As Web3 remains in its early stages, its ideals and original vision of creating an interoperable financial landscape are under attack, according to Jamie Burke, the founder and CEO of Web3 accelerator Outlier Ventures.
In an interview with Cointelegraph, Burke outlined several aspects of Web3 that are currently being threatened by concepts like Web2.5 and regulatory actions. The executive said that while these are “understandable,” it takes Web3 away from its original purpose and hinders its wider vision.
According to the executive, some projects are settling down and compromising on limited versions of Web3. Working with startups, Burke said that there are founders who are building temporary fixes due to various technical limitations. “Whether it’s an independent app developer or large enterprise, they’re all kind of making these compromises,” he said. This ends up making products that are not interoperable. He further explained that:
“They just want to build products people can use that have Web3-like characteristics, but because they’ve been built in silos, that means that they’re not fully interoperable.”
This then becomes a huge problem, especially in decentralized finance (DeFi), where fluidity and composability are necessary aspects of the space. Burke argued that when these silos are created, it ends up having app chains that are not interoperable with other app chains.
And while some argue that these are temporary, the executive highlighted that as business models get built within these Web2.5 paradigms, more people will want to defend them. “And so, Web2.5 becomes permanent, and we never really realize the full vision,” he added.
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On the other hand, Burke said that the industry is also facing regulatory attacks from government factions who want to exercise control over the industry. According to Burke, both the United States and Europe somehow expressed that they want central bank digital currencies (CBDCs) to replace stablecoins.
“They can directly control who you do what with they have full auditability, but they are by design, in state capture. So, the state can then send it to you, and they can block you,” he said.
Burke believes that as these regulatory challenges allow more control for governments, it leads to the “stifling of innovation” and creates a “problematic version of Web3.” He explained that instead of these, it would be better to support peer-to-peer markets. Burke suggested:
“What I would propose is that when you enable basic economic primitives, like digital property rights, like the sovereignty of identity and wealth, you enable peer-to-peer markets.”
Burke suggested that these markets will increase the amount of exchange of value. When this happens, it will result in greater tax income for the state.
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