Thread by @levie

For products to work at scale they need sustainable business models and networks. Would love to see more discourse in web3 about the complex financial incentives conflicts that we’re going to see if the movement goes beyond DeFi/trading-related use cases. A few examples👇

Users becoming “owners” of a product sounds epic, but misaligned incentives complicates things. Users should want more value at lower prices, shareholders should want ROI. With these mixed, are you building for users with their customer hat *or* shareholder hat on? Crazy tension.

Product value props and customer relationships get distorted when users are incentivized to use your product beyond the utility they receive. If the incentives run out, or a new network emerges with a temporarily better incentive, do your users stay? Lots of network instability.

With 24/7 trading of crypto, there’s a market constantly deciding prices on digital “things” (neat!). While finance loves volatility, end-customers desire predictability. If the cost of using a social network or reading a book changes daily, that’s not great for most people.

Finally, when developers have stakes in protocols, there may be nonstop fractioning around dev patterns. To build anything complex, you need stable patterns. Worse: this chaos was once invisible to users, but now they have the keys, so it’s bound to confuse non-geeks.

Anything is solvable, of course! But if the cost to mitigate these exceed the utility at the end of it all, it’s probably not going to work. To cross the chasm from finance and trading use-cases —where these issues are likely desirable— these issues will have to get solved IMO.