A little while back, Paul and Rich did an episode on the promises of Web3 — but there’s still more to be said. This week, they chat with internet pioneer Michael Sippey to get more clarity on what Web3 entails. Michael explains the three main components that make up Web3 (think DeFi, NFTs, and DAOs) and shares why he’s so excited about its possibilities.
Michael Sippey What do you think you can do with software, right?
Paul Ford I thought that was Salesforce? Anyway…
Rich Ziade Whoaaa! [Rich laughs]
MS There you go. Thanks, goodnight.
[music ramps up, plays alone, fades out]
RZ Paul Ford.
PF Not too long ago, we had a podcast or two where we tried to explain Web1, Web2, Web3.
PF And I would give us a C+, B- for really nailing it down.
RZ Well, you know.
PF Charming, charming endeavor, like fun to listen to. Everybody loves, you know–
RZ E for Effort? We touched on a lot of important subjects.
PF Absolutely. But not–I don’t think anyone stood up and was like, I understand exactly what this is. And I’m able to communicate and operate with it.
RZ Well, you know what, it’s time to bring in the big guns.
PF Someone who knows Web1, Web2, and Web3. A frequent guest on the Postlight Podcast, Michael Sippey.
RZ Michael, welcome back to the podcast.
MS Hey guys! I think it’s the third–I think it’s the third time.
PF There’s one person, another product manager, Tim Meaney, who has been on more than you. And you are one of our most frequent guests.
RZ Yes. Let me give the 60 seconds–we recorded a couple of podcasts, Michael, which I’m sure you’ve listened to already, because you’re a big fan.
PF Who doesn’t listen to this podcast?
RZ Where we talk about Web1. And the innovation with Web1 is this idea of connecting what were effectively documents through hyperlinks. And publishing was never the same. And when I say publishing, I mean, in the broadest sense, the idea of connecting documents on the web through basic HTML markup.
PF Michael is too young to have any memory of any of that.
RZ Exactly. Web2 was this reimagined–
PF We have to explain, like Michael had, it’s not wacky to say you you had like the first blog. Like, it’s not–
RZ Is that true?
MS It’s almost true. It’s probably the one of the first like 10 or 15. Somewhere in there. There’s a book about it, but like, yeah, somewhere in there.
RZ That’s amazing. We’ve got a pioneer here.
PF But it’s a little joke about, you know–
PF Ha! Ha! Ha! Ha!
RZ Yeah. Time passes. And we start to get more and more control, to putting content out into the world. Not just consuming it. A lot of the early web is consumption. And the tools got better and faster.
PF User generated content.
RZ But then also something else happened. And Tim O’Reilly summed it up with the Web2 paper that he put out, which was that the network that makes up the web can also pass data along. And then these richer experiences were coming because the discrete content or currency that was powering the web wasn’t just going to be documents anymore, it was going to be information and data and applications. And it opened up a whole world. Meanwhile, RealAudio, that will be a different podcast. I remember RealAudio trying to be real for so many years. And it was ahead of its time. But we won’t get into that.
PF We should also like, Michael at this point is is your Web 2.0 was a lot about Twitter, right? Like you were at Twitter.
MS Yeah. So combination of like six apart and helping to build blogging platforms and all of that work. And then moving to Twitter and spending some time there working on, yeah, Web2 products, I did a bunch of Web1 stuff and Web2 stuff.
PF You were a wild thing back in the day, because you were able now you’re not quite as unusual as used to be, but you are a business person working around websites and web platforms, as opposed to just some wacky startup kid. I mean, that’s also a little bit of color for people. When you’re listening to Michael, you’re listening to someone who really has seen the business of the web and the the kinds of transactions that happen evolve over really, just like Rich and I, over decades. Like it’s changed, which gets us towards this new kind of transaction, that we’re all trying to wrap our heads around.
RZ I’m gonna say this out loud. I mean, I think the term is getting–
PF Don’t mumble it.
RZ Is circulated pretty aggressively. Now you’re seeing Web3 a lot. I don’t think there is that sort of seminal article or essay that sort of nails it. It feels a little hodgepodge. And so we want to bring clarity, if there is such a thing. I don’t know if there is. It feels more like a movement and an actual thing.
PF Well, I don’t think we–and I want to go to Michael instead of just you and me talking. But yeah, nonetheless, I’ll say one more thing. I don’t think there is a Tim O’Reilly anymore. I think it’s the web is too big. Web 2.0 is like the last moment when I think a human being could come in and say, hey, it looks like it’s this. And everybody could go yeah, you know what. you’re right. I don’t think we have that anymore.
RZ That’s a little sad.
