The Web Needs A Better Model

What Happened

Billions of dollars were channeled into speculative ICOs, up to 90% of which suffered major losses or became defunct within a year. This culminated in the 2021 bull market, where the crypto market cap briefly touched $3 trillion, and “Web3” was diluted into a catch-all marketing term to attract investors.

Market Context

Over 80% of Netflix viewing is dictated by its recommendation algorithm, and Amazon is far from a neutral marketplace — its matching engine gives preferential treatment to Amazon’s own products, and third-party sellers pay up to 50% of their revenue in fees for the privilege of competing for Amazon’s customers.

Why It Matters

The primary barrier to peer-to-peer digital commerce has been the risk that one party won't fulfill their side of a deal. State channel (ERC-7824) design eliminates this risk without sacrificing efficiency. Before transacting, parties commit funds to an on-chain smart contract. This acts as a security deposit. If one party walks away, their committed on-chain funds ensure the other party is made whole. By settling profits and losses in near real-time, the system removes the need for a trusted central intermediary.

Details

More than ever we are at the mercy of platform-based giants like Google and Amazon, who act as digital landlords. We have become cloud-serfs, giving our data and producing trillions in value for algorithms we will never own.

The promise of Web3 was a world beyond these digital landlords.

Reclaiming the Web3 thesis

Web3, as defined by Ethereum co-founder Gavin Wood in 2014, was a "post-Snowden web" — an antidote to centralized control built on peer-to-peer trust.

Gavin’s architectural vision has been twisted.

Ethereum created “more individual millionaires than any other project” and together with the rest of the ICOs wave shifted the focus from technological principles to financial gains.

The mission of building a trustless, peer-to-peer internet would for a time being be buried under layers of hype.

Intermediaries no more

The power of centralized platforms stems from their role as a trusted intermediary.

You trust Amazon to handle payments and arbitrate disputes with the sellers; you trust Google to vet, rank and present information. This trust-as-a-service model creates a golden cage: the intermediary owns the rules, the data and a significant cut of the value exchanged.

Early Web3 attempted to solve this problem with on-chain transactions, where every interaction is a public, permanent record. But this is like asking a global commerce system to run a single, congested highway. Real-world commerce requires an infrastructure that can match its speed and complexity — not everything should be an on-chain transaction.

State channels present a superior infrastructure

Think of a state channel as a high-speed, private lane between two parties that bypasses the congested blockchain. Thousands of interactions — value transfers, data permissions and contract updates — can happen instantaneously and for free, with each step cryptographically signed.

For commerce: instead of renting space on Amazon’s platform and paying up to 50% in fees, a buyer and seller open a direct channel governed by an impartial smart contract.

For data: instead of surrendering your life story to Google, you open a channel with an app, granting temporary, paid access to your data and revoking it at will.

This combination of on-chain security and off-chain efficiency enables a new creation: the autonomous enterprise. This is a system where business logic is encoded onto smart contracts, executed transparently and operating globally without the need for a traditional corporate structure.

Bitcoin removed the need to trust the government’s money printing. Ethereum removed the need to trust people to enforce contracts. Now it’s time to remove the need for people to blindly trust platforms.