I’ve been thinking a great deal about the evolution of web3 recently.
An 80% crash really puts things in perspective…
Over the last month, three separate threads of thought finally came together and helped me make sense of things:
- beltran’s tweet about teleonomy
- Another dive into Complex Adaptive systems
- Milk Road’s Big Rant on the Killer Use Case
- To back up a bit…
The Tricky Matter of Orthogenesis
Teleology is the explanation of phenomena in terms of the purpose they serve. In the field of biology, if you describe something as “evolving in order to…” or say “birds have wings so they can fly”, you are guilty of teleology. This kind of thing drives evolutionary biologists nuts because you are implying an ultimate goal to the process. This is known as orthogenesis; a now obsolete theory. We know that organisms do not have a tendency to evolve in one particular direction, although it is very tempting to think so, because it allows us to think in terms of progress and a plan. Humans like progress. It gives us certainty and security and satisfies the hope that maybe someone is steering the ship after all. It also plays into our own bias that humans are the pinnacle of evolution and were the pre-determined goal of all those genetic mutations.
You see this bias in those wonderful old tree of life diagrams with humans at the crown of the tree.
In 1965, artist Rudolph Zallinger created The Road to Homo Sapiens (aka The March of Progress) for the Time-Life publication Early Man. Zallinger was inspired by the frontispiece to Man’s Place in Nature (1863) by T. H. Huxley, a contemporary of Darwin. Huxley, however, was simply comparing skeletons of different extant primates. Zallinger’s artwork became such a meme because it rearranged things to suggest a linear succession, each form more advanced and sophisticated than the last. But this was a fantasy.
Evolution has no final destination, no foresight, no plan.
Teleonomy, on the other hand, is a term coined in 1958 to describe the apparent discovery of purpose via natural selection.
Species appear to move towards a goal, but the progress happens as the species adapts to the environment, not through the direction of a divine agent. There is no prior knowledge of the goal. They just kind of bumble along, trying things, until they hit upon an advantageous adaptation and turn into something more successful. This will influence the environment, which will in turn, encourage further adaptations.
Whilst mostly a linguistic difference, the distinction is important.
When I saw Beltran tweet about teleonomy in regards to web3, I broke out in a big grin. Like him, I’ve also read The Selfish Gene and remembered something I’d been struggling to put into words.
2020 was the Dawn of Web3
Could it be that crypto is just going through the necessary steps of finding its purpose? It’s clearly self-adapting. Is this a bug or a feature of decentralisation? Do we want a select few persons determining the evolution? Or do we want it to be decentralised and autonomous, and just trust the process will get us there eventually, a little battle-scarred, but richer for the experience?
Every hack, failure, or bear market is a chance to reset, and try again. This time with a little more knowledge and a few more skills. Every innovation, ICO, or bubble is a trial to see what’s popular or might be useful. Each cycle, masses are drawn in, then the greed gets washed out the system, the good stuff hopefully stays, and the bad stuff gets rejected. With relatively little stewardship from the founders and DAOs, crypto gets a little better each time.
Vitalik once wrote a thread on contradictions in his values, where he touched upon this tension. Decentralisation vs guidance. Profit/hype vs public goods.
I find it telling that both Vitalik and Gavin Woods seem to err on the side of too little authority over too much, even if that means accepting some stuff you don’t personally like.
I want crypto/DeFi/Web3 to be better, and I am actively working towards that. But I also recognise that we’re still figuring out what people want. The goal is to “be better”, but that’s a pretty damn vague goal.
The sudden adoption of “Web3” as a catch-all term points towards the essentially unpredictable progress of crypto.
When I started in the industry, everyone called it “crypto”, then in 2020, everyone said “DeFi”, now everyone says “Web3”. I find this mildly amusing because it feels like a branding exercise. I blame NFTs. But this change conceals a harsh truth:
Not many people care about crypto, and they never will.
That’s just fine though. We’re bigger than that now. In 2021–22 there was a realisation that while some people wanted to play around with money and cryptography, a lot of people just liked pictures. Another group of people just liked playing mobile games for monetary rewards. Another group of people just liked stablecoins as a hedge against their failing national currencies. And then there was a general hubbub once again around the power of big tech (i.e. Web2), privacy, and free speech.
That’s altogether a lot bigger than “cryptocurrency”, so we needed a better umbrella term for the next generation. Web3 is the one that fit.
People like to talk about user experience being the barrier to mass adoption, but I’m not sure we’re even talking about the same thing. The user experience of what exactly? Lending apps? Staking? Wallets? Governance? Buying a token? Showing off an NFT? Do “the masses” even want those things? Maybe they want one or two of them, but probably not all of them, even if the UX was perfect.
