Three Mental Models for Thinking About Web3 Infrastructure

Slim Waist Model

The narrow waist is a key concept in the protocol stack, enabling protocols to be widely adopted globally. The Internet Protocol (IP) is a successful example that connects decentralized computer networks through the creation of a unified layer.

The success of IP stems from its unrestricted design. It provides a simple interface that allows various data flows, regardless of the type of traffic and the technology used. This flexibility has enabled IP to remain vibrant over 40 years of technological change.

In blockchain, consensus mechanisms play a narrow-waist role. They connect validators and application developers, creating a unified computing foundation for the blockchain. Different blockchains make different trade-offs between autonomy and unrestrictedness, and in the future, we will see which approach is more effective.

Modular Model

Modularity means that protocols can be broken down into independent basic components. It is related to unrestrictedness but is not exactly the same. Modularity can increase flexibility, but it can also add complexity.

In the early stages of technology, maintaining integrity is more beneficial. As technology matures, the advantages of modularity will become more apparent. It can reduce costs and increase flexibility, but it will also increase complexity.

Different blockchains adopt varying degrees of modularity. Bitcoin is relatively less modular, while Ethereum is more modular. Choosing the appropriate level of modularity requires weighing various factors.

Network Flywheel Model

Tokens play a key role in driving protocol adoption, especially in addressing the cold start problem. They can incentivize participants and promote the self-development of the network.

The network flywheel describes how tokens drive protocol development: the founding team creates initial value, attracting validators to provide resources, which in turn attracts developers to build applications, providing utility for users, and ultimately reinforcing the vision of the protocol. This cycle repeats continuously, driving protocol development.

By distributing tokens at various stages of the flywheel, the network can better overcome cold start issues. Tokens play an important role in driving multi-party participation in the market.