a16z Podcast: Crypto and the Evolution of Open Source

Key takeaways

The transition from libraries in traditional open source to shared services in blockchain offers developers a more equitable playing field.
Blockchain services can reduce systemic asymmetries faced by smaller developers by allowing them to build on existing infrastructures.
New governance models in blockchain are crucial for evolving services and addressing community concerns.
Real-world applications in media and finance can greatly benefit from the compounding effects of innovations built on shared services.
Challenges remain for decentralized ecosystems, including potential monopolization and the effectiveness of governance models.

Summary

The Evolution of Open Source vs. Crypto Service Models

The podcast discusses how the traditional open source movement established libraries that served as building blocks for applications. However, this model created asymmetries between well-resourced entities and weekend developers. The introduction of crypto and tokenized networks has changed this dynamic by allowing the creation of shared, open, and permissionless services on blockchain platforms such as Ethereum. This shift means that developers can build on existing services rather than starting from scratch, thus promoting combinatorial innovation and reducing redundancy.

Asymmetries Between Developers

Dennis and Jesse explore the systemic asymmetries in deploying open source libraries versus utilizing blockchain services. They explain that while established companies can leverage libraries effectively due to their resources, weekend developers struggle with deploying and maintaining applications on their own. In contrast, blockchain services offer a unique advantage where successful deployment leads to communal utility; a developer can use a service without having to reinvent it, resembling a collaborative city where the foundational infrastructure is already built.

Innovation Within Decentralized Networks

The conversation highlights the importance of new governance systems in blockchain networks, allowing participants to evolve services and rectify issues. In this setting, developers have incentives to improve existing services, aligning their success with the network's growth. This cooperative approach contrasts with traditional corporations that often stifle innovation. The reference to urban development emphasizes that just as vibrant cities thrive despite underlying problems, decentralized networks can foster innovation through community involvement and collaboration.

Real-World Applications and Implications

The hosts detail potential applications of this new model, particularly within media and finance. For instance, having a canonical identity for creative works enables artists to easily monetize their creations as they can reap benefits from derivatives and remixes, unlike the cumbersome systems in place today. In finance, decentralized exchanges can catalyze a new wave of financial products based on shared protocols. Each application leads to further innovations, highlighting the compounding effects of participation in a decentralized ecosystem.

Challenges Ahead for Blockchain Ecosystems

Despite the numerous advantages, the podcast addresses challenges such as whether decentralized networks may inadvertently create monopolies or solidify centralizing forces as they grow. The idea of forking and formal governance is brought up to navigate these issues, as the community might need to balance between collaboration and competition. The participants believe that while forks are possible, they are not always practical due to the social complexities involved in implementing functional, independent networks.

Show notes

with Devon Zuegel (@devonzuegel), Denis Nazarov (@iiterature), and Jesse Walden (@jessewldn)

The open source movement enabled so much in computing, including the collaborative building of libraries -- that is, building blocks of code that developers could combine together to build applications. But as these applications grew to massive scale, those libraries ended up being somewhat asymmetrical for "nights-and-weekend" developers (compared to say, the disproportionate resources of a large company with billions of users and big data).

Blockchains, however -- enabled by cryptotokens that align incentives among stakeholders -- shift open source development from libraries, to the creation of shared, open, permissionless services. Instead of being siloed and repetitively produced as if from the industrial factory era, any smart contract developed on Ethereum becomes a shared service that can interact with any other service... incentivizing developers to improve on existing services, build on top of them, and enable combinatorial innovation at greater scale than ever before.

But if decentralized networks are to win the third era of the internet, how will we resolve challenges such as single-purpose services (another form of consolidation), community conflicts, and other issues? In this video, freelance software engineer (and blockchain app developer) and writer (and urban watcher) Devon Zuegel guest-interviews a16z crypto partners Denis Nazarov and Jesse Walden, the co-founders of Mediachain Labs (which was acquired by Spotify in 2017). They draw on their past experiences leading open source development of a decentralized media attribution protocol for connecting creators to their audience, and what the implications of "services vs. libraries" could be for creatives now. And what about identity, stablecoins and crypto finance, and more? Finally, they extend their previous analogy of cities and network effects and how it fits the idea of libraries vs. services in crypto.

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