Web 3.0 era investment logic

Web 3.0 era investment logic

12:56 AM

Web 3.0 era investment logic


Fabric Ventures is a well-known digital cryptocurrency fund in the United States. It is a fund focused on the Web 3.0 ecosystem. Its investment goal is to transform the Internet from a centralized to people-centered decentralized computing.



Throughout Venture Ventures' portfolio, we can see a large number of Web 3.0 projects such as Polkadot, Blockstack, Ocean Protocol, Decentraland, Orchid Orchid Agreement, Raiden Lightning Network, and Staked.US. And the fund is also keen to organize Web 3.0 related activities, they held an an offline event called CogX in London in June this year, which covers almost all Web3.0 ecological projects.

Fabric Ventures can be understood as one of the investment kings of the Web 3.0 era, but how does the fund understand the paradigm shift logic of Web 3.0, and how do they pick the blockchain team? The block rhythm BlockBeats Translator 0x4 brings you an exclusive article translation.

Intergenerational platform transfer

Recap history

We are at the beginning of a paradigm shift in software architecture: the wave of decentralized data networks is on the rise. In the past few years, we have witnessed the significance of this revolutionary movement beyond the scope of Bitcoin and other cryptocurrencies, and even beyond the open-source software and blockchain. From a broader perspective, this is a victory based on an open-standard peer-to-peer data network that reflects the power of appropriately tuned economic incentives that begin to take advantage of everyone's pockets, desktops, cars, living rooms, and wrists. Personal data center. The popularity of high-speed wireless broadband access, rapid and mature localization software and machine learning technology have made rapid progress in recent times, turning this paradigm into a thriving technology popularization campaign.



Over the past few decades, advances in technology architecture has enabled the commercialization of computer operating systems and software packages, which are accessible globally through data centers and cloud infrastructures for commercialized operating systems and software packages... In this new wave of technology, data centers are being extended to the most marginal areas of the network and the data itself are being open-sourced, and commercialization is also being used in reusable and trusted block building. Distributed users and machines interact with data through the underlying peer-to-peer network. These peer-to-peer data networks are themselves a the structure that allows third parties to authenticate and manage information input while providing their users with data in an available, secure, and flexible manner.

Although Google Inc. quietly discarded the motto of not doing evil, at Fabric Investment Fund we are more interested in building new software architecture, its motto will become impossible to do evil


Supreme individual rights

By providing users with their data, the decentralized data network wave is deriving the huge data silos guarded by technology giants, which were the lifeblood of Internet companies, but now they are becoming unbearable for tech giants. burden. Equifax's data breach led to the disclosure of 145 million American privacy, and according to Facebook disclosure, Cambridge Analytica used personal data on 87 million accounts, and recently 50 million login accounts were leaked. These endless leaks have made users increasingly tired of storing personal data in the centralized data storage architecture of these technology giants. Although Google Inc. quietly discarded the motto of not doing evil, we are more interested in building a new software architecture in the Fabric Investment Fund, its motto will become impossible to do evil: in this architecture, all local users can Controlling your data, the supremacy of individual rights can rise. (* Block rhythm BlockBeats Note: Blockstack's slogan is also Can't be evil.)

Yuval Harari recently mentioned in a TED speech that totalitarianism is not an evil ugly power defined in the retrospective review. On the contrary, totalitarianism will package itself as a solution to the present. The simple solution to complex problems seems quite tempting, and resisting such a solution seems stupid. Harari believes that within a specific business or government organization, a centralized data storage architecture may induce these organizations to master the data, and based on this technology, the targeted development and use of personal data, the degree of utilization Will reach the level that has not been imagined so far. We need organizational structures, data architectures, incentives, and technologies to eliminate this danger. In addition to eliminating the possibility of third-party evils, building applications based on distributed data networks will improve the intimate trust between people and improve computer services through increasingly sophisticated data encapsulation facilities. (* Block Rhythm BlockBeats Note: Yuval Harari is the author of A Brief History of Humanity, A Brief History of the Future)

