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On the inevitable journey into the mainstream, crypto might replace one gatekeeper with another. Are we ready for this sacrifice?
The estimated windfall Apple got from its App Store in 2020 is $67 billion. Thatās up from $50 billion in 2019, a 28% increase. Even as the company has lowered its commissions for smaller developers, the App Store remains a major component of Appleās bottom-line profits. And itās not just Apple taking a cut of developer revenue: On Android, the worldās most popular mobile operating system, the Google Play Store netted $38.6 billion in 2020.
Thatās over $105 billion in revenue from the top two app stores combined. Itās no wonder that regulators in many countries are closely considering whether there is sufficient competition in the marketplace. So it should come as no surprise that Coinbase, Americaās most visible and well-known crypto exchange, also wants to be the on-ramp to the decentralized application economy.
But what do we sacrifice when we replace one gatekeeper for another? Does it jeopardize the decentralized ethos and accessibility for all thatās sacred to many crypto believers? These are important questions worthy of discussion as we build on our momentum and push further into the mainstream.
Related: Decentralization vs. centralization: Where does the future lie? Experts answer
The 80/20 rule
Vilfredo Pareto had it right with his 80/20 rule: 80% of revenues comes from 20% of customers. However, in the case of Appleās App Store, itās more like the 95/2 rule: 95% of revenue comes from the top 2% of apps.
Letās assume that a decentralized application (DApp) store would reflect a similar reality, where the most successful apps generate the most revenue. That means any DApp store that managed to secure the most popular apps would have a huge advantage. The most well-funded platforms would spend lavishly to gain exclusivity and secure gatekeeper status. Then, anyone that wanted to access the top apps would need to go through that gatekeeper.
The monopolistic elements of any app store are what make the economics so lucrative. If you own the rails, you own the profits ā itās that simple.
But the 80/20 rule shouldnāt extend to Web 3.0 economics. Rather than many profits for the few, itās many profits for many more, with users participating in the governance, growth, maintenance and daily operations of the ecosystems they favor. The ownership aspects of the Web 3.0 economy distribute rewards to ecosystem participants more evenly based on their contributions. Itās a more balanced dynamic that proposes a new way to do business.
Related: Is a new decentralized internet, or Web 3.0, possible?
Building the Web 3.0 DApp store
What will it take to ensure truly decentralized distribution for DApps? Weād need a DApp store that meets a few criteria:
- Governance ā first and foremost, a DApp store would be run by the community. There would need to be a decentralized autonomous organization to vote on all governance issues, such as commissions, security, etc.
- Ownership ā profits would be distributed to the community according to its governance structure. There would also need to be funds reserved for the organization to manage app verification, secure the system and maintain the community.
- Tokenomics ā thereās an opportunity to do some very interesting things around incentivizing developers to use the platform exclusively and do other key tasks like support the distribution infrastructure and other essential technologies.
- Interoperability ā users should be able to move freely between different DApp stores, taking their apps (and their data) with them. There can be no one DApp store to rule them all.
Related: Game theory meets DeFi: Bouncing ideas around tokenomic design
Apps are the center of the digital economy, something that will continue as we progress toward Web 3.0. The on-ramps into decentralized finance, nonfungible tokens and other emerging digital assets require mobile access points that bridge the gap between those who have laptops and those who only access the internet via mobile devices.
Weāre in the midst of the transition from Web 2.0 to Web 3.0. While gatekeepers remain in positions of strength, they will continue to pursue user growth alongside decentralized protocols looking for access points to new users.
When weāve truly transitioned into Web 3.0, weāll likely see DApps that serve smaller niches than they do today. Weāll see a vibrant ecosystem of DApps that are more focused and developed by compact teams.
Related: How NFTs, DeFi and Web 3.0 are intertwined
Weāll also see apps deconstructed into component parts. For instance, a decentralized exchange will be deconstructed into several layers: the user-facing front-end, the aggregator back-end and the liquidity provider as infrastructure. Itās akin to the āmonolith to microservicesā evolution in the software cloud infrastructure space.
Without true decentralization when it comes to apps, weāve simply replaced one gatekeeper for another. The key here is going to be the communityās commitment to supporting a diverse array of app store gateways.
Whatās at stake?
The risk is that, on our inevitable journey into the mainstream, convenience and ease-of-use will trump decentralization. In fact, thatās often why centralized gatekeepers emerge: they make things less complicated, which in turn makes things more accessible to the masses.
As the crypto community works together to build a thriving digital asset economy that benefits the majority, we must all keep these tradeoffs in mind. We absolutely must make digital assets easy to understand and accessible while also pushing back on any arguments that centralizing power in the hands of the few is a worthy tradeoff on the fast track to the mainstream.
We can ā and should ā push back to protect what makes our shared vision so powerful: a future thatās accessible to all.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the authorās alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Diane Dai is the co-founder and chief marketing officer of DODO, a decentralized digital asset exchange based in Singapore. She is a pioneer in the Chinese DeFi community and has extensive experience in marketing, social media management and business development. Prior to founding DODO, she spent time at DDEX and CypherJump.Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.