This article was first published on the PAKA public account on March 14, 2023.

The capital hotspots are constantly shifting. In this round of bull and bear alternation, we see some entrepreneurs who were originally trying to profit in the Web3 field but lacked faith, leaving to fight in new capital hotspots. But in our view, the opportunities in Web3 are like an iceberg, and the part being exploited now is just the tip of the iceberg.

In the Web3 field, we have experienced many hotspots, from BTC to Ethereum, from 1C0 to X2EARN, from Decentralized Finance to the metaverse, from Non-fungible Token to DAO. Each hotspot is an exciting point, but our understanding of the power of Web3 should not stop at these exciting points. We want to try to outline a framework to understand the underlying logic of Web3 transforming the world.

Industrialization has provided us with a materially abundant world. In such a world, companies, as a form of organizational behavior, are the primary providers of social services. They continually compete and innovate to gain greater profits, while also creating better services for us. However, in some areas, we have discovered some worrisome situations.

• In some areas, due to the need for large initial investment, strong network effects, or artificially set entry barriers, a few entities have formed a monopoly situation. They obtain excess profits through exploitative pricing, which harms the interests of the public;
• With the advent of the information age, information services have become an important type of service. However, centralized entities that control a large amount of user data through information services tend to take possession of user data, leading to a data island effect. At the same time, these entities can arbitrarily violate user privacy, and even exert influence on public emotions and thoughts.
• In some 'network-as-a-service' fields, there are numerous participants, but the power to make rules is in the hands of the centralized entity that initially launched the network, and they also reap the majority of the benefits from the network.

The emergence of blockchain technology has provided us with a new option, which is Decentralization service, we call it De-Service.

Currency

BTC is the earliest De-Service, which attempts to provide a new type of currency. It can be said to be the hardest thing in this centralized world, with a difficulty level of hell. Now, although BTC has failed to become a payment system as Satoshi Nakamoto wished, it has become the recognized "digital gold". BTC ultimately tore a gap from the existing monetary system and realized Hayek's theory of free currency.

However, BTC is not the end point of this practice, but the starting point.

Calculation

The essence of ETH is to provide a De-Service, which attempts to provide a universal computing platform that allows anyone to run programs on the ETH network. Tens of thousands of nodes on the ETH network will run the program for you and output consistent results through the Consensus Mechanism. However, this type of computation is highly redundant, and in order for the calculation results to be trusted, a huge cost must be paid. To improve this issue, L2 solutions represented by Rollup have been proposed, which adopt the basic idea of "off-chain computation, on-chain verification". This verification method must be "lazy", rather than recalculating on-chain again. Generally, there are two ways: one relies on people's economic rationality, requiring computing participants to provide deposits and imposing penalties when they make mistakes, while rewarding those who discover errors and challenge them. On-chain computation is only needed when disputes need to be arbitrated; the other relies on cryptography, requiring computing participants to generate validity proofs off-chain, and verifying the validity proof on-chain with extremely low overhead, which is equivalent to verifying the entire computation process.

Like BTC, the development of Ethereum (ETH) is also different from its original vision. Instead of becoming the "world computer," ETH has become the largest Smart Contract platform (which is not to say that Smart Contract platforms are not great). However, beyond ETH, there are still some new public chain systems striving towards the direction of a general-purpose computing platform, such as Dfinity, Golem, and 01928374656574839201, these platforms are trying to provide Decentralization computing services, challenging traditional cloud computing service companies.

In addition to public chains such as Ethereum (ETH) that provide general-purpose computing services, there are also some platforms that are providing specialized computing services for specific fields or types, such as Livepeer's Decentralization video transcoding service, Render's Decentralization graphic rendering service, and Phala's privacy computing service. We can foresee that there will be more types of dedicated computing services in the future.

Storage

FIL is a De-Service system that provides Decentralization storage services. Storage Miners earn FIL rewards by providing storage space to the system, while users of storage space pay FIL to obtain file storage services. Since the Mainnet launch in 2020, FIL has accumulated 400 PiB of storage space, contributed by tens of thousands of storage Miners worldwide. The vision of FIL is to become the 'Global Hard Drive' and challenge traditional centralized cloud storage providers. In addition to FIL, there are many other players in the Decentralization storage field that provide differentiated services, such as Arweave, which offers permanent storage services, Sia, which provides large-scale file backup storage services, and Storj and Crust, which offer encryption storage services.

Bandwidth

In addition to storage and computing, the third important component of Internet infrastructure is bandwidth. Meson Network is a De-Service system in the field of bandwidth. Meson will integrate and monetize the idle bandwidth of long-tail users at low cost, providing an efficient bandwidth market with Decentralization. Users will no longer need to deal with sales personnel from centralized bandwidth agencies, but only need to upload or access resources in the market according to the standards and protocol of Meson Network.