Turn to people-oriented computing services

Although building trust in computer systems has become a consensus between the individual and the technology community, it turns out that when humans interact with hardware devices and software applications, it is difficult to fully trust them. As the potential of various types of software continues to expand, they begin to serve us in an increasingly intimate and personalized way and the need to build trust between people and software is increasing. When a person shares personal genetic and physiological information, relying on algorithms to make trade-offs when humans are at risk, and even by filtering the information flow that forms the basis of our daily decision-making, the establishment of a trust relationship between people and programs become Mandatory.



In "Sapiens", Yuval Harari also explores the idea that, on the historical scale, human beings can conceptualize abstraction and share common beliefs through language, making strangers unfamiliar. People can cooperate and the community can rise. Nowadays technology can abstract this kind of trust, and with the correct incentives being coded at the protocol level, this mechanism allows people to cooperate and trade on a global scale.

In the upcoming wave of decentralized data networks, we will a shift from zero-sum game capitalism to the composite interest of collaborative communities. Perhaps there is a good way to imagine this technological feat of coordination under minimal central control, which is the development of modern cities. Decentralized autonomous organizations based on blockchain technology can achieve a balance between flexibility and efficiency, coordination and incentives in a range of new areas. Replacing the interests of the owners with the common interests of the network, and aligning the incentives between network builders, service providers, and users: top-down command and control power structures (the structure is highly corrupt) ) Replaced with an emergency structure.

Looking back, looking to the future, see how the latest platform examples are converted

To understand where value may arise, and where we are likely to focus our efforts as investors and company builders, it is necessary to look at how technology can be subverted in the past few decades.

Let us recall the great prosperity that the United States created in the 1950s and 1960s after World War II. At the time, as American companies became multinational corporations, the business models of these technology companies were mainly to make profits on the production of expensive proprietary computer hardware. The result of this business model is that computers are held in the hands of a small number of users, including governments, businesses, and wealthy individuals. As the cost of microprocessor production plummets and the US economy continues to improve, a new computing architecture shifts the power of the industry from proprietary hardware systems to chipmakers and software companies. When Tom Watson, IBM's then-president, couldn't imagine a computer other than the practitioners, Bill Gates of Microsoft knew that every family would own it in the future. Your personal computer.

In the 1970s and 1980s, with the popularity of personal computers, technology companies set off a new wave – shifting their business model of selling cheap computer hardware with licensed operating systems. With the rise of Microsoft and its unremitting efforts to win developers, consumers naturally, choose the platform with the most compatible applications, Microsoft's Windows operating system, which begins to spread among hardware vendors, and it will almost All packages are unified under one system. Until 2000, Microsoft's market share exceeded 90% of all PCs sold, most of which came from the operating software and application software layers.

However, despite Microsoft's dominance of the user's desktop, it has never protected servers in the wiring closet and data center—these are still the most successful Unix workstation companies in the The 1980s (Sun, Silicon Graphics, and IBM). Controlled. In the early 1990s, Linus Torvalds attempted to break this expensive hegemony with a cheaper, more open alternative, Linux, an open-source version of the Unix operating system for software servers. The system combines common hardware with the Linux operating system, Apache web server, MySQL and PHP to create a new wave of the technology business. By 2012, Microsoft's share of the computer market had fallen to 20%, and by 2017, Linux-based Android systems had an 85% share of the mobile computing market.

Over time, cheap software has become more popular and networks are available everywhere. This social reality has driven technology companies to shift their business models to provide free software and networks to convert the user data they collect into currency. Today's technology giants have absorbed open-source software and combined it with a large number of monopolistic user data silos to create a competitive technology moat to defend their trillions of dollars in company market capitalization. However, as today's technology companies face increasing data usage issues, users are beginning to scrutinize ownership of their data, and the government is pushing for broad data protection regulations (such as GDPR).

