The Evolution of Web3 Partnerships

The landscape of Web3 partnerships is rapidly evolving, moving away from the once-popular 10K NFT drops on platforms like OpenSea. Pedro Miranda, who works on NFT technology at the Solana Foundation, points out that the future of Web3 adoption likely lies elsewhere. This shift in focus reflects a maturing industry that is beginning to recognize the true potential of blockchain technology beyond simple collectibles.

Pedro explains, "If you actually look at any on-chain analytics, no Web2 partnership in Web3 has produced an increase in on-chain, a meaningful increase in on-chain transactions." This observation challenges the notion that partnerships with large Web2 brands automatically lead to increased blockchain adoption or usage.

Instead, the Solana Foundation is dedicating approximately 80% of its efforts towards working with crypto-native teams. These are the innovators who are pushing the boundaries of what's possible with blockchain technology, focusing on concepts like ownership, composability, and developing applications that leverage the unique properties of blockchain networks.

The Role of Social Proof in Web3 Adoption

While the impact of Web2 partnerships on actual blockchain usage may be limited, they still play a crucial role in terms of social proof. Pedro defines social proof in this context as "someone who has no knowledge of Solana goes on their website, and sees that they're building on the Solana network. And that is like, hey, this is legitimate, and this increases the positive perception that they have with Solana."

This social proof can be particularly valuable when approaching new potential partners or users who may be unfamiliar with blockchain technology. For example, being able to point to a successful activation with a well-known brand like Boba Guys can open doors to conversations with other businesses in related industries.

However, it's important to note that social proof primarily impacts retail users and consumers, rather than B2B relationships. As Austin points out, "The people who are most valuable to be building on Solana shouldn't be convinced by the fact that ASIX did a really cool shoe drop using USDC on Solana. They should be able to just look at the technology, do the work themselves, and be like, 'Oh, we're real engineers at a real company. We're not going to take the word of another company to say this is interesting.'"

The Shift from B2C to B2B in Web3 Partnerships

A notable trend in the Web3 space is the pivot from business-to-consumer (B2C) activations to business-to-business (B2B) applications. Pedro observes, "We're seeing a lot of web2 companies interested on how a unified data layer can automate and improve their back end and their operations more so."

This shift is driven by several factors, including the recent downturn in the crypto market and a broader reassessment of how blockchain technology can provide real value to businesses. Companies are now looking beyond flashy consumer-facing NFT drops and exploring how blockchain can solve actual business problems.

One area where this B2B focus is particularly evident is in loyalty programs. Pedro explains that companies are exploring how blockchain technology can make it easier to collaborate with different partners and manage complex loyalty ecosystems. For example, the recent partnership between JetBlue and Starbucks, while not blockchain-based, illustrates the kind of inter-company loyalty point transfers that could be greatly simplified using blockchain technology.

The Challenges of Legacy Financial Systems

The inefficiencies of traditional financial systems were highlighted by Pedro's experience working at Silicon Valley Bank (SVB) before joining the crypto space. He describes spending a significant portion of his day just ensuring that payments would go through, using systems designed in the 1970s that required extensive manual processes.

Pedro recalls, "I would say 30% of my day was actually making sure that the payments would go through. So making sure that the startups actually received their money, for example, and we would be using these systems that were, I don't even know how to describe it, it was designed in like the 1970s where it was such a manual process."

This experience underscores the potential for blockchain technology to streamline and modernize financial processes. While regulatory considerations are important, many of the inefficiencies in the current system stem from outdated technology and ingrained institutional cultures resistant to change.

The Case for Central Bank Digital Currencies (CBDCs)

The discussion around Central Bank Digital Currencies (CBDCs) reveals a complex landscape of potential benefits and concerns. Pedro presents an interesting case for CBDCs as a tool for more precise monetary policy, particularly in scenarios like deflationary spirals.

He proposes a system where a CBDC could be issued with specific parameters, such as a time limit for spending or a decreasing spending window for each subsequent transaction. This could potentially increase the velocity of money in the economy, addressing issues like Japan's long-standing deflationary problems.

