A new wave of applications

Thank you for your interest in this post! We’re undergoing a rebranding process, so please excuse us if some names are out of date.

Few blockchain applications have real adoption. It’s a fact. Barely a few surpass the low hundreds in terms of daily users. MakerDAO is considered to be the only one with meaningful market fit1. Here are some dismal stats about a normal day last week (Feb 9th of 2019):

In other words, 86% of them had zero users today. 93% of them had zero transaction volume. To say this is a disappointment is an understatement: $21B was raised in 2018 alone. Investors and consumers were sold on the promise of a new web called Web3.

Why Web3?

This new age of Web3 is based on the original founding principles of the internet: openness and permissionless collaboration.

“The original idea of the web was that it should be a collaborative space where you can communicate through sharing information.”

Tim Berners-Lee

We know how all these promises turned out in the end. A few internet companies monopolize our data and gate-keep innovation, making it harder and harder for entrepreneurs to compete on an equal footing. These companies use our information to sell us more and more effectively. Even worse, they leak our data and expose it to security threats 2.

“If you are not paying for it, you become the product.” 3

However, we still need to fulfill the original vision. We want to create and publish anything on the web without asking for permission. We want to build our applications without worrying that a company may change their Terms of Service 4 to shut us down or squeeze our profits down the line. We can transact and send money without going through multiple intermediaries and paying hefty fees. And most important of all, we want to truly own all our data and assets.

Problems in Paradise

In 2016, the potential and seemingly unlimited possibilities captivated us. Like at a midnight summer party, the energy was palpable and contagious, initiating two years of creative experimentation. Now, the music has stopped, and the fresh morning light is revealing issues that need to be addressed. Several problems are preventing mass adoption, such as inadequate infrastructure, UI/UX friction, and indiscriminate use—or overuse—of blockchain.

First of all, infrastructure arguments are right. It’s going to take a few years to create a solid foundation. It is true that Bitcoin was created ten years ago, but it is also true that email needed almost two decades to reach mass adoption5. The Web3 stack needs time to be built 6. Many teams, including Zeppelin, are working on it. Multicoin provided a great analysis of the different components of the stack along with their current status here.

These problems are more apparent because thousands of new products are released daily. But building something with better technology is not enough. In Zero to One, Peter Thiel explains how to build privileged businesses on the shoulders of technological breakthroughs. We need to start with the unique capabilities the new technology unlocks. Then we need to consider how to leverage these functionalities to build something that is ten times better – usually referred to as 10x. PayPal is a perfect example of this: it leveraged the ubiquity of the web to let people pay electronically for goods and services, starting with eBay products. We can’t expect that blockchain is going to solve and displace incumbents in every single market. Offer something 10 times faster, 10 times cheaper, or let users do something they couldn’t do before, and they will adopt it.

The pain users are willing to withstand is directly proportional to the amount of value we offer in an application. The truth is that at this point we offer little and demand a lot. We force users to install browser extensions or dedicated browsers, reminding them to write down a litany of a dozen meaningless words under the threat of losing everything if they misplace them. Then we instruct our already scared users to spend some of their hard-earned dollars to purchase some obscure currency. That’s not all: in the odd case that they’re still with us, we expose them to unresponsive interfaces and long loading times.

Working with the Existing Paradigm

We are in the middle of a multi-decade infrastructure inversion—a shift from centralized data silos built on top of the cloud architecture toward a more open, accessible, and inclusive alternative. At the same time, the idealism of the space may be misleading us. Many entrepreneurs in the space are focused on reinventing every single aspect of their business, turning a deaf ear to the lessons learned in the startup world during the last decades.

Carlota Perez. S-Curve Technological Surge Cycle

Following the Carlota Perez framework, we’re still in the installation phase of crypto. It’s easy to see an end-game where many things are decentralized, open, and permissionless. We are still far from the deployment stage. For the time being, every single detail of the stack need NOT to be decentralized right now—or maybe ever.

“It’s important for a startup to understand the scope of its innovation. Outside of that scope, use standards and off-the-shelf. Some founders waste a lot of time trying to reinvent everything.”

David Sacks

Do website fonts need to be hosted in a censorship-resistant CDN? Probably not, S3, Akamai or other content-delivery-networks may continue delivering your static assets. We need to leverage the best lessons and tools available in the current paradigm—cloud/mobile—to accelerate adoption.

Green Sprouts

Fortunately, we’re starting to see mature projects emerge in the last few months. Projects that are focused first and foremost on building something people want, and founders that know that although blockchain is a great technology, it is still just that: a tool to create value and help people. They don’t focus on generic good-sounding slogans like decentralization or disintermediation. They create something that helps people. For most of these companies, the specific details of the technology are secondary.

Veil, Dharma Lever, Guesser, and InstaDApp are great examples.

These projects are transparent for the end user. They’re indistinguishable from centralized applications in terms of user interface, user experience, and responsiveness. The user doesn’t need to know more about the blockchain than they know about the cloud. On top of that, they capitalize on the unique benefits that blockchains offer, such as native digital money, fractional ownership, trust minimization, and censorship resistance. At the same time, they are pragmatic and work with the best tools and practices from the current paradigm.

Looking Ahead

At Zeppelin, we are convinced that the path towards adoption lies in the middle, between radical innovation from the new paradigm and consolidation of the existing one. A middle ground where we leverage the best of the current infrastructure but with new components that make all the difference to our users.

We are committed to providing a professional-grade set of tools to help everyone develop game-changing applications. Applications that provide unique benefits that are tangible to people. Applications that do not need to be called DApps—they’re just like any other website. They can stand on their own without forcing the consumer to be an expert on crypto to use them.

During the next few weeks, we’re going to release a few products and tools toward realizing this vision. If you want to stay tuned, visit our ZeppelinOS website and sign up for updates.

The best is yet to come!

  1. Maker Investment Thesis by Placeholder VC
  2. Biggest Data Breaches of 2018 by Business Insider
  3. If you’re not paying for it, you’re the product by Forbes
  4. How publishers will survive Facebook’s newsfeed change by Techcrunch
  5. History of Email – Wikipedia
  6. The dApp Developer Stack by Fred Ehrsam