The DApp Trilemma

Businesses are not a charity, and those that do, do for tax exemptions. Blockchain-based or blockchain-aided applications are no different. The ecosystem that some people make crypto to be is a delusion: it’s all about the money.

This is where the DApp trilemma comes in. DApps can only seem to happen under one of the following scenarios:

a pyramid scheme, an organizational-funded development, or a closed-sourced application.

This is the sad reality of DApps that live beyond the first renewal of the DNS ownership. I have studied the pyramid schemes for many months now, the vast majority of crypto projects, dispised org-backed DApps, and tried to find closed-source ones with support. I shall describe the reasons for DApps to exist under such pitiful conditions.

Pyramid Schemes

I’ve followed dozens of blockchain-based or aided projects, and the vast majority use their own flavor of pyramid scheme. This ranges from the socially-acceptable ICO pyramid scheme all the way to FOMO3D blatant Ponzi. Aragon, Status, Bancor, Brave, etc. can only exist thanks to people basically being scammed out of their money to the point that some of these orgs have already created useless, unpromised side-projects using the ICO funds. We’ve reached a point where pyramid schemes are spawning their own little organizational-funded projects.

The reason for this to be is simple to understand. Cryptocurrency libertarians demand open-source codebases, even of the overwhelming majority can’t read a single line of code, and those who can, don’t. Projects with open-source codebases need leverage in order not to be just be redeployed by the next man in line. That’s why these projects need to have an edge that compensates the open-source: faster development with hired coders, brand-building with marketing teams, incentive alignment with rewards for early adopters, etc. In the end, all of these depend on the starting lineup to get a firm grasp on the competition before there is even any chance of competing. Users? They’re already bought in. Coders? We have millions of dollars to pay them. Marketing? We have teams for all 5 continents and Antartica.

Organizational-Funded Development

Perhaps worse than pyramid scheme projects are org-funded projects. The most popular org-funded projects are probably Tether and OmiseGO. Realizing why an org-funded project can exist is pretty obvious. While this category isn’t too popular yet, there seem to be more upcoming org-funded projects, such as more stablecoins and traditional-finance firms delving into crypto. These projects are fickle, since funding depends on some external organization that can just shut off the flow of resources once it’s no longer in their best interests to proceed. Some of these projects try to be good guys by having open-source code or avoiding money-grab ICOs, but it seems to depend on what the heads of the project deem best for PR.

Closed-Source Applications

Also known as “evil people”. Purists and rivals will quickly jump to judge a closed-sourced application as an evil scam, ironically coming from supporters of pyramid schemes. This viable category is uncommon thanks to the overwhelming opposition to closed-source software. Nevertheless, closed-source software at least allows a small team to build enough momentum to eventually go open-source. Despite the passion some developers have for crypto, they still need food, water, and shelter. These projects are closer to what we know an indie-games. And just as indie-games, the lifespan of closed-source applications is very short.
Is This the Endgame?

ICOs and pyramids schemes burned the trust people had in them. Closed-source applications are shunned and rejected. Unfortunately it feels like the future of DApps will lie on organizational-funded projects. This is, in fact, reminiscent of the dot-com aftermath. As I’ve explained in the post (on Medium) “Governance: The Root of All Forks”, larger chains keep getting larger and with the painful burns of 2017 shitcoins, new DApps and blockchains will have a much harder time going for the pyramid scheme route. As the market stabilizes and traditional ventures wish to have a slice of the pie, decentralization programmers will seek private funding with better results. Ultimately, DApps will be absorbed by the old money as the dust settles.