Web3 troubles provide useful learning opportunities


New buzzy web3 things like NFTs and DAOs, are – on balance, we think – A Good Thing. DAOs, for instance, will likely provide a platform to create a “fan-club+” experience – take a look at artist RAC’s experimental racOS DAO, where fans who own tokens are given access to exclusive RAC content. But… our general warning around NFTs and DAOs still stands: just because it’s a hot new technology doesn’t mean you should jump in with both feet.

The benefits of a DAO, for instance, rests on the decision-making processes of leaders and the group. One DAO that found out how this can go wrong the hard way is Spice DAO, which formed to buy a rare book version of an unmade movie adaptation of “Dune”. It then paid nearly $3m over the expected selling price, and then, it seems, didn’t really know what to do with it. After learning that simply buying the book didn’t infer any IP rights to the DAO, their plans descended into chaos and now the book will be sold again – possibly at a loss. Dan Olson, whose long-form video criticism of NFTswent viral earlier in the year, breaks down the story in one withering Twitter thread here, and, boy, there is plenty to learn from Spice DAO.

Meanwhile, the Axie Infinity “play-to-earn” game – which offered players the chance to earn crypto as a result of playing the game (here’s our “Need to Know video on it)  – continues to earn something else: more controversy. First, critics voiced concerns about the impact of its game on the actual human beings playing it. Then it was the subject of a huge $625m hack. Now there are suggestions that members of Axie’s team made a large transaction of tokens off Axie’s blockchain just before the hack happened.

What does it all mean? It means web3 is still a place where things can go very wrong very quickly if you approach it without caution. Learning: make web3 tech fit with your existing plans – not the other way around.

Written by: Joe Sparrow