At the heart of Web3 lies an ideological battle: protocols versus platforms. This isn't merely semantics—it's a fundamental question of architectural design, economic control and long-term societal impact. Protocols represent open coordination and communication mechanisms that aim to distribute power and value across networks. Platforms, on the other hand, are structured to consolidate control and optimize profit. The difference isn’t abstract - it determines who gets to write the rules, who extracts the value and whether the digital commons can truly remain open. This tension underpins everything from how blockchains are governed to how users interact with applications and it shapes the incentives that will ultimately define the next era of the internet.

Historical Patterns: Web1 to Web3

The internet’s history reveals cycles of decentralization followed by centralization. Each major era has been marked by its relationship to control, ownership and user agency - often summarized by the shift from "read" to "read/write" to "read/write/own."

Web1 (roughly 1990–2005) was characterized by static websites and open protocols like HTTP and SMTP. Users could "read" information but not interact with or contribute much to the ecosystem. It was decentralized, but technically inaccessible to most people.

Web2 (2005–2020) introduced dynamic platforms like Facebook, YouTube and Twitter, enabling users to "read and write." While participation exploded, control became centralized. Platforms hosted and monetized user-generated content, accumulating massive value while locking users into closed ecosystems.

Web3 aspires to add the third verb: "own." Through public blockchains, tokens and smart contracts, users can theoretically own their identity, data and value flows. But the irony is clear: the more successful Web3 becomes, the more pressure there is to consolidate, monetize, and ultimately recentralize. Despite its promise, early signs suggest that Web3 may repeat historical patterns if we’re not deliberate in resisting them.

Platforms: Walled Gardens Reimagined

Platforms, such as Facebook or Amazon, thrive on centralized control. They leverage network effects to trap users in walled gardens, monetizing through exclusive control of user data, infrastructure, and transactions. Value flows upwards, enriching platform owners first, users second - if at all. Yet it's important to acknowledge that centralization hasn’t only brought drawbacks - it has also made the internet vastly more usable. Platforms lowered the barrier to entry for billions of users, provided seamless user experiences, and introduced standardization, security and support that the early web lacked. Without the centralized models of Web2, the massive adoption of internet services - from messaging and payments to e-commerce and cloud storage - would not have been possible at the scale and speed we witnessed. In fact, it was platforms that bridged the gap between the raw, fragmented openness of Web1 and the dynamic interactivity of Web2. They built on top of open protocols and abstracted away complexity, packaging it into accessible, scalable services. This progress, however, came at the cost of sovereignty and control. Web3 promised liberation from these walled gardens, yet even decentralized systems risk slipping back into centralized behaviors. Take Uniswap, for example. Originally a beacon of decentralized innovation, its "fee switch" highlights how economic incentives could reintroduce centralizing dynamics. Similarly, Coinbase’s Base Layer-2 clearly demonstrates a platform-centric trajectory, emphasizing centralized control within an ostensibly decentralized ecosystem.

Economic Gravity: Why Centralization Happens

Centralization often emerges naturally due to economic gravity - the tendency for value, power and influence to concentrate wherever efficiency and profit can be maximized. In a capitalist context, this gravity is especially strong. Venture capital seeks outsized returns and favors structures that offer predictable growth and control. Regulatory pressures incentivize compliance through recognizable legal entities. Tokenomics often reward early adopters disproportionately, leading to governance captured by a few. These forces pull even the most decentralized systems toward centralized behaviors. Circle’s dominance over USDC exemplifies this gravitational pull, as centralized issuance ensures regulatory clarity and liquidity stability, but reintroduces single points of control and systemic risk. There’s a fundamental conflict at play: the goal of protocols is to remain open, neutral and resistant to control. Their purpose is to create shared infrastructure that anyone can build on without permission. Platforms, however, aim to control user interactions, extract value and maximize retention and monetization. Protocols aim to empower communities; platforms aim to optimize shareholder returns. This is not merely a design difference - it’s a question of economic alignment. As argued in "The iPhone Myth," crypto will never have a singular 'iPhone moment' precisely because protocols are not built to deliver sleek, vertically integrated experiences. Instead, they reach inflection points where they must decide: become a platform, with all the centralizing implications that entails, or double down on being infrastructure—less visible, but more open. This decision is the true test of values in Web3.

Protocols: Open by Design

Protocols, by contrast, are inherently open and neutral. Think HTTP or SMTP - no single entity controls email or web browsing. Protocols allow permissionless innovation, empowering anyone to build atop infrastructure without gatekeepers. Their neutrality is their strength: they provide foundational layers that invite creativity, composability and decentralization. But this same openness is also their vulnerability. Without mechanisms for capturing value directly, protocols struggle to sustain themselves economically. Their survival often hinges on indirect incentives - such as token price appreciation or speculative governance tokens - which rarely align well with long-term utility. Unlike platforms, protocols don’t optimize for user experience or economic efficiency out of the box. This limits adoption unless someone steps in to abstract the complexity - typically a platform. This is the fork in the road: remain a neutral substrate, or evolve into an experience layer - i.e., a platform. As previously explored in "The iPhone Myth," protocols rarely have the luxury of a singular "iPhone moment" - a seamless consumer inflection point. Instead, their adoption curves are slow, cumulative and infrastructure-driven. The tension emerges when protocols attempt to accelerate growth by adopting platform strategies - introducing gatekeeping, monetization layers or governance concentration - thereby compromising the very openness that made them powerful in the first place.

