Original author: David Hoffman, founder of Bankless

Compilation of the original text: Babbitt

If you've followed crypto Twitter over the holidays, you've probably noticed how 2021 ended in perfect crypto fashion, with heated debates.

cause

cause

It all started when Jack Dorsey retweeted a meme about how Web3 pumped all of its value into the mouths of Silicon Valley VCs, leaving only a few drops for retail investors.

I've seen this sentiment elsewhere, so it's not just Jack's problem. To some, "Web3" is a marketing term that VCs are using to make short-term bets. They invest in hype - not substance - and then take advantage of the hype and turn around and sell it to retail investors who don't have access to Web3 investments.

There is some truth to this. (Because) the hype around Web3 matters.

A16z even sponsored a public opinion survey to gauge people's opinion of"Web3"opinion of the word.

And it turns out: People love it.

So, are VCs taking advantage of this to bring retail investors into seed rounds early? Will the future of Web3 be forever denied because of this?

Or something completely different will happen?

Below, let us analyze it.

transfer"Overton Window"s position

Uniswap

On September 16, 2020, Uniswap minted UNI tokens and airdropped 60% of the supply to the community (via a combination of retroactive airdrops and community treasury). For reference, the retrospective airdrop involved over 250,000 unique addresses on Ethereum.

Uniswap kicked off the retroactive airdrop movement, and hundreds of retroactive airdrops have occurred since then, distributing billions of dollars to hundreds of thousands of unique individuals who have interacted in some capacity with certain crypto apps .

Uniswap raised $11 million in its Series A seed round, led by a16z, with participation from other venture capital firms.

Ask yourself: Does the Uniswap airdrop increase or decrease the value of these VCs’ seed investments in Uniswap? I think adding distribution and significant retail ownership on Uniswap adds orders of magnitude value to VCs' investments.

Value comes from aligned incentives, and the Uniswap case illustrates how it makes economic sense for VCs to participate and allocate capital to retail investors. The Uniswap airdrop gave free capital to 250,000 unique Ethereum addresses, and also provided a liquidity event for early-stage venture capital firms.

However, not all Web3 investments have the same good results as Uniswap. But there are also better ones.

ENS

Ethereum Naming Service airdropped 50% of the total ENS supply to its users, with the other 50% allocated to the project's approximately 500 early contributors and ecosystem participants.

(You know) ENS has never raised a dime from VCs. If any funds want to acquire ENS, they will have to buy it from ENS users.

Coinbase

Web3 shifts the Overton window of capital allocation so well that it affects traditional stock markets.

Note: The Overton Window is a theory of the range of policies that are politically acceptable to most people over time. The Overton Window is named after its discoverer, Joseph Overton. Overton's earliest thought was that the political viability of a policy depends primarily on whether it falls within that range, not on the personal preferences of politicians. Overton argues that this window constitutes the approximate range of policies that politicians can pursue without going overboard and taking public opinion into account.

When Coinbase listed its COIN directly to the public market, it airdropped 100 shares to each of its 1,700 employees. With COIN opening at $250 per share, that's $25,000 for every Coinbase employee"Gift"。

And when was the last time a traditional company gave away equity to its employees? This is the culture that cryptocurrencies are exporting to the rest of the world.

Web3: a work in progress

The above examples are perhaps some of the best that Web3 has to offer. There are plenty of other examples that are not as good, and even more that are not good for retail investors. Of course, many others don't even consider retail investors at all.

However, we have to remember what the pattern was before Web3.

Enter"Enter". It was true for Bitcoin in 2010, it was true for Ethereum in 2015, and it is still very true of many of the Web3 platforms being built today.

Before Crypto, retail investors had to wait for companies like Twitter to go public on Nasdaq or the NYSE. Retail investors can then, through their brokerage firms, buy stock in these companies from the venture capital funds that lead the Series A, B, C, D, E... of the companies that are now public.

Crypto is orders of magnitude better than what came before, and the fact that Jack complains that retail investors are not fully incorporated into Web3 platforms is completely ignoring where we came from, and where we are going.

follow incentives

A follow-up tweet from Jack talks about how VC incentives will corrupt Web3.

"You don't own "web3". VCs and their LPs are. it will never escape their incentive"。

All of the largest airdrops that have occurred have rewarded users disproportionately in the cap table. I believe Jack doesn't understand the alignment between venture capital and retail investors that Web3 brings.

A Web3 platform will only succeed if it puts ownership in the hands of the community. The Web3 platform relies on community ownership. Without community ownership and participation, it's not Web3 at all.

If you believe what I said above, getting retail investors in large numbers via airdrops or other methods is economically something VCs need to think about. Web3 platforms that give ownership will be more successful than platforms that don't. Therefore, venture capital firms need to consider including retail investors when making investments.

The problem is not the motivation of the VCs, Jack is just stuck in the Web2 paradigm.

how"how"Continue to develop need to wait and see.

Also, I couldn't help but make two versions of his meme ps, which I think more accurately reflects reality.

Follow Incentives Part 2

What is Jack's motivation? Why is he mourning Web3 so loudly?

It's no secret that the only thing in cryptocurrency that Jack cares about is Bitcoin. He routinely denigrates any cryptocurrency that isn't Bitcoin, and now it's Web3's turn, I think.

I think Jack has a problem with Web3 because he, like many Bitcoin enthusiasts, thinks that the only thing that is truly decentralized is Bitcoin and everything else is decentralized theater. He tries to present this false, distorted version by exaggerating the flaws of Web3 and ignoring its strengths.

He's trying to bring this decadent version of Web3 to life so that he can dance on its grave.

I see Jack both denying the reality of Web3 and projecting his Web2 thinking onto the industry as a whole. Sadly, anytime there is a fundamental anti-crypto sentiment in the world, a leader like Jack can whip up enough invective to legitimize criticism.

Impact of U.S. Accredited Investor Regulations

Jack Dorsey didn't mention the dreaded accredited investor regulations when he criticized Web3, and that speaks volumes.

That's not to say that Web3 startups want to take money from venture capital firms. They are forced because the SEC does not allow non-accredited investors to invest in private securities. This is why it is difficult to find a way to include retail investors, even though Web3 platforms would very much like to do so.

Web3 should be owned and operated by its users. It is the SEC that prevents this reality from manifesting, not the VCs. Jack doesn't mention this anywhere.

I think that's evidence of Jack's bias against Web3. Jack is spreading misinformation and false information to create a narrative that answers his cognitive bias of being a Bitcoin maximalist.

¯\_(ツ)_/¯

- David

PS Don't forget the starting point of the Web3 movement: