Variant Fund Investment Partner What Can Blockchain Applications Achieve and Why It’s Important

Unlocking the Potential of Variant Fund Investment The Power of Blockchain Applications and Its Significance

Author: Alana Levin, Partner at Variant Fund, originally published on Coindesk; Translated by: 0xxz@LianGuai

Sometimes it feels like people are averse to embedding cryptographic elements into other more traditional types of consumer applications. After all, why should something like movie tickets be on the blockchain when millions of people have already been buying them the old-fashioned way? Or so the logic goes.

To me, this is short-term thinking. The real breakthrough lies in the long-term capabilities created through aggregated data on the blockchain. Traditional-looking applications that have elements of on-chain data or resource choice are able to create the ability to view user behavior patterns across time and applications. These are new information networks that not only don’t exist in web2, but couldn’t exist. My hypothesis is that these metagraphs will expand the design space, attracting and engaging consumers.

Blockchain as Metagraphs

One direct way to conceive of a blockchain is as an open, permissionless database. Users interact with applications through wallets, which sit above the layer of on-chain data. I’ve always thought of them as being akin to cars, transporting users from one destination to another (where each “destination” is an application). Therefore, wallets also provide the identifiers for interactions across applications on different blockchains.

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The result is that the blockchain itself becomes an information network. By providing a unified identifier for user activity across applications, developers can begin to build and leverage more comprehensive views of user behavior. These metagraphs are useful for segmenting customer behaviors, identifying power users, and facilitating more meaningful connections.

An example might help to illustrate the value of these metagraphs. Consider the relationship between a musician and two of their fans:

• Fan A: Listens to the artist’s music for five hours every week on Spotify, likes every Instagram photo they post, subscribes to their newsletter, collects vinyl records, buys their merchandise, and attends every concert they have in town. But the artist will never know that all of this is coming from the same fan.

• Fan B: Listens to the artist’s music for 10 hours every week on Spotify, but doesn’t do anything else.

Which fan seems more like a superfan? Based on the data the musician can see, they might unknowingly value the second fan more – after all, Fan B listens to their music for twice the amount of time as Fan A. Don’t believe this is a real pain point? Let’s say the musician is Taylor Swift, and both Fan A and Fan B really want to be on the whitelist for early ticket purchasing rights to her next tour. Based on Spotify data alone, Fan B might have priority. That’s a painful outcome for Fan A and an unoptimized outcome for Swift.

Blockchain changes the game. Putting information and activities on the chain expands the scope of applications, creator behavior, and consumer behavior. Many components in the musician example can easily involve (very tiny) on-chain elements:

• Subscribe to a newsletter through Mirror and have the subscription sourced on-chain.

• Like/collect social media posts on Lens (or one day Farcaster?).

• Buy goods with on-chain digital twins or vinyl records.

• Collect a record on Sound.xyz.

• Each ticket itself could be an NFT.

• Scan a QR code at a live show to generate an NFT attendance token.

Individually, these seem like incremental improvements over consumer apps.

But the aggregate metagraph is a new kind of social mapping—that’s what matters. Building a new road connecting two towns, someone might say it doesn’t make sense. But building a new highway system where each new road doesn’t make a major incremental impact, but overall creates new connections, and you’ve built something powerful.

Extending the metagraph: Time as a new dimension

If cross-application activity is one form of metagraph extension, then user behavior over time is another. Every on-chain action has a timestamp, meaning third-party developers can link things that happened on a specific date/time, regardless of whether those actions occurred within their specific app.

This is a higher-order functional improvement for creating compelling products. References to personal history can create powerful emotional connections between users and applications. But in web2, time as a dimension has been limited to existing applications: data is siloed, so apps can only reference behavior that happens within their app.

These emotional ties are powerful retention levers. For example, I haven’t sent a real Snapchat in years, but I still use Snapchat because I enjoy the nostalgia reminders like “5 years ago today” and the feelings they elicit. The longer an app has existed, the stronger its ability to embed time into the product.

The problem is new apps can’t tap into that time element. Until now, the only way to generate “5 years ago today” type notifications is for the app to already have existed for at least 5 years. That’s not a favorable environment for new apps, and it may be one reason we haven’t seen many new consumer apps take off in the past five years.

Web3 changes the game. By incentivizing on-chain activity, it democratizes access to information. The ability to tap into a global background of information expands the design space for developers to reimagine and remix consumer experiences at specific points in time. One of my favorite examples is an app built entirely around recreating the “vibe of 2015,” with its interface and content tailored to songs, writings, and media types consumed by the individual in 2015. It’s like browsing nostalgic playlists on Spotify, but with an interface enriched by other media relevant to that period, making the experience ten times more immersive. And because this data isn’t controlled by extremely expensive APIs, app developers can build it with relatively low costs. In other words, this idea doesn’t require venture capital-scale funding to provide a delightful experience.

Why is this important?

In the short term, some groundbreaking web3 applications may appear indistinguishable from web2 – the cryptographic elements are just hidden behind the scenes – and the real “eureka” moment will come a few years later. An idea only needs to modify 3% to create something completely new. Putting selected elements on the blockchain might be that 3%: it creates selectivity for what can be built using on-chain data.

The challenge is that what these products or features are is not immediately obvious, at least in the short term. Therefore, some may overlook the benefits of facilitating this open access. I think that’s a mistake. Open access to data promotes experimentation, which in turn creates a developer market where builders can construct with the broadest range of ideas. Additionally, the most interesting meta-graphs might rely on identifying patterns across many applications and time frames.

I speculate that at some point, the richness and breadth of on-chain data will reach a tipping point. So while some applications may seem today to be analogs because they only appear to be innovating at a few layers of the product surface, those three layers have the potential to fully transform the long-term trajectory.

It should be noted that building on the crypto track also comes with short-term, more solitary game benefits. Cryptocurrencies often provide cheaper and better payment infrastructure, especially when the user base is distributed globally. Creating secondary markets is relatively easy, meaning areas that traditionally suffer from resource waste (e.g., unused flights, reservations, etc.) can become more efficient and unlock net-new value. The traceability and value allocation based on origin might be easier to track and program on-chain.

But for each of these solitary game examples, it’s important to note that the problem being solved should never truly be seen as a “crypto” problem. Instead, the framework should be to use crypto as the supporting technology for whatever industry the application is actually in: restaurants, entertainment, sports, content creation, etc. The most compelling short-term benefits are typically best described relative to each industry’s backdrop. Blackbird’s flyLianGuaiper is a great example of this. So, I’ll avoid prognosticating too much here. I think the view on how this crypto enables specific industries might be best left to those industries themselves to explore in depth (hopefully by true industry experts).

The key point of this piece is to emphasize what can be achieved when the majority of a more expansive system is re-architected in an open and collaborative manner – because it may not be obvious, but equally important. We are in a phase now where cryptocurrencies are becoming both simple and inexpensive enough to use behind the scenes, with virtually no additional cost, and at least opens up a valuable call option on future product directions.

So, if you’re building an application that utilizes cryptographic elements and someone asks, “Why does it have to be web3?” send them this piece. Because the question shouldn’t be whether blockchain is necessary, but whether it is helpful.

This is like asking if you need a car to travel from one place to another that is only a 20-minute drive away: it’s not necessary, but if the technology is secure and cheap enough, it might be the better option.

Blockchain is the same way: as long as the infrastructure continues to improve, the answer to “Is using blockchain helpful?” lies right here. It will become increasingly certain.

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