"Infra is either a platform or a commoditization." - It's an inspiring idea, but I don't fully agree with it.
What I understand @_weidai Teacher's core view: The endgame of web2/web3 infrastructure product development may have two completely different paths:
1) In the fierce competition of the subdivision track, it was imitated by competing products and reduced to "mainland goods";
2) Platform products with strong network effects.
The value brought by the former is linear, and it makes a penny to sell the product to a customer; The latter brings a squared increase in value, and the more users based on the platform, the stronger the scale effect, and the steeper the value growth curve of the platform.
Focusing on the Crypto industry, infra's transformation product business mainly includes all XaaS track projects: such as RaaS (Rollup-as-a-Service), AVSaaS (AVS-as-a-Service), ZKaaS (ZK-as-a-Service) and so on. RaaS stands for projects such as OP Stack, @arbitrum Orbit, @Calderaxyz; AVSaaS stands for Project @eigenlayer; ZKaaS stands for projects such as @boundless_xyz, @SuccinctLabs.
But what is easy to overlook is that most of the products in the INFRA track are technology-intensive, and they are not easy to imitate; Taking a step back, before the technical barriers disappear, they have enough time to reach a consensus on the community of interests of B-end consumers, and the value generated by B-end consumers as platform products can be passed on to infra itself.
This is not a one-time transaction, but a strongly related community of interests.
A good example of this is OP Stack and @base, OP Stack provides RaaS one-click chain service for Base, and Base feeds back to OP Stack's parent company @Optimism through revenue sharing. The more revenue that Base generates, the more revenue @Optimism share. The OP Stack is well positioned to capture the value generated by Base's potential network effects.
Another example is @eigenlayer, @eigenlayer can be attributed to a commoditized infra, but what he provides to B-end consumers is not a one-time AVS service with a clear price, but a community of interests strongly associated with its native token, $EIGEN. After @eigenlayer brand upgrade to EigenCloud, it provides B-end users with data availability EigenDA, dispute resolution EigenVerify and verifiable off-chain computing EigenCompute, in a sense, the essence of EigenLayer's brand upgrade is to maximize the value generated by the network effect of B-end users.
So
Putting aside technical barriers and value transfer, it is unfair to talk about the commoditization of infra, and infra can be invincible through the feedback of B-end users through platformization.
on infra & platforms
tldr: infra either become platforms or face commodification long term
new technology (like zk, fast consensus etc.) often gets built out as infrastructure, which are basically products that unlocks novel and useful capabilities for applications and use cases
examples: zk enabled rollups and privacy-preserving payments, fast consensus enabled faster decentralized chains.
at some point, every infrastructure company faces a choice between two business models: product/process businesses vs. platform businesses. note: it's a spectrum instead of a strict binary divide.
example of product/process businesses: iphones, software (like b2b saas), rollup-as-a-service
example of platform businesses: app store, ride hailing/uber, social networks, chains
product/process businesses often has Θ(n) value, where n is the number of customers or product that gets sold.
platform businesses often has Θ(n^2) value, where n is the number of participants, crucially due to the network effects of the platform. this is how the math works: the marginal value of the network to each new entrants is linear in the size of the network. hence summing over all the participants we get n^2 asymptotically
one key long-term difference between the two is this:
- products tend to commoditized over time
- platforms tend to have winner-take-all effects
a good case study here are phones and app stores: smart phones are mostly commoditized now, but the app stores (application platforms with distribution) create and accrual proportionally more value
while digital infrastructure companies can build product businesses, it is much more beneficial to find ways to unlock network effects and build platforms
how does this apply to blockchains? chains are (secure) application platform, they not only provide backend infrastructure, but also network effects in form of liquidity, users, and distribution
if you are a technical founder in crypto, think about how your tech unlocks better platforms
infra either become platforms or get commoditized
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