As we rapidly approach the quarter-mark of the 21st century, it’s hard to play down the effects of global digital migration on our lives. Many areas of life and society are conducted at least in part — and sometimes entirely — online. The global average internet penetration is approximately 67.5%, while digitalization has happened at lightspeed in the European Union, where 93.1% of households are connected to the internet.
The Evolution of Web3
Far from slowing down, this trend seems to be picking up at pace and is now evolving toward its next milestone: Web3. Web3 offers numerous advantages, including increased decentralization, security, and transparency. However, it also raises significant concerns and unresolved questions — chief among them being the imbalance of power between creators and consumers.
The Uneven Power Balance
Although Web3 was initially designed to be decentralized, creators are increasingly developing protocols that are often, at best, exploitative or manipulative, consisting of pump and dumps. At worst, they are illegal scams and frauds. In the United States alone, $5.6 billion was stolen from investors through cryptocurrency scams in 2023.
The Need for Decentralized Governance
Power is becoming concentrated in the hands of a few creators, and the only way we can combat this is by giving strength back to the many. To facilitate decentralized governance and a safe, equitable transition to Web3, we need tools built for the blockchain to democratize the digital society and allow collective decision-making among general populations to mirror real-life social behavior.
The Role of Memecoins in Achieving Decentralized Governance
If developed correctly, memecoins, otherwise known as ‘community’ or ‘culture’ coins, present a key tool for achieving this. While frequently lacking traditional utility, memecoins are usually designed exclusively to serve the communities they emerge from.
The Challenges of Memecoins
However, memecoins are susceptible to manipulative pump-and-dump projects in many current forms. Events like this have harmed most coin holders while favoring select and limited insiders who are privy to certain information surrounding the memecoin cycle.
Overcoming Crypto Manipulation
The key to overcoming crypto manipulation from a small group of bad actors is to develop memecoins underpinned by community-empowering infrastructures, including decentralized autonomous organizations (DAOs). A DAO is an organizational structure with no central governing body. Combining a DAO with a meme/community coin means that holders of the coin have built-in rights to collectively govern within the remit of the DAO.
The Benefits of Decentralized Autonomous Organizations
Only people with a stake in the memecoin have such privileges, meaning the holders’ interests are placed firmly in the center of voting and governance systems. The community’s development and growth coin mirrors the community’s development and growth. DAOs are already changing the face of decentralized finance.
The Power of Decentralized Governance
Uniswap DAO has been working toward expanding its $6 billion treasury — a treasury that uses its DAO to vote on what it should do with the capital. Although this technology currently has a novel use case, its application also has the power to change how we view money and who can access it.
Conclusion
Whether it be a small group of African entrepreneurs looking to build a liquidity pool or a group of residents in Ohio raising funds for a school, the power of digitally administered democracy is the global breakthrough that will redefine the current state of crypto and finance. This momentum and support will only continue under US President-elect Donald Trump’s administration.
The Future of Web3: A Call to Action
Web3 has the potential to transform everyday life and is developing rapidly, but in its current form, it is at risk of abuse by a small number of malicious creators. We must proceed cautiously to protect Web3 and ensure it delivers on the promise of decentralized finance and decentralized governance.
The Path Forward: Community-Driven Infrastructures
The best option is to take measured steps to develop community-driven infrastructures and systems like community coins. It is time for the industry to give power back to the community.
Zach Burks’ Perspective
This article is written from the perspective of Zach Burks, a blockchain developer and the CEO of Mintable. Zach collaborated with the Ethereum Foundation on improving ERC-721 and is the author of ERC-2981. This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice.
Disclaimer
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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