Pedro explains, "In my thesis was that in a hypothetical deflationary scenario, the United States government could issue a CBDC where you have X amount of days to spend it. And then, for example, you also are given $1,000, you give it to me, I have 30 days to spend it. That's a traceability part. I spend it and I give it to Mira. I can actually change the parameters and say, 'Okay, every single transaction, the amount of days to spend the money goes down by two days, right?'"

However, this proposal raises important questions about privacy and government control over personal finances. The potential for a CBDC to be used as a tool for surveillance and control, as seen in China's digital yuan rollout, is a significant concern that needs to be addressed.

Privacy Concerns and the Surveillance State

While the potential benefits of CBDCs for monetary policy are intriguing, they come with significant privacy concerns. The example of China's digital yuan (e-CNY) rollout serves as a cautionary tale of how CBDCs can be used to extend state surveillance and control over citizens' financial activities.

Austin points out, "We see in China, the e-CNY being rolled out, and it is sort of the latest extension of the surveillance state. Money can only be used for certain things. There's money that's transportation-specific. It is highly monitoring people's transactions."

This raises important questions about the balance between the potential benefits of more precise monetary policy and the fundamental right to financial privacy. In a democratic society, the implementation of a CBDC would need to come with strong privacy protections and limitations on government access to transaction data.

The Disconnect Between Crypto Twitter and Policymakers

One of the most striking observations from the discussion is the significant disconnect between the conversations happening on Crypto Twitter and those taking place among policymakers in Washington D.C. This gap in focus and understanding can lead to misaligned policies and missed opportunities for constructive engagement.

Amira Valliani, Head of Policy at the Solana Foundation, notes that while crypto enthusiasts on Twitter might be focused on the latest DeFi protocols or NFT projects, policymakers are often more concerned with issues like CBDCs. She estimates that "somewhere between 25 and 50% of like Democrats in particular when they're talking about like blockchain and web three policy, it's about CBDC. Whereas like crypto Twitter is like 1% CBDC, if that."

This misalignment can lead to frustration on both sides. Policymakers may feel that the crypto community is not engaging seriously with their concerns, while crypto enthusiasts may feel that policymakers are missing the transformative potential of blockchain technology in areas beyond government-issued digital currencies.

The Need for Constructive Engagement

The discussion highlights the importance of more constructive engagement between the crypto community and policymakers. Austin points out that many staffers and members of Congress are reading what's being said on Crypto Twitter, but often find the language and tone unconstructive.

He explains, "And a lot of the language that's coming out in crypto Twitter is not constructive. And the instinct is to read that and say like, all right, well, screw these people. They don't seem to be like, you know, helpful at engaging or be charitable towards my decisions."

This observation underscores the need for the crypto community to be more mindful of how they communicate about policy issues. By adopting a more constructive and nuanced approach, the industry may be able to better influence policy discussions and outcomes.

Crypto as a Tool for Progressive Goals

An interesting point raised in the discussion is the potential for blockchain technology to advance progressive goals, despite the current skepticism from many on the political left. Amira shares her experience at a recent "DAOs at Harvard" summit, where she encountered "a bunch of like super crunchy progresses talking about like essentially digital cooperatives and how DAOs could, you know, better help share power and like create these sort of new organizational structures."

This perspective contrasts sharply with the often negative view of crypto among progressive politicians and policymakers. It suggests that there may be untapped potential for blockchain technology to advance goals like economic democratization and community ownership that align with progressive values.

The Potential of DAOs and Digital Cooperatives

The discussion of DAOs (Decentralized Autonomous Organizations) and digital cooperatives highlights an exciting area of blockchain application that often gets overlooked in mainstream crypto discussions. These organizational structures have the potential to create more equitable and democratic business models.

Amira shares an example of a food delivery cooperative in Colorado that has reached a GMV (Gross Merchandise Value) of $10 million. This cooperative model allows restaurants to profit more from deliveries compared to traditional platforms like DoorDash or Uber Eats that take high commissions.

