Unlocking Beauty and Network Effects in a Changing World

Unlocking Beauty and Network Effects in a Changing World

Beauty is subjective, and yet, it exists in everything around us. However, not everyone has the ability to see it. Society often imposes its own standards of beauty, leaving little room for the unconventional. But what if we challenged these norms and chose to see beauty through our own eyes? What if we embraced the uniqueness in people, environments, situations, and experiences?

In the quest to redefine beauty, we must first understand that it is a personal journey. It is about becoming yourself and not being judged by societal standards. Each one of us holds the power to decide what we find beautiful, without relying on handed-down guidelines. By being observant and independent, we can discover a different quality of life, where the beauty lies in embracing our individuality.

While beauty is a subjective concept, the world of technology has its own set of complexities and evolving dynamics. One such phenomenon is the rise of cryptocurrencies and non-fungible tokens (NFTs) in Web3. These innovative digital assets have their own network effects, which differ from the traditional web 2.0 variants.

In the realm of Web3, network effects are natively layered, meaning that every project combines multiple forms of network effects. These effects, however, are weaker and less defensible compared to their web 2.0 counterparts. The value of the Ether token, for example, increases with the addition of more nodes, as it enhances capacity and validates transactions. This creates cross-side network effects within a 2-sided interaction network, where token buyers can also be validators and vice versa.

However, this network structure also presents challenges. Firstly, there is a unique form of negative network effect, where the addition of a token buyer decreases the value of the network for other token buyers. This is due to the identity-agnostic nature of blockchains, where the identity of each node does not matter to others. Secondly, there is a risk of commoditization, as competing blockchain protocols aim to become "large enough" to compete, resulting in a sea of protocols and tokens.

Web3 platforms also lack the "matching" or "app store" component seen in Web 2.0 platforms. Additionally, there is no underlying product other than the Ether token. These factors have led to the emergence of numerous Layer 1 blockchain protocols, expanding the scope of the network effects. The more smart contracts there are for a protocol, the easier it is for developers to build new ones. However, the cross-chain composability of smart contracts across protocols may dilute their impact on defensibility.

The value and utility of Web3 network effects are still unclear, as the technology is in its early stages. However, projects like Axie Infinity demonstrate the potential of combining multiple network effects. Axie Infinity incorporates game mechanics, a marketplace, and decentralized autonomous organizations (DAOs) into its network. The marketplace component, with its differentiated supply, adds defensibility and becomes the go-to destination for in-game items. DAOs, described as "group chats with a shared goal and money," create another form of interaction network, where identity influences defensibility.

In evaluating the potential of Web3 projects, several key factors come into play. How do users interact with each other? Does the addition of a user increase value for all users? How does scalability affect value? And most importantly, how does defensibility change as adoption grows? These questions will be crucial in determining the long-term success of Web3 projects.

So, what actionable advice can we derive from these insights?

1. Embrace your own definition of beauty: Challenge societal norms and discover beauty through your own eyes. Be observant and independent, and you will experience a different quality of life.

2. Embrace the potential of Web3: Explore the world of cryptocurrencies and NFTs, and understand the unique network effects they offer. Stay updated on the evolving dynamics of Web3, as it has the potential to reshape industries and create new opportunities.

3. Evaluate Web3 projects based on key factors: When considering investing or participating in Web3 projects, analyze how users interact, the network effects at play, scalability limitations, and the defensibility of the project. Look for projects that combine strong network effect layers and have the potential to emerge as winners in the Web3 era.

In conclusion, beauty exists in everything, but not everyone sees it. By challenging societal norms and embracing our own definitions of beauty, we can unlock a different quality of life. Similarly, in the world of technology, Web3 presents new opportunities and network effects that require careful evaluation. By understanding the dynamics of Web3 and embracing its potential, we can navigate this changing landscape and uncover new possibilities.