Empowering Communities Can Shape the Future of Cryptocurrency Development
Introduction
As we rapidly approach the quarter-mark of the 21st century, it is becoming increasingly evident that global digital migration has had a profound impact on our lives. From communication to commerce, and from entertainment to education, various aspects of society are being conducted online. The global average internet penetration stands at approximately 67.5%, with the European Union boasting an impressive 93.1% of households connected to the internet.
However, this rapid digitalization has also created new challenges, particularly when it comes to Web3. Initially designed to be decentralized and democratize access to information and services, Web3 is now at risk of abuse by a small number of malicious creators. In this article, we will explore the uneven power balance between creators and consumers in Web3 and discuss potential solutions to combat this issue.
The Uneven Power Balance
While Web3 offers numerous advantages, it also raises significant concerns and unresolved questions. One of the primary issues is the imbalance of power between creators and consumers. Although Web3 was designed to be decentralized, creators are increasingly developing protocols that are exploitative or manipulative in nature. This can lead to pump-and-dump schemes, where a small group of insiders reap the benefits while the majority of coin holders lose out.
In 2023 alone, cryptocurrency scams in the United States resulted in losses totaling $5.6 billion. The concentration of power in the hands of a few creators is a major concern and can only be combated by giving strength back to the many.
Facilitating Decentralized Governance
To combat this issue and facilitate decentralized governance, we need tools built for the blockchain that democratize the digital society and allow collective decision-making among general populations. Memecoins, or ‘community’ or ‘culture’ coins, present a key tool in achieving this goal. While frequently lacking traditional utility, memecoins are designed exclusively to serve the communities they emerge from.
The Power of Memecoins
Memecoins can be a powerful tool for decentralized governance and collective decision-making. However, they are susceptible to manipulative pump-and-dump projects that harm most coin holders while favoring select insiders. This power dynamic is unsustainable and contradicts the original purpose of crypto – to give people a voice in governance.
To overcome this issue, we need to develop memecoins underpinned by community-empowering infrastructures, including decentralized autonomous organizations (DAOs). DAOs are organizational structures with no central governing body, allowing holders of the coin to collectively govern within the remit of the DAO.
Decentralized Autonomous Organizations (DAOs)
Combining a DAO with a meme/community coin means that holders of the coin have built-in rights to collectively govern. Only people with a stake in the memecoin have such privileges, ensuring that the holders’ interests are placed firmly at the center of voting and governance systems.
The community’s development and growth coin mirrors the community’s development and growth. DAOs are already changing the face of decentralized finance, and their application has the power to change how we view money and who can access it.
Case Study: Uniswap DAO
Uniswap DAO is a prime example of this technology in action. With a $6 billion treasury that uses its DAO to vote on what it should do with the capital, this innovative approach is redefining the current state of crypto and finance.
Whether it be a small group of African entrepreneurs looking to build a liquidity pool or a group of residents in Ohio raising funds for a school, the power of digitally administered democracy has the potential to transform everyday life. This momentum and support will only continue under US President-elect Donald Trump’s administration.
Web3 and Its Risks
Web3 has the potential to transform everyday life and is developing rapidly. However, in its current form, it is at risk of abuse by a small number of malicious creators. We must proceed cautiously to protect Web3 and ensure it delivers on the promise of decentralized finance and governance.
The best option is to take measured steps to develop community-driven infrastructures and systems like community coins. It is time for the industry to give power back to the community.
Conclusion
As we move forward in this rapidly evolving digital landscape, it is essential that we prioritize decentralization and democratization. By giving strength back to the many, we can ensure a safer, more equitable Web3 that delivers on its promise of decentralized finance and governance. The future of Web3 depends on our ability to overcome the challenges posed by malicious creators and focus on community-driven solutions.
About the Author
Zach Burks is a blockchain developer and CEO of Mintable. Zach collaborated with the Ethereum Foundation on improving ERC-721 and is the author of ERC-2981.
This article is for general information purposes only and should not be considered as investment advice. Always conduct thorough research before making any investment decisions.
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