With the democratization of hardware, operating systems, software, and networks, the new paradigm shift we are observing will open up access to data within the network. With the disintegration of existing monopolistic data silos, we will observe that the data itself and access to the data will be packaged into commodities for sale. But such a paradigm shift still leaves people with the question: Once the data monopoly is weakened or lost, where will the business model of existing technology companies turn?

To answer this question, we reviewed the history of open-source software development and the associated engine and profitability methods. In the beginning, the open-source software movement emerged between privacy enthusiasts, hackers, and government entities that realized that the public software they used could not be commercialized. The movement relies heavily on a moral belief that software should be open and accessible and accessible to all.

Developers realize that the open-source software movement fundamentally improves the software development process in addition to making the software freely available. Different online communities have been built around open source projects, and their reputation has accumulated in these communities, creating exponential growth among technology contributors, software maintainers, and users. The advent of open-source software has enabled people to distribute software around the world, and developers have begun to form companies that add a very thin monetization layer to a vast distribution network. In 1993, Bob Young founded ACC, which sells Linux and Unix accessories, which later became Red Hat. Around the same time, Monty Widenius (Fabric Ventures consultant & founder of OpenOcean) began working on MySQL in 1994, working to consolidate MySQL with the same open-source Linux, Apache, and Python to form LAMP, making it in 2008. It was the most popular database in the world before it was acquired by Sun Microsystems for $1 billion.

Over the past 20 years, as large technology companies have become aware of the viability and benefits of open source, the world has become dependent on open-source software. React and React-native JavaScript development tools are primarily maintained by Facebook, and Google has made countless contributions to Android, Kubernetes, and Go. Less than 20 years ago, Microsoft was considered a major opponent of open-source software. Today, Microsoft has transformed into a company that supports the most open-source developers in 2017, and recently it has acquired Github for $7.5 billion. These tech giants have chosen open-source software, basically stopping the charging of software, and instead of monetizing user data to build their entire business path: creating numbers by using software without ownership and data not belonging to them. The market value of trillions of dollars.

Unfortunately, in this third wave of open-source software development, developers have not only lost the moral ambitions and romantic motives that drive the first wave but often do not have the economic benefits that have driven the second wave or Reputation return.

With Nakamoto reporting the Bitcoin white paper in 2008, we entered the fourth era of open-source software development: by addressing the double-spending problem and creating digital scarcity in distributed systems, Nakamoto is a peer-to-peer network. The integrated digital value transfer layer laid the foundation. This breakthrough in basic architecture enables open-source networks to reward and motivate contributors without central authority or sponsors. Unlicensed innovation and a peer-to-peer network on an open platform, coupled with a pass-driven incentive and governance system, have triggered explosive growth in developers and ecosystems around open source projects. The open-source development movement eventually discovered its elusive "business model" - a model that does not necessarily reward a single-centric entity, but rather equitably encourages all contributors and participants to create distributed numbers in each network. economic.

Paradigm shift driven by three major trends

Over the past 20 years, the success of the Web 2.0 era has been largely dominated by three basic technologies: cloud storage, socialization, and mobility. We believe that technological innovation in the coming decades will be driven by the interaction between edge computing, machine learning and distributed data: edge computing captures millions of data points in a large number of devices, and progressive machine learning algorithms absorb these rich The data, located at the bottom of the decentralized data will support security, flexible communication, and fair incentives.


