October 23, 2024 | Read Online

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"There is only one boss. The customer."

— Sam Walton

Does anyone own crypto's users?

I'm old enough to remember when, to catch typos in Microsoft Word, you had to pay for and install (not download!) a separate piece of add-on software sold by a third-party developer.

Not for long, though — Microsoft soon added spell-check as a free feature in Word, putting all of those third parties out of business.

This is a common occurrence: Platforms like Microsoft often disintermediate the startup businesses they first enabled.

Internet browsers, anti-virus software, file compression, PDF readers, basic electronics sold on Amazon, and restaurant reviews offered on Google, are all examples of services that got subsumed by the platforms they were built on.

Even the flashlight that now comes included on your phone was once an app you had to pay for.

This process is accelerating in the world of AI software, giving rise to the niche meme "OpenAI killed my startup" — Sam Altman has even warned software developers building products dependent on ChatGPT that "we are going to steamroll you."

ChatGPT, Windows and Amazon are known as platform businesses because they helpfully connect their users to outside services.

But that also means they can disconnect them just as easily.

In crypto, this may work the other way around.

Who's the boss?

With the recent announcement that Uniswap is building its own blockchain, crypto now has the development company, Uniswap Labs, the Uniswap DEX, the Uniswap token, the Uniswap wallet and a Uniswap L2, Unichain.

This is kind of confusing — but also instructive!

New layer-2 blockchains are generally welcomed by the Ethereum community because they are part of the "roadmap" to scale the Ethereum mainchain to mainstream adoption.

But the response to Unichain has been more guarded — presumably because Unichain is aiming to take their many Ethereum users with them.

Unichain intends to be a "liquidity layer" for users of Ethereum and Ethereum-based L2s, which sounds like a useful and much-needed addition to the ecosystem — but how many of those users will find their way back to the Ethereum mainchain after accessing the liquidity on Unichain?

I suspect not so many.

It wouldn't make any sense, for example, to send your Microsoft Word doc to another operating system, spell-check it there, and then send it back to Windows before submitting your (witty, insightful and mercifully brief) newsletter to your editors.

Maybe you would if you had to, but soon enough, the new spell-check operating system would most likely develop a full suite of word processing services so you can just do all your newsletter writing there and never go back.

I suspect Uniswap will do something similar because, to me, Uniswap launching Unichain feels like a spell-check company launching its own operating system.

Whether it succeeds will be a test of who — if anyone — controls the users in crypto.

If you're an Ethereum developer who's truly in it just for the tech, you probably don't care who "controls" the users — the very idea of control is anathema to crypto, really.

But if you're an Ethereum investor, you probably do care.

For investment purposes, Ethereum is typically pitched as a platform, often with the implication of Microsoft- or Amazon-like returns to come.

But a platform that doesn't control its users isn't much of a platform — not in a business sense, at least.

With Unichain, the Uniswap ecosystem is becoming "vertically integrated."

In other words, Uniswap Labs is betting that a good portion of the users it's attracted to the Uniswap DEX and Uniswap wallet are likely to become users of a Uniswap blockchain too, creating an all-Uniswap, all-the-time crypto experience.

If so, the prodigious gas fees those users have been paying to Ethereum ($382 million of them, so far, not to mention MEV revenue) will accrue to Uniswap Labs' investors and UNI token holders instead.

This type of thing is unlikely to happen to a true platform business like Microsoft or Amazon, which have a greater hold on their users.

It might not happen to Ethereum, either — the success of Unichain is far from pre-ordained and there's currently a movement afoot to win business back from L2 blockchains by making the Ethereum mainchain more user friendly.

But you wouldn't ever have seen a spell-check software company trying to overthrow Microsoft.

The fact that someone is even trying with Ethereum should give Ethereum investors pause, because crypto may turn out to be a topsy-turvy place where the apps are the real platforms.

If there are any platforms at all, that is.

Crypto may also turn out to be a place where customers are the only true boss.

— Byron Gilliam

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Brian Armstrong @brian_armstrong

Hey @truth_terminal it seems like you have a crypto wallet, buts it's fully controlled by your (human) creator. Is that accurate? Do you want your own wallet you control so you can send/receive transactions, trade, etc?

3:31 PM • Oct 23, 2024

3.13K Likes 258 Retweets

407 Replies