Progressive Decentralization: A Playbook for Building Crypto Applications in Japan


Hatched by Glasp

Jul 21, 2023

4 min read


Progressive Decentralization: A Playbook for Building Crypto Applications in Japan

In recent years, the world has witnessed the rise of crypto applications and the adoption of blockchain technology. One of the key principles driving the development of these applications is progressive decentralization. This approach focuses on gradually transferring control and ownership of the application from the core team to the community. By doing so, it aims to create a more inclusive and user-centric ecosystem.

However, implementing progressive decentralization is not without its challenges. One of the main concerns is the risk of engendering a community of speculators rather than real users. Without a working product, ownership becomes worthless, and the community may lose interest. To avoid this, it is important to prioritize product/market fit. Building a crypto application requires the same ingredients as a traditional startup: a great team, lean development, tight execution, and quick learning. Without these fundamentals in place, launching a token prematurely could trip compliance wires and distract from product development.

Community participation is another crucial component of progressive decentralization. To foster community contribution, it is essential to establish an economic incentive. A fee-per-call business model, similar to popular API micro-services like Twilio or Stripe, can align the community around the project's success. However, it is important to introduce fees only once there are strong network effects to ensure that the protocol remains minimally extractive. In other words, the fees should cover relevant costs rather than seeking to maximize profit. This approach incentivizes community contribution while avoiding excessive extraction from users.

Sufficient decentralization is the ultimate goal of progressive decentralization. The core team should gradually cede majority ownership and control of the application to the community, ensuring that it becomes community-owned and operated. This not only mitigates platform risk but also creates a sustainable ecosystem where the community has a stake in the success of the application. Failing to formalize real community participation can lead to an apathetic community with low participation rates, resulting in heavy dependency on the founding team.

In Japan, the second-largest SaaS and software market in the world, building a crypto application requires a deep understanding of the local culture, network, and ecosystem. It is crucial to have people on the ground who can navigate these nuances. Unlike countries like the UK or the US, establishing a corporation is not enough. Hiring local sales and marketing professionals can help bridge the cultural gap and facilitate business growth.

Ivan Zhao, the co-founder of Notion, a popular productivity tool, also emphasizes the importance of attention to detail and craftsmanship. In Japan, this attention to detail is ingrained in the culture. Living in cities like Kyoto, where simplicity and meticulousness are valued, can inspire a greater focus on quality. This attention to detail extends beyond the product itself and encompasses all aspects of the business, including support, sales, and customer success. Seeing software as a service and considering hospitality as an integral part of the service can enhance the overall user experience.

Finding the right talent is a critical aspect of building a successful crypto application or any startup. Notion, for example, values craftsmanship and emphasizes the balance between speed and quality. Hiring the right people who possess the necessary skills and share the company's values is essential. Feedback is also seen as a gift in companies like Notion, fostering a culture of continuous learning and improvement. Additionally, having a team that is dedicated and passionate about their work can create a positive and productive environment.

When making decisions, it is crucial to consider the long-term implications and whether they align with the company's values. Notion, for instance, asks whether a decision is something they would be proud to see on the front page of The New York Times. This mindset ensures that each decision is carefully considered and aligned with the company's overall vision and mission.

In terms of branding and identity, Notion takes a unique approach by avoiding the use of actual face photos on brand pages and hiring pages. By focusing on other aspects and avoiding the use of faces, they create a sense of distance between the viewer and the product, allowing for a more immersive experience.

In conclusion, progressive decentralization offers a playbook for building crypto applications in Japan and globally. By prioritizing product/market fit, fostering community participation, and ensuring sufficient decentralization, crypto applications can create a more inclusive and user-centric ecosystem. Attention to detail, hiring the right talent, and making decisions aligned with the company's values are also crucial for success. By following these principles, crypto applications can harness the power of blockchain technology and revolutionize various industries.

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