Web2 companies that provide streaming services, online games, and other flow services spend huge amounts of money on CDN every year, mainly because they need to distribute large amounts of content to users at high speed. With the arrival of Web3, more user data is being generated, and there is an exponential rise in the demand for content and delivery speed from the metaverse and GameFi. The efficient CDN service provided by Meson Network will be the foundation for decentralized storage, computing, and dApp ecosystem data transmission. Meson Network currently has gathered over 30,000 Nodes worldwide, with a total bandwidth of about 40Tb/s, and is providing data transmission services for platforms such as Matters, MASK Network, IPFS, RSS3, and arweave.

Telecommunications

In the field of telecommunications, there are also De-Service challengers - Helium is a global distributed hotspot network that can provide wireless networks for mobile devices, including internet of things devices. Any entity can operate mobile hotspot devices, provide hotspot services to earn HNT, and today, Helium's "Miners" have deployed hundreds of thousands of hotspots globally. It can be said that Helium has profoundly changed the construction, operation, and ownership structure of the telecommunications network. With the development of 5G and internet of things, the traditional way of building networks from top to bottom by traditional telecommunications companies no longer has cost advantages, and Decentralization hotspot networks like Helium will play an important role in the construction of the next generation of mobile networks.

Map

HIvemapper's De-Service is a more agile and real-time updated map. HIvemapper's "Miners" install dedicated dashcams in their vehicles and submit road and street view data to the map while driving, earning $HONEY Token rewards. We are accustomed to using map products provided by large internet companies, but these companies spend huge costs every day to collect and update information. Hivemapper crowdsources the collection and updating of information to more people who are not specifically driving to collect data, but can earn extra income by collecting map data. Hivemapper fundamentally changes the way maps are built and significantly drops costs. However, for Hivemapper, map data is just the beginning. In the future, more sensors and internet of things devices can be mounted on dedicated dashcams to provide more diverse data such as air, noise, and weather to the network.

Power

Peak is a German internet of things project that is dedicated to establishing a charging pile network in a decentralized manner. In this network, Miners are responsible for laying the charging piles, and electric vehicles can pay Tokens to use the charging service. The project is still in the early stages.

Why Blockchain?

Why can De-Service only be realized on the basis of Blockchain technology? The answer lies in the two basic characteristics of Blockchain:

• Verifiable
• Unlicensed

These two characteristics enable us to create a system like this:

• Anyone can join the system, provide services, or pay TOKEN, claim services, without admission restrictions;
• Whether the service provider has provided services to the service requester is verifiable. Verifiability means that different individuals or institutions can arrive at the same conclusion by examining the same evidence, data, and records. In a system, in order to achieve verifiability, all data records in the system must be publicly accessible, consistent, and tamper-evident, which is exactly what blockchain provides.
• The rules of the entire system are clear and transparent, and no one can change or shut down the system without consensus from the majority of participants. Any changes to the rules require consensus from the majority of participants.
• If consensus cannot be reached, a fork is formed, and supporters of each fork play based on the rules of their respective forks. In order to avoid forks and weaken the network, participants tend to establish a fair rule that can be recognized by the majority of participants.
• Coordinate the collaboration of various participants in the system through encryption tokens and corresponding economic models.

Based on blockchain technology, Web3 is demolishing the 'White Horse Gate' that only the emperor could pass through and turning it into a wide road accessible to everyone.

Finance

Let's take a look at DeFi from the perspective of De-Service again:

The Decentralized Finance Summer of 2020 has brought us many surprises and many Web3 native financial innovations, many of which are now considered infrastructure.

Before the appearance of AMM, liquidity providers were in a high-walled industry, and it was generally difficult for the general public to participate. Due to the high capital and professional knowledge thresholds, this industry has been monopolized by some large institutions, from which they have obtained high profits, becoming true "financial aristocrats".

And AMM flattens all this, anyone, any amount of funds can provide Liquidity to the AMM Pool and earn transaction fees. The essence of AMM is just a transparent Algorithm and rules, which run on-chain, thus possessing verifiability. No participant will doubt whether the results output by the AMM Algorithm follow the Algorithm rules.

In addition, the lending protocol, yield aggregator, derivatives protocol, insurance protocol, and various combinations before them of Decentralization have created an open and transparent financial system, with no access restrictions for any user or capital, providing all users and capital with opportunities to benefit from various investments. Despite the existence of various scams, Ponzi schemes, high leverage, gambling, and other phenomena in Decentralized Finance and traditional finance, undoubtedly, openness and transparency are the first steps towards fairness.