The cooperative is now looking to scale using blockchain technology, which offers advantages in terms of ease of calculation and cross-jurisdictional expansion. This example illustrates how blockchain can be used to create more equitable economic models that benefit small businesses and communities.

Blockchain as a Tool for Economic Reform

The conversation touches on the potential for blockchain technology to serve as a tool for economic reform and democratization. Austin points out that for many people, especially those with progressive leanings, crypto represents either "the truest expression of neoliberal capitalism run amok, or this is the truest expression of community oriented cooperative ownership of businesses that I've ever seen in my life."

This duality reflects the flexibility of blockchain technology and its potential to be shaped according to different economic and social visions. While some blockchain projects may indeed embody libertarian ideals of free-market capitalism, others are being designed explicitly to create more equitable and democratic economic systems.

The Challenge of Perception

One of the challenges facing the crypto industry is overcoming negative perceptions and skepticism, particularly among those who have seen previous attempts at economic reform fail to deliver on their promises. Austin notes that there's often "a refusal to believe that it's possible to build better economic systems on blockchain because what they've seen for most of their lives is that most of these sort of reform minded policies end up not having the effects that people hope they make."

This skepticism is not entirely unfounded, given the prevalence of scams and speculative excesses in the crypto space. However, it also risks overlooking the genuine potential for blockchain technology to create more transparent, efficient, and equitable systems in various sectors of the economy.

The Need for Honest Dialogue

Amira emphasizes the importance of honesty and transparency in discussing both the potential and the problems in the crypto space. She argues that "the best thing we can do is like to be honest about where things need improvement and to celebrate successes and sort of advocate for this sort of responsible usage of blockchain."

This approach of acknowledging challenges while highlighting genuine innovations and successes could help bridge the gap between crypto enthusiasts and skeptics. It also aligns with the goal of creating systems that are inherently resistant to abuse or exploitation, rather than relying solely on the good intentions of their creators or users.

The Future of Web3 Adoption

As the discussion wraps up, it's clear that the future of Web3 adoption lies not in flashy consumer-facing NFT drops or partnerships with big brands for the sake of social proof. Instead, the most promising avenues for blockchain technology appear to be in solving real business problems, creating more efficient and transparent systems, and enabling new forms of economic organization.

The shift towards B2B applications, the exploration of blockchain for loyalty programs and supply chain management, and the potential for DAOs and digital cooperatives all point towards a maturing industry that is beginning to deliver on its promise of transformative change.

The Role of Solana in the Evolving Web3 Landscape

Throughout the discussion, it's evident that Solana is well-positioned to play a significant role in this evolving landscape. With its high-throughput, low-cost infrastructure, Solana offers the technical capabilities needed to support large-scale B2B applications and complex economic systems.

The Solana Foundation's focus on working with crypto-native teams and exploring innovative use cases aligns well with the industry's shift towards more substantive applications of blockchain technology. As Pedro mentions, recent innovations like account compression on Solana make it possible to "mint a million NFTs for, yeah, $110," opening up new possibilities for large-scale on-chain applications.

The Importance of Education and Outreach

As the crypto industry continues to evolve and mature, education and outreach will be crucial in bridging the gap between the tech-savvy crypto community and policymakers, traditional businesses, and the general public. The discussion highlights the need for more nuanced and constructive dialogue about the potential and challenges of blockchain technology.

By focusing on real-world use cases, addressing legitimate concerns, and demonstrating the tangible benefits of blockchain-based systems, the industry can work towards greater understanding and adoption. Solana, with its growing ecosystem and focus on scalable, efficient blockchain solutions, is well-positioned to lead in this educational effort and drive the next wave of Web3 adoption.

Conclusion: A Pivotal Moment for Web3

This wide-ranging discussion highlights that we are at a pivotal moment in the development of Web3 and blockchain technology. As the industry moves beyond speculative hype and towards solving real-world problems, there are significant opportunities to create more efficient, transparent, and equitable systems across various sectors of the economy.

