TL;DR: In web2 communities, participation is limited to giving and receiving cheap feedback in the form of likes, and democratic processes are inhibited by filter bubbles and echo chambers. As a result, web2 communities are narrowed down to communities of opinion. Web3 communities, on the contrary, are communities of participation because members partake in decision-making processes and financial profits. Participation is realized by shared ownership based on private ownership, which brings members skin in the game and incentivizes them to act and make good decisions. The tools of communities of participation are composability and open source. They enable the communities to share knowledge, collaborate, and build on top of each other, even beyond the individual communities’ borders.
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Over the last weeks, Constitution DAO raised over $40m from over 17k individuals to collectively bid on one of the thirteen surviving copies of the US Constitution auctioned off at Sotheby’s on November 19th. They didn’t win the bid. But they showed what crypto communities are capable of by achieving this symbolic act in a decentral manner.
However, what ConstitutionDAO did wouldn’t have been possible without the previous achievements of web2, which are communication and collaboration on a global scale in real-time. We’ve seen incredible social and political movements happening because of web2. Metoo, blacklivesmatter, and social media usage during Arab Spring had real effects on social change.
But the possibilities of web 2 came with downsides. Trolling, fake news, and cancel culture are buzzwords today’s online communities are infamous for.
All communities have ingroup members that hold common values, and there are outside “enemies” who endanger those values with contradicting beliefs. Centralized social media companies found their strategy for profit in taking advantage of this human group behavior. They keep users on their platforms with implemented mechanisms that push extreme opinions and emotions because feelings and identities are what people care about.
Social media make us feel part of a community. But our participation is limited to clicks and cheap judgment in the form of Likes. Free decisions and nuanced discussions are taken away from us by filter bubbles and echo chambers. Those dynamics inhibit democratic processes and promote homogeneous, extreme, and shortened opinions. Thus, the social of web2 narrows down to a conformist community of opinion.
Web2 communities are opinion communities. In contrast, web3 communities are communities of participation.
Participation can mean different things. Firstly it can be political participation by decision-making and engagement in governmental processes. Secondly, it can be financial participation through ownership, allowing to benefit from the performance of an asset or company.
Web3 communities promise both types of participation to their members. Decentralized autonomous organizations, the communities of web3, contain the solution in their name. Decentralization is met when power is distributed between many. And financial participation, as well as decision-making, is power.
Decision power can be distributed among the individual members in different ways. For example, voting power can be equal for everyone, or dependent on contribution. There are still many open questions on how to realize decentral governance.
Financial participation in web3 communities is less opaque and more settled. It is realized by shared ownership. Either directly by owning a piece of a collectively purchased asset or by owning tokens representing the community’s shares.
If ConstitutionDAO had won the bid on the rare copy of the US Constitution, all contributors to the crowdfund would have owned a percentage of it. Whatever would have happened to the value of the historical piece, everyone had shared the monetary ups or downsides.
Anyone can receive community tokens by contributing. That also comprises using the community’s products because, in the end, it’s the consumers who decide what has value. Retroactive airdrops incentivize early users with possible retroactive rewards. ENS just airdropped their token on November 8th, four years after the project’s launch in 2017, and made some long-time users gain tens of thousands of dollars overnight. The token’s value has increased significantly since then (131% at the time of writing).
Owning a piece of a community in the form of tokens brings every member skin in the game. Skin in the game incentivizes people to act and make good decisions.
In web2 communities, the only things to gain or lose are attention and social confirmation. Even content creators who offer value to the platforms need to find additional ways to get sponsored. There is no incentive for users to establish a nuanced way of discussion, as good arguments cost much more effort than liking or canceling.
The incentive structures of web3 communities make them an unknown mixture of capitalism and communism.
In capitalistic societies, business owners profit from the means of production. Marx dreamed that in communist societies, workers would overthrow the capitalist system of private property and make the factory a common good. In web3 communities, shared ownership is based on private ownership. The profit for one entails the profit for everyone.
Private ownership yields incentives to care about the things you own. Not for nothing, economic science suggests that ownership prevents the tragedy of the commons, the tendency of depletion of resources that are “the commons” but not owned by anyone. To maintain a good condition of common goods, people would need to put effort without gaining anything.
However, there are common goods in web3 communities, not owned by anyone but accessible to everyone and free for usage to potentially make a profit. The ideal of open-source knowledge and code undermines the concept of intellectual property. There is a prevailing spirit in web3 communities, postulating that going alone doesn’t bring you as far as going together.
The tools of communities of participation are open source and composability.
Inefficiency and chaos are negative associations with decentralized organizations. Admittedly, web3 communities are chaotic. Yet they can be efficient because of the technological advantages of composability and the ideal of open source. Everyone can reuse what others have already built if it works well.
The possibilities of composability and open source allow many new communities to rise in no time. That is happening right now. The potential of small communities to double in value brings incentives for skilled people to join young communities from the start.
Contrary to new communities, those that already ‘made it,’ having large treasuries and many members, are often exclusive. Membership can depend on owning a rare NFT or a specific amount of community tokens.
The opportunities and possible gains of starting a new web3 community with a few dedicated contributors are high. But how long will this abundance of opportunities continue? The crypto space is still small. How will communities of participation evolve when more people want to participate? Can the principles of decentralization, shared ownership, and open source ensure fair distribution of power over time?
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