The True Reason I Must Paint

The True Reason I Must Paint

In the world of art, there is a certain allure that captivates the hearts and minds of both artists and viewers alike. It is a realm where beauty is not defined by a set standard, but rather, it is subjective and deeply personal. As an artist, I have often pondered the true reason behind my need to create art. And in my contemplation, I have come to a realization - the beauty lies not in the object itself, but in the emotions and connections it evokes within us.

When I pick up a brush and immerse myself in the act of painting, I am not simply fulfilling a job or a duty. No, I am a person who paints, driven by an innate desire to express myself and connect with others through my art. For me, the act of painting is a means of communication, a way to convey my thoughts, emotions, and experiences in a language that transcends words.

In the world of Web3 and cryptocurrencies, we can also observe the power of network effects. These network effects are intricately woven into the fabric of these platforms, creating a web of interactions and connections that shape their value and utility. However, unlike the network effects of Web 2.0, the network effects in Web3 are still in their infancy, and their strength and defensibility are yet to be fully realized.

One of the key aspects of network effects in Web3 is the addition of more nodes, which increases the capacity and value for buyers of tokens like Ether. As more token buyers enter the network, the value of the token increases, making it more attractive for nodes to validate transactions. This creates a cross-side network effect, where token buyers can also become validators and vice versa. However, this network structure also poses challenges, such as a unique form of negative network effect and the risk of commoditization.

The addition of token buyers beyond a certain point can actually decrease the value of the network for all other token buyers. This is because blockchains are identity agnostic, meaning that the identity of each node does not matter to others. Each new node adds less incremental value to the network as it scales. This is in contrast to the identity-focused nature of the telephone network, where the ability to contact a specific person depended on their connection. This difference in network structure has led to a proliferation of competing blockchain protocols and tokens.

In the world of Web3, there is another layer of network effects that can be observed. These network effects are created by the smart contracts built on top of the blockchain protocols. The more smart contracts there are for a protocol, the easier it becomes for developers to build new ones. However, the cross-chain composability of smart contracts across protocols may dilute the impact on defensibility.

As we delve deeper into the realm of Web3 projects, it becomes clear that evaluating their potential requires a careful examination of various factors. How do users interact with others within the project? Does the addition of a user increase value for all users? How does scalability and the limitations of growth affect the value? And perhaps most importantly, how does defensibility change as adoption grows?

Looking at the example of Axie Infinity, we can see how the combination of different network effects creates a powerful ecosystem. Axie Infinity combines interaction network effects with marketplace network effects, reinforcing the value and defensibility of the platform. The Axie Marketplace, in particular, is highly defensible due to the unique nature of its supply. It is likely to remain the go-to destination for buying in-game items.

In the world of art, there is also a form of network effect that can be observed - the community of artists and art enthusiasts. Within this community, the value and defensibility of individual artists can depend on the tribal and psychological switching costs of the community. Just as in Web3 projects, the long-term winners in the art world are likely to emerge after a phase of experimentation and exploration.

So, what can we take away from these observations? First, it is possible that true network effects may no longer be the primary source of defensibility in this era. Instead, it may depend on the strength of the community and the emotional connections within it. Second, we may still be in the early stages of the Web3 cycle, where utility and stronger network effects are yet to emerge. This echoes the early years of Web 1.0 with Yahoo and Web 2.0 with Myspace, where experimentation paved the way for the emergence of the dominant players.

In conclusion, Web3 projects and the world of art share common threads in their network effects and the factors that determine their value and defensibility. By understanding the dynamics of these network effects and evaluating the potential of projects based on their interaction, scalability, and defensibility, we can navigate this new era with greater clarity and insight.

Actionable Advice:

1. Dive deep into the community and emotional connections within a Web3 project or art community. Understand the tribal and psychological switching costs that can influence defensibility.
2. Evaluate the scalability and limitations of growth within a project. Consider how the addition of new users affects the value and utility.
3. Stay abreast of the evolving landscape of Web3 projects. Embrace experimentation and exploration, as the long-term winners are likely to emerge after this phase.