Web3 is owned by the VCs, Jack Dorsey says. Well, I’d argue that web3 is whatever we make it – and the VCs only own it if we allow them to. We are building web3 right now and we have the power to control where it goes and how it is funded on the way there.

If we take decentralization and autonomy seriously, there is no good reason we must follow outmoded venture capital standards. Other means exist, such as smart contract-controlled, on-chain funding, which is more intuitive for projects to utilize, more equitable, completely transparent, and more adaptable for investors and developers alike.

This is why I consider entirely on-chain methods to be the future (or at least the next great evolution) of fundraising.

The long, winding road

If web3 is set to be owned by VCs, let’s agree that Web 2.0 is already owned by billionaires, conglomerates and multinational corporations with cultural influence, political power and the largest allocations of wealth humanity has ever seen. Fine then, no use raging against the dying light – but herein lies the rub: Literally everything we do on the Internet is designed to generate more capital for them while further monopolizing their power. Every time we log on, we’re actually clocking in.

With that in mind, is it any wonder that seasoned Web 2.0 players like Jack Dorsey are cynical about the future of web3? The main thing we should all remember moving forward is that web3 stands alone – it doesn’t replace Web 2.0 – that sandbox continues to survive as-is.

Web3 will exist concurrently, independent of Web 2.0. Believe it or not, some of us look at this opportunity as an ethical imperative, and think it is necessary to iterate upon the concept of the Internet, correct the sins of the father, and perhaps begin influencing the way our society functions at its most fundamental. Rather than empowering companies, we should be empowering communities.

At the end of the day, that is precisely what web3 is: An open source way to give the same platform to individuals that corporations currently dominate. Our new framework’s entire reason for existing is to empower individuals and to be more equitable and accessible to all people, regardless of age, race, sex and nationality. The status quo will not disrupt itself, so somebody has to do it.

The future is ours to write

How exactly does this disruption occur? The starting point is entirely on-chain. The majority of developers currently building the protocols and DApps of web3 are a new generation of creators who come to their work with a philosophical bone to pick.

They know how the old models work, who they service and how it is designed to stay that way. Coming from traditional startup accelerators where the experience consists of building a company, raising capital, forming a board, and hiring employees provide us a solid foundation to work from and improve upon.

Blockchain technology already provides us with open source, immutable ledgers that we can use to facilitate all our funding needs in a way that directly aligns with the ethos that has driven web3 from its inception. Utilizing self-executing smart contracts, we can control the open and closing points of a raise and make every investment and their terms open and verifiable to everyone.

Transparency is vital to any web3 project worth its salt, so by utilizing these on-chain, publicly verifiable fundraising methods, we can ensure there is no favoritism. This model doesn’t allow for back-room deals because everything is out in the open and everyone can see that all investors are on the same playing field. Better still, share deals and structures are revealed every single time an investment is confirmed on the blockchain.

Another tactic we can utilize is whitelisting, which can ensure the people who are genuinely passionate about a project and involved with the space end up holding the most economic influence.

By pre-selecting crypto addresses, all the vetting and due diligence can be completed beforehand and streamline the process. Funding contracts are generic and can whitelist any address for any reason, so the power rests entirely with the team issuing the smart contract. This is granular-level control over a process that tends to be messy and time-consuming.

Conscientious creation

On-chain funding models also offer a more equitable approach to developers, allowing them to circumvent certain socio-economic barriers like education, employment, credit, connections, etc. These models let developers get their projects off the ground even if all they have is the project they are building. The entire framework offers a more meritocratic way of functioning, where all that matters is the project and its potential.

Smaller projects can save resources and time by eliminating the need for building a pitch deck, opening a bank account, and actively seeking out investors in the traditional sense.

This is the community-driven spirit that the blockchain industry was born from. We can put simple tools in place to help foster growth and funding in a way that makes sense for each project, and that is what will enable web3 to be owned by the developers, the enthusiasts and the users.

And still, more remains

On-chain raises are not meant to kill the traditional VC model altogether, because after all, working with sophisticated investors offers builders valuable perspectives. VCs are experts at analyzing business and financial models, planning for scaling, and evaluating execution risk and where companies stand in a market. VCs who prioritize these traits will remain as valuable as they are today. Every project wants and needs people who have a proven track record of helping companies grow and succeed.

On-chain funding is not a magic bullet — it is simply the best framework we currently have to align the funding process closer with the mechanisms the developers find most useful while keeping the process open and equitable.

We should pay close attention to these new innovations and welcome them to help this new Internet realize its full potential.