Combining these three technology waves will produce a large amount of data, but these data are still blocked for privacy, trust or competition. In 2010, the world produced approximately 1 terabyte of data. According to McKinsey & Company's research, 16 terabytes of data were produced worldwide in 2016, however, only 1% of them were analyzed. By 2025, the world is expected to generate more than 160 megabytes of data. Due to the emergence of data sources that have never been used, privacy sources and fine-grained value distribution, there will be unimaginable technological breakthroughs in the world, such as personalized medical treatment through genetic data, coordination of distributed autonomous agents and Unlock the data generator for monetization methods that have never been explored before. (Block rhythm BlockBeats Note: Zebyte is 2^30 times TB, ie 1ZB=10.7TB)

However, if today's isolated data structures cannot be rapidly upgraded, the proliferation of available data and the efficiency gains of machine learning algorithms may soon lead us to nationwide monitoring of capitalism, a dystopian future: politicians not only Being able to predict how things will happen, we can use our emotions to be kind enough to make decisions we have not made yet. They can act most accurately for the future they foresee, and their goals are not necessarily disclosed to the public, nor necessarily to our own goals. Decentralized data architecture will not only prevent technology giants and other data monopolies from gaining such universal power but will also enable individual participants to take advantage of this a new wave of applications to improve their quality of life. At the same time, users of new applications can control their privacy and participate in financial returns.

The novelty of TOKEN and cryptocurrency economics

A fundamental problem that has plagued various network architects have been the mismatch between the value created by the network and the value acquired by the ownership structure. The value of the shareholding structure comes from future cash flows, which are net profits generated by the the ability of centralized companies to generate revenue from customers. This is a a system that works for commercial companies that sell goods and services: Apple sells high-end hardware, Netflix and Spotify sales monthly membership. However, when equity models are applied to networks where core value lies in low-cost distribution and user-driven content creation, there is a real risk of differentiation: it is difficult for Twitter to monetize its user-created content and Facebook has to turn to a near-reverse Utopia's panoramic prison, to truly realize its value based on the user base and open-source network. When the online community begins to generate valuable content, users of the online community are transformed from the customer into the product itself. At this time there is a fundamental mismatch between the value of community users and commercial companies: a business entity attempts to capture the full value created by the user community, while the user community itself does not receive any financial rewards.

Jumping out of the centralized network of equity-controlled equity firms in the control network, and instead of modeling the network as a a digital economy model with local certification, we can not only increase the the value gained from it but also distribute the value it generates to the real value creator. In this digital economy, network scarcity is represented by a certificate, which is used to motivate distributed people, machines, and other participants to reward their contributions to the network, such as managing valuable resources, work content, and utility. Expressing the digital scarcity of the network (such as computing power, labor, content contributions, or community governance) as a digital pass allows for continuous network upgrades and unlimited flexibility.

These certificates become programmable digital software that connects humans and the assets they own – both virtual (such as personal data) and physical (such as real estate). What these passes can achieve is a smart balance between users, developers, resource providers (such as miners) and capital providers (such as investors) through virtual currency economics, a cutting-edge approach to incentive design. Intrinsic benefits and utility.

Clarifying the scarcity allows people to subvert to the subversion of ownership, which in itself transcends purely digital assets, and existing assets will have the potential to improve liquidity, transparency, access, compliance, and taxation. This will promote the existing assets to pass the certification and ultimately lead the new encryption capital market.

A few decades ago, we witnessed the transformation of data and communication content from analog signals to digital distribution. Everything from data creation and distribution to monetization can be reimagined. The impact of digital on newspaper, television and movie content is obvious: new giants like Netflix and Spotify have emerged, and companies like Blockbuster and Kodak have either been marginalized or completely gone. We are now convinced that the impact of the pass on ownership is as great as the impact that digital has had on content.

Classification of certificates

Into the world of the past, we can divide it into three core categories according to different characteristics: currency and commodity, utility-based and security. Considering that individual pass tokens may have several features at the same time, or evolve different characteristics over the life of their underlying network, we now summarize these features as follows:

The value of a value-based storage (SoV) certificate relies on on its characteristics of confrontational review and equal trading to ensure that the value of its storage is completely unrelated to any other market, commodity or currency. For example, Bitcoin, Monroe, and Zerocoin are slightly different in terms of transaction speed, network security, and network privacy. These value-storage cryptocurrencies are closest to the equivalent of real money. When considering the quantitative theory of money, they can use the exchange equation (MV = PQ) to understand their dynamics.