PF No, I don’t think it’s that, I think it’s just giant.
MS I think that’s amazing actually, that’s a feature, not a bug.
PF I think that’s right. Like you who could come in and say like, this is what movies are now, right? Like, that’s where we’re at. We’re just so big. This is what video games are. They could be little indie, indie games, it could be triple it could be Death Stranding, like it’s there is no single answer for what the web is.
RZ I don’t know the origins of how the phrase came about or got coined, or whatever it may be.
PF Well there there was a 1.0. And then he added one to it.
RZ No, not that. Not Web3. Before you define it. Michael, are you excited about it?
MS I am extremely excited about it. I mean, I share, I’m old enough to like, basically know that there’s, I have some skepticism. There’s a lot of hucksterism that’s out there. I think that really, we can get into this. I think the really fascinating thing is that Web3 is being built on top of Web2. So all the things that we built in Web1 and Web2, like, we built Web2 on, there wasn’t really a Web2 to build Web2 on top of like, we built all the social mechanics and all of the like social media on top of Web1. And what’s happening with Web3, and why I think it’s, you know, kind of freaking people out a little bit is that it’s being built on top of Web2. So all of the kind of social dynamics and things that are play, like you see the conversation about it happening on top of Web2 platforms. And so it means that, you know, we’re building like, there is another internet that’s being built on top of the one that we already have, and that we didn’t have a thing to grease the wheels before.
PF Define on top of. Like, using the API’s and services that exist?
MS No, I mean, like socially. Information distribution, right? And people learning about it. So the conversation.
PF Twitter and Discord.
MS Lots of Twitter and lots of Discord.
PF How many Discords are you on?
MS I could actually, ALT+TAB and go look.
PF Let’s find out. It is worth knowing.
MS I don’t know, like, 15? 20?
PF Oof. I mean, no, but you know what they add up if you start playing around. Discord is in a funny way, to me, I really see it as like another evolution of the web, where it’s a chat client. It’s it looks like Slack, it feels like Slack. If you’re used to Slack, it looks like IRC or whatever.
RZ It reminds me of the chaos of IRC a little bit.
PF It’s very like thematic, like I’m in a bunch that are related to archives, digital archives, retrocomputing. It’s my hobby projects, and you end up in like 20 of them. And I’m in some climate Discords too. And they’re just groups of people, lots of rules, like a lot of sort of moderation tools that actually aren’t as ad hoc, as moderation used to be like, you have to pass certain tests again. And then the test can be like couches. And so, but Discord and crypto really came up together. And so I think like as Web3 and blockchain related stuff happened, it became the natural place for conversation and, interaction. Okay, so 20 Discords.
MS Yeah, roughly 20. A mix, you know, most of it like web three and kind of token related. And a lot of I’m not, I’m just like reading and not actively participating in.
PF Yeah, this is the other thing about Discord. It’s mostly, I’m sure everyone is a lurker, statistically.
MS Oh, for sure.
PF It’s very two-way conversational, but I’ve only talked, you know, a few times. Alright, so we’re talking about it, we’re talking how it’s built. What is it? What is Web3?
MS So basically, the way to think about this is that we don’t really have the single voice that’s defining, like Tim did for Web2, for Web3, they’re a bunch of people that are writing about this. And talking about it. They’re much smarter than I am around this topic. I think we should just talk about like, one, the primitive behind it, which is the blockchain and blockchain technology. And then basically, there are three big kind of themes of things that you’re that you’ve read about in terms of Web3, in terms of like, organizations and projects and things that are happening. One is decentralized, finance and DFi. The second is NFTs, non-fungible tokens, can talk forever about those. And the third is DAOs, or decentralized autonomous organizations. Right now, there will be more things. But right now, those three kind of big kind of overlapping things, imagine a Venn diagram of those three overlapping things, basically, on top of blockchains. And specifically, I think, like, it’s probably more interesting to talk primarily about Ethereum is what comprises what a lot of people are calling kind of web three now. Okay, there are other blockchains. There’s other things. There’s other applications being built, but generally around like the theme of Web3, it’s those things around DeFi, NFT’s and DAOs.
RZ Let’s run through each.
