If Web3 succeeds in becoming the third iteration of the internet that its builders envision, one big side effect would be a return of a healthy open source software ecosystem.

Open source hasn’t gone anywhere, of course, but it’s become an increasingly conflicted field. Big corporations exert an outsize amount of control on important open source projects, and it’s become riskier than ever for a young company to stake its future on an open source-based business model.

Ultimately, according to panelists in a session about the Web3 infrastructure stack during Uncesnored, a recent event about blockchain infrastructure organized by Equinix Metal, the way big businesses operate doesn't really gel with the idea of spending a ton of money on developing something that’s free and open for anyone to use. (Watch this and all the other Uncensored sessions here).

“The traditional open source funding model is completely broken because of misaligned incentives -- misaligned corporate incentives,” one panelist Greg Osuri, founder and CEO of Akash Network, a Web3 startup, said.

The handful of companies that built “walled gardens” on top of open protocols Web 1.0 consisted of and came to represent Web 2.0 are now effectively the internet’s control centers, Abbey Titcomb, who runs community at Radicle, also a Web3 startup said. A business will be hard pressed to survive without playing by their rules.

“With that has come the hypercapitalization of these platforms, as we see, the hyperexploitation of the users for data to make more money, more profit, because those are the models these platforms are bound by,” she said. “It’s inherently unsustainable.”

Web3 is almost entirely open source. In a decentralized-web future, “open source is the standard again,” Titcomb said. “That aspect of Web3 is very powerful.” And new crypto-based finance mechanisms hold a promise of fixing the broken open source funding model.

The third panelist was David Vorick, founder, CEO, and lead developer of Skynet. (Watch all the sessions here)

Akash, Radicle, and Skynet each represent a different layer of the Web3 stack. Akash has a decentralized compute platform, Skynet a decentralized storage platform, and Radicle a platform for hosting and sharing Git repositories without relying on a centralized host like GitHub.

The big vision of Web3 is to decentralize control of internet infrastructure by creating open protocols that harness already existing but underutilized compute resources, be they cloud data centers or PC towers sitting under people’s desks, connected to the internet. Another element of the vision is giving users control over their personal data and making data about the data (all the interactions and other activity on a platform) fully open for everyone to use to build applications.

There’s nothing new to the idea that a more peer-to-peer web would be better. What is new, as Vorick explained, is that we now have the technology to make it possible.

“There's really only one digital building block that’s able to accomplish this,” he said. “That’s blockchain.” It solves the problem of coordination, which stifled early attempts to build a decentralized web. “Blockchain gives us the ability to solve that coordination challenge in a way that we just had no idea how to do” a decade ago.

New Ways to Fund Open Source Software

Many Fortune 500 companies use open source software without paying for it, so the investment open source developers make in creating it isn’t reciprocated, Titcomb said. And while big corporations often do invest in open source development, their profit models are generally “in direct opposition” to making such investments.

Unlike traditional bootstrapped open source projects, Web3 startups tend to fund themselves with cryptocurrencies, using their own digital coins as incentives for participating in their distributed networks. This model addresses the misalignment of monetary incentives open source suffers from today.

New, open and decentralized crypto exchanges, or “protocol treasuries,” which don’t belong to any person or company, have reached mind-boggling size. Daily trading volume on some of the largest ones easily surpasses a billion dollars.

“There is so much power behind the concept of these community governed protocol treasuries that are funding critical open source Web3 infrastructure,” Titcomb said.

Open Questions

There are still some fundamental questions about Web3 that have to be resolved. It’s a messy, crowded field, and with so much money being made in crypto, far from everybody is in it with altruistic ideas, like building a better internet, or fixing open source.

Many, Titcomb admitted, are “playing financial games, making millions and billions of dollars.”

And there have been very real, very negative consequences, such as the largely coal-powered bitcoin network that mushroomed amid a climate crisis, the new avenues for large-scale fraud, as exemplified by the scam of cosmic proportions that was OneCoin, and the general ways in which anonymous forms of payment help criminals do business online.

There’s also the question of funding of the physical infrastructure these distributed networks run on. The fiber in the ground, the intercontinental submarine cables, the large internet exchanges, all the things without which the internet doesn’t exist, regardless of the protocols used, are funded, built, operated, and controlled by large profit-driven corporations. Whether a startup funded by its own crypto coin will cough up a few hundred million dollars to build a cable across the Pacific remains to be seen.

Right now, the bet in the Web3 world appears to be that the incentives for participating in these distributed networks will be so strong that the companies that operate those capital-intensive physical assets will have a hard time saying no.

Akash’s Osuri believes that with so many companies working to build every layer of the Web3 stack, “it’s only a matter of time” before we see usage of decentralized systems go up significantly. But, he admitted, those decentralized systems may be “complementary to your traditional systems.”

Whether that complementary coexistence will be a temporary state as the world transitions to a fully decentralized Web3 future is the big question to ponder over the coming years.