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Investor Li Jin, who runs Web3 venture capital firm Variant Fund, is one of the greatest proponents of a decentralized internet. She has advocated with firmness and lucidity for the power of Web3 fundamentals like tokens to deliver new and fair financial reward to creators.
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Challenged recently on just how that vision is panning out, given the troubles the crypto sector in particular faced during 2022, she doubled down.
“I would push back against the characterization that Web3 is dead in the water,” she told Recode’s Peter Kafka during a recent podcast episode. “[Yes] there is a ton of volatility in token prices. Just as with any nascent technology cycle, there is inflows of capital when everyone is very exuberant and then prices can rapidly collapse because the technology has not yet grown to the level of stability to meet that price.”
Instead, Jin points to the innovation happening in the creator economy as proof that Web3 is still thriving.
“There are communities that are engaging in co-creation of media or films or books together, incentivized through shared ownership of tokens that represent their ownership of that end product,” she said. “There are thousands of online communities now that are pulling capital together on [block]chain and deploying that towards different causes or managing it. So there’s already glimmers of product market that’s happening at small scale.”
It’s true that while Web3 has been hit by negative headlines, even more attention has been paid to the rise of media creation AI, but this shouldn’t and hasn’t sucked the air from out of Web3 development.
Jin acknowledged some issues, though, with Web3 adoption. Among them, that users have not been rewarded with ownership to date.
“Ownership means both financial ownership as well as the ability to govern or influence the future directions of these products,” she said. “So our vision is really a world in which that changes, in which users become owners of these platforms. And so that is still our high-level vision.
“That is the mission that we are steering towards. We are really trying to drive towards an Internet that is more meritocratic, where people are actually compensated fairly for the value that they’re adding to these platforms.”
Startups are building decentralized social networks she said. “We’ve had this existing paradigm of closed social networks for almost two decades now. What comes after this? So there are lots of developers working on this next generation of social networking.”
She highlighted one project that Variant has invested in called Lens Protocol. It is building an entirely decentralized social graph where all of the user’s profiles their content and their follower relationships are represented to be truly user owned, portable and composable across applications.
Another issue is the opaqueness of much of the Web3 onboarding process. To non-users the jargon alone is a deterrent.
“I think that’s a really valid point,” she said. “Right now the onboarding flows to participate in a lot of these web3 applications is very clunky and difficult to navigate. A newcomer or someone who is not fluent in Web3, I think it’s immensely challenging to get over that hurdle. Like if I were to ask my mother to go buy an NFT or Mint a profile, she probably would have no idea what to do unless I walked her through step by step.
“How do we lower the barriers for people to participate and make it much easier to onboard?
She then said that it wasn’t really Web3’s fault (or that of its practitioners) that adoption was lagging. The problem with onboarding is overblown, she said.
“We have a product market-fit problem,” she said, arguing the need to create Web3 applications that are compelling enough to give people have an incentive to join.
Earlier in the podcast Jin reiterated her argument that there is currently no creator middle class. There are either a very few who breakout to become media stars in their own right and earn millions of dollars, or a swathe of hobbyists and enthusiasts posting content with little expectation of reward.
“I think this is where crypto comes in,” she said. “If you look at the underlying reasons why the creator economy, earnings distribution looks the way it does today, it’s really because of that predominant business model of Web2, which is advertising and having to reach like a massive audience and be able to monetize on a CPM basis.
“Where I see crypto really unlocking the next chapter of the creator economy is through this introduction of a brand new concept and capability to the Internet, which is digital scarcity. By introducing digital scarcity through tokens, crypto is able to restore pricing power to creators in a way that didn’t previously exist when there was no scarcity.
“We’re seeing this play out now with creators selling NFTs that represent different pieces of digital media, or creators even tokenizing themselves and being able to have a base of fans who become like quasi investors in their future potential.”
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