De-service Movement

Compared to various Ponzi-based X to Earn, we believe more in Serve to Earn (provide services, earn profits). The birth of Blockchain technology has given us a great opportunity to connect a certain resource or service together, build an open, transparent Decentralization network, and realize the exchange of resources and the creation of value in this network.

If the service provided by a centralized institution is called Ce-Service, the service provided by a network composed of such resources and rules is called De-Service.

A large part of what we see in Ce-Service will be replaced by De-Service in the future. Of course, this is not a black-and-white world. In the future, De-Service and Ce-Service will coexist, cooperate, and even integrate and blend with each other. For example, Helium and traditional telecom companies may form collaborations. Traditional telecom companies tend to cover densely populated areas, while Helium has a more significant cost advantage in sparsely populated areas. Together, they provide network coverage to users within the widest possible range.

So, where does De-Service's vitality come from?

First of all, the De-Service mode has direct cost advantages and economic benefits. The De-Service mode can better integrate idle or long-tail resources, create a sharing economy, thereby reducing service costs, allowing consumers to enjoy lower prices, and then the Token economy enables the De-Service network to have agile control capabilities, can more flexibly respond to changes in demand, and avoid resource waste.

Second, in the De-Service mode, the subject of the service is no longer a closed company, but a freely accessible 'Node'. They profit by providing services, and to some extent, they have partial ownership of the entire network, or in other words, they have 'capital'. These 'Nodes' are distributed across different geographical regions worldwide, spanning different jurisdictions, but they share the same trap rules and have equal opportunities to profit from providing services in the network. Therefore, we believe that the De-Service mode will promote a balanced distribution of capital globally and mitigate the trend of economic disparity. Furthermore, the competitive relationships among the service Nodes in the De-Service system make it difficult to establish exploitative pricing and monopolistic profits.

Thirdly, the data in the De-Service system is anonymous and open. This unlocks the composability between different service systems while protecting the privacy of participants.

Of course, the De-Service system will also face many challenges.

First of all, any bilateral market will encounter the problem of "which came first, the chicken or the egg", that is, the problem of "supply first or demand first". It may need to go through a longer or shorter subsidy period, before gathering enough resource consumers, first gather enough resource supply. For example, so far, FIL is still in the subsidy period, and only a small part of the Token rewards for storage providers is paid by storage service users, and most of them are paid by the network through inflation rewards.

Secondly, to drive the rise flywheel, it is necessary to design a reasonable Token economic model. If the Token economic model is not suitable for the development of the network and does not coordinate the interests of the participants well, the network is very likely to lose resources and decline.

Third, to achieve sustainable development, a reasonable governance mechanism is needed. It is unrealistic to rely solely on code for governance. Decentralization services require Decentralized Autonomous Organizations (DAOs) to operate. Governance includes several important aspects: ① governing the rules, adjusting the rules to adapt to the development of the network; ② managing the protocol treasury, many De-Services have their own protocol treasuries to support the long-term development of the network, and the use of these funds will be determined through governance; ③ self-audit, conducting audits of non-compliance and behaviors that do not conform to public order and good customs within the network can make the network more sustainable. For example, if someone uses FIL to store violent and pornographic content, it should be intervened by the governance mechanism.

Fourth, the De-Service system should do its best to resist its own re-centralization. Although the De-Service system has free access and is therefore fully competitive, it is very likely that a small number of groups or participants in specific areas will capture most of the benefits from the network due to their advantages in certain resources or technologies. Although there may be no direct harm in the short term, it is very likely to make the system highly dependent on certain groups, and no longer neutral.

Which First

Which areas will be the first to produce De-Service?

The virtual domain will generate De-Service ahead of the physical domain because blockchain technology is fundamentally information technology. It is natural for De-Service to first emerge in the currency and finance fields. To break through the barrier between the atomic world and the Bit world, we also need further development of Oracle Machine technology.

Standardized services will emerge before personalized services in the field of De-Service, such as storage resources. Essentially, the 1 TB space I provide is no different from the 1 TB space provided by others, making it easy to establish a unified rule and form a market. However, this is not the case in some areas, where the quality of service is difficult to quantify.

Areas with significant centralization issues will prioritize the emergence of De-Service, such as the social media sector. To discover these areas, it is better to seek out those "white-horse gates" in the real world.

Summary

De-Service is a grand and far-reaching social movement spawned by blockchain technology, which is exploring and shaping a new type of production relationship suited to the information age. At the same time, it gives us a perspective to re-examine the world and discover opportunities. We have reason to believe that the power of Web3 is continuing to ferment, and its transformation of the world has only just begun.