Web3 belongs to the VCs, Jack Dorsey said. Well, I’d say web3 is all we do with it – and VCs only own it if we let them. We are building the web3 at present and we have the power to control where it goes and how it is funded along the way.
If we take decentralization and autonomy seriously, there is no valid reason to follow outdated venture capital standards. Other ways exist, such as smart contract-controlled blockchain finance, which is more intuitive for projects to use, fairer, completely transparent, and more adaptable for investors and developers.
This is why I consider fully on-chain methods to be the future (or at least the next big evolution) of fundraising.
The long winding road
If web3 is to be owned by VCs, let’s agree that web 2.0 is already owned by billionaires, conglomerates and multinational corporations with cultural influence, political power and the greatest allocations of wealth humanity has ever seen. Alright then, no need to rage against the dying light – but therein lies the catch: Literally everything we do on the internet is designed to generate more capital for them while further monopolizing their power. Every time we log in, we actually clock in.
With that in mind, is it any wonder that seasoned Web 2.0 gamers like Jack Dorsey are cynical about the future of Web3? The main thing we should all remember moving forward is that web3 is self-contained – it’s not to replace Web 2.0 – this sandbox continues to survive as it is.
Web3 will exist simultaneously, independent of Web 2.0. Believe it or not, some of us view this opportunity as an ethical imperative and feel that it is necessary to reiterate the concept of the Internet, correct the sins of the father, and perhaps begin to influence the workings of our society to its fullest. fundamental. Rather than empowering companies, we should be empowering communities.
If we take decentralization and autonomy seriously, there is no valid reason to follow outdated venture capital standards.
Ultimately, that’s precisely what web3 is: an open-source way to give people the same platform that businesses currently dominate. The rationale for our new framework is to empower individuals and be more equitable and accessible to everyone, regardless of age, race, gender and nationality. The status quo will not disrupt itself, so someone has to.
The future is ours to write
How exactly does this disturbance occur? The starting point is entirely on-chain. The majority of developers currently building web3 protocols and DApps are a new generation of creators who come to their work with a philosophical bone to choose from.
They know how old models work, who they are for, and how they are designed to stay that way. Coming from traditional startup accelerators where the experience is building a company, raising capital, forming a board of directors, and hiring employees, we provide a solid foundation to work from and improve on.
Blockchain technology already provides us with open-source, immutable ledgers that we can use to meet all of our funding needs in a way that directly aligns with the philosophy that has guided web3 since its inception. By using self-executing smart contracts, we can control the opening and closing points of a raise and make every investment and its conditions open and verifiable for everyone.
Transparency is vital for any Web3 project worth its salt, so by using these strings, publicly verifiable fundraising methods, we can ensure that there is no favouritism. This model does not allow behind-the-scenes trades because everything is open and everyone can see that all investors are on the same playing field. Best of all, trades and stock structures are revealed every time a investment is confirmed on the blockchain.
Another tactic we can use is whitelisting, which can ensure that the people who are truly passionate about a project and involved in the space end up wielding the most economic influence.
By pre-selecting crypto addresses, all the checks and due diligence can be done in advance and streamline the process. Funding contracts are generic and can whitelist any address for any reason, so the power rests entirely with the team issuing the smart contract. This is granular level control over a process that tends to be complicated and time consuming.
On-chain finance models also offer a fairer approach to developers, allowing them to bypass certain socio-economic barriers like education, employment, credit, connections, etc. These templates allow developers to start their projects even if they only have the project they are building. The framework as a whole offers a more meritocratic mode of operation, where only the project and its potential count.
Small projects can save resources and time by eliminating the need to build a pitch deck, open a bank account, and actively seek out investors in the traditional sense.
It is the community spirit from which the blockchain industry was born. We can put simple tools in place to help drive growth and funding in a way that makes sense for every project, and that’s what will allow web3 to be owned by developers, enthusiasts and users.
And still there is more
On-chain increases aren’t meant to completely kill the traditional VC model, because after all, working with sophisticated investors provides builders with valuable insights. VCs are experts in analyzing business and financial models, planning for scaling, and assessing the execution risk and position of companies in a market. VCs that prioritize these traits will remain as valuable as they are today. Every project wants and needs people with proven track records to help businesses grow and succeed.
On-chain funding isn’t a silver bullet – it’s simply the best framework we currently have to more closely align the funding process with the mechanisms that developers find most useful while keeping the process open and fair.
We must pay particular attention to these new innovations and welcome them to help this new Internet achieve its full potential.