Web3 Protocol Design: From Token to Protocol

The Web3 field is shifting from a focus on Token economics to protocol design. At the heart of this transition is the understanding that protocol design is the key to a project's success, while Token design is merely a supportive tool. This article will explore the intrinsic laws of protocol evolution and the key points of Web3 protocol design.

The Inherent Laws of Protocol Evolution

Internet protocol: the bond of interaction

The internet is essentially a network composed of various protocols. These protocols include internet protocols, physical protocols, and political protocols, all of which are formalized interaction systems capable of facilitating complex group behaviors. The uniqueness of internet protocols lies in the fact that they connect interactions between people as well as interactions with software.

Evolution of the protocol: Web1 - Web2 - Web3

The evolution of the protocol can be understood from two dimensions: the degree of decentralization and the clarity of the economic model.

Web1: Decentralized & No Clear Economic Model

Protocols from the Web1 era such as NNTP, IRC, SMTP, and RSS ( remained neutral in terms of value flow, ownership, access rights, and payment mechanisms, without a clear economic model. These protocols are easy to understand, but over time they have gradually faced failure or change, mainly due to a lack of specific functionality and difficulties in obtaining funding.

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)# Web2: Centralized & Clear Economic Model

Web2 addressed the limitations of the Web1 protocol by providing specific functionalities. However, the Web2 protocol is completely controlled by its owners, limited only by commercial strategies and legal constraints. At this stage, network effects and switching costs become two key centralized forces.

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)# Web3: Decentralized & Clear Economic Model

Web3 introduces decentralized components, leveraging encryption and blockchain technology to reduce reliance on trust, while clarifying economic principles and supporting decentralization. Web3 offers features of openness, interoperability, and open-source, with a clear economic model, and integrates funds in the protocol to achieve sustainable development.

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Web3 Protocol Design Case

Taking "Unstable Confusion" as an example, this is a Web3 protocol based on "Stable Horde". The design goal is to establish a decentralized, interoperable image generation market. The following mechanisms are mainly considered:

1. Verification mechanism: ensure the accuracy of reasoning.
2. Pricing Strategy: Establish a reasonable pricing mechanism
3. Storage mechanism: ensure the correct transmission of work results
4. Task allocation strategy: Reasonable allocation of tasks to workers

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Key Points of Decentralized Protocol Design

1. Seven key design elements that may lead to centralization risks.
2. Reduce switching costs and promote interoperability
3. Create a decentralized system using Web3 technology
4. In-depth research and selection of the best solutions

When designing decentralized systems, considering the above points can help build systems with long-term robustness and decentralized characteristics. The design of Web3 protocols is shifting from focusing on Token economics to a more comprehensive protocol design, which will provide broader space for innovation and development.

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