Zero tailpipe emissions. Instant torque. Quiet operation. Low maintenance. There is so much to celebrate about electric vehicles that one of their most obvious distinctions usually goes without saying: They are computers that move, and their movement is controlled by software. 

In web3, a resource controlled by software can be an asset, with all the composability that implies. 

As participants in web3 build bridges to the “real world” and look for real world assets to finance, tokenize, and otherwise bring on-chain, assets that can be controlled by software will be the first to cross over. 

Electric vehicles will be among the biggest of these new asset classes. They meet a set of criteria that few other assets do:

• Natively controlled by software

• A new asset class

• Rapidly growing to trillion dollar-scale

Electric vehicles are natively controlled by software: If the software in the vehicle says “don’t go”, the vehicle doesn’t go. This is more true of an EV than even a modern, electronics-laden combustion vehicle, whose software dependencies are more superficial. If the vehicle is owned or otherwise financed on-chain, and the financing or use payment hasn’t been made to the contract that controls the vehicle, the vehicle can be disabled until payment is made. 

The most familiar web2 example of this are shared scooters which won’t go unless they get a software command that activates them, which of course only comes if someone pays for the ride using the app. This type of transaction has happened billions of times around the world over the last decade that shared scooters and bikes have been in service. See Bird, Tier, Hellobike, and my former company, Scoot, which was the first to deploy this model.

Another example is from the pay-as-you-go (PAYGo) financing industry. Millions of solar home systems, smartphones, and other essential electronics have been sold to people in parts of the world where savings and access to credit are both very low. These sales allow the buyer to make incremental payments (often weekly) in order to continue to use, and eventually own, the device. If the payments aren’t made, the device doesn’t function, so repayment rates are high. See M-KOPA, PayJoy, and Angaza.

While an electric vehicle, especially a regulated vehicle like a car or truck, needs a legal owner, that could be a simple LLC, and the utility of that vehicle is still subject to software. 

Electric vehicles are a new asset class. Large, proven markets inevitably have established competitors and often have regulations that are designed to or inadvertently protect incumbents, making it harder for new products to compete. Continuous mass production of electric cars began a bit over a decade ago, and only ~1% of cars and trucks in the world are electric. Electric bike/moped mass production began about a decade earlier, but was almost all in China, and only ~30% of two wheelers today are electric. How these new types of vehicles will be financed is an open question that web3 can answer.

Electric vehicles are rapidly growing to trillion dollar-scale. There are already $1.4T in auto loans in the US alone, and many of those as well as many in Europe and elsewhere will become electric vehicle loans. But the big prize is among the billions of people who have never been able to afford their own vehicle of any kind, but will be able to afford electric vehicles, especially two-wheelers (currently 90% of EVs in the world), if offered financing. This transition and growth creates opportunities for new players and new models that incumbents, even if they adapt, won’t be able to capture all of. 

I glossed over a non-trivial technical challenge of linking a software-controlled vehicle to a software contract, especially in a trust-minimized or decentralized way, but this is already happening in various forms. See Helium’s wireless networks, IoTeX and IOTA’s IoT-specific protocols, DIMO’s and WeatherXM’s data gathering protocols, and Celo’s use of ultra light clients on mobile devices. 

Electric vehicles aren’t the only asset type that meet the above criteria, they are just the biggest. Web3 welcomes creativity (and craziness) so we should expect all kinds of assets to be financed, or attempted to be financed, with some form of web3 technology or business model. 

But I will name one important and often cited real world asset type that does not meet the above criteria: Real estate.

X Buildings can’t be meaningfully controlled by software. Bringing them on-chain requires tokenizing an LLC, making an NFT out of the title and a ream of other documents, or similar flimsy mechanics. Putting a smart lock on the door only partly controls the utility, with all due respect to Slock.it, the original project in this space. 

X Real estate finance is a decades-old industry that is highly competitive, heavily subsidized and regulated - exactly the kind of industry you don’t want to compete with head-on.

? Real estate finance is already a multi-trillion dollar asset class in the US alone, with little room to grow, though it may be growing quickly in the global south as those countries’ credit environments mature.

There is so much to look forward to in the coming chapters of web3. Infrastructure improvements. More participants (especially in the global south). Better UX. Alongside these, incorporating real-world value into DeFi will make the ecosystem healthier, more stable, and more credible. Digitally-controlled real world assets like electric vehicles will be a big part of that. You will probably park at least one in your wallet. 

