Web3 Innovations Are Taking the Place of Middlemen

Cryptocurrencies and the broader blockchain ecosystem are helping to transform how we live our lives. Because of these new technologies, Web3 is being hailed as a permissionless and open innovation platform based on middleware blockchain protocols. They are displacing intermediary software-as-a-service (SaaS) firms and extracting more revenue as a result. Now, before going into further details, let us first understand what Web3 is. 

What is Web3?

Web3 is supposed to liberate the world from monopolistic control. Web3 refers to a blockchain-based decentralized online ecosystem. Platforms and apps built on Web3 will not be owned by a centralized gatekeeper, but rather by users who will earn ownership stakes by contributing to the development and maintenance of those services.

In 2014, Gavin Wood coined the term Web3 (originally Web 3.0). At the time, he had just finished working on Ethereum, the cryptocurrency that is second only to Bitcoin in terms of popularity and market size. Today, he is the CEO of the Web3 Foundation, which supports decentralized technology projects, as well as Parity Technologies, which is focused on developing blockchain infrastructure for Web3.

Now, a technology this advanced is taking the place of middlemen along with middleware protocols. Middleware protocols are not new. After all, Web2 is supported by middleware applications, the most important of which is HTTP. Middleware is what allows users in a computing environment to interact with one another and with applications. And, with Web3, there are a variety of protocols in this new internet's middle layer stack to support applications.

Web3 and Middleware Protocols Together Make It Better

With the introduction of blockchain technology, the way we go about our daily lives is changing. The blockchain enables this by providing a secure and trusted peer-to-peer (P2P) network between users, whether it's through financial transactions, purchasing art, purchasing property, or donating to a charity. Companies are no longer extracting value from users; instead, developers are extracting value from protocols.

And it works quite efficiently. Developers can stake the native token once for the equivalent network bandwidth for the lifetime of that stake on a middleware protocol. The longer applications are staked and used on the network, the closer the cost gets to zero. After a few months, the service is essentially free, and there are no monthly fees, as there are with SaaS fees.

Developers can always sell the native tokens of the middleware protocol they purchased on the secondary market or to another developer after unstacking their initial investment. They can also stake the software-as-a-service node to gain more protocol tokens in exchange for serving application requests.

Middleware Protocol that is Unique For Every Layer of the Stack

At a distinct layer of the stack, each application-specific middleware protocol provides a unique service. For example, the RPC layer is with Pocket Network, the indexing layer is with Graph, the cloud layer is with Akash, the video transcoding layer is with Livepeer and Arweave, and the storage layer is with Filecoin and Storj. The protocols are complementary since they exist in distinct areas of the decentralized Web3 developer stack. ERCgraph, Proxy Poster, LiFinance Bridge Aggregator Analytics, and Balancer Chat, for example, employed both Pocket and the Graph in their ETHOnline 2020/2021 hackathon projects. The protocols are synergistic since they are at distinct portions of the decentralized Web3 developer ops stack.

This is demonstrated by the fact that the Graph's subgraph indexers must ping a base-layer Ethereum archive node, which can be costly to host and maintain. Indexers can save money by utilizing the RPC endpoints of a middleware protocol, which provide users with maximum uptime and no single points of failure. They must use Livepeer's orchestrators to ping a base-layer Ethereum full node, which incurs monthly costs to run and maintain. Orchestrators, like indexers, can save money by utilizing a middleware protocol's RPC endpoints. As a result, a two-sided marketplace emerges between customers and providers.

Conclusion

With the above-mentioned mutually beneficial relationship, better service attracts apps, more app usage creates more node money, and more node revenue draws additional nodes, increasing redundancy, and so on. Because Web3 middleware protocols will run on decentralized protocols — the building blocks of blockchain and crypto technology — we can expect a substantial convergence and symbiotic interaction between these three technologies and other disciplines.