Recap from OST LIVE with Matthew Liu of Origin Protocol — Building Decentralized Marketplaces
Matthew Liu is the Co-Founder of Origin Protocol, which publishes a protocol for creating sharing-economy marketplaces using the Ethereum blockchain and IPFS. Matt was the third product manager at YouTube (acquired by Google) and VP of project management at both Qwiki (acquired by Yahoo) and Bonobos (acquired by Walmart). He joined us to discuss how Origin is creating a sharing economy without intermediaries.
Liu says centralized marketplaces like Uber and Airbnb are examples of “large monopolies that have created a ton of value for their customers but have also captured that value in monopolistic terms.” Origin, in contrast, “can enable true peer-to-peer commerce for all developers while allowing buyers and sellers to connect,” he says. Origin has also built a decentralized application (Origin DApp) that can be accessed from anywhere, allowing for people to buy and sell using the Origin protocol.
Today’s Sharing Economy
Internet marketplaces have been around for more than 20 years, including ebay and craigslist. Over the past two decades we’ve seen free marketplaces rise and start becoming great businesses.
In the past decade, Airbnb and Uber pioneered the concept of the sharing economy. The sharing economy consists of service providers providing a service that is fractional in nature. For example, a fraction of car usage is tapped to drive different riders. Internet marketplaces have created new economic value for sellers while providing ease-of-use and new services for buyers. Although some great internet marketplaces and companies have been created, there are flaws, Liu says, that make the current model ripe for disruption.
Current marketplaces have a centralized intermediary that helps create trust and liquidity, but take away value and revenue from users. “As great as these services are for the consumers,” Liu says, “in some cases they’re not great for the suppliers.” Origin is focused on moving toward a truly peer-to-peer world. If middleman fees are cut out, then the savings could be shared between buyers and sellers, creating a win for both sides. Marketplaces run by centralized companies are susceptible to a single point of failure. It’s easier to ban or heavily regulated a centralized marketplace because it’s an easy target. A decentralized and distributed marketplace would be difficult to censor and enforce regulations on.
Current business models don’t incentivize early adopters. For example, Uber drivers in 2012 were paid a higher percentage of per ride revenue than they receive today. Users don’t have a stake in the platform as the founders and venture capitalists do. Some marketplaces are not available everywhere because it’s not justifiable to open in certain markets, most being third-world countries.
Decentralized marketplaces have the potential to solve the problems with today’s sharing economy. First, a decentralized marketplace creates a true peer-to-peer market without middlemen, diminishing the costs of an intermediary. Second, a decentralized marketplace is not susceptible to a single point of failure or regulation. It can operate in locations where government policies are enforced. Third, in the way that cryptocurrencies can bank the unbanked, decentralized marketplaces can provide a service in regions where such marketplaces do not exist.
There are still some obstacles with creating a decentralized marketplace, including identity and dispute resolution. This is something that Liu says the team in researching and pushing forward, evaluating projects like ERC-725, an open standard for identity. Liu believes there is enough promising technology that Origin, collectively with rest of the community, can solve this problem over the next one to three years.
Coming Up Next on OST LIVE: Christian Kameir
Christian Kameir is managing partner of Sustany Capital, a blockchain venture fund focused on early-stage ventures. Kameir is an official member of the Forbes Finance Council and a seasoned public speaker on topics ranging from high-tech investing to blockchain technologies. Kameir will join us to discuss the potential for NFTs. Subscribe to our YouTube channel or listen to the audio format on anywhere you listen to podcasts, including on iTunes, Stitcher, and Spotify. We’re also now available on Alexa! Simply add “OST LIVE” to your flash briefing.
OST blockchain infrastructure empowers new economies for mainstream businesses and emerging DApps. OST leads development of the OpenST Protocol, a framework for tokenizing businesses. In September 2018 OST introduced the OpenST Mosaic Protocol for running meta-blockchains to scale Ethereum applications to billions of users. OST KIT is a full-stack suite of developer tools, APIs and SDKs for managing blockchain economies. OST partners reach more than 300 million end-users. OST has offices in Berlin, New York, Hong Kong, and Pune. OST is backed by leading institutional equity investors including Tencent, Greycroft, Vectr Ventures, and 500 Startups.