Since 2017 (and earlier), people have been clamouring for “better UX” in crypto, but what are we really talking about here?
Here are some of the things that the Web3 industry has tried to solve:
- Social media
- Interest accounts
- Video platforms
- Gaming rewards
- Anonymous transactions
- Supply chains
- Buying a copy of the American Constitution
- (Examples chosen at random as I plucked them out of my memory.)
A cynic would rightly say it has failed on almost all of them.
A true believer would say it “just needs better UX”.
I’d say “we’re testing it live.”
We’re running thousands of little tests, exploring uses cases, seeing what’s popular, and finding opportunity.
Let’s look at finance and adoption.
How many people actually have an investment app on their phone? How many people regularly buy ETFs? How many people used to have a stockbroker? How many people do options trading?
More millennials own cryptocurrencies than mutual funds
I just searched Google Play for the top apps in the “Investment and Saving” category. Here are the download numbers:
- eToro: 10M+
- Trading212: 10M+
- Plus500 Trading: 10M+
- Here are the numbers for some DeFi wallets:
- Trust Wallet: 10M+
- MetaMask: 10M+
- Coinbase Wallet: 5M+
- Importantly, these are DeFi wallets where you control your own seed and do complicated things like staking, yield farming, and derivatives trading. The numbers for centralised exchange apps such as Binance and Coinbase are 50M+.
DeFi is already winning in adoption. But it doesn’t matter how good the experience gets, because a lot of people don’t really care about financial instruments. It’s just not that sexy of a subject. They might want a better savings rate, but they probably don’t want to do anything esoteric like trade perpetuals.
A surprisingly large amount of people care about artwork/NFTs. That was an astonishingly successful experiment, and paves the way for more work in this direction.
A Light Touch
If we accept that Web3 is here to stay, I think we can absolve ourselves of some of the pressure, chill out a bit, and allow it to evolve naturally. Especially if we truly enshrine the value of decentralisation. The market will show us what it wants, and the builders will respond in turn. The craziest among us will run insane experiments, and the most adventurous of users will volunteer as human guinea pigs, YOLO’ing stacks of cash into unaudited smart contracts just because it makes them feel so goddamned alive.
When the going is good, the adrenaline will rush, the tokens will flow, and the party will feel like it’s never going to end. I consider things like share-based stablecoins, ve(3,3) models, treasury bonds, and gauge vote bribes to be some of the wilder ideas DeFi has come up with. But it is a mistake to focus on the chaotic edge of experimentation and think that represents the entire industry. These are just the shock troops of crypto exploring the darkness and opening up the map. The dark forest, if you will.
For every failed experiment, we gain knowledge of what can work. Each hack is a sacrifice to the money gods, in return for greater security in the future.
Outside of these grand TVL-grabbing spectacles, people are quietly chipping away at granular usability problems, and inching incrementally further towards a better UX for all.
I see a lot of individuals proclaiming “crypto UX is broken”, or how they are going to “fix web3”, or “make web3 accessible to all”, and while these are laudable goals, it sometimes smacks of solipsism. Web3 is a huge thing now, with more than a few types of user. Sometimes they want different things, and that’s OK. We also should admit the huge debt we owe to the pioneers like Curve, no matter how unfriendly they may appear, and recognise we need crazy innovation to make space for the simplification that comes later.
When I see something that delights the degens and infuriates the critics, I’m not going to stick my fork in the ground and go no further. I will observe with interest, I will ask questions, and I will help smooth out the kinks where I can.
If something is hard to do, but people do it anyway, there is far more value in figuring out why people want to do it, than just complaining that it’s hard.
I’m guilty of this too, but recently I’ve seen a LOT of people complaining about how bad web3 is. This is at a time when user numbers are off the chart, dex TVL is exceeding Coinbase, NFTs are going mainstream etc etc. It’a bit of a head scratcher… Seems to me like plenty of people are using it, no?
I’ve also noticed that these sort of think pieces are usually lacking any direct input. It’s fine to point out a problem, but I prefer it when someone then comes up with a better user flow, or attempts to write better error messages or something. Honestly, I’d like to see more web3 builders share their work. Let’s all learn from each other!
We are going through a process of natural selection. Both the good and the bad things are necessary steps in the process of finding our next form. The things to which detractors point are problems to be worked on. The advanced strategies I mention are things to be marvelled at and observed from a safe distance. Or consumed only as part of a balanced diet.
Crypto is getting harder AND getting easier.
DeFi is getting weirder AND getting simpler.
It might not look it, but these are two aspects of the same process.
Trust in the process.
I look forward to the next ten years. 😎