Building a Future Without Fees: Positive Sum Economies - Willy Ogorzaly

what is up eat denver gm all right can you guys let's see can you guys see the slides all right cool my name is willy ogarzali i'm super excited to be here today to talk to you guys about a topic that i'm very passionate about and many members of the shapeshift and giveth communities are very passionate about building a future without application fees i should mention too i'm a shape-shifter by day give it there by night so to be clear i needed a catchy title but today we're focusing on a future without application fees we're not taking aim at protocol fees at least not today we're specifically talking about this layer on top so to start i'd like to invite everyone to close your eyes for a moment and take part in a quick little envisioning exercise with me imagine a future teaming with open source technologies and applications where the best most efficient protocols win and other than protocol fees people don't pay to use decentralized applications you can open your eyes now now i'm not selling you a world in which developers are altruist who are coding for peanuts but rather one in which positive sum games reward developers even more than if they were to charge fees on top of the applications they built now to me this seems like an obvious and inevitable future and if you agree sweet we can stop the presentation now and get back to building it can be those little robots in the bottom right corner that could be us but believe it or not some projects that i talk to and a lot of the people i talk to clearly do not get this they somehow think that putting fees on top of decentralized protocols is a perfectly acceptable business model i'm not just talking about obscure products but products we all know and love today i want to challenge this for dapps i want to show you that there's better ways to monetize and to capture value than by extracting it for protocols i want to show you how valuable it can be to share a slice of the revenues that your protocol earns with applications and interfaces that add value and for users i want to help save you money or even better i want to help make you money and transform you from just a regular old user into an empowered community member with the power to fight for more utility and better business models so historically in the web 2 world how do interfaces make money well in addition to selling your data one popular way to monetize an interface is by charging fees there's all sorts of fees you can charge you can charge a transaction fee a subscription fee a one-time fee but when you do this you add a barrier that every user of your product must overcome fees inevitably add friction and they detract from user experience nobody likes fees or if you do like fees i hate to break it to you but you may be a psychopath furthermore if your project success relies on network effects which in this open source world i think for many projects it will it is imperative that you minimize friction in your network flywheel otherwise a competitor is going to come with less friction build stronger network effects and win now the parts are really important so i'll repeat it if the success of your project depends on network effects it is imperative that you minimize friction otherwise a project with less friction and their flywheel will build a stronger network and win so what's better than fees no fees free baby we all know how powerful free is one of the main reasons i'm here is to stack up on some dope swag the power of free is embedded deep into our psychology so the first example i want to share is bitfract which is a tool i built with some friends in the last bull run bitfrac was the first tool where you could trade bitcoin for multiple digital assets at once it was really cool but i think the reason that people really liked bitfract was that it was free bitrac was built on shapeshift and on yep sorry oops bitfrap was built on shapeshift and shaped have had an awesome affiliate revenue model where we got paid for the volume that we drove to shapeshift in a way that didn't cost users anything extra and i think this is one of the reasons that people really loved bitfract and why we're generating revenues on day one free does not mean that you can't make money in fact today i want to show you how you can be wildly successful and make even more money without fees so please close your eyes again and imagine with me a future where the only fees are on the protocol level now that isn't beautiful enough imagine that interfaces are not only open source and free but they reward you with governance tokens when you use them and those governance tokens entitle you to a share of the revenue generated by the interface now how freaking beautiful does that sound can open your eyes let's be real though the bills don't pay themselves and developers time is far from free so how do you make money there's a number of creative ways to make money and there's more money legos being developed as we speak today i want to talk about two specific monetization strategies for dapps that don't require charging any fees if you're building if you're thinking about building a dap and trying to figure out how to monetize it i hope there's a good chance that one of these will work for you but if not i hope they at least give you some inspiration so the first example i want to use is giveth on givist 100 of every donation goes directly to top projects could we charge fees on top of these donations or could we charge projects to list them i mean i guess but that would be terrible this money is for charity so we came up with a model that we think is much better one thing we've learned at giveth is that it's all about the givers as long as you have givers donating the projects will come and you can build a really strong network but in the current nonprofit industry being a giver is hard once you've decided which cause you want to support and how much you want to donate you need to research multiple competing projects and pick the best one to donate to but you just want to give away your money and giving away money should be easy so on giveth we're super excited to introduce the concept of donating to causes soon you'll be able to donate to the cause you care about and trust that 100 of your donation will be allocated to top projects in that cause it's gonna be very similar to get coin we're actually working with git coin to take quadratic matching so that if you do donate to a project your donation will get matched this means that the donations are going to be sitting idly for about 45 days between the time they're donated to a cause and then allocated to an end project and i can see people nodding they're starting to put it together anytime you have crypto sitting there doing nothing that's an opportunity to generate yield so on giveth 100 of every dollar donated go directly to projects and in the meantime the