Invisible Layers: Protocol Infrastructure

To resist centralization, protocols must develop robust, invisible infrastructure layers - components that operate below the surface but are critical to functionality, interoperability and trust. These layers allow systems to scale without sacrificing openness. Chainlink is a prime example, offering decentralized oracles that allow smart contracts to interact with real-world data without relying on a single provider. But it's far from the only one. The Graph provides decentralized indexing and querying for blockchain data, allowing dApps to efficiently access structured information without depending on centralized APIs. IPFS (InterPlanetary File System) and Filecoin introduce decentralized storage protocols that challenge centralized cloud models, enabling tamper-resistant data sharing. Meanwhile, protocols like Spruce.ID or Veramo are building decentralized identity frameworks, giving users control over their personal information across applications. These tools exemplify the principle of the "invisible layer": powerful infrastructure that supports decentralized ecosystems while remaining neutral, permissionless and composable. They don’t compete for user attention; they make decentralized innovation possible without introducing the gravity of platform lock-in. It is within these unseen layers that Web3's best chance for sustainable decentralization lies.

Inflection Points: When Protocols Face the Platform Temptation

The Uniswap "fee switch" debate epitomizes a growing trend: moments when protocols face pivotal decisions about whether to remain neutral infrastructure or evolve into monetized, centralized platforms. Uniswap, a decentralized protocol for permissionless token trading, proposed redirecting a portion of trading fees from liquidity providers to UNI token holders. While this aligned incentives for governance participation, it also risked concentrating control and transforming the protocol into a value-extracting platform. These moments - inflection points - aren’t unique to Uniswap. Compound introduced its COMP token with governance rights and incentivization mechanisms that gradually shifted power to large token holders. MakerDAO's evolution has included greater reliance on real-world assets and centralized custodians to maintain DAI’s stability, raising similar concerns about creeping centralization. Even Arbitrum, one of the leading Layer-2 rollups, had its governance questioned after its foundation unilaterally moved millions of ARB tokens despite promises of community control. These are not merely technical or economic decisions - they are philosophical. Each represents a fork in the road: stay lean, open, and slow to monetize or embrace the efficiencies and economics of platforms. As outlined in "The iPhone Myth," crypto’s path will likely lack a singular consumer breakthrough moment. Instead, the sector will face recurring points of tension - where protocols must choose between short-term economic gains and long-term decentralized resilience. Inflection points test a protocol’s values. They ask: who are we optimizing for - users, builders or token holders? The answer shapes not just the trajectory of the protocol, but the future landscape of the internet itself.

Protocol Governance: Balancing Power

Governance is where decentralization either flourishes or falters. As protocols face inflection points, the structures they rely on to make decisions become critical levers for maintaining openness - or slipping into platform behavior. Effective governance models must walk the tightrope between inclusivity, efficiency and resilience. Decentralized Autonomous Organizations (DAOs) are at the heart of this balancing act. Optimism Collective, for instance, employs a bicameral governance structure with a Citizens’ House and Token House, reflecting an ambition to balance community values with capital incentives. Gitcoin, through mechanisms like quadratic funding and delegated voting, experiments with allocating resources toward public goods in a way that reflects broad stakeholder input. Yet these models face mounting challenges. Optimism has had to recalibrate its voting power distribution after early criticisms of governance token concentration. Gitcoin has struggled with low participation rates and voter fatigue, revealing the difficulty of sustaining long-term engagement in DAO processes. We also see emerging governance frameworks in protocols like Arbitrum and ENS, where treasury management, upgrade decisions and community funding hinge on transparent, participatory models. But even here, governance is a moving target - often co-opted by whales, dominated by insiders or influenced by offchain power dynamics. Governance is not merely an operational layer - it’s a values layer. It determines who gets to influence the protocol at critical moments. And when protocols reach inflection points, robust, well-designed governance may be the only thing standing between decentralization and drift toward platform control.

