Long-term, I think there will be both open source protocols managed as decentralized autonomous organizations – and corporations building products for consumer + enterprise users on top of these ecosystems
1.
My current working mental model is WordPress + its ecosystem
WordPress – the open source CMS – powers more than 40% of the open web
And using WordPress is a wide array of customers – from large enterprises down to individuals
Automattic, WP Engine are two companies valued at more than $1 billion that are solely focused on enabling customers to have success using the WordPress platform
But beyond that – there is a medium + long-tail of other software and services firms which focus on supporting the full spectrum of customers building on top of the platform
In total, according to a study by WP Engine, the value of the WordPress ecosystem was estimated at $596.7 billion in 2020, and is expected to reach $635.5 billion by the end of 2021.
2.
In crypto – one example I’d highlight is THORchain + Nine Realms Capital
Nine Realms is focused on making it easier for institutions to use THORchain
It does that providing an API, which makes it easier for wallets + exchanges to tap into THORchain’s liquidity – as well acting as an institutional frontend – making it easier for institutions to deposit assets in THORchain’s pools
Similar to WordPress + WordPress VIP – companies could interact with the open source protocol directly – but most (if not almost all) – will choose to work with a trusted third party – who will make the software easier to use + provide a higher level of support
A.
In general, I think most end users (both consumer + enterprise) will not use open source protocols directly – but will interact through products built by companies – which give the users the benefit of the protocol while abstracting away the complexity
B.
As such – to be successful – open source protocols will need at least one (if not multiple) companies building products and services for end users on top of them over time
3.
While I think the analogy for open source software as a public good – with most users interacting through a product or service run by a company – isn’t a huge jump from projects built on cloud infrastructure to projects built on blockchain infrastructure – where I get excited is about thinking about this mental model with other types of emerging DAO structures
A.
One example I’d highlight is drug development DAOs
With drug development DAOs (like Vita DAO or Hair DAO) – individuals come together with a shared common goal (eg longevity or hair growth) – with the idea that collectively – this group can help find + finance the best new emerging research (in a field that has likely been under funded historically)
Long-term – for the IP to have an impact on patients – it will need to be used in the development of a drug – and I think that is more likely to happen via a corporation (either a large existing company like Pfizer or a new startup focused on the individual asset) than by members in a DAO
A1.
Because while the community and its treasury (both of IP + monetary value) is aligned for the early research goals – corporations (with its command control structure + equity incentives) are likely better set up to take the final steps from late stage IP to drug development
A2.
As an aside – I think the opposite is also true – or more specifically – I think reading Pfizer’s application for Vita DAO is interesting – because even with all the resources of a large public company – I think it would be challenging for them to set up a similarly motivated community of principal investigators
3.
I think WordPress is relatively unique as an open source project
In that the company that started the project – I think lets it operate as a public good
Which creates a ton of value for the world – and captures only a portion of overall revenue
Because for most enterprise startups built around open source software – there tends is a natural tension between how much value to give away + how much value to capture in revenue
A.
At best, I think DAOs with tokens have the potential to create incentive for the creation + management of new valuable open source protocols + other types of public goods
B.
Because the best token models will have a way to capture value back to the protocol (ETH, RUNE) and if applications are building on to of a protocol, they’re highly incentivized to hold the token (YFI, Forta)
4.
So long-term
Value will continue be created + captured by both protocols + products
Where DAOs (with tokens) are a new structure for managing public goods
And venture-backed startups are still used to build products + services for end users
And each structure used when best – with value shared back + forth between the two
Life in Beta 