My first foray into the internet was playing Neopets in 1999.

This was a place where people could raise digital pets and participate in a burgeoning virtual economy.

I played this seemingly childish game for years even into high school because it was so elegantly designed - it was one of the earliest forms of an incentive-aligned online community where anonymous participants could meet each other in a digital village to collaborate, build, chat, collect, and quite simply, be themselves.

Your pets, and therefore your identity, was your portal to the Neopia metaverse - you built your own personal webpage in HTML, you created “guilds” to connect decentralized members with one another to achieve a common goal, you joined forums to socialize and bond over shared hobbies, you played games or worked on “quests” assigned to you to earn a virtual currency that you used to buy and sell rare virtual items in your storefront.

Sound eerily prescient?

Mind you, this was 23 years ago.

Neopets demonstrated an early promise of a decentralized governance model controlled by the members who worked together to build the community in a meaningful way.

During these early days of the world wide web, there were no intermediaries between me and my fellow Neopians - no monthly subscription to pay to play the game, no commission was made by the hosting platform, and advertisements as a form of monetization fabulously did not exist.

The only problem with Neopets was that it was a close-looped world - what were Neopoints good for IRL?

Fast forward 16 years later, I would lead product teams that bridged the digital and physical at marketplaces like Uber, DoorDash, and Cameo.

These marketplaces were a virtual agora that connected dispersed consumers and suppliers with one another while taking a cut to broker the transaction.

And in all fairness, this made sense in the mid 2010s – having a marketplace take a cut while competing with other marketplaces was a much better solution than consumers having to pay a monopolist - the taxi company who historically controlled the price of a ride through medallions.

However, even with the existence of a marketplace, if you integrate the aggregate consumer demand curve, there is still a large area of consumer surplus not maximized.

Uber taking a 30% commission eats into consumer surplus (rider) and producer surplus (driver) because there are individuals on the demand side who are priced out of the market unless the ride was 30% cheaper, or individuals on the supply side who wouldn’t drive unless they could make 30% more.

Let’s also not forget about all the data that you forfeit to the central platform in this process as well.

This is the cookie cutter definition of deadweight loss.

Bringing this back to Neopets, I would argue that as our consumer internet saga evolved over the past two decades, a similar user-first, values-aligned, and digitally-native community like Neopia has not yet emerged.

In fact, the landscape for the consumer internet has become increasingly more extractive.

If we use the analogy of what consumers need from suppliers (be that content, goods, or services) as a gushing water source at the top of a glacier, the current web2 ecosystem is plagued with multiple dam builders that sit in between the top (suppliers) and bottom (consumers) of the waterfall.

These intermediaries are large technology platforms that profit off the water source before it finally arrives at the bottom as a mere trickle.

That extraction can come in two forms - a take-rate like the marketplaces we mentioned above, or in advertisements (which in my mind is a more insidious form of extraction.)

We must do better.

Over the past two years, we have seen an explosion of new protocols that facilitate exponentially faster, cheaper, and larger volumes of transactions per second that allows for the beginnings of a reality where the matching logic of a “marketplace” can be coded into the smart contract itself.

To come full circle on the water source analogy I alluded to, how web3 transforms the current dam-building process is to give you your own spigot to collect and use your own water.

I believe that the future of marketplaces will run on web3 based on four core principles:

Crypto as a vertical has expanded faster than I could have ever imagined from seven years ago when I first used Bitcoin as a less extractive alternative for cross-country currency transfer when I was moving from Canada to the United States, to two years ago when I matriculated through YCombinator’s W20 cohort ideating on a virtual co-op that provided benefits for gig workers (aka a driverDAO), to a few months ago joining OrangeDAO.

The rate of growth in the web3 ecosystem is explosive.

Fanning this fire is a surge of brilliant builders who won’t sit idly by to accept the mediocrity that is the current iteration of the internet.

In a one-liner – it’s the next era of the Internet. Web 3.0 is the paradigm shift towards developing a more democratized Internet – an Internet that is governed by the collective rather than by corporations and large organizations. 

Web 3.0 manifests through new technologies, such as cryptocurrencies, virtual and augmented reality, AI, and more. However, the Web 3 movement isn’t spearheaded by new technologies, but rather by a shift in how we as humans view and value the Internet. Web 3.0 is about creating an Internet for the people, by the people. 

Now, some people would have you believe that Web 3.0 is about a world where middlemen don’t exist, where every protocol has its own token, and companies all run on various blockchains. In my opinion, this belief largely misses the mark of reality and while the intentions of these pontificators are sincere, they are not practical in nature. 

Web 3.0 is about rearchitecting the existing services and products of the Internet so that they benefit people rather than entities.

Cryptonetworks (Bitcoin and Ethereum) and artificial intelligence will be a means for achieving this goal. While it’s impossible to predict the future, I believe a world where Web 3.0 is actualized will have open-source protocols at the foundation while businesses act as interfaces that provide convenient access and additional features. Data will still be used to drive decision making but will not be used against the consumer. Data rights will be protected rather than stomped over in search of profits. Incentive and market mechanisms will help ensure that information is trustworthy and verifiable. 

A Web 3 world will prioritize the sovereign individual rather than the wealthy elite and rent-seekers of the world. The rearchitecting of systems and protocols will focus on democratization and decentralization. 

If this is a world you also believe in, hit me up at joannazhu.ca@gmail.com, DM me @joandthezhus or we can grab coffee if you’re based in the SoCal area.

Let’s build a better, fairer, and user-first internet internet together. 🚀

-Jo