Ryan Boder, API3

Thank you for tuning in to today’s episode of the Breaking Changes podcast. I’m your host and chief evangelist for Postman, Kin Lane. With Breaking Changes, we explore the world of APIs through the lens of business and engineering leadership. Joining me today we have Ryan Boder, the DAO core team lead from API3. Ryan took me through a journey of how APIs are beginning to power the Web3 universe, helping me understand many of the basics but then also exploring what is possible for this new space.

I always like to start with the basics. Just who’s Ryan Boder, and what do you do?

Sure. So I’m Ryan Boder, I’m the head of marketing at API3. I’m working cross-functionally on a lot of different things, but my main job is to figure out how to communicate the somewhat complex topic that we work on to everybody in the world. So I’m happy to be here. And I also, just so you know, I do have a software development, and particularly a networking and API type background, so I used to work on APIs professionally. So I’m really excited to be here on this show, because this means a lot to me. I was using the original Chrome extension back, oh gosh, probably 10, 12 years ago.

So you’re a technical guy, but what brought you to marketing then, and got you into selling all of this?

I’d say it’s a number of things. One was, you kind of get bored doing the same thing for too long, and I’ve been building things for so long that eventually it started to feel repetitive. But two is that I kind of realized—I’ve always been somebody who’s been a hardcore techie for my entire adult life—and I kind of realized, and maybe I didn’t initially pay enough respect to, the difficulty in dealing with people, the difficulty in communication, the difficulty in helping people understand what problems your product solves. So I think over time, as I got more experienced, I started to appreciate more how challenging that problem is, and it seemed like something I wanted to go and give it a try.

I like to think of marketing and tech, and really sales and every other aspect of business, as very much the same thing. It’s just a different side of the same problem. You’re all working toward the same goal. You shouldn’t be building something if you don’t have a way to market it to your customers, and you shouldn’t be selling something if you don’t have a way to communicate, and you shouldn’t be marketing something if it doesn’t solve a real problem and if you don’t have a way to deliver it. So I just realized, hey, here’s a whole new world that I get to learn about. So it was probably six or seven years ago that I made the switch into, I guess you’d call it the dark side.

Well, I’m thankful for folks like you, because I don’t know how many times I’ve been along for a ride where we built the killer product that makes a lot of sense, but we didn’t have anybody to market it, anybody to handle the business side, and now that product, nobody knows anything about it because it never went anywhere. So as a techie myself and a developer, I recognize the value of this. But you’ve kind of picked a doozy of a space to be doing this in. So let’s start with the basics of what API3 does, and then I think there’s a lot to unravel here as far as connecting the tech to business to what’s going on in the world right now. So give me the lowdown. What does API3 do?

All right. In the simplest way I can say it, API3 connects web APIs to smart contracts. That’s really what we do. There is plenty of complexity in how we go about doing that and what it’s used for and how it’s used, but yeah, we connect web APIs to smart contracts that run on the blockchain. If you are familiar with blockchain, Web3, Ethereum, and smart contract stuff out there, then we’re an oracle. So we’re what’s known as a blockchain oracle. We provide off-chain data into on-chain smart contracts. But really what it comes down to is, in practice all of the data that ends up in smart contracts comes from web APIs, and so all we’re really doing is connecting web APIs to the contracts in blockchain applications, decentralized applications.

The main way the data is consumed is through what’s called a data feed. Because blockchains are isolated from the rest of the internet, because they can’t just reach out and interact with another computer, it’s much easier if they can just read data that’s already on chain, rather than having to make a request and wait for a response. So when you talk about DeFi applications, decentralized finance, and all the stuff that’s happening that’s been so big in blockchain over the past couple of years, it’s data feeds that everyone’s looking for. So as an oracle provider, we can turn your API into a data feed and make that available to smart contracts, Web3 applications, DeFi applications, whatever you want to call them, and however they might be used in a particular situation. We can turn your API into a data feed, or we can make it available in a simple request-response fashion, which is more like how a traditional API works. And depending on the situation, one’s better than the other, so you just have to pick the right one for the problem you’re working on.

So let’s stick with the basics for a little bit. What’s the benefits of a smart contract to my business, to be able to operate and provide these?

Yeah, so I guess you could answer that a couple of different ways. One is, it’s a fast-growing new market. So if you have a business that’s established on Web2, that’s established in the API economy, then you have a whole new, very fast-growing market of potential customers that exist over on Web3. So from a business standpoint, that’s why it’s beneficial. From a tech standpoint, what it comes down to is, by building things in smart contracts, you’re enabling—I guess if I break it down to individuals—you’re enabling two individuals to interact with each other in a way that normally would require some sort of level of trust, some sort of central trusted authority to maybe arbitrate the transaction or the interaction. But in smart contracts on blockchain, you’re able to do that without a middleman, without a centrally controlled middleman.

