Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets
Just yesterday we wrote about the Starknet token launch and distribution to early adopters and ecosystem members through an ‘airdrop’. The narrative quickly turned sour as many users realised that they had missed out. Starknet had set the token distribution criteria in a restrictive way and mostly awarded developers rather than users. What should have been a great moment for Starknet turned into an unmitigated PR disaster as thousands of angry users flooded social channels.
This highlights the good, bad and ugly of web3. As Chris Dixon, partner at Venture Capital fund a16z, wrote in his recently published book ‘Read, Write, Own’, web3 adds the ownership element to the digital world. In web2 you created the content, but the companies owned it. In web3, you own the companies, and you own the content.
That changes the game entirely. While web2 companies would spend their marketing budget on ads, web3 companies run carefully crafted token distribution campaigns. Ultimately, the goal is to reward as many power users as possible to turn them into product evangelists. But the skillset to design such campaigns is completely new. It can also attract mercenary users who come for the ‘free money’ and leave as soon as it has been distributed. Other users run entire bot farms to try to qualify for token distributions with as many wallets as possible. The regulatory risk surrounding token launches does not help clarify things either.
Starkware clearly hopes that in the long run none of this will matter. It is a bet that web3 will ultimately look more similar to a web2 world. Their adoption will come from developers who will build applications and that ultimately their impressive technology will power mainstream use-cases. Maybe they do not need to care about a user group which their Head of Ecosystem dismissively referred to as ‘e-beggars’.
On the other hand, for crypto to ‘work’, it requires two critical components: liquidity and community. At its core, Blockchains are financial technology that use game theory to incentivise users to do certain actions such as providing liquidity to protocols. Or stake their funds and participate in governance. Without community and liquidity, your Blockchain quickly turns into a ghost town. Many failed projects had to learn that lesson. A lot of Starkware investors must be hoping that this time will be different.