“Decentralisation” is generally perceived as the most important metric for judging the success of a blockchain project. It is the holy grail of blockchain technology that participants seek to achieve by expanding their network across many nodes and multiples geolocations. But this conception of decentralisation was heavily influenced by early Proof-of-work protocols and their definitions of “censorship-resistance”. Web 3.0 requires a different approach that we will outline in this article.

Plurality of blockchain consensus

Decentralised networks have many advantages compared to their centralised counterparts, as they are designed to be low-trust and high participation. Unlike back-end servers that are managed and administered de facto by a single entity with multinational ramifications, Proof-of-Stake blockchain (full or light) nodes can be run by anybody who owns a PC, a laptop or a mobile device. This is in sharp contrast with Proof-of-Work blockchains where the pre-requisites in terms of resources and knowledge are often so high that ordinary people are locked out of effective participation and, instead, directed towards speculation on token’s price appreciation.

But there is more to decentralisation than hardware and routing. Off-chain consensus is overlooked as a core feature of blockchain technologies, yet it remains the epicentre of all community-related disputes. This is an area where two radically opposite schools of thoughts still persist to this day. While most PoW blockchains are committed to keeping their communal activities separate from on-chain mechanisms, new PoS blockchains are choosing to incorporate governance into their network’s lifecycle.

Consequently, there has been a rise in experimentations with PoS designs such as shared security, blockchain hubs, blockchain shards, on-chain governance, and self-sovereignty. Ethereum, Cosmos, and Polkadot are the three blockchain ecosystems that crystallise developments that have been bundled under the label “Blockchain 3.0”. Where PoW blockchain projects relied on insularity to cement their development operations, Blockchain 3.0 ecosystems prioritise interoperability to grow their communities.

Diversity of network participants

“Web 3.0”, a term coined by Dr Gavin Wood, is the idea that web applications can become public goods and be shared among different creators, actors, and contributors. It further extends the concept of decentralisation to the client from which users can choose what data to read or write, how to display it, and where to store it. Unlike current web applications that live on permissioned stores and require multiple KYC threads to be reached, Decentralised applications are permissionless entry points for interaction with distributed data from IPFS and blockchain networks. In this context, the pre-requisites to participation have been lowered to the bare minima: a cryptocurrency account and a Web3 wallet.

One of the most striking features of Web 3.0 is its ability to generate network effect from seemingly nothing. While the core proposition of blockchain technologies still remains difficult for most people to grasp, web technologies already have an established base of pioneers and users. This means that current web users are well-positioned to gauge the value that projects can bring into their digital lives and, as such, they have become the main drivers of adoption for DApps and their underlying blockchains.

As a result, Blockchain 3.0 network participants (i.e researchers, engineers, validators/miners, governors, vault/bridge workers, developers, and users) have been incentivised to come together and (re-)create communities by design. And since all participants are free to build or break ties to pursue their own interests, there has been an increase in activities and operations across numerous blockchains in recent times. Decentralised Autonomous Organisations that strive to find new ways to generate long-lasting value for their members are becoming the fabric of the “Decentralised web”.

Blockchains that operate with Proof-of-Stake consensus and incorporate Cross-chain communication are the foundational technologies that will sustain Web 3.0 in the foreseeable future. It is on these third-generation platforms that a plethora of on-chain and off-chain services are being built by a variety of participants looking to cater for their collective needs. It goes without saying that, ultimately, the goal of these platforms is to facilitate the inevitable merging of real life people and their digital personas into a malleable but persistent “Metaverse”.

References:

Gavin Wood: Why we need Web 3.0

Ethereum.org: Web2 vs Web3