To make it a little bit more concrete, if I’m going to transfer money to you, I would send it to your bank account, I wouldn’t send it directly to you. I could write you a check, you could deposit it into your bank account, but it needs to go through the bank or a trusted middleman in order for that transfer to happen. In smart contracts, that’s not necessary. You can have a peer-to-peer interaction between two people, two individuals, or two entities that don’t necessarily trust each other, and you can do it safely. So it all comes down to, in the term that’s used, trustless computing, trustless computation. Smart contracts enable trustless computation.

And folks tend to lean towards this being financial—it’s a transaction—but you said it very well there. I think it’s a transaction and/or interaction, because it could be, I could be insuring something, it could be an ongoing relationship, not a single transaction. And this is where we start moving more towards applications, right? We’re able to actually do some sort of sustained business logic, but still with that base underlying trust.

Yeah, exactly. It’s always easier to explain things by breaking it down to the simplest form of, say in this case, two individuals interacting with each other. But in practice it’s more complicated, because usually it’s like you might have a pool of people or a group of people that are interacting, and a marketplace where trades are taking place, and some sort of what we call staking, where people are putting their assets on the line in order to hopefully ensure something or get some sort of a gain in the future. So it is more complicated in practice, and yes, it’s definitely bigger than just financial. I think, because of Bitcoin, the simplest application for blockchains was Bitcoin, building a digital currency, and Bitcoin was the first successful implementation of a digital currency. But we’re seeing things like logistics, we’re seeing insurance, we’re seeing art—if you’re familiar with NFTs, art or creative work. There’s just a—I kind of feel like it’s one of those things where I can’t tell you what all is going to happen, because the market’s going to figure that out, but there’s so much possibility. It’s really just a new paradigm of computing, kind of like the internet was a new paradigm of computing, or maybe another way to look at it is the cloud, cloud computing.

So before cloud computing, there were a lot of things that were maybe infeasible for small businesses or startups, a lot of things that if you weren’t a large corporation, you just couldn’t play in that game, you didn’t get to compete. Whereas with cloud computing, when that came along and everything became more elastic and more on demand, then suddenly there was an entirely new wave of applications, software-as-a-service applications, that ended up being built on top of that. And we have something similar here. It’s like this whole new computing paradigm, this trustless computing paradigm, where in the past you had to have some sort of large corporation with a lot of money and a reputation, or maybe a government of some sort, that could be a trusted arbitrator between two people that are trying to transfer value or do something that involves transferring value. In smart contracts and on blockchain, that becomes a peer-to-peer thing, that becomes much more decentralized—decentralized is the word that’s used most often—but it makes it so that you can have these applications without needing the trusted middleman.

Yeah, that makes a lot of sense. So I think people get Web1, you get that it was the basic website, static, and it took a while before things were dynamic and data-driven and grew. And then we’re familiar with Web2 now—mobile applications and web and SaaS and these things. Describe for me Web3 applications. What are the limitations, the constraints, how do they work?

The limitations. So in order to—I guess you could define a Web3—it is difficult to define a Web3 application. I don’t think there is a widely accepted definition of a Web3 application, but structurally they usually consist of a smart contract or a set of smart contracts coupled with a front-end website that are interacting with each other. So people are interacting with the website, and then the website’s interacting with the blockchain. Well, the website is facilitating the interaction between their local wallet and the blockchain, and making some valuable thing happen. That’s really what a Web3 application normally comes down to technically.

But then what you’re getting out of it is, going back to some of the decentralized finance examples, if I’ve got some money, say I’ve got some Bitcoin or I’ve got some Ether or some other token, it allows me to do something like lend it to somebody in another country, maybe somebody in another country that I’ve never met before, that we have no traditional way to interact. It allows me to safely lend them money and earn interest, and it allows them to have access to a loan that they wouldn’t have otherwise. So it creates a much more equitable and global marketplace for transferring value. That’s really—it’s hard to maybe comprehend how big a deal that is, but that’s a really big deal and really opens the door to a lot of new cool stuff and new valuable things to be built or to be executed, because they couldn’t happen otherwise. Because if I’m in an area that’s unbanked, for example, or an area that doesn’t have access to modern banking, modern finance, then I maybe can’t get a loan to start a new business or a new endeavor, and now I can.

