More than ever, we are grace of platform -based giants like Google and Amazon that act as digital landlords. We have become cloud-serfs, giving our data and producing trillion in value for algorithms we will never own.
Over 80% of the Netflix display is dictated by its recommendation algorithm, and Amazon is far from a neutral marketplace’s matching engine gives preference to Amazon’s own products, and third-party sellers pay up to 50% of their revenue in fees for the privilege of competing for Amazon’s customers.
The promise of web3 was a world beyond these digital landlords.
Recovery of the Web3 thesis
Web3, as defined by Ethereum co-founder Gavin Wood in 2014, was a “Post-Snow Web”-An antidote against centralized control built on peer-to-peer confidence.
Gavin’s architectural vision has been twisted.
Ethereum created “more individual millionaires than any other project” and together with the rest of the ICOS wave, the focus changed from technological principles to financial gains.
Billions of dollars were channeled into speculative ICOs, of which up to 90% suffered from major losses or were discontinued within a year. This culminated in the bull market in 2021, when the Crypto Market Cap card touched at $ 3 trillion, and “Web3” was diluted during a captivating marketing period to attract investors.
The mission of building a confidence-free, peer-to-peer Internet would for some time be buried under the layer of hype.
Mediatricians no more
The power of centralized platforms stems from their role as a trusted intermediary.
You trust Amazon to deal with payments and arbitration conflicts with the sellers; You trust Google to Veterinarian, Rank and Current Information. This trust-as-a-service model creates a golden cage: the intermediary owns the rules, the data and a significant cut of the exchanged value.
Early web3 tried to solve this problem with on-chain transactions where any interaction is a public, permanent record. But this is like asking a global trading system to drive a single, overloaded highway. Trade in the real world requires an infrastructure that can match its speed and complexity-not everything must be an on-chain transaction.
State channels present a superior infrastructure
Think of a state channel as a high speed, private course between two parties bypassing the overloaded blockchain. Thousands of interactions – value transfers, data permits and contract updates – can be done immediately and free of charge, with each step cryptographically signed.
The primary barrier of peer-to-peer digital trade has been the risk of a party not meeting their side of an agreement. State Channel (ERC-7824) Design eliminates this risk without sacrificing efficiency. Before trading, parties enter into funds for a smart contract on-chain. This acts as a deposit. If a party goes away, their committed funds on-chain will ensure that the other party is being done whole. By settling profits and losses in almost real time, the system removes the need for a trusted central communicator.
- For Trade: Instead of renting space on Amazon’s platform and paying up to 50% in fees, a buyer opens and sells a direct channel that is managed by an impartial smart contract.
- For data: Instead of handing over your life story to Google, opening a channel with an app that provides temporary, paid access to your data and recalled them as desired.
This combination of on-chain security and efficiency outside the chain enables a new creation: the autonomous business. This is a system where business logic is encoded on smart contracts, is performed transparently and works globally without the need for a traditional business structure.
Bitcoin removed the need to rely on the government’s cash printing. Ethereum removed the need to trust people to enforce contracts. Now is the time to remove the need for people to blindly trust platforms.
