributed DNS (e.g. IPNS for IPFS, DNS Gateway for Arweave, etc.) locates the gateway.

The request passes through the gateway and enters the service logic (Off-Chain Worker and Indexing Service).

The service logic deals with the DS to deposit, retrieve or update data. Dealing with the blockchain when necessary, sending transactions, updating status, getting results.

The service logic returns the processing results to the gateway.

gateway returns results to the user.

In addition, directly based on the raw data stored in distributed storage, there can be another set of branching processes, i.e., analysis of big data, mining, AI training, etc. In the Web 3.0 scenario, such analysis can be done by third-party big data AI services for more professional processing and more professional analysis.

Here, we explicitly give a system architecture of Web3.0 App, which can be found to have a certain degree of similarity with the system architecture of Web2.0 App. It is not excluded that Web3.0 App can also have other architectural patterns and computational paradigms.

For example, Arweave proposes the Turing paper tape computing paradigm, see: “Blockchain Storage ARWEAVE: Paper Tape for Turing Machines, Turing Paper Tape, a New Paradigm for Trusted Computing” and “The Evolution of Consensus, a Journey of Blockchain App Paradigm Evolution”.

Competition between Web3.0 and Web2.0
Web3.0, as an emerging thing, is bound to compete with the existing solid Web2.0 ecosystem. The pace of development will vary from industry to industry. Here is a brief analysis of how Web3.0 competes with Web2.0.

The competition between Web3.0 and Web2.0 starts with consistency or similarity in user experience.
The slogans of distributed, decentralized, more secure, privacy protection and openness alone are not enough to impress the mass consumers. In the choice between security, privacy and user experience, the majority of users will choose user experience first (figure of convenience). Therefore, Web3.0 applications should also make great efforts in user experience, and try to keep the same user habits as Web2.0 applications, so as to smoothly transition to a new and better integrated experience. But we should not give up the most basic requirement of Web3.0 – security – for the sake of user experience. Overall, it is a higher demand for application development.

Having reached a similar competitive starting point, Web3.0 has the following competitive advantages over Web2.0 platforms.

The traditional business models of Web2.0, advertising, membership, games, etc., can be used in Web3.0, and there may be a slight evolution in the form. Web3.0 will not lag behind Web2.0 in these respects.

The clear rewards for value contributors in the Web3.0 platform will motivate users to use the new platform rather than the old one.

More secure user behavior and better privacy protection under the new platform will encourage users to feel more comfortable using the new platform.

More user usage means more data deposits, which will eventually create the ultimate unfair competitive advantage of data. The article “Thin Heads and Fat Tails: Understanding the Crypto Reinvention of Capitalism” argues that the ultimate unfair competitive advantage is the accumulation of data from open platforms and the big data mining and AI training on top of them as time progresses. Web 2.0 companies will not be able to compete with the traditional closed Web 2.0 companies.

Web3.0 has the characteristics of both privacy protection and open access at the data level. As an open platform for raw data, it can inspire endless innovations on top of it: data processing, big data analysis, AI training, etc., etc. And some of the revenue from these innovations can be fed back to the data providers – the users. Eventually, a large, richly layered and solid Web 3.0 open data ecosystem will be formed.

However, in the initial stage, there will be some problems that need to be studied, such as

Open data is taken and used by closed property rights companies, and no longer open in the reverse direction. Resulting in a period of time in which the quality of the products of the large enterprises remains ahead of the Web3.0 App.

The closed camp will not sit still, and the open product form will not prompt the closed property companies to allocate some resources to join the open camp. What does this mean for the open camp and the closed camp respectively.

In what areas will Web 3.0 be the first to challenge Web 2.0 platforms?

What areas will Web3.0 eventually cover, and which areas are not suitable for Web3.0 to survive?

The rent-seeking problem of Web3.0 platform
If the Web3.0 platform is indeed very competitive, as we have analyzed. Then it is also possible to develop into a monopoly platform (in a certain field) eventually. Theoretically, an organization in a monopoly position must have the incentive to seek rent. Can Web 3.0 platforms, then, meet this inherent challenge?

The forkability and orthodoxy requirements of blockchains help address this issue.

For more details, see “The essence of crypto protocols is no longer “decentralization”, but forkability of blockchain” and “Vitalik: Orthodoxy is the scarcest resource of crypto ecosystem”. I will not repeat this article.

In the previous article, we gave the system architecture of Web3.0 App, but now we have one more requirement: the openness of DS component in combination with the forkability of blockchain. That is, this data storage component should not be tied to a unique blockchain, but should allow all forks of this blockchain to have 100% functional access. This requirement should be present as a pre-built policy from the beginning of the Web 3.0 system design. This policy, in itself, is a deterrent to limit the incentive for the governing bodies of Web3.0 systems to do evil.

Exploration in this area should yield some very interesting results.

This paper has discussed that blockchain is an essential part of Web3.0 applications as a core vehicle for carrying the organizational evolution and benefit distribution of Web3.0 applications, and that Web3.0 needs blockchain.

This paper also briefly discusses the Web3.0 App system architecture, the competitive advantage of Web3.0, and the rent-seeking problem of Web3.0 platform.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-is-blockchain-the-core-vehicle-to-carry-the-organizational-evolution-and-benefit-distribution-of-web-3-0-applications/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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