Unbundling the unbundlers - The end of winner-takes-all

For instance, a Web2 marketplace provides a central search interface and a central reputation system. In a Web3 d-commerce ecosystem, the best search interface and the best reputation system gain market adoption, not just the one sponsored and enforced by the central market maker.

Web3 extends this open market competition from producers to the creators of market infrastructure.

Web2 platforms encourage open market competition in production by reducing search costs for consumers, commoditizing distribution for producers and encouraging price transparency. This leads to open market competition among producers to a marketplace and the best producers bubble to the top of search results, and benefit from market exposure.

Web3 provides a new paradigm for managing and enabling transactions. In the management of markets, the single biggest shift enabled by Web3 is the unbundling of market infrastructure from market governance.

As the ecosystem builds market infrastructure components in a decentralised manner, value accrues at the protocol layer (growing token value) which provides reliability of governance across all market infrastructure components. Conversely, as the token value increases, more market participants come on board to create new forms or market infrastruct... See more

The protocol layer still provides reliability of market governance, without requiring a central intermediary or arbiter. However, market infrastructure components are decentralized and may be owned across various players in the ecosystem. This decentralisation allows a greater degree of customisation in market infrastructure while also allowing sha... See more

In the Web3 world, market infrastructure gets unbundled from market governance. While the core components of market governance are encoded into the protocol layer, components of market infrastructure may be built by the ecosystem around the protocol.

For instance, a marketplace like Ebay bundles seller onboarding, seller analytics, buyer onboarding, buyer decision support, search functionalities, and exchange infrastructure. All these components will be unbundled in a Web3 world.

While Web2 benefits from network effects in production, Web3 benefits from a mutually reinforcing cycle where greater adoption of the protocol for governance drives greater creation of marketplace infrastructure, which in turn reinforces the adoption of protocol. Once such a loop is set in motion, Web2 companies building market infrastructure withi... See more