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The truth about dEcEnTrAliZaTiOn

How does it actually work?

gm, hope everyone is having a great week!

I had some fun this week gauging interest on a podcast idea I mentioned on Monday's post. Right now, I have 5 guests locked down for season 1 of the pod (halfway there)! Tons of interest from others but still going through their profiles to make sure they fit the guest criteria I'm looking for.

If you're an early stage founder or a student in web3, check out this notion page I put together giving a tl;dr of how I'm envisioning the episodes. If you think it fits your vibe, please fill out the form 🖊️. Also, open to any feedback on the pod idea in general - nothing is finalized and I'm just experimenting rn!

On another note, I've been doing research on what the best webcams and microphones are for podcasting and live streaming. If you have recommendations, please help out a beginner!

The reality of decentralization

Decentralization is one of the most important words in crypto. However, it is thrown around way too much and it's pretty unclear as to how some of the most important tools we use today are just supposed to become community owned in a snap of a finger.

One of the core tenets of web3 is to ensure that the next wave of technology isn't controlled by a small group of VPs in the Bay Area. So, how do we actually make that happen? Well, the reality is that it's going to be a gradual shift over the next decade.

Long Take: Can balanced regulation for the crypto markets emerge after  crash?

Great products require a ton of work to be built. And it's not easy to build enough momentum from a general community with just a vision. Early product building requires diligent user testing, multiple iterations, and high intentionality. There's a reason that most founders says the earliest days of their building journey were the toughest until they found product market fit.

Slow and steady wins the race

Okay. So two things are clear. One, we need to decentralize. And second, it's hard to do so from the start. Then how should founders who are starting a new project in the crypto space approach their roadmap?

Jesse Walden, partner at Variant, came up with a pretty simple yet effective plan for this.

Note: if you're a founder and have not come across his post, it's a must read. He posted it 3 years ago and is still one of the most mentioned articles in the space.

Basically, instead of having to worry about building a product with the community in the early days of an idea, it's better to slowly roll out changes that lead to it over time.

At a high level, Jesse describes the process in 3 steps:

  1. Early stage: Find product market fit with a small, focused team that has the proper incentives to build a good product

  2. Growth stage: Start involving your community in parts of the business where it makes sense to do so

  3. Later stage: Once there is community market fit, have the core leadership team exit

Uniswap is an example of a dapp that built out an early product and eventually handed over governance & ownership to the community.

Here's an awesome table that Jesse put together to understand what the process might look like.

Minimum Decentralizable Units

One key thing to note is that though the decentralization will come eventually in Jesse's playbook, founders must plan for it from the start.

Jad Esber & Scott Kominers of a16z wrote up a framework that guides founders on what they should be thinking about. It's fantastic and definitely deserves a read - check out the post here.

The tl;dr is that it's best to build a decentralization roadmap by segmenting your business into minimum decentralizable units (MDUs). Each section will be on its own journey and you can calibrate accordingly based on the type of product you're building and the community you're serving. Some founders may focus on making their tech stack decentralized asap while others might involve community members in growth & documentation from the early days.

"Visually, we think of this as like a set of slider bars – a “decentralization equalizer,” perhaps, with a different adjustment for each MDU."

This planning definitely requires more time upfront for web3 founders compared to traditional startups, but if the end goal is to truly build a community owned protocol, then it's a necessity to start planning from day 1.

The reason I love the MDU framework is because it makes the whole idea of decentralizing your product a lot more approachable. Founders don't have to think of every detail and spend obsessive amounts of time trying to figure out a 2 year roadmap that everyone knows will not pan out as expected.

It's more of a "take it day by day" kind of approach which makes sense. Why? Because successful decentralization requires an invested and excited community. And at the beginning of a product lifecycle, no one really knows what kind of community will form and what they will want.

That's all for today :) Hope you enjoyed the read - if you have any concepts, products, or ideas in web3 you want me to cover, I'm open to any suggestions!

Reminder, if you're an early stage founder, check out the Web3 World podcast page this weekend.