Product vs. Protocol: Finding a Balance in Web3 – Variant

The first and largest “user” of a Web3 platform — defined as a software service running on an open blockchain (and often called a “protocol” in Web3 parlance) — is usually the product team that built the underlying platform. Web3 teams building these platforms are wise to build the first product on top and give it away for “free,” as a commodity, i... See more

Web3 companies, in other words, can commoditize the complement — but not as a means of draining profits and position from a potential competitor, as in Web2, but as a practical means of furthering sustainable innovation.

Web3 protocols have an opportunity to do things differently, owing to the fact that they can distribute tokens to turn their users into owners, empowering them to govern the platform in alignment with their continued interests.

Web3 teams have an opportunity to learn from and improve on the strategy of commoditizing the complement. In this essay, we’ll discuss why building and commoditizing a product on top of a user-owned protocol offers maximum leverage to execute this strategy, with potential for stronger economic equilibriums that drive growth, and value, beyond that ... See more

In the Web2 era, platforms like Twitter and Facebook ran powerful but temporary versions of the “commoditize the complement” strategy early in their growth phase. By giving away their products and APIs for free, the platforms were able to attract invaluable social graphs and user data, which in turn helped attract an ecosystem of third-party develo... See more

Web3 teams have an opportunity to learn from and improve on the strategy of commoditizing the complement. In this essay, we’ll discuss why building and commoditizing a product on top of a user-owned protocol offers maximum leverage to execute this strategy, with potential for stronger economic equilibriums that drive growth, and value, beyond that ... See more

Companies selling cars, cereal, and printers benefit when prices decrease for gasoline, milk, and ink, because the total price of a product includes the product plus anything else you need to maximize its potential--the complement.