Yeah, it’s very similar—I used the cloud analogy earlier. When did the cloud start? I guess if we use the Amazon analogy, we’re talking 2006, 2007, and you had compute, DNS, all these new types of storage, these new types of resources that were elastic and new and real, and that was the seed of this next change. But really where most people were looking was at the applications and the end result of what was being delivered. But I noticed that Stripe, Twilio, these other types of raw resources—telephone, SMS messaging, payments, voice command, things like that—were emerging, and these were being remixed to enable what I consider the Web2 economy, which created Ubers, created DoorDashes, created the gig economy. These raw resources went into that. But describing, telling normal people about this—I started in 2010, and everyone just kind of was like, this guy’s crazy. I was talking about this API economy and this new thing, and I could see it, but no one else, or very few other people, saw it. So that’s really what this feels like. So if I have raw resources available by APIs, is this a new place for me to be peddling those resources?

Yeah, absolutely. That’s exactly what API3 does. That’s really our whole thing. Because you mentioned a few examples there, like Twilio, which is an API infrastructure play. They ended up enabling numerous new applications that we all probably used and knew, and the average person probably didn’t know who Twilio was or had no idea that they were even a part of what they were doing. And that’s kind of how API3 is, where infrastructure like that—we create this connection, we allow web API companies, Web2 API companies, to offer their services on Web3. And for the most part, even the users in DeFi, the users in Web3, they don’t know about us. They don’t have to interact with us, they don’t see API3 when they’re looking at the website, when they’re doing their insurance or getting their insurance or offering their insurance, or doing their loan or doing yield farming, which is a similar way that people end up making a return on their cryptocurrency. So you don’t have to know everything about the API companies, but it’s the developers, it’s the builders on Web3 who know about us. And likewise, it’s the builders on Web2 who knew about Twilio and use Twilio.

So you talked about the data feeds into this. I can see there being price feeds, conversions, those types of data. You mentioned art and other things. What are other types of data feeds that I could bring to Web3 via API3 that would benefit the community, or is that uncharted territory?

So there’s established data feeds that are very widely used, like price feeds, like you said. And then there’s additional types of data feeds. Another one that is talked about a lot now is weather. So a weather data feed—you want to know what the average weather is in a certain area, or you want to know whether a storm or a catastrophic event occurred, for an insurance product. So weather data is big. But logistics data is another one. A lot of people are looking to build logistics solutions. Take the automotive industry, for example. There’s a huge logistical problem, because of all the parts that are required in the supply chain that goes into building a vehicle. It comes from all over the world, and it’s very hard to track, very hard to manage, and there’s a lot of room for people to cheat, a lot of room for things to be different, mistakes to be made, for people to falsify where something was produced, when something was produced. So in the automotive industry, they’re looking at building supply chain tracking on blockchain and making it so that it gives you a reliable or immutable—that’s the term that we like to use for the blockchain, meaning once it’s on there it will never change, it’s permanent—an immutable record of traceability back to where things were put together, how things were put together, when they were put together.

So you might be a logistics company that has an API that allows you to track a package, and you could potentially, with this new wave of applications that are starting to be built on Web3, offer your services as an API or as a data feed. Although track a package isn’t the best example, because it’s hard to offer a data feed that tracks a package, that doesn’t really make a whole lot of sense. Data feeds are normally more global information. The price of silver to the US dollar is a global price, that’s something where you can estimate it globally, but the location of a package depends on the specific package, so it’s harder to build a data feed around that. Rather, you have to do it as a request: here’s the ID of the package I want tracked, give me back the location. So that needs to be done as a request-response.

But yeah, it’s really insurance products. The hot topic in insurance on blockchain is called parametric insurance, and what that means—another way to think of that is programmatic insurance. Traditionally with insurance, you buy a policy, and then if something happens and you want to make a claim, you call your insurance agent, they report it, they write it down, you have an adjuster take a look at it, and they make a subjective decision about whether you’re going to be covered or not, and then they send you money. Parametric insurance is a smart contract where you say, if this certain input or this certain event occurs, trigger a claim, trigger a payment. So it’s an automated software version of insurance. And you can do that with certain types of insurance, like weather-related insurance, so agricultural insurance. There are APIs that will tell you whether there was a drought in a particular area, and then you can have that trigger an insurance payout if you have farmers that had purchased insurance through this parametric insurance product. Rather than having to go through the process of filing a report, waiting for an individual to take a look at it, make a claim, you can have an automatic and immediate payout.

