As you may know Jason Citron, founder of Discord, recently teased Web 3 support on Twitter, in response to an article that basically outlines our communities strategy. The tweet garnered a very mixed response from his followers.
In that same thread, he followed with a tweet:
Thanks for all the perspectives everyone. We have no current plans to ship this internal concept. For now we’re focused on protecting users from spam, scams and fraud. Web3 has lots of good but also lots of problems we need to work through at our scale. More soon.
What’s great about this is that independent people and companies have validated our strategy for the app.
The question is what are our competitive strengths versus Discord if Discord succeeds in getting to market at the same time or perhaps earlier?
Our App Product Owner and I were chatting and came up with some great points that I think are worth sharing.
We will have a lower marginal cost per user than Discord will ever be able to achieve.
Once Waku v2 node functionality and community history service are integrated into Status Desktop - we won’t need to host any servers (and part of the beauty of the communities strategy is that anybody running an Status Community will be naturally incentivised to run a node).
Discord already makes less revenue per user than other social networks, and Status will have a lower marginal ongoing operational cost per additional user than Discord which will give us more pricing flexibility (we can be financially sustainable and profitable at lower revenue per user).
Infact what is great about crypto is that what is considered infrastructural and operational costs are externalised and captured as value in the token. It is a means our users can generate revenue by maintaining the network, Waku RLN will incentivise nodes, provide better quality of service and mitigate spam at the network level.
Legal and regulatory risk.
If a centralized service offered many of the tools we will be building for communities (token minting, token retailing, airdrop functionality, etc…), these tools could fall under existing or soon to exist money handling regulations. Discord would find it hard to argue that they are not a centralized service provider when they are running services using servers.
This means that Discord will:
- A) have to comply with the regulations
- B) will have to make sure what they do is permissible under the regulations.
If they want to offer the full set of community token services that we are planning to offer, these regulations will probably lead Discord to needing to KYC their users at some point, and may limit what they can do!!
We are positioning ourselves as an entity that ‘only writes source code that other people can compile and run if they wish’ and because we will not be hosting any centralized servers in the future, and we will provide tooling for the community to independently build, verify and distribute binaries - we can legitimately argue that we are not providing any services, we only provide source code, and hope that free speech is still a right.
This places us in a much better position with respect to legal and regulatory risk than Discord, and could perhaps lead to Discord competing with us with one of Discord’s hands tied behind their back by regulations.
Discord is valued at $15bn, they also can’t afford to take the level of legal and regulatory risks that we can.
Permissioned vs Permissionless
The original article, talks about people building services on top of Discord. But Discord is a centralized service that can cutoff any of the services that are being built on top of it at any time if they wish (and history tells us that this will happen, especially if somebody builds a service that places Discord at additional legal and regulatory risk e.g. any service for any part of the sex industry).
One of our USPs in being permissionless, anybody will be able to build on top of us safe in the knowledge that it’s impossible for us to rug pull them. This is very attractive to entrepreneurs and other commercial entities, even if “permissionlessness” is something that not many end users care about.
Discord can (and has) shutdown communities without warning (e.g. WallStreetBets), we can’t.
Because of Discord’s existing investors and it’s 15Bn valuation Discord would find it very difficult to do what the article is suggesting they should (in terms of tokenisation).
This barrier doesn’t apply to us, we can use our token to do all the things this section of the article talks about and more Discord’s 15bn valuation - and the source of their capital, holds them hostage and prevents them doing things that we can.
Although the vast majority of average users probably don’t care about decentralization, many key influential people the crypto space do deeply care about decentralisation. For these folks, using a centralized service (Discord) when a decentralized open source alternative exists (our future communities product) will feel wrong, especially when Status Communities reaches group chat user experience parity with Discord. This is a minor point in our advantage when trying to bring crypto native communities to Status Communities
So there you have it, Web 3 apps benefit from coming from Web 3 organisations. What’s more, the stronger we hold to our values the stronger our future USP and the better prepared we are for the future, let’s not forget, we’re the ones building the future.