The first field study by the Crypto Council for Innovation explores how Web3 lowers barriers for founders, promoting inclusivity through new funding mechanisms and the open-source culture of apps.
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Summary
- The revolution of the open-source nature of Web3 apps
- Case studies and future opportunities
- Regulatory ambiguity in Web3: an obstacle to inclusivity and innovation
The revolution of the open-source nature of Web3 apps
The Crypto Council for Innovation, supported by the W.K. Kellogg Foundation, has published its first field study. In particular, highlighting how Web3 is revolutionizing access to capital for new founders.
Entitled “Building a More Inclusive Web3”, the report demonstrates that the open-source nature of the blockchain and decentralized financial models offer founders greater resources and tools to effectively manage their communities.
The research, conducted through three months of ethnographic investigations in various cities of the United States, including New York, Atlanta, and Los Angeles, involved over 60 builders.
One of the main obstacles identified is access to capital. In particular for underrepresented founders such as black and Latino, who receive less than 1% and 2% of annual venture funding respectively.
Instruments such as investment DAOs and token collections are emerging as crucial solutions to overcome these barriers, despite the existing regulatory challenges.
Case studies and future opportunities
The report of the Crypto Council for Innovation presents 14 case studies that illustrate the positive impact of Web3.
For example, Patientory uses decentralized technologies to give patients back control over their health data.
On the other hand, EMTECH works to improve financial inclusivity by developing infrastructures for central banks that facilitate access to CBDCs for unbanked communities.
Another significant example is Félix, which reduces the costs of remittances and cross-border payments using cryptovalute. This with a format based on Whatsapp messaging, familiar to Latin users in the United States.
These cases demonstrate how Web3 can bridge historical gaps in access to capital and social networks, offering innovative and democratic solutions.
Renée Barton, Manager of Impact Research at the Crypto Council for Innovation, emphasized that new financial instruments based on Web3, such as Gitcoin and DAOs, are emerging as crucial alternatives to traditional venture funding.
These tools allow for a more democratic fundraising and grant-giving process. This helps a greater number of founders to obtain the initial support needed to develop their ideas.
The report from the Crypto Council for Innovation not only provides an overview of the current state of the Web3 ecosystem but also highlights the future opportunities to promote inclusivity and innovation on a large scale.
Investments in education, greater collaboration between industry and politicians, and a particular focus on diverse founders are key elements to realizing the potential of Web3.
Susie Lee from the W.K. Kellogg Foundation emphasized the importance of supporting diverse entrepreneurs to tackle large-scale problems and promote racial equity in the capital markets of the future.
Regulatory ambiguity in Web3: an obstacle to inclusivity and innovation
The report from the Crypto Council for Innovation (CCI) also highlighted how regulatory ambiguity in the Web3 sector is exacerbating structural inequalities.
Striking thus disproportionately the underrepresented builders with limited access to capital and networks. This regulatory uncertainty not only hinders innovation but also reduces the benefits for consumers.
The report revealed that 50% of the builders interviewed made significant business decisions or incurred additional costs due to the lack of clear guidance.
Furthermore, 40% of these builders would consider the idea of moving abroad if they had the opportunity.
While 10% have halted potential offerings or closed products for fear of possible regulatory actions, citing the inability to comply in the absence of clear policy.
The fear of regulatory retaliation is also influencing the types of projects being built. Builders using governance and utility tokens to support the functionalities of their projects are worried about their future.
In some cases, the manufacturers are completely abandoning the products, with serious implications for the types of products being developed and for those who develop them.
Renée Barton del CCI highlighted that this uncertainty has a greater impact on builders who do not have the necessary resources to face such challenges.