Huh, interesting. Because I see, I have a data source, I want to make that—that’s one layer of this. But then I could be offering this application, say the insurance part. But it seems like, knowing financial products and understanding insurance, there could be other layers there too. So say my MacBook’s getting old, I ordered a new one and I got the supply chain issue response, I can’t get it right away because of supply chain issues. Now, in theory, there could be insurance, like home-based business remote work insurance, covering my small business that keeps me producing, keeps me productive, and if I’m unable because of supply chain shortages, I’m insured against that. So that’s the insurance. But then it seems like you could also be betting—there could be a pool of people who are betting or shorting the good or the bad of that supply chain. So they got the supply chain data feed, you’ve got the insurance product that’s covering remote work, but then once you’re doing it at that scale, you’ve got a pool of people that you can basically bet upon, but it’s in the blockchain, and you could create some sort of market around that. So is that kind of—because that seems like creating Uber for the next thing. It’s like you’re creating financial products based upon everyday life in that sense.

Yeah, that’s a great example. And betting is definitely one of the more popular use cases in Web3 currently, where you have people that want to bet in sports betting or something like that, or betting on gaming. You have people that want to bet on an event, and these are all things—with sports betting, there are APIs that are able to deliver that data into the smart contract and enable the bet to be enforced, the outcome of the bet to be enforced, the money to be distributed as it’s supposed to be. So yeah, anything that people might bet on. I think the big theme is, it’s easier to do this stuff when the inputs and outputs are easily mapped to data or easily mapped to a digital form. So you probably have a much wider variety of inputs—the outcome of a sports game would be an input to a betting contract, it’s easier to map those into a digital form. It’s a little bit harder to map the outputs into a digital form. So usually what we’re seeing now is the output is somebody gets paid. That’s the easiest digital output that we can produce, is money or tokens or cryptocurrency, or whatever you’re trading happens to be, transferred from this account into this account. But I also think that—this is so early, we’re in such an early place for Web3—we’re going to start seeing more physical, real-world outputs as well, having blockchain contracts that end up triggering something to happen in the real world. There’s no reason to think that won’t happen, it just hasn’t happened as much thus far.

So internet of things, that could be tied to this whole Web3 reality?

Oh yeah, definitely. And I mean, I’m not just making this up. People are doing this now, people are talking about this and building things like this, but it’s not widely adopted. If you think of Web3 as pretty early in the adoption curve right now, then even within Web3 there are more established use cases and then newer cutting-edge use cases. So the more established use cases in Web3 are financial products. Banking is even a rather newer one, but decentralized finance: loans, yield farming, staking, the ability to take an asset that you have, put it at risk and then get a return on it, or the ability to borrow an asset and then pay a premium in order to get access to it. That’s what’s currently widely done in Web3. But then, with all these new high-performance and lower-cost blockchains that are being built, these new smart contract platforms, those are going to enable a much broader class of applications. Like social media, for example, or interacting with people and communicating. You don’t see a whole lot of that on Ethereum, because Ethereum has very high gas costs, it’s not super high performance, it’s currently suffering from a scalability problem. So there’s not a big motivation to do my communication or my social networking on Ethereum. But as, when the cost goes down to near zero, when the cost gets negligible, and the speed gets usable, user-friendly, then why not? Then maybe I will be using a social networking platform that exists on the blockchain, rather than having to store all my data with a Facebook or trust a Facebook or whatever social platform you happen to use. Maybe that’s done in a more trustless form on Web3. It’s just a matter of getting over the obstacles to be able to kick it off.

So for normal people, explain the gas cost, the gas fees. How does that work?

A blockchain is a network of computers, a distributed system, decentralized system. It’s basically a bunch of computers. So imagine 500 computers that are all running the same software, they’re all nodes in the network. And in order for a smart contract to do some computation, to execute, all 500 of those computers have to start with the same inputs, do the same computation, and then agree that the output is the same. So that’s called consensus—they’re achieving consensus on the network. And once they reach consensus, then they will etch that result into the immutable, permanent blockchain. But it costs money to run 500 computers. Somebody’s got to pay for the computation to do that. And not just the computation to do the calculation in your program, the application, but there’s also a lot of computing that has to be done in order to cryptographically secure the network, or in other words, prove with a super high level of confidence that all the nodes did reach consensus. So the computing that’s necessary, I guess, to implement this big distributed computer, costs money, as well as the computation that you’re trying to do for your application. And gas is the built-in, native currency in the blockchain that allows you to pay for that computation.

Kind of my next-generation Amazon build, but it’s distributed. And like you said, it’s going to fluctuate, and the lower we can get it, the better off I am as someone operating in this environment, because I’m going to be able to keep costs low.