The goal of Stabilizing Coins is to separate volatility from cryptographic assets and to provide a digital asset that can be linked to fiat currencies such as the US dollar, which are primarily used as accounting units and trading medium. Three of the categories include:

a. Centralized issuance of bonds - to maintain stability by the same amount of statutory reserves held by the central government.

b. Collateral – over-collateralized by cryptographic assets such as Ethereum.

C. Coinage Tax Shares - Re-create an algorithmic central the bank that maintains stability by controlling supply and demand leverage.

Payment-based certificates are the simplest and most iterative types that are often enforced into the network as the only way to provide digital assets on the network. As a result, payment-based certificates have become almost a currency in the virtual digital economy, even though they have not become more investment, liquid or stable enough to be a means of value storage. Conversely, in the future equilibrium, the payment pass will be closer to working capital, and users will try to minimize working capital due to the opportunity cost. Therefore, they are likely to have very high rates, but the value accumulation is very low. Due to the nature of the source code (replicable and divisible), these VSI models are highly risky to run, they may be forked or replaced by the same protocol, which also allows them to pass appropriate value Save the pass for payment.

A securities pass is a representation of the virtual currency of an asset, which includes traditional commodities, stocks, art, and any kind of encrypted collection. The former relies on a strong guarantee of ownership of the underlying asset, can be valued based on the value of the underlying asset, and has a premium in terms of liquidity, severability and availability. The latter often represents a scarce encrypted digital asset that is as if it were art or real estate, meaning that the value of the asset itself is limited, and the creator's reputation, its position in the digital landscape, and the overall demand for the asset. Determined its price. (block rhythm BlockBeats Note: CryptoKitties belong to this category)

Governance Pass allows its holders to vote on how the network works, where developers are going to focus, and when software upgrades should be implemented. As the number of companies running on the network and the number of transactions processed continue to increase, the value of the network will increase, and the impact on network development will become a scarce resource. In fact, in such a network, the price of voting rights is likely to grow exponentially as the value of the network it protects increases. This type of pass feature usually needs to be combined with other types of pass-through designs mentioned earlier. (block rhythm BlockBeats Note: Aragon belongs to this category)

The discount pass gives the owner the right to discount when purchasing assets provided by the digital network. Buying a discount pass is equivalent to buying a coupon and is entitled to a fixed discount percentage of all economic activity within the network. As the value of the network increases and the number of transactions increases, the holder of the certificate can demand a greater discount. This pass-through design simulates a usage fee that can only be provided in the form of a web service (not involving money payments).

Work-based certification is based on the idea that service providers need to share risks to encourage them to provide high-quality work for the network. Whether it is an objective job (such as computing resources) or a subjective job (such as a qualitative rating), the service provider is obliged to invest a certain amount of pass into the network in exchange for the right to provide profitable work. If the work is done correctly, the service provider will receive the fee paid by the user (not necessarily the local pass).

Conversely, if the service provider misbehaves, their share will be cut and assigned to other service providers. As the amount of network usage grows, there will be more jobs that are immediately profitable or profitable in the future, which will increase the number of service providers who wish to deliver these jobs. Therefore, the demand for these work-type certificates will increase, and because their supply is relatively fixed, the price of such certificates will increase with the use of the network. (block rhythm BlockBeats Note: PoW class tokens belong to this category)

The architecture of the Destruction & Foundry Equilibrium is based on two simple features: network users use the pass to pay for the service, but they do not pay for the pass but destroy it (in dollars); The new pass (calculated by local pass) will continue to expand. The users of the network refer to the service provider for each of the destroyed certificates, and they will receive the newly generated certificate distribution as the paid fee. Therefore, when the usage of the platform increases and the number of passes consumed by users exceeds the number of passes issued through inflation, the supply of certificates will be reduced, thus pushing up the price of each pass. (block rhythm BlockBeats Note: USDT belongs to this category)



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