As we approach the quarter-mark of the 21st century, it’s hard to ignore the profound impact of global digital migration on our lives. The internet has become an integral part of daily life, with approximately 67.5% of the world’s population connected online. In the European Union, this figure is even higher at 93.1%. However, as we continue to digitize various aspects of society, it’s essential to acknowledge both the benefits and challenges that come with this shift.
The Uneven Power Balance in Web3
While Web3 offers numerous advantages, such as decentralization, security, and transparency, it also raises significant concerns. Chief among these is the imbalance of power between creators and consumers. Although Web3 was designed to be decentralized, many protocols developed by creators are often exploitative or manipulative, consisting of pump-and-dump schemes at best, or outright scams and frauds at worst.
The Risks of Centralization in Web3
In 2023 alone, $5.6 billion was stolen from investors through cryptocurrency scams in the United States. This highlights the power imbalance that exists in Web3, where a small group of creators can manipulate markets and exploit unsuspecting investors. To combat this, we need to give strength back to the many by developing decentralized governance tools and systems that empower communities.
The Role of Memecoins in Empowering Communities
Memecoins, also known as community or culture coins, present a key tool for achieving decentralized governance and equitable transition to Web3. These coins are designed exclusively to serve the communities they emerge from, often lacking traditional utility. However, when developed correctly, memecoins can democratize digital society and facilitate collective decision-making among general populations.
The Limitations of Current Memecoins
While memecoins offer potential for community empowerment, many current forms are susceptible to manipulation by a small group of bad actors. Events like pump-and-dump schemes have harmed most coin holders while favoring select insiders who possess information about the memecoin cycle. This power dynamic is unsustainable and contradicts the principles of crypto, which aim to give people a voice in governance.
Overcoming Crypto Manipulation with DAOs
The key to overcoming crypto manipulation lies in developing memecoins underpinned by community-empowering infrastructures, including decentralized autonomous organizations (DAOs). A DAO is an organizational structure with no central governing body, where decision-making power rests with token holders. By combining a DAO with a meme/community coin, holders of the coin have built-in rights to collectively govern within the remit of the DAO.
The Power of DAOs in Decentralized Finance
DAOs are already changing the face of decentralized finance (DeFi). Uniswap DAO, for example, has been working toward expanding its $6 billion treasury, using its DAO to vote on what it should do with the capital. This technology has novel use cases and has the power to change how we view money and who can access it.
A Global Breakthrough in Digital Democracy
The application of DAOs and community-driven infrastructures will redefine the current state of crypto and finance, providing a global breakthrough in digital democracy. Whether it’s a small group of African entrepreneurs building a liquidity pool or residents in Ohio raising funds for a school, digitally administered democracy has the power to transform everyday life.
Conclusion
Web3 has the potential to transform everyday life but is at risk of abuse by a small number of malicious creators. To ensure that Web3 delivers on its promise of decentralized finance and governance, we must proceed cautiously and develop community-driven infrastructures and systems like community coins. It’s time for the industry to give power back to the community.
About the Author
Zach Burks is a blockchain developer and the CEO of Mintable. He collaborated with the Ethereum Foundation on improving ERC-721 and is the author of ERC-2981.
Disclaimer
This article is for general information purposes only and is not intended to be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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