MS Sure. Okay. Well, first, if you start with like, you guys have talked about blockchains on this podcast. And if you if you just start with the kind of underlying like technology, you have, essentially a distributed network of computers. That is running a bunch of really complicated math involving cryptography. That means that you can have verified ownership of digital assets like in the Bitcoin case, it’s like the Bitcoin currency or store value, can debate whether or not it’s a currency or store value, or the Ethereum on the Ethereum network. You can have a The Ethereum currency or other programmable tokens, right. And so you can have that verified ownership of who owns it, you have a record of all the transactions that happen. It’s an immutable public record of all the transactions that’s happened on that chain. And it means that because it’s a distributed network, and not one person or not one organization owns that network of machines. You can trust strangers, right? So you can have essentially a trustless system where you don’t have to trust a single organization or single entity. And you can trust those people, you can trust them online. So what does that good for? It gets you that immutable public record of transactions, which ends up to be like really useful for coordinating between people. It gets you what a friend of mine says, like basically calls like self custody, digital ownership. So you basically own digital objects, like whether it’s a currency or a token, you’re the one with the keys, you’re the ones that actually like are responsible, you actually own that yourself. In the case of Ethereum, because it’s a programmable blockchain. So it’s not just about the transactions. But there’s actually with programming language called solidity, you actually get a programmable kind of Turing complete computer that you can actually write transactions against. And you get globally kind of shared, read and write access to that computer. And that means that you can have kind of shared value in those things. And it’s all programmable. So there’s some things that like happen out of that. So that’s like the underlying compute. And if you think about, like, all of the things that like a bunch of the investment that in the kind of Web1 and Web2 world that happened is around compute infrastructure, right? So a big part of Amazon’s bottom line is AWS. Now, the Ethereum blockchain and all the blockchains are nowhere near the compute power of what Amazon offers, right? It’s too slow, it’s too expensive, etc. But if you think about it, like there is no one that essentially owns the Ethereum blockchain. So you can write code that will run on the Ethereum blockchain, for as long as the blockchain exists. So if you believe that there’s value in that blockchain, and people will continue to run those nodes in the network, over time, you can essentially like, decide I’m going to write code that will run on this blockchain and it will run quote unquote, forever, or until the Ethereum blockchain doesn’t exist anymore. So without having to worry about like, what company runs that etc. So you now have like compute infrastructure that has immutable public records, digital ownership, and shared value that is programmable. So that’s like the underlying technology so that if you think about just like, start with there, then let’s talk about each one of those three applications on top right. So DeFi, and I’m not a finance person. So this is like some of this stuff is like goes way over my head. But it’s fascinating to me. So essentially, think of DeFi, decentralized finance as programmable money. There’s an application, there’s a protocol on the network called Uniswap, which we can talk about just as an example of Uniswap. So Uniswap is a set. It’s a collection of smart contracts that run on the Ethereum blockchain that just run so they wrote these contracts, they run on the Ethereum blockchain. And they define a standard way to create liquidity pools, right so that you can swap assets. So I can swap one token for another. Basically, it’s an automated market maker. So it used to be like you go to the stock exchange, and you have to, you want to do buy and sell like most of the way that those exchanges work is you’re finding an individual buyer with an individual seller. What happens with Uniswap is that it actually just defines it’s an automated process with liquidity pools, so that you can actually trade one Ethereum token for another Ethereum token, and know that you can actually trade those back and forth, that actually becomes like, really, really important, as you start to think about some other things we’ll talk about in terms of like DAOs, and et cetera, et cetera. But like, it creates liquidity and in a marketplace for individual tokens on Ethereum. So that’s like one decentralized finance application or protocol that’s on the blockchain. But there are a whole bunch of others. So there are ways to essentially borrow money, borrowing money from strangers, essentially. So using protocols like Ave or Compound, there are ways to like lever yourself up and like do options trading on things like entirely trustless. Using smart contracts, there’s a thing called staking. So you can earn yield by essentially staking and securing the network through like proof of stake algorithms. And then there’s even now like automated, smart contract based insurance products. So there’s like one called Nexus Mutual, which like helps you like, basically, you can get covered against like smart contract failure or exchange hacks, like basically you can insure yourself when you’re actually doing DeFi transactions. And all of these are essentially just, just in air quotes, smart contracts that are written on the Ethereum blockchain. And these are essentially just like it’s programmable money and these are not financial institutions, there are programmers that have written these, that now essentially like enable these types of capabilities on the blockchain. So, there are people making, like, real yield and real money based on all these products.
PF And that’s DeFi.
MS That’s DeFi. Alright, NFTs, what are NFTs? So non-fungible tokens. Lots of press about NFTs. What does this provide? Like, essentially verifiable ownership of unique digital assets? Okay, why would you want to do that? Like, status, right? So like, you’re part of a club. So this is like, the board AP Yacht Club, or people that if you see a lot of these people on Twitter with their crazy avatars.
PF Let me throw back unique at you, right, like, it’s yeah, it’s verified ownership of a digital asset, you know, has been granted to you. But that doesn’t make it unique in any way. Right?
