If your goal is to build new open ideas collaboratively – a decentralized protocol is the way. Start from the end concept and work backwards.
Sage advice – You learn guitar playing covers
Products live (and die) on their management teams and realized KPIs. This could be great for revenue run, however flatten against longevity curve. Exit targets for products look like mergers, acquisitions or IPOs while exit targets for protocols look like ubiquity. As a strong advocate for public goods I find protocols (DNS, HTTP, etc) stand the test of time.
What makes a good protocol
A protocol is as good as the number of independent services, builders, apps and business models thriving on it. Many mistake products and protocols. When a protocol with a lot of users has just one dominant client its just a product with open APIs. By design, when the usage and APIs are distributed – decoupled from each other you have a protocol.
The variety of independent clients are key for driving a protocol to an exit target of interoperability.
With adoption of design and usage patterns, behaviors shift and introduce market segments empowering business models which run on the underlying protocol. We've seen how billion dollar ecosystems surfaced from Uniswap Labs standardizing Automated Market Maker Protocol – which is used by many development teams, across many chains with a wide spectrum of usage and value propositions.
Example of protocols and product use cases :
Protocol: Ethereum Virtual Machine (EVM)
Products: Ethereum, Build and Build Chain, Polygon, Avalanche
Protocol: Non Fungible Token (specific: ERC-721)
Products: Doodles, On Chain Monkeys, Reddit Collectables, Sea Port
Protocol: Automated Market Maker (AMM)
Products: Uniswap, Sushi, 1Inch, Set, Curve Finance
Products: Registration, Twitter NFT Avatar, Snapshot Voting, Etherscan
In all cases in order to achieve a distribution model that makes sense developers need to build on the protocol. Developers care about user quality over everything else as it is the primary ingredient for driving adoption of their specific use cases, which ultimately have some revenue target.
Developers will learn new tech stacks (see Rust w/ Solona vs Soldity w/ EVM) to place their products in front of high quality active users. Quality of the user matters. Even if the protocol has gaps or less performant technology, developers will follow the higher quality audience and adapt.
Developers don't want zombies, bots or any type of user that will result in high attrition rates or churn. Real users create real activity, which lead to a teams ability to deliver real value by solving meaningful problems in the products they build.
While a protocol is the end goal – people don't directly use the protocols, they use apps. With an understanding of the impact in building a protocol teams should start with an app that can demonstrate the value chain and surface attention.
It may sound like a chicken-egg scenario it's largely an approach to how you design and architect the model. The right app will get higher quality users. The right approach to expand the protocol so others can build on top of it will lead to wider adoption and greater discovery of high quality users across all of the apps using the protocol.
With ample high quality users ecosystems emerge, circulating value reinforcing the longevity.
In blockchain technology protools serve a bigger, more valuable role. Bringing product ideas to market with protocol roots leads to more diverse and ubiquitous usage and overall sustainability. Success of leading protocols in the space validate the model.