Editor’s note: This is a guest post written by Maria Gilfoyle and Chris Picardo, investors with Seattle-based Madrona Venture Group.
We have been diving deep into Web3 at Madrona and the two of us spent the past week meeting with entrepreneurs at the ETHDenver conference.
Web3 is an evolution of the internet built on decentralized protocols, including Ethereum (the ETH of the conference title), that enable users to own their contribution to the internet. Trust is distributed without a middleman in Web3.
We are excited about Web3 because we see new consumer behavior emerging, a massive talent migration in progress, and the emergence of new applications and ideas that don’t have categories yet.
We were blown away by the positive energy at the conference. With more than 15,000 people attending and 8,000 people on the waitlist, the momentum and enthusiasm for Web3 felt unprecedented.
Web3 is incredibly relevant to the Pacific Northwest. One of the original Web3 companies, Dapper Labs, was founded in Vancouver, B.C. Data centers that dot the landscape support not just Microsoft, Amazon and Facebook but also cryptocurrency mining. And the market for Seattle-based talent is hot. Additionally, Seattle and Portland will host Web3 conferences in April and July, respectively.
Our three key takeaways from the conference revolve around the talent market, the future work on Ethereum, and the most exciting areas for startup opportunities.
First, top talent including engineers, product managers, and entrepreneurs are leaving their Web2 jobs to work at Web3 startups. Community optimism, green field tech opportunities, and allure of career momentum are attracting top talent.
In the tens of companies that we met, they were all remote-first, with their employees often spread between two or even three continents. Seattle has been a top market for tech talent for decades and the opportunities now are even greater for anyone looking to join a crypto company. Given the reality of a distributed workforce, ETHDenver was, in essence, a Meetup for hundreds of companies.
Second, Ethereum needs some intensive work to support the growth. Discussions at the conference confirmed Ethereum developers are working hard toward making Ethereum scalable and reducing user friction. During Ethereum founder Vitalik Buterin’s talk, he confirmed Ethereum will be moving from proof-of-work to proof-of-stake by the end of 2022. Moving to proof-of-stake will reduce the amount of energy produced by transactions on the Ethereum blockchain and make Ethereum more decentralized with more people able to stake their Ethereum from a home computer.
Even with goals to improve Ethereum’s speed and flexibility, the number of transactions happening on Ethereum is not keeping pace with consumer adoption. This could result in a multi-chain future. The growing number and rapid rate of transactions on Ethereum are generating an increasing need for cross-chain interoperability. Web3 builders are eagerly innovating with Layer2 (L2) solutions including ZK-Rollups.
Which brings us to the third takeaway, the innovation we witnessed and continue to see every day. Web3 entrepreneurs at ETHDenver were working in all areas of Web3 — building Web3 software developer kits, interoperability protocols, Layer2 innovation, technology for a multi-chain ecosystem of blockchain, and Web3 social media platforms.
One area of specific interest is the explosion of Decentralized Autonomous Organizations (DAOs). These are essentially a new way to organize a company, a community or a group of likeminded people, based on the Web3 principle of distributed ownership. We met multiple DAO founders that are building niche, decentralized, communities and companies that are structured as DAOs so users can be an owner. We also saw many startups building tools for DAOs to improve their operations. DAO tooling includes treasury management and community communication platforms.
On the consumer side, we met multiple founders building Web3 social media platforms and social wallets. Web3 social media platforms aggregate users’ on-chain actions into one feed and social wallets enable users to send messages like emails between crypto wallets.
All of these entrepreneurs are aggressively working to solve tough problems within blockchain infrastructure that will scale the underlying infrastructure and increase the millions of people that will use consumer-facing apps that run on blockchain — known as Decentralized Apps or Dapps.
At Madrona, we see blockchain technology as an innovative technology ripe for growth. We are excited to partner with Web3 founders to build Web3 companies and DAOs — including at the upcoming Madrona Venture Labs’ Launchable event which is attracting Web3 founders and teams to build their ideas into companies with incredible industry leaders/mentors.