MS No, doesn’t make it unique. What it does is it essentially makes the pointer to the record that it’s unique that it’s like, yeah, Paul owns this. One thing that I think is really fascinating about Web3 is this shift to, it really is truly kind of internet and web native of kind of understanding that, yeah, you know what, I can right click on that image and save it to my hard drive and post it as a meme and share it everywhere. And that actually makes it more valuable.
PF Oh, interesting, because what I keep hearing about are sort of right click mentality where people are like, what do you mean you copied my monkey picture?
MS So this is like the interesting thing about like, status versus kind of meme culture, right. So of course, like, if you’re taking that monkey picture, and you’re associating with your identity, there is a community of people who basically have granted status to that monkey picture. And if you’re using it, without it being verified, that you’re the owner, then you’re going to get grief for that on Twitter, right? If you just went and changed your avatar to that. But those memes and those images could actually, like spread and be interesting and used in different environments. And so and it’s not just about like, what people call like PFPs, or profile pictures, which I think is a really funny three letter acronym for a two word name. So it’s not just about PFPs, there have been, you know, memes that have been minted by their owner as NFTs and sold on NFT marketplaces. And like, essentially, the value of that is because of like, those are really popular in the world.
PF What I assumed was going to be happening when I started reading about this was like, oh, okay, so sort of the digitally signed metadata that you buy that points to the digital asset, I’m assuming the digital asset would be encrypted, and that your metadata would include the decryption key, right? So we’re not there yet. Like, it’s just sort of like, Hey, over there, it’s a JPEG right? Well, I put it on the web. And I can give you a little bit of code, or I can give you a little bit of data that absolutely says you own it, which I’m gonna preview a certificate, I’m kind of more interested in with what would happen if the objects were encrypted, but public. And then you could actually sell the–anyway, regardless.
MS I think one of the things that’s really interesting is that, again, getting back to like this being truly kind of internet feeling enter to me feeling internet native, is that that model of like, oh, you own the keys, and you can only unlock it, if you have the keys is essentially just like if you equate NFTs to art, that’s essentially what the art market is today, right? Like I buy a piece, I put it inside my house, the only way I could actually see that piece of art is if I have the keys or if I give you the keys to come into my house or invite you into my house. And I think what’s different now with Web3 and with NFTs is that it’s a recognition that the internet is a completely different type of medium, and those images and those and those artworks, and specifically when you start to start thinking about digital art and NFTs and there’s lots of other potential applications for NFTs, like the value actually is in being seen and being replicated and being part of culture.
RZ Let me sort of restate this back to you with an analogy, Michael. So I can better understand. That signature, that verifiable signature that proves my ownership of a digital asset is to me very similar to my title on my home, right? Like me walking in out of my house doesn’t confirm that I own it. I could be a renter, I could be a squatter, I could be a trespasser. But if push comes to shove, I can go to the county clerk, pull up my title. That’s why we have to pay a little money for title searches when we buy a house, to make sure that my ownership of the house is effectively on notice to the world, so that they know that that house at that address is mine. The reason we do that isn’t for status, it is actually for, to keep order. Right? So people don’t run into each other’s houses and cause chaos. It is how we establish order. So the utility of it drove that mechanism around title ownership in the real world, what is the utility that drives digital ownership? In the case of NFTs? Other than this sort of self fulfilling marketplace that can obviously fuel value?
MS Yeah, I think we’re just starting to see where these can go. So, one is NFTs are not just about digital art, right? And about essentially representations. NFTs can be used for access, they can be used as objects in a game, they can have utility that lives outside of just the image or the the representation itself. Because again, just think of these as, like, these are essentially tokens. And you can imagine, like, I’m going to show up to this particular party, and I want to know that, like, can I get into this party, like, check my wallet for the existence of this NFT and I can walk into this party. Or I basically log on to this game, and I can bring my NFT collection to this game and use those shields, those weapons, those whatever, like in that game, and it’s where it starts to blur between, like, fungible tokens where they start to look like currency or like, all the way to like, non-fungible tokens, which are one on one and unique, right?
RZ What I’m hearing here is that you need scarcity.
MS There can be scarcity.
RZ Which is why people are scoffing at NFTs today. Because it’s like, look, monkey picture, I own it. $80,000 USD, ha, ha, ha. Well, that’s a bunch of nonsense. But what you’re saying is, there’s only 80 tokens to get into that party. You have scarcity. There’s one title search that will bring up the title to one piece of property. There’s no dupes. There’s dupes, there’s chaos in the streets. Right? So scarcity is down the road. Is that part of the promise that’s creating this value in NFTs today?
