Thread by @cdixon

Web2 is built on advertising. Big companies like Facebook and Google make most of their money on advertising, and many web2 startups build their customer base using advertising.

When you build a business on advertising, the theory is that if you retain enough customers, the long-term economics will work out and you’ll eventually be profitable.

However, there are a bunch of reasons that in practice this can be dangerous. @bgurley covers this well in this classic post abovethecrowd.com/2012/09/04/the…

Web3 takes a different approach by letting users and builders participate in the growth of networks as genuine owners.

https://twitter.com/cdixon/status/1442201621266534402

Instead of the value and control accruing to a company at the center, it gets distributed out to the edges, to the people who actually build the network.

This means you no longer need advertising.

Tokens are self-marketing. When someone genuinely owns something and feels skin in the game, they want to evangelize it.

Bitcoin is the ultimate case study of this: a trillion-dollar network that was built through community-led evangelism and R&D.

(This couldn’t have happened without social media. In the pre-social media days, it was vastly harder to do bottoms-up evangelizing. In this way, web2 enables web3.)

Removing advertising, and relying on community-led R&D, transforms the economics of internet services. This enables web3 services to have zero or very low take rates.

https://twitter.com/cdixon/status/1425645842552086532

This is also why the token distribution mechanics are so important. The key is fostering a genuine community— and distributing ownership to the people who do the hard work of actually building the network.

Also, self-marketing networks are a very powerful force.

In the good case, this force is paired with a genuinely useful network.

That has not always been the case, leading to memecoins and such.