Edcon 2018 Takeaways and Forward-looking Thoughts
After going to a few blockchain conferences, you may at some point be wondering, “who are all these people and do they even know what they are talking about?” Often you see long-time industry leaders come out and explain how blockchain will change everything we do, but offer no technical and philosophical reasoning why. It gets tiresome after a while.
Edcon however, is certainly not your average blockchain conference. This is not a conference full of blockchain rookies pitching nonsensical ICOs and business models. It is purely an Ethereum community conference, and one of the biggest of such gatherings every year. With it, all the core developers including Vitalik show up, along with leading project implementers such as Joe Lubin from ConsenSys. You see everything relevant and listen to things worth hearing, from the best sources and thought leaders themselves. For anyone new to the Ethereum community, this is a great way to get acquainted and familiarized with the vision and common goals. For anyone already involved, it’s a great way to keep updated with the advancements of many of the lead projects and protocols, as well as see new ideas that are upcoming.
Now that I’ve had some time to reflect on this experience and all the great conversations I had with project leads and thought leaders there, I’ve put together some important takeaways as Ethereum moves forward.
Ethereum Community Leadership
Several important topics such as governance, scalability and regulations were discussed in depth by key researchers and developers like Vitalik Buterin, Vlad Zamfir, Karl Floersch, Joseph Poon and Joe Lubin. It’s important to note that suggestions and solutions to these issues always take into consideration the original decentralization goals of Ethereum. One thing is clear, we do not want a handful of entities to have significant influence and protocol layer control of the Ethereum main chain, future shard chains, plasma chains and other important subtleties that shape the network. Architecturally preventing and economically disincentivizing the formation of cartels, collusion and corruption of special interest groups is vital to cultivating decentralization.
Revolutionizing economic opportunities while keeping non-value adding actors from extracting unnecessary rent is always acknowledged by thought leaders. The maturity of the Ethereum community is very apparent, and it is clear that there is no shortage of entrepreneurship and intellectual capability. There is no toxicity, misinformed thinking and irrational exuberance that you may see in other communities out there. There is only great mind sharing and collaboration going on for the benefit of the community as a whole. For an example, see what Kauri has created for helping to facilitate this (https://kauri.io/). This is always refreshing to know and see firsthand that the Ethereum community is in the right headspace.
Uncommon Business Models
A common theme I see amongst successful and upcoming projects in the space is having a general strategy of focusing purely on user-experience first and then a profitable revenue model later. Low hype, heads down and creating a technologically sound product. Bringing value to everyone on the user level which does not incorporate rent seeking fees and paywalls that we see with existing incumbents in our economy is a popular and demanding trend in the community. Many entrepreneurs here just want to create a free product/service for the benefit of everyone. For those projects that are purely open source with no incorporated entity, this is no problem. But for those with an actual business with equity ownership incorporated, this creates a very different business model than what typically exists today. This can of course bring challenges long run as cash flow is needed for working capital and eventually expected for ROI by early investors. Somewhat reminiscent of the Dotcom bubble internet companies, valuing equity whilst no revenue model exists is difficult and in most cases a trap.
On the contrary, more obscure and unconventional business models can pay off in the long run. Amazon is a great example of that. Jeff Bezos had the idea of being customer experience and convenience first, and drastically change how industries would be forced to operate through e-commerce. With the sacrifice of profits in the short run, a focus on amassing a loyal user base allowed Amazon to methodically accrue significant market share and subsequent value. Great ideas and visions that unite a movement create intrinsic value with it as time goes on. Additional premium services or add ons, consulting and onboarding, mind-sharing etc…are eventual ways to create profitability, so long as the core product/service remains the most profound.
One for all not all for one
As discussed before, many projects and associated companies in this space have a vision much broader than just ultimate profitability and returns for shareholders. Take OmiseGo as a great example. Easily one of the most promising Ethereum projects with a focus on being the leading decentralized payment gateway (i.e. similar to Stripe), and using plasma chains for scalability.
In the noisy ICO market, they could have easily raised over $100 million. Omise raised $20 million when they initially incorporated in 2014. Then in 2017 when they announced OmiseGo, with the decision to integrate their product on the Ethereum blockchain, they hard capped the ICO privately off chain at $25 million. They claimed they wanted to guard against a few wealthy backers taking all the spoils, and that, “it is both irresponsible and counterproductive to take more than we think we need.” This position is very respectable and brings legitimacy to an investment space that is full of scandal. I would also mention that many of the other best projects in the ecosystem have this position and mindset, and that these are the people that you want to associate and mindshare with.
Collaboration is better than isolation
Companies that utilize many elements and tools being created in the Ethereum ecosystem are at a huge collaborative advantage compared to those that want to try and build everything themselves. While good competition in the marketplace is healthy, I think it can also be inefficient. It’s all about a community of decentralized tools for the benefit of everyone, not one entity’s role to monopolize everything for their own claim and taking.
In particular, there is plenty of competition and noise in the financials space, but very few ideas with actual quality and differentiation. I’ve seen so many protocols for decentralized credit and financial contract creation, of which almost all may suffer the same fate of non-usage. Many are trying to do too much and sacrifice quality in the process of building everything from scratch. In my opinion, the company or platform that utilizes the very best of the niche solutions being built in the opensource community will excel. For example, combining decentralized exchange and liquidity with the elements of Dai + Bloom + Rippio + OmiseGo + uPort brings together fundamental elements in creating a decentralized financial ecosystem. This concept would be completely transformative and unlike anything we’ve seen before in traditional finance.
Boring is valuable
Some of the simplest creations are often the most widely used and adopted. Look at Metamask as an example. Almost every DApp on Ethereum uses it as a client interface to connect users to the Ethereum mainnet, and yet it’s so simple and primitive.
Problems that still need great solutions include: fiat to crypto on-ramps, liquidity and market making solutions that are near 100% effective at all volumes, simple tokenization of real world assets, simple user interfaces and user experiences that make the lay man not even realize he’s using a blockchain-based service (no more complicated UIs and custody dependent experiences), simple wallet, identity and privacy management or autonomous versions therein.
Focusing time and attention on simple, near protocol-level solutions that are far-reaching and cover many existing gaps is worthwhile. Overall, I think a good mindset with all of the above considered is important to have when making technical and strategic investing decisions in helping to build out the Ethereum ecosystem.