MS Not necessarily. I think that there is an application for scarcity. And I think this is where when you start to connect, like some of the investments that companies like Meta, formerly known as Facebook, are making in the Metaverse and really connect starting to connect kind of real world activity and digital world activity, you can imagine, like scarcity actually playing like a significant role. But I think that it’s also just think of it as like, there is one application today, which is like, or several applications around PFPs and digital art, etc. There are other applications around like game tokens. There’s other applications around ticketing and events and scarcity and access, like, I think that we’ll start to see lots of really interesting experimentation around the integration of NFTs in the music business. And essentially, creating digital records of super fandom and being able to hold particular entity that could grant you backstage access with an artist could grant you like, you know, essentially different ways to essentially connect those two things, there’s going to be a ton of experimentation, there’s going to be a bunch of experiments that fail, there’s going to be some that succeed. And so we’re still figuring this all out. This is what’s so exciting to me about this is like this is all still super nascent. Right, super, super, super early. And while there’s like a lot of focus on the money and the speculation, and frankly, like fueled again, this is like Web3 is being built on top of Web2, fueled by some of the kind of social dynamics and things that happen on top of Twitter and Discord, yeah, Instagram, etc, etc. Like, we’re still like, in very, very early days of how all this stuff is gonna play out.
PF There’s no doubt that it’s an internet thing, right? Like, I mean, all the aspects of internet culture that drive us bananas.
RZ I want to make a cynical statement followed by an optimistic one. The cynical one is the examples, a lot of the examples you just gave really require some private entity controlling the sphere. And the web is very anti-scarcity, right? Like images are just images and they’re everywhere. And yeah, you can kind of mess with the right mouse click but let’s face it, the images there I can do whatever I want. Inside of a game, I was playing a game recently. I’m a gamer, Paul.
PF I know it’s one of your–it’s really cool.
RZ They were selling me stickers I can put on my racecar.
PF Oh, you should do that. You should get some racecar stickers.
RZ And it costs real money. It cost actual money. Right?
PF Well the Fortnite model, right? You can play just fine, but if you any of the fun stuff, or like the silly stuff, you got to pay.
RZ But what’s key there is this umbrella private entity that is managing, essentially policing, the availability of these things. So you’re not just tossed around willy nilly on the web, it’s much harder to to lock down. So you have music industry. I am, you know, the agent of these big artists, there’s VIP options. I still don’t see why I need that to sell VIP backstage passes to be frank, because I control them. I create them. I’ve decided that there’s going to be 50 of these for this tour, and no more. And I can sell them on Ticketmaster VIP.
PF If you’re selling them one to one, but if you want a little bit of a marketplace and for it to be more dynamic and for them to go out there, then the blockchains are attracted.
RZ To finish the cynical thought, StubHub will take good care of that secondary marketplace. But to finish that, but I do think that when there’s this wild swirl of activity and creativity, shit pops out the other end that we just haven’t seen. I think that’s what I’m seeing more of here.
PF I mean, we have a lot of NFT stuff. It is wild. It’s new. Some of it, a lot of it’s incredibly tacky.
RZ It’s gonna be another acronym that none of us are going to have thought up. And it’s only going to be a year and a half away, I feel like. Because there’s this wild flurry of just messing around right now. I think that’s sort of my me arguing with myself.
PF I do want us to get away from just letters and I would love to have them be called like Syrup Pigs or something like that, where you’re just like, wow, yeah, I’m really in a Syrup Pigs these days.
RZ Yeah, I get it. I think it’s a human thing. It’s how expertise gets created.
PF Oh, there’s a lot of that. There’s a lot of that. People love the jargon.
RZ There’s a bit of that.
PF Alright, so those are NFTs.
RZ The last one is actually the one I’m actually most curious about.
PF Which is?
RZ The DAOs.
MS The DAO. Okay.
RZ So let’s tell the story of the–there was a DAO that tried to get all the money to get to buy something.
PF Constitution DAO.
RZ Oh, Constitution DAO. Yeah. So tell that story to set it up for Michael, Paul.
PF Okay, so Constitution DAO, so digital autonomous organization, everybody together and they’re like, there’s a copy of the United States Constitution, it’s on sale.
RZ There’s like 18 of them in the world or something.
PF Not a lot, not a lot. And it’s printed, you know, there’s not many of them, and it’s worth $25 million, or something.
RZ It’s worth a lot of money!