However, realizing this potential will require ongoing effort to bridge the gap between the crypto community and policymakers, to address legitimate concerns about privacy and security, and to demonstrate the tangible benefits of blockchain-based systems. Solana, with its high-performance blockchain and growing ecosystem, is well-positioned to play a leading role in this next phase of Web3 development and adoption.

As the industry continues to mature, it will be crucial to maintain a balance between innovation and responsibility, always keeping in mind the ultimate goal of creating systems that empower users and promote economic fairness. By doing so, Web3 can truly deliver on its promise of transformative change and create a more open, efficient, and equitable digital future.

Facts + Figures

• Web2 partnerships in Web3 have not produced meaningful increases in on-chain transactions or usage, according to on-chain analytics.
• The Solana Foundation spends approximately 80% of its time working with crypto-native teams rather than pursuing Web2 partnerships.
• Social proof from Web2 partnerships primarily impacts retail users and consumers, not B2B relationships.
• There's a notable shift from B2C to B2B applications in the Web3 space, with companies exploring how blockchain can improve backend operations and data management.
• At Silicon Valley Bank, about 30% of an employee's day was spent ensuring payments would go through, highlighting the inefficiencies in traditional financial systems.
• The proposed CBDC system could allow for specific parameters like time limits for spending or decreasing spending windows for each transaction.
• Between 25% and 50% of Democrats' discussions about blockchain and Web3 policy focus on CBDCs, while this topic represents only about 1% of discussions on Crypto Twitter.
• A food delivery cooperative in Colorado using a blockchain-based model has reached a Gross Merchandise Value (GMV) of $10 million.
• Recent innovations in Solana, like account compression, make it possible to mint a million NFTs for approximately $110.
• The rate of fraud and illegal activity in crypto transactions is estimated to be around 0.2% to 0.5%, compared to 5% for fiat transactions, according to reports from Chainalysis.

Questions Answered

What is the current trend in Web3 partnerships?

The current trend in Web3 partnerships is shifting from business-to-consumer (B2C) activations to business-to-business (B2B) applications. Companies are now more interested in how blockchain technology can improve their backend operations and data management rather than launching consumer-facing NFT collections. This shift reflects a maturing industry that is beginning to recognize the true potential of blockchain beyond simple collectibles.

How effective are Web2 partnerships in driving blockchain adoption?

Web2 partnerships have not been particularly effective in driving meaningful increases in on-chain transactions or usage, according to on-chain analytics. However, these partnerships still provide value in terms of social proof, especially for retail users and consumers. They can help legitimize blockchain platforms like Solana in the eyes of those unfamiliar with the technology, even if they don't directly translate to increased on-chain activity.

What are the potential benefits of Central Bank Digital Currencies (CBDCs)?

Central Bank Digital Currencies (CBDCs) could potentially allow for more precise monetary policy implementation. For example, a CBDC could be issued with specific parameters like time limits for spending or decreasing spending windows for each transaction. This could help address economic issues like deflationary spirals by increasing the velocity of money in the economy. However, these potential benefits must be balanced against privacy concerns and the risk of increased government control over personal finances.

How does the conversation about crypto differ between Twitter and policymakers?

There's a significant disconnect between the conversations happening on Crypto Twitter and those taking place among policymakers. While crypto enthusiasts on Twitter might focus on the latest DeFi protocols or NFT projects, policymakers are often more concerned with issues like CBDCs. For example, an estimated 25-50% of blockchain policy discussions among Democrats focus on CBDCs, while this topic represents only about 1% of discussions on Crypto Twitter.

How can blockchain technology support progressive economic goals?

Blockchain technology has the potential to support progressive economic goals through the creation of more equitable and democratic business models. Decentralized Autonomous Organizations (DAOs) and digital cooperatives are examples of how blockchain can enable new forms of community ownership and power-sharing. For instance, a food delivery cooperative in Colorado has used a blockchain-based model to reach a Gross Merchandise Value of $10 million, allowing restaurants to profit more from deliveries compared to traditional platforms.