By Alex Tapscott

My alma matter, Amherst College, was one of the first schools to get Facebook in 2004, and I was an active user of the platform during those early years. At the time, I was happy to get access to the service, but the million or so first users of Facebook like me were also instrumental to Facebook’s hitting critical mass of users and driving its network effects. Despite this fact, we did not share in any upside from our efforts, and instead ended up, like everyone else, trading our personal data for a steady stream of hyper-targeted ads.

One can easily imagine a “Web3” version of a social network where everyone’s interests are more aligned: users get access to a useful application or service while earning an interest in the network via a token for helping bootstrap it in the early days. The social network – it could be a company or perhaps a protocol – gets users who are economically aligned and thus incentivized to use it. In the Web3 version, we would still use the platform to connect with friends, share photos, and create communities, but we would also earn a stake in the network and have some say in its direction. This ‘ownership’ incentive helps the start-up compete against better funded and more entrenched competitors. Slowly but surely, the user-owned social network siphons off users from established ad-based social networks, and the network’s native token (owned by users and founders alike) increases in value. Win-win. Or is it?

Some critics allege that Web3 based models lead to perverse incentives, where early users (and perhaps even knowledgeable insiders like VC’s and other influential people) try to greedily exploit early token rewards, indifferent to what the underlying service does. Once those incentives dry up, they move on to the next thing. That leaves any remaining users who may want to use the service fighting for scraps of ownership. Developers focus on token economics at the expense of underlying usefulness. The gamification of internet services may scare off laypeople for whom ownership is a nice-to-have not a need to have. Everyone becomes a mercenary as they hunt down the next honeypot.

Done correctly, token economics (or “tokenomics”) can power user growth for the long term. Done the wrong way, it can turn people off for feeling they arrived late to the party and divert the attention of founders. There are several examples of projects that got token incentives wrong at first – such as Axie Infinity - but who are adjusting them to make their product more sustainable. Others, like Uniswap, continue to be popular long after the ‘easy money’ of earning the native UNI token have come and gone, because the service is inherently useful. The solution is twofold: first, build an equitable and sustainable token distribution model that incentivizes long term adoption. Second, make the underlying application or service inherently useful. Too often Web3 applications have seemingly been developed to justify earning a token and little else. Make ownership incidental to the experience not central to it.

I doubt that a user-owned Facebook would have chosen an ad-driven model, but perhaps 2022’s version of 19-year-old Mark Zuckerberg is a token-obsesses Web3 entrepreneur preoccupied with building a model where users harvest value from token distributions rather than build lasting network effects. Such counterfactuals are impossible to prove. Ultimately, if internet users are going to continue to create value, we should have a model for them to capture some value from useful services. The two must go hand in hand.

Reflections on W3B: Enterprise Blockchain is Dead, Long Live Blockchain in the Enterprise

On November 8th and 9th, the Blockchain Research Institute (BRI), a frequent collaborator of Ninepoint, and mci group hosted Web3 and Blockchain World in Toronto. 800 participants from 22 countries spent 2 days in a Canadian wilderness themed conference hall interacting with each other and 92 speakers. The conference explored digital identity, supply chain, DeFi, health care, digital assets, Web 3 and DAOs, ESGs, and Metaverse. It featured discussion about leadership skills in a Web3 world, ghost stories about failures, successes and hard lessons learned in startups, diversity, global adoption, and what Web3 means to the youngest generation of entrepreneur-innovators.

There was an exciting product announcement from Anthony Di Iorio unveiling the Andiami decentralized compute cube, a fascinating discussion about governance between Charles Hoskinson and Don Tapscott and a real-time analysis of the collapse of FTX narrated by Alex Tapscott and Fortune's crypto editor Jeff Roberts.

The Web3 and Blockchain Awards Gala dinner, hosted by BNN Bloomberg and CTV National News' John Erlichman, was a great event enjoyed by all and allowed some important stories to be told and some significant accomplishments and inspirational leadership to be recognized.

So what lessons were learned at W3B? We learned that the rate and pace of modernization of supply chains is accelerating, and new coopetition models will be necessary. We learned that self-sovereign identity will be a core building block for a great variety of systems. We learned the DeFi space needs to continue growing into new markets and that the metaverse will have some mind-bending multidimensional navigation characteristics. The big major takeaway: 2023 will be the year when blockchain takes off in the enterprise but it will do so in a different manner than most enterprise blockchain efforts to date.

“Enterprise blockchain is dead, long live blockchain in the enterprise.” What does this mean? In much the same way as we initially saw “internet” technology adopted in the enterprise as “intranets”, as internet technologies matured and leveraged open innovation, enterprises shifted their interest and efforts to public internet technology, we are starting to see the same thing happen in Web3. More and more enterprises will start to leverage public blockchains for their state information and this will reduce the friction for enterprises to work with and coordinate their activities with ecosystems of partners. This is of course a topic that the BRI is looking into in detail and believe will have a profound effect on businesses and governments going forward.

For those of you who were able to make it to the conference or joined us virtually from around the world, thank you for participating, and I hope that you found it as informative and fun as I did. For those of you who didn't make it but would like to get access to the online experience, you can do so here.