PF It’s gonna be at Sotheby’s, let’s all get together, commit Kickstarter style to our very own Ethereum, we’ll put our Ethereum into this using some website. And if we got enough money, we will go to the auction, and we will try to buy it. And we will then probably give it to some institution to display but it will be owned and the management of it will be courted to the people who invested in this acquisition. And it didn’t succeed. And in fact, this guy who really hates crypto, I think is the one who bought it.
RZ Seriously? I don’t know who bought it.
PF I can’t remember his name.
RZ Did they give everyone their money back?
PF Well, again, the fees for crypto transactions are very high. So if you wanted your money back–
RZ Oh, this ended up a mess on the other side?
PF It is shocking, I’ve never heard of anything in crypto world ending up a big catastrophic mess before but in this case, shockingly–
RZ It was a mess?
PF Yes, it was a mess. I guess if you put a lot in you could, your fees would be okay.
RZ Alright, it sounds like–
PF In crypto, everyone is like, ah, we did it and it didn’t work out. And then they were like, should we create a whole new organization? Everybody’s like, nah, and now they’re gonna do it. Now somebody wants to like buy the Lakers. I got about eight fundamental facts wrong with that. [Rich laughs] So you know, Michael, what did I miss?
RZ What is a DAO? Start there. What does it stand for?
MS So it stands for Decentralized Autonomous Organization. My friend Jesse Pollack, who’s kind of my guru on DAOs, calls it like, essentially software enabled organizations. So essentially, with software, you can incrementally make systems to enable decision making. And with decision making, you can do things like capital allocation, you can make decisions about what an organization should do. You can create all sorts of different voting mechanisms, you can have it decide like as your organization, your software can say, well, it’s one token, one vote. Or it could be like, essentially one person, one vote, it could be, we want a delegation system in order to some people that actually have been part of the DAO for longer, you should be able to delegate your token votes to this individual person. So because you believe they may be able to make smarter decisions with you. You can decide and define like, these are the way that proposals are generated for what this DAO should do. So if you think about like, there’s another thing that I read recently that is fascinating is like DAOs are essentially subreddits with bank accounts and governance, right?
PF That sounds like a great way to build a society. [Rich laughs] Woof! Yeah, everyone on Usenet gets a gun. That’s what you just said, okay.
RZ You mean the members of the subreddit…
MS I didn’t say gun. [Paul laughs] So, you get bank accounts and governance, right. So what do you get? You have tokens and crowdfunding. So just like we were talking about Constitution DAO, you can have like different ways of raising money, and they did it with Ethereum. You get a treasury, you have mechanisms for proposals, and essentially making like proposals of what the organization should do, voting, delegation, transfers of authority.
RZ An operating agreement?
MS Yeah. So an operating agreement that’s written in code, right? And what I think is really fascinating about this is that when you combine, like the tools, that again, some of this is all built on top of like Web2 related things, right, so lots of things happening in Discord, lots of coordination happening on Twitter. But if you think about those community based tools that let people connect and organize regardless of where they are in the world, combined with the ability of go back to the blockchain piece of essentially like having that transaction and having that trustless way have essentially a ledger of decisions with the ability to either piggyback on existing currencies like Ethereum or Bitcoin or mint your own currency, and have that now this gets back to our DeFi piece, like have that currency, be able to swap for other ones that are more illiquid, like Ethereum. Now you have an automated market maker, and those things now have value, those things can actually trade and go up and down. And you have like different mechanisms for doing creating digitally scarce goods, right, so NFTs. The combination of those three things you actually start to get, like really interesting mechanics at play. So here I’ll give just give a couple of examples of what I think are interesting DAOs. One is, is called the Nouns Project. So these were a bunch of interesting kind of NFT artists, one of whom is this gentleman, Dom Hoffman, who used to actually start the app Vine. He’s now deep in the Web3 space. So the Nouns Project at nouns.wtf, essentially mints one NFT every day, which is a character that they call the Nounders. They mint one NFT and they auction that off every day. So there’s one NFT auction every day forever, because they wrote a set of smart contracts that run on the Ethereum blockchain. And until ethereum basically dies, one Noun will be auctioned off forever. Okay. So great that auctions off someone buys the Noun. Where does that money go? That money goes into the Noun’s DAO treasury. Nouns launched several months ago, I want to say like four ish months ago, now, they are currently sitting on like, roughly 14,000 eth, from the auction of those NFTs, which equates to about $57 million. So by writing some smart contracts, this organization has raised $57 million, by owning one of the nouns, you have a vote in the DAO. So now the DAO can have make you can make proposals, you can basically have a say in what is the Noun’s DAO, what do they do with Ethereum that’s in their treasury. And people are essentially proposing like, we want to give money away to this, we want because like Nouns, the