Web3 innovation replaces middlemen with protocol middleware
Cryptocurrencies and the wider blockchain ecosystem are helping to change the status quo in the way we live our daily lives. With this new technology, Web3 is introduced as an unauthorized and open innovation using blockchain protocol middleware. In this way, they replace enterprise middleware as a service (SaaS) and achieve greater value. Protocol middleware is by no means new. Ultimately, Web2 is supported by middleware applications, with the most important application being HTTP. Middleware allows users to interact with each other and with applications in a computing environment. And with Web3, there are different protocols in the middle layer stack of this new Internet application support. More importantly, do they really matter? Creating value with middleware protocols With the advent of blockchain technology, the way we do our daily activities is changing. Whether it’s a financial transaction, buying art, buying real estate, or donating to a charity, blockchain makes it possible by providing a secure and reliable peer-to-peer (P2P) network among consumers. This is no longer the case when companies extract values from users, but rather when developers extract values from logs. But how did that happen? In the middleware protocol, developers can stake their own token once for lifetime network bandwidth equivalent to that bet. The longer the app is stopped and the network is in use, the closer the price is to zero. After a few months, the service is usually free, and with stake-based tokenomics, there are no monthly fees like SaaS fees. Developers can cancel their initial investment at any time and sell their own acquired middleware protocol tokens on the secondary market or to other developers. You can also bet on Software-as-a-Service Nodes for more than Application Request Protocol tokens. Other middleware providers include Arweave, a global disk that allows users to store data persistently. Arweave users pay 0.54 AR once for one GB of persistent storage, and while it offers almost zero marginal fees, the upfront fee is non-refundable. Graphs, a query payment model for indexed on-demand blockchain data, are micropayments and can be expensive for developers depending on the volume and frequency of queries. synergistic connection Each application-specific middleware protocol offers unique services at different layers of the stack. For example, Pocket Network has an RPC layer, Graph has an indexing layer, Akash has a cloud layer, Livepeer has a video transcoding layer, and Arweave, Filecoin, and Storj have a storage layer. Since they are in a different part of the decentralized stack for Web3 developers, the logs are free. For example, the following ETHOnline 2020/2021 hackathon projects use Pocket and graphics: ERCgraph, Proxy Poster, LiFinance Bridge Aggregator Analytics, and Balancer Chat. And because they are in different parts of the decentralized operations stack for Web3 developers, the protocols are synergistic. This is noted by the fact that the graph subgraph indexer needs to ping the Ethereum archive node from the base layer, which can be expensive to implement and maintain. To save money, indexers can use RPC endpoints for middleware protocols, providing users with maximum uptime without a single point of failure. With the Livepeer orchestra, they need to ping the full Ethereum node from the ground level, which also incurs a monthly O&M fee. Like indexers, orchestras can use middleware protocol RPC endpoints to save money. This in turn develops a two-way market between consumers and suppliers. With this synergy, better services attract applications, more application usage generates more revenue from nodes, and more revenue from nodes attracts more nodes, increasing the surplus, thereby perpetuating the economic flywheel. SaaS Violation The Web3 index tracks demand-side costs (DSF) for service protocols across multiple layers of the decentralized developer stack. For example, Pocket generated $3.9 million in DSF in 30 days due to a new deflationary payment model. That means the developer pays by dilution and gets the node by inflation. Charts earned $6,460, Livepeer $50,396, Arweave $171,406, Helium $7,591, and Akash $4,623. This new economic approach has the potential to fundamentally disrupt SaaS while maintaining the “always fair start” mechanism crypto people seek when contributing to a thriving community. It also means a lack of monthly rent for intermediaries, which allows developers to capitalize on their efforts.