Originally posted here.
tl;dr — Web3 is a revolution. It gives us the means to create new types of economic activity. But so far it’s only used by a handful of crypto-rich users as a way to speculate on the future. At O(1) Labs, we believe the key to unlocking its true potential lies with richer ways to interact with users, while preserving their privacy. With Mina and zero knowledge proof technology, we are enabling developers to build private Web3 applications for anyone around the world. If you’re excited by this vision, start building zkApps today, or come join our team to make Web3 useful for everyone!
In 2018, after the first NFT, DApp and tokenization summer, I wrote about how Web3 gives us a stateful internet. A state-less internet, what we had up until recently, prohibits digital economies from flourishing in a self-sovereign way. This resulted in massive centralized entities, the FAANGs of the world, capturing a majority of the economic value created. Individuals and smaller organizations also benefited, but in a relatively smaller way.
More recently, Web3 has been compared to the preceding internet eras with Web1: Read; Web2: Read/Write; Web3: Read/Write/Own. Since the advent of Bitcoin, but especially Ethereum, we have seen more distributed ownership of economic activity on the internet. Ownership of new protocols, NFTs or DAOs, is with orders of magnitude more individuals at much earlier stages than it was with companies in the preceding internet eras.
What hasn’t happened yet is the creation of new types of sustainable economic activity. For all the billions of dollars of valuations and “total value locked”, or TVLs, we’re limited to a minuscule group of users for anything but speculation. No DeFi or NFT application, other than those enabling the buying or selling of crypto assets or those that have done an airdrop to their users, has more than 100K users. MakerDAO, the largest such DeFi application by TVL, has less than 80k users. We are not yet at the stage where Web3 is useful for the general public. It is only the crypto rich who are participating in the economic activity of creating and financializing a new asset class.
Now, this economic activity makes Web3 highly valuable even if it is just limited to that. The financial infrastructure used by institutions is due for a much needed upgrade, and what we got today already provides the beginnings of one. However the potential of Web3, as it is often cited by any of its proponents, is much more than just digital financial engineering. A stateful internet should give any individual the means to directly create, participate in, and own new types of economic activity.
At O(1) Labs, we believe that the means to distribute ownership of Web3 is here, but Web3 itself isn’t yet. That’s where zero knowledge proofs and Mina come in.
A Private and Secure Way to Access Web3
In the physical world, the means to interact with value is very flexible. That is because the interaction happens between two intelligent humans. The downside is that it is very inefficient. I can easily and privately prove my identity to a bar bouncer or a police officer in my neighborhood without permanently handing over my private information. However I can’t do that with someone on the other side of the world. I would need to travel all the way for that.
Web3 makes it much more efficient by allowing anyone around the world to interact with digital value at a moment’s notice. But it is not very flexible, today. To interact with the Web3 police officer, say the KYC smart contract of a DeFi protocol, I would have to hand over a ton of private information. And not just to the protocol, but for the whole world to see. That is because the stateful internet lives on blockchains, and data submitted to any blockchain today is public forever for anyone to see. This lack of flexibility is the main reason, even more so than scalability, why we don’t see any retail adoption of Web3 applications today. No protocol can underwrite the creditworthiness of a user, so all lending is overcollateralized. You can’t vote on a DAO proposal privately because all votes are public for everyone to see. Tough luck if you are a Swedish citizen traveling in the US and want to use a DeFi protocol that is blocked in the US — unless you want your identity information to live forever on the blockchain. You want to link your NFT to be your profile picture (PFP) on your Twitter account but don’t want to display your entire crypto holdings and activity? Nope.
If we want Web3 to host new applications that are used by the whole world, then we need to find a way for users to easily attest to facts about themselves without violating their privacy, or requiring them to purchase cryptocurrency they otherwise don’t have a use for. Luckily, zero knowledge (zk) proofs give us this flexibility. With zk technology, we can attest to facts about digital information. A user can share proof that they have the various financial credentials as verified by a trusted counterparty to make them creditworthy. You can prove you’ve voted on a DAO proposal but not share what you’ve voted for. The Swedish citizen can prove they have a Swedish identification without sharing their entire ID documentation. And yes you can proudly display your NFT as your Twitter PFP without letting anyone dig into your personal finances.
How is this possible today? At O(1) Labs, we have been hard at work enabling Mina as the private and secure platform to access Web3. Mina is known as the world’s lightest blockchain, but it’s also the world’s most efficient zk state layer. Developers can build apps, or zkApps, that request zk proofs of information from users. Thanks to Mina’s cutting edge zk technology, users generate those proofs on their own devices, without their personal data ever leaving their custody. Because Mina is light, developers can also choose to use it in tandem with other blockchains, thanks to trustless zkBridges. An app that prefers to stay on Ethereum does not need to move over their entire tech stack to benefit from Mina. In this way, Mina becomes a user data verification layer 2, to go with Web3 lingo, in addition to being the world’s lightest blockchain.
The above is available in test mode today. Thanks to an intuitive SDK in TypeScript, developers are already starting to explore the new paths this opens up for Web3, and leverage zk technology without having to learn cryptography. Teller is looking to underwrite users and give them uncollateralized loans. Aragon is exploring enabling private voting. Developers like qcomps are designing entirely new types of online games like a multiplayer escape the room.