characters have glasses, they want to essentially fund organizations that give glasses to kids that can’t afford glasses, there’s like, all sorts of things that they want to do with the Treasury. And part of it is actually like, investing in making Nouns kind of feel like crypto punks, and have like actual cultural cachet, and currency. So that over time, the value of nouns not only as from the new theory, that’s coming from the auctions, but that people want the Nouns because they actually see them out in the world, and they have cultural cache, and they’re gonna go do things with that money. So that’s like, one interesting to help, right. Another is an online community called as a community called Friends with Benefits, which is essentially a right now like a very big Discord full of people. They minted their own currency, their own token called FWB, to be a member in the discord and to participate in the conversation. And then they also do events and parties and all sorts of stuff. You have to hold, you have to have a certain number of FWB Tokens, you go and buy those on Uniswap, like you swap your Ethereum for FWB. And that grants you access to the FWB community. And that community is essentially building out like they want to be like known as the kind of web three crypto community, they are hosting parties, they’re doing things, they’re like, I voted in a proposal today for them to do a partnership with a consumer packaged goods company, and like partner on like an FWB drink, like there’s all sorts of like really interesting things that they’re doing to essentially grow the value of that community. And the idea is like, over time, if you participate and contribute in that community, the value of that community will go up and the value of the tokens that you’re holding will go up. There are other experiments that are happening with DAOs, around creating, essentially currencies for local communities. The DeFi protocols are also DAOs. So that if you actually hold the tokens in those DAOs, you can vote on what happens with those DeFi protocols. Essentially, think of this as like, organizations and software. So those are about DAOs. And I think that like that starting to really, you know, I was a I went to business school, I read a lot of like coasts when I was in business school, which is all about like, transaction costs and the nature of the firm. And when you start to think about kind of global organization and different currencies, and providing new ways for people to get to essentially participate in these economies, like you’re really starting to break the walls of like, what is a company and what is not a company? And this is also like some of the like, huge challenges that are ahead, which we can talk about, but like there are really big interesting kind of really big interesting challenges that are ahead for all this stuff.
PF Alright, so let me summarize the space as you see it. I mean, we know that opponents of it now you see it as based on those those sort of like blockchain underneath, those three things on top. Very, very early days, society is organizing itself to make sense of these new technologies. Interesting experiments. Interesting community. Wait and see what happens next. Looks pretty promising and pretty interesting. That sort of a fair assessment?
MS Yeah. And if you’re curious, I would do more than wait and see what happens next. Like, I would go buy some Ethereum and set up a wallet and experiment, right? See what it’s like to actually buy an NFT.
PF Where should people set up a wallet? Is it just Coinbase?
MS Right, so are two things that are happening one is so Coinbase offers like by default, there’s like Coinbase is sort of operates like a bank. So they do custom–like they actually are holding the wallet. So but it is the easiest on ramp to go buy Ethereum. So you’re holding it, you buy Ethereum and you’re holding it in your Coinbase account, then go get a Metamask wallet, it’s a browser extension, and a mobile app. So install Metamask, make sure that you save your passphrase in a safe place. Because those are your keys. This is what it means by like self custody assets. Those are your keys, you’re the only person should that should have those keys, don’t ever give those keys to anybody else, then you’re going to get an address that is on the blockchain, then you can go back to your Coinbase account and send yourself Ethereum right from your Coinbase account over to your wallet. Essentially, think of it like taking money out at the ATM, you’re going to the bank, you’re saying I need some cash, I’m putting it in my wallet. Then you have that in your wallet. Now you can start to do things like buy NFTs, you can go over and if you want to actually experiment with different coins, you can go explore those coins and learn about them on things like Coindesk and all the different media that’s popped up around web three. And then you can go swap for those that Uniswap Like I want to have hold some of those tokens. Great. Now I can swap Ethereum for these tokens and essentially hold that. And it’s just like, if you have to some disposable income and some money that like again–
RZ Don’t mortgage your house.
MS Don’t mortgage your house. But like, you know, if you can afford to like essentially buy a couple $1,000 worth of Ethereum. Go do that and use it as like, essentially your education budget around Web3, because the more that you kind of dive in and understand what’s happening, you’ll start to essentially like go down that rabbit hole. And there actually are like, sites that will help you learn all this stuff, including one literally called Rabbit Hole that will help you like understand what this is all about and teach you about Web3.
PF Alright, the limits? Where? What’s going to go wrong? Tell me.
RZ Be the cynic. Put the cynic hat on for 60 seconds, Michael.