revenue sitting there idly can generate yields to fund further development and that can potentially generate billions of dollars of revenue this is a winning model could give it still win by charging fees maybe but that's not the freaking point the point is isn't can i get away with charging fees the point is should i and i really believe the answer is no because if givit doesn't charge fees we can be the best way to donate to social good projects which platform would you guys rather donate on the one that charges fees or the one that doesn't which platform would you rather list your project on if you assume similar ux code call quality and features which used to be really good competitive advantages in the web 2 world but are much less so in this new open source world the one thing that does trump fees is network effects fees had a lot of friction but web 2 businesses have figured out how to make their fees just low enough so that the value of this network they've built is worth it and it makes it very hard for a non-disruptive startup to come in and compete i saw this firsthand in austin when uh uber and lyft got banned for a bit some startups tried to take over and as soon as uber and lyft came back in they just wiped them away so with uber and lyft for example right now about 33 of every ride you take goes to a company in san francisco that's like a 50 tax on the rider so if your ride's 24 bucks that means 16 bucks is going to the driver eight bucks is going to a company in san francisco now please don't get me wrong i'm all about free market innovation and rewarding these innovators but how long in humans evolution are we going to pay 50 tax on every ride we take but alas when any of us need a ride we're still probably going to use uber and lyft however some of us in this audience no matter how much eth we have we'll still compare rates between uber and lyft to see who's cheaper and drivers will still run both apps to get more business few of us are actually loyal to any specific one of these brands but the network effects that they both established make it almost impossible for any new startup to displace them notice i said almost i don't think we're stuck with uber and lyft for the rest of human history but i do think that it's going to be very difficult to beat them at their own game launching a decentralized uber with slightly lower fees is not going to cut it we need to disrupt these so to accelerate this disruption don't just race web 2 companies to the bottom front run this race entirely make your app free and use the growing variety of money legos to generate revenue in a new way ideally one that just is not easy or possible in web 2. because when you make your app free when you monetize creatively and when you build network effects it's very very hard to compete especially in this open source world code can be forked but network effects cannot be the next business model i'm really excited to share with you guys is shapeshift new model shapeshift is proud to now be a community owned open source and free we are now officially a public good so many of you may be wondering how the heck do we make money when shapeshift first launched in 2014 and made money by charging fees on trades and then when the fox token launched in 2018 its primary utility was to waive these fees the more fox you held the more trading fees you could waive and this made pretty good sense shapeshift wasn't open source at the time we were basically a closed source trading desk so the fox token was a pretty neat way that we were able to capture the value of this very robust trading engine we've been building for years in the form of a token but then we fast forward to january 2021 we've seen the proliferation of dexes shapeshift announced that it's getting out of the regulated business of trading and embracing these decentralized protocols finally no more fkyc you can imagine what the f stands for so now how do we make money and what's the utility of fox should we add fees on top of these decentralized protocols and then make the fox token waive these fees no not going to make it now don't get me wrong i really love metamask but who do they think they are charging 0.875 percent on top of decentralized exchange protocols this is more than the protocols charge i just think this is lame but wait what if shape shift charge 0.865 percent or 0.855 percent instead of racing metamask and all the other wallets adding fees on top of trades to the bottom shapeshift doesn't charge fees on top of decentralized protocols in fact shapeshift doesn't charge any fees anywhere you can buy sell send receive trade and earn yield under crypto for free the only fees you'll be paying when you're using shapeshift are on the protocol level instead the shapeshift out can generate affiliate revenues whenever a user trades buys earn interest sells an nft buys shape-shift swag whatever it is the shapeshift down can earn affiliate revenues in ways that do not cost the user any extra and furthermore this is where it gets really exciting we can even give the user some fox in other words users could be interacting directly with contracts like yarn on chain using their own node and it would cost them more than using shapeshift in terms of the opportunity cost now shapeshift can be the best way to use yarn the best way to use one inch the best way to sell your nfgs on openc not just in ux terms but economically down to the bottom line that we all care so much about each of these protocols already offers affiliate revenue models there's many more and more coming but you can already see there's already options for the main things that crypto users want to do and there's even options for things crypto users don't want to do like tax services this model can be applied to any protocol or crypto service that charges users instead of charging users more to use these services through us let's charge them nothing and better yet let's share some of the revenues we generate from their activity with them in the form of fox so to recap not all fees are evil from fees in the protocol level often serve a purpose and the market will determine the optimal balance often they're necessary for the sustainability sustainability of the protocol interfaces can serve a purpose as well and the market will determine the optimal balance for them as well but i believe that optimal balance will trend towards zero or even negative rather than competing with web 2 companies and each other in a race to the bottom front run this race entirely make your fee zero figure out a creative way to monetize and start building network effects these types of business models particularly the the float model of generating interest would be very difficult and very expensive for a web 2 startup to implement but for dows the building blocks are already there just waiting to be assembled we have the opportunity here to create a better world let's dow it [Applause]