Navigating the Middle Path

Between the poles of rigid decentralization and pragmatic centralization lies a third route - designing protocols that are economically viable without betraying their core principles. The challenge is clear: how can protocols sustain themselves and incentivize participation while avoiding the gravitational pull of platform dynamics? The answer may lie in protocol-native economics - design patterns that embed sustainability into the very structure of the protocol. Ethereum Name Service (ENS) offers one illustrative example. It generates predictable revenue through decentralized domain registrations. These fees are routed transparently and governed through a DAO, ensuring value flows stay within the ecosystem rather than being siphoned off by rent-seeking intermediaries. But ENS is not alone. Audius, a decentralized music protocol, attempts to reward artists and listeners alike through token-based incentives and governance. Similarly, Livepeer enables decentralized video infrastructure while creating recurring revenue through protocol fees for transcoding services. These models embed value capture without hardcoding control into a single entity. These protocols show that sustainable economics don't require platform lock-in. Instead, they require careful calibration of incentives, transparent value flows and participatory governance. This middle path is difficult to walk—it lacks the sleek UX and top-down coordination of platforms - but it holds the potential to create lasting, open systems where value is not just created, but shared.

Real-world Value Flows: Case Studies Beyond DeFi

Beyond DeFi, decentralization’s value becomes more tangible when protocols intersect with the physical world. These are not merely technical innovations - they reshape economic incentives and infrastructure models in sectors like communication, supply chain, mobility or energy. This emerging category, often referred to as DePIN (Decentralized Physical Infrastructure Networks), demonstrates how protocols can organize and incentivize large-scale, real-world coordination without traditional corporate structures. Helium is a foundational example, rewarding users for deploying and maintaining wireless infrastructure with crypto incentives. Its model shifts network build-out from centralized telecom companies to a distributed community.

Other notable DePIN projects include:

• Hivemapper, which crowdsources real-time map data via dashcams and rewards drivers with tokens, decentralizing an industry currently dominated by Google Maps.

• DIMO, which lets car owners contribute vehicle data in exchange for tokens, laying the groundwork for decentralized data monetization in automotive ecosystems.

• WeatherXM, where individuals operate weather stations and are compensated for providing high-quality environmental data.

These networks use crypto not as speculative assets but as coordination tools. By aligning economic incentives with infrastructure contribution, DePIN protocols extend Web3 beyond the screen - into the physical infrastructure we rely on daily. The takeaway is clear: decentralization can produce real-world value flows. But as with DeFi and general-purpose protocols, DePIN networks will also face inflection points. Will they remain true to decentralized ideals as they scale, or will they drift toward platform dynamics for growth and efficiency? Their future will depend on how deeply decentralization is embedded—not just in code, but in culture and governance.

The Regulatory Factor

Regulatory landscapes significantly influence centralization trends - but not always for the better. While rules are essential to protect consumers and establish clarity, they often lack the foresight to differentiate between emerging infrastructure and legacy intermediaries. Europe’s MiCA regulation, for instance, represents a milestone in crypto legislation - but one that’s skewed heavily toward custodians, stablecoin issuers and centralized platforms. Take Circle and USDC: their centralized issuance model fits neatly within MiCA’s framework. But what about DAI, MakerDAO’s decentralized stablecoin? Its hybrid approach - backed by crypto collateral and governed by a DAO - challenges conventional regulatory models, yet it receives far less attention and legitimacy under European frameworks. That’s a missed opportunity. DAI represents a future where financial infrastructure can be both compliant and credibly neutral - if we allow for nuance. Instead of encouraging innovation in protocol-layer infrastructure, MiCA tends to reinforce known models of control. It regulates what it can see—centralized apps and institutions—rather than building the incentives for Europe to lead in trustless, permissionless technologies. In doing so, it may unintentionally drive talent, capital and open innovation outside the EU. The principle should be simple: regulate apps, not protocols. Treat protocols like TCP/IP or SMTP - not like financial entities. Europe, for all its strengths in digital rights and consumer protection, must evolve beyond reactionary compliance if it wants to remain competitive. We don’t need more walls. We need incentives to build.

The Road Ahead

Protocols versus platforms isn't a battle to be won but a spectrum to navigate consciously. The stakes are high - the internet’s future soul hangs in the balance. The infrastructure decisions we make today will shape the power dynamics of tomorrow. Will Web3 empower users, developers and communities - or simply enrich new gatekeepers dressed in protocol clothing?

To move forward, we must recognize that Web3 doesn’t need to mimic the playbook of Web2. It needs its own. That means investing in invisible layers, supporting protocol-native monetization models, and designing governance that is inclusive, accountable, and resilient. It also means resisting the temptation of sleek centralization in favor of slower, more sustainable decentralization. Regulators must evolve too. Europe and the broader global community need to understand that protocols are infrastructure - not businesses - and should be treated as such. We must incentivize the building of open systems rather than penalizing experimentation. This is a call to action. Builders: embed decentralization not just in your architecture, but in your values. Users: demand transparency, not just convenience. Policymakers: regulate outcomes, not ideals. Investors: fund public goods, not just private exits. Web3 doesn’t need an iPhone moment. It needs millions of inflection points - and millions of conscious decisions to keep the internet open. The choice is still ours.

The New Internet Is Already Here. Let's Make It Work.