MS So one right now, I’m spending most of my time thinking about the Ethereum blockchain. Right now there’s a thing transactions on Ethereum are slow and expensive. And by expensive, you actually have to pay some Ethereum in the form of what they call people called gas. And that’s very expensive transactions, like I bought an NFT this morning, and I paid roughly 40 or $50, just for the transaction.
MS So yes, so one of the things that could happen is that there’s a whole bunch of things to go to, like make that gas go down and transactions get faster. The cynic says like, that’ll never happen. And this will always be slow and expensive. And so this will never actually take over. The second is that the user experience of all of this is really like still super janky. It is like built by nerds for nerds right now. And it’s way too complex. And it’ll never essentially like in like classic, whatever terms, like cross the chasm, because it’s just as like too hard for people to get their heads around. The third is that there’s going to be so much regulatory uncertainty around, especially around DAOs. And like securities law, what actually is a firm who has the rights to actually like, where’s the liability? What kind of contract enforcement is there? There’s probably some of this in the in the Constitution DAO question of like, do you actually get to vote in this? Do you actually own a share of the Constitution? Like what is it that you actually own when you’re holding tokens of–
RZ Yeah, I mean, there’s zero case precedent yet. Right?
MS Right, exactly. And probably also some labor regulation that’ll that’ll come through of like, what does it mean to like work for a DAO? And like, what happens if there’s, like, can you be wrongfully terminated from a DAO? Like, what happens if there’s sexual harassment within a doubt, like who actually has that liability? And then the last thing is like, there’s a ton of like scams and fraud and froth and stuff that’s happening there. And it’s like, how does that play out from a public perception standpoint? And can the industry essentially build, essentially like kind of distributed decentralized trust and safety that can actually function?
PF These are the things to watch.
RZ It’s a very experimental time. I mean, that’s just what we’ve got.
PF Fast forward five years. What do you think? You still doing this?
MS Yeah, I’m still doing this, I think that this is–so I don’t have a job in this space right now I’ve left my Web2 job I’ve been exploring in this. I’ve been, you know, looking at kind of different opportunities, and just really spending a whole bunch of time like thinking about the space and experimenting and playing. If I go back and you say, like, what are the things that that we spent a lot of time building in web two, we talked about one compute infrastructure. So like having this actually like an interesting kind of decentralized compute infrastructure that is available and running, even though it’s wildly expensive right now that will get cheaper, I firmly believe that will get cheaper and faster. The second is that we spent a lot of time building identity systems, the experience when you install your own wallet, and the experience of essentially being able to sign in to different sites with your wallet. And knowing that not one central organization controls that. And that that like you can choose any wallet that you want. Like, I’m not tied to Metamask, there are a whole bunch of different wallets, rainbow is one of them that I could switch to Coinbase has its own wallet that I could switch to. And it’s all the same underlying tech without one company controlling that is sort of mind blowing. And the third is all of this has baked in payment by default, not only like peer to peer, like sending money between back and forth between people to people or organizations, but also the ability to create new currencies, and new tokens and stores of value. Like the combination of those three things means like, there’s an entirely new platform that we’re building on top of, and that for me is incredibly exciting.
PF Alright, December 9th, 2026. We’re gonna record another version of this.
RZ It’ll be Michael’s 16th guest appearance on the podcast at that point.
PF Alright, well look, that was a fantastic explication that actually just clarified an enormous amount for me, and I appreciate it.
RZ Yeah, I think people will have questions, but rest assured, even the experts have questions. Yeah. And hit Michael up on Twitter. Yeah, that’s a good.
MSI don’t know if I’ll be able to answer but I’ll do my best.
PF Alright, Michael. Well, yeah. So what’s your Twitter handle?
MS Sippey. S I P P E Y.
PF Right there on twitter.com. And thank you for coming on the Postlight Podcast.
MS Such a blast, guys. Always a pleasure.
RZ Thanks, Michael.
MS Nice to chat.
PF Well, Rich.
PF Learned a lot. I mean, that was a very clear explanation.
RZ I mean, it was moving fast. There was a lot of terminology. I think people might struggle with some of it.
PF Go back and listen to it again at half speed. Everybody’s trying. I bet they listen to it at 1.5 speed. You’re not going to get the comprehension.
RZ Go back and listen at normal speed. I think that’s key. Check us out.
PF Hello@postlight.com. We’ll build your Web2 and maybe even 3 sites.
RZ 4. We’ll do Web4.
RZ Yep. We’ll do it all.
PF Web6 is just–
RZ Check out our case studies, Postlight.com, email@example.com. Anything you need. We are a digital product studio based in New York City with great strategy, design, engineering, product leadership at your disposal. Have a lovely week, Paul!
[music ramps up, plays alone, ends]