Zero tailpipe emissions. Instant torque. Quiet operation. Low maintenance. There is so much to celebrate about electric vehicles that one of their most obvious distinctions usually goes without saying: They are computers that move, and their movement is controlled by software. 

In web3, a resource controlled by software can be an asset, with all the composability that implies. 

As participants in web3 build bridges to the “real world” and look for real world assets to finance, tokenize, and otherwise bring on-chain, assets that can be controlled by software will be the first to cross over. 

Electric vehicles will be among the biggest of these new asset classes. They meet a set of criteria that few other assets do:

• Natively controlled by software

• A new asset class

• Rapidly growing to trillion dollar-scale

Electric vehicles are natively controlled by software: If the software in the vehicle says “don’t go”, the vehicle doesn’t go. This is more true of an EV than even a modern, electronics-laden combustion vehicle, whose software dependencies are more superficial. If the vehicle is owned or otherwise financed on-chain, and the financing or use payment hasn’t been made to the contract that controls the vehicle, the vehicle can be disabled until payment is made. 

The most familiar web2 example of this are shared scooters which won’t go unless they get a software command that activates them, which of course only comes if someone pays for the ride using the app. This type of transaction has happened billions of times around the world over the last decade that shared scooters and bikes have been in service. See Bird, Tier, Hellobike, and my former company, Scoot, which was the first to deploy this model.

Another example is from the pay-as-you-go (PAYGo) financing industry. Millions of solar home systems, smartphones, and other essential electronics have been sold to people in parts of the world where savings and access to credit are both very low. These sales allow the buyer to make incremental payments (often weekly) in order to continue to use, and eventually own, the device. If the payments aren’t made, the device doesn’t function, so repayment rates are high. See M-KOPA, PayJoy, and Angaza.

While an electric vehicle, especially a regulated vehicle like a car or truck, needs a legal owner, that could be a simple LLC, and the utility of that vehicle is still subject to software. 

Electric vehicles are a new asset class. Large, proven markets inevitably have established competitors and often have regulations that are designed to or inadvertently protect incumbents, making it harder for new products to compete. Continuous mass production of electric cars began a bit over a decade ago, and only ~1% of cars and trucks in the world are electric. Electric bike/moped mass production began about a decade earlier, but was almost all in China, and only ~30% of two wheelers today are electric. How these new types of vehicles will be financed is an open question that web3 can answer.

Electric vehicles are rapidly growing to trillion dollar-scale. There are already $1.4T in auto loans in the US alone, and many of those as well as many in Europe and elsewhere will become electric vehicle loans. But the big prize is among the billions of people who have never been able to afford their own vehicle of any kind, but will be able to afford electric vehicles, especially two-wheelers (currently 90% of EVs in the world), if offered financing. This transition and growth creates opportunities for new players and new models that incumbents, even if they adapt, won’t be able to capture all of. 

I glossed over a non-trivial technical challenge of linking a software-controlled vehicle to a software contract, especially in a trust-minimized or decentralized way, but this is already happening in various forms. See Helium’s wireless networks, IoTeX and IOTA’s IoT-specific protocols, DIMO’s and WeatherXM’s data gathering protocols, and Celo’s use of ultra light clients on mobile devices. 

Electric vehicles aren’t the only asset type that meet the above criteria, they are just the biggest. Web3 welcomes creativity (and craziness) so we should expect all kinds of assets to be financed, or attempted to be financed, with some form of web3 technology or business model. 

But I will name one important and often cited real world asset type that does not meet the above criteria: Real estate.

X Buildings can’t be meaningfully controlled by software. Bringing them on-chain requires tokenizing an LLC, making an NFT out of the title and a ream of other documents, or similar flimsy mechanics. Putting a smart lock on the door only partly controls the utility, with all due respect to Slock.it, the original project in this space. 

X Real estate finance is a decades-old industry that is highly competitive, heavily subsidized and regulated - exactly the kind of industry you don’t want to compete with head-on.

? Real estate finance is already a multi-trillion dollar asset class in the US alone, with little room to grow, though it may be growing quickly in the global south as those countries’ credit environments mature.

There is so much to look forward to in the coming chapters of web3. Infrastructure improvements. More participants (especially in the global south). Better UX. Alongside these, incorporating real-world value into DeFi will make the ecosystem healthier, more stable, and more credible. Digitally-controlled real world assets like electric vehicles will be a big part of that. You will probably park at least one in your wallet.