Protocol Frontends as Competitive Marketplaces
About six months ago Uniswap Labs made the announcement that they were removing some tokens from their frontend UI.
This set off a wave of arguments on CT about what it means to be decentralized. Uniswap is arguably one of the most decentralized protocols in DeFi, but what does that matter if users will be interacting with your protocol on a centralized web server?
I watched a number of responses to this. One of the more popular ones was to evade regulation by hosting the frontend on IPFS or have users install frontends locally. While this is certainly a valid approach, I think it’s more important to find solutions that will scale to the masses.
A tweet from Moxie the other day got me thinking about this again.
He had a number of valid criticisms of “web3”, but one of his main points was that users do not want to run their own servers. To me this is exactly why having users direct themselves to official open source IPFS links or downloading and running their own instance is not the way to scale web3. We already have a much better tool for that. Free markets.
CT needs to stop thinking in terms of the protocol being linked to a single company running an official frontend. It’s going to be a target for regulation and will end up being a much worse user experience. Our focus instead should be shifting to placing the bare bones protocol at the center and having multiple, jurisdictionally distinct, for-profit businesses providing services at the edges.
MakerDAO does this already. There is no official UI. Instead there are multiple companies competing to get users onto their platforms. They each charge fees in order to fund development of truly kick ass websites.
There is a reason why this system works well. It works well because in a truly competitive environment companies have to work hard to get your business. This means doing everything they possibly can to put your experience at the center of their business model.
Now you might say, “well aren’t we just reinventing web2 with blockchains on the backend?”. And my answer to this is yes, absolutely and we should. Web2 has great UX for the average user. There’s a subtle difference here though and that is the part about the backend being the blockchain. This is very important for the “truly competitive” part above and why web3 is superior.
If PayPal or Facebook want to shut down your account, you have no choice. They own all your data, so if you move to a competitor you lose your data and have to start from scratch. If PayPal or Facebook instead have all your data on the blockchain then sure they can ban you, but you can just pick up and leave for their competitor with all of your data in-tact. You always have the power to opt-out. This is the key difference.
Mark Cuban tweeted this the other day:
Although he later found the feature in settings, it’s entirely possible this feature might not of existed. In web2 the best you can do is pressure Twitter to implement this feature. Maybe they want to, maybe not. It’s possible that the spam and inflammatory remarks drive higher engagement, so it’s not in their best interest to give you this option.
Web3 gives you an opt-out by placing all your data on the blockchain (or storage-optimized adjacent services). Twitter is super annoying? Pack up and leave to a startup that is using proprietary AI technology to auto-filter spam. You keep your social graph, posts, avatar, everything.
An example generic Social Media Protocol:
You define the base protocol which should always aim to be maximally decentralized, permissionless and uncensorable. You then surround the protocol with frontends that compete for end users. This is how we get the UX of web2 with the user-empowering nature of web3.
Don’t like Ads? Use Pay Twitter. Can’t afford a monthly subscription? Use a free version with ads. Hate the arguments? Use Nice Twitter. Every single service can have it’s own proprietary business model aggregating and filtering content in just the way you like it.
The solution to increasing regulatory action is not to evade with services like IPFS, instead we want to meet the users head on with a multitude of frontend solutions. The spoils will go to the companies that can work in regulatory frameworks, and give users a great experience. Individuals can always fall back to the core permissionless protocol if the government is hostile in your jurisdiction.
I propose we stop using the term Decentralized Frontends to refer to a bunch of open source Github repositories that users run their our own machine and instead use this term to refer to the larger basket of options that includes individual companies providing services. Web3 is all about user choice.