Yeah, you’re right, and it certainly does fluctuate, like extremely in some cases. You sometimes try to get an Uber and you get—what do they call it when there’s a lot of demand?—surge pricing, you might end up paying a little bit more. Well, I’ve seen gas prices on Ethereum range from a few bucks up to well over a hundred dollars just to do one transaction. And yeah, it hasn’t been the greatest user experience, let me put it that way. But it has that same surge pricing, that same fluctuating gas pricing. That’s what enables the network to be so secure, that when you have a lot of competition for the computing resources, it’s the one who’s willing to pay the most that gets to use them.

Yeah, you have something worth doing, something valuable, you can take that lead, you can pay the premium, and you get to do what you want, you’re the top dog. Yeah, it makes a lot of sense. It’s how markets work, it’s how financial products work, it’s just digitally applying that across the board to an unlimited number of digital resources and capabilities.

So who are you trying to reach when you’re marketing API3 products? Who do you target? Is it more technical, is it more business?

A mix. We’re a connector, so we’re connecting two sides. One would be API providers or API businesses, and the other would be smart contract developers. So I think of both of them as our customers. In reality, if your definition of a customer is who you’ve served, then it’s both of them. If your definition of a customer is where money comes from, the money comes from the Web3 side and then flows up to the API provider side. So I actually use the Amazon marketplace as an analogy sometimes. If you think of API3 and the whole ecosystem around API3 as the Amazon marketplace, you have buyers and sellers. And the API companies are the sellers—they’re the people running APIs who might want to offer data or offer a service via their APIs. And then the smart contracts are the buyers. And of course it takes a developer to build a smart contract, so the smart contract developers are really our customers.

Yeah, but I can see, that’s a really interesting analogy, because as soon as those contracts and those applications are established in Web3, for whatever the purpose is—weather, currency, all these different things—you have people who are plugged into those, buy and sell and are part of those marketplaces, kind of like Amazon. And as soon as I sell to—the Web2 APIs in the Amazon marketplaces—you put your API in there, now any company who has Amazon push through their procurement, meaning that company has a relationship with Amazon, can pay an Amazon bill and that’s been approved, now they can buy your API. Whereas if they have to go to your API and find it directly, they’d have to push it through a procurement process. You’re a small startup, you probably don’t have the resources to go through procurement like that. So just being in the Amazon marketplace opens up all of these new business opportunities. And that feels like what’s going on here with that analogy in Web3, is now I’m able to just plug in—I may not want to be the smart contractor, the app master in the Web3 world, but I have some valuable resources that could be there, and that’s all I could be, just plug it in. But now there’s this whole new world of developers who are going to be able to build with that.

Yeah, you’re absolutely right. Now, the Amazon marketplace analogy is not a perfect analogy, because another analogy that I like to use, because we’re building infrastructure, is we’re kind of like your web server. So you have browsers that are consumers of websites, and then you have companies that build websites. And one way that you could go about building a website is you could implement the HTTP protocol—you could have your development team sit down and implement the HTTP protocol and build your website like that. Of course nobody does that. Maybe people did something like that back in the day, but now everybody just uses Apache or nginx or whatever web server you might be using.

API3 has a software called Airnode. It’s really the thing that we build. Airnode is like a web server. It takes the complexity out of you connecting your APIs to the blockchain, because it’s actually a pretty difficult thing to do. So in that sense, API3 is more like a web server, and it enables you to just—you build your website the way you want it, and if your APIs are akin to a website, then the Airnode is what allows you to connect those and host those or serve those on blockchain applications, Web3 applications.

Yeah, I think that’s a good analogy. I’m always looking for the analogies to try to bridge the world and get people understanding, because web servers have kind of been commoditized and are out of sight now. But circa 2000, it’s like, Apache, nginx—now, I mean, these are still valuable resources. So helping people see how you do that, I think is pretty critical for this new space.

Well, yeah, the next add-on to that is, Airnode is intended to be commoditized. It’s not a product that we sell, it’s an open-source software that we want to just become the standard way that API companies connect. So we want it to be the Apache or the nginx for Web3. We’re not trying to build an IIS. We’re trying to become the standard open-source way that you just download and set and forget, and suddenly you’re connected to Web3.

Yeah, I’m not going to go there, that’s like the trauma and PTSD from IIS days. Once I discovered Apache, I was like, I’ve been lying to myself all these years. The Microsoft world back then just kind of was a scam, I felt like, and once you developed open source and Apache and realized you could go so much further and do so much more—anyways, I won’t go down that road. So what’s in it for you then? Why is it worth investing in the open source like this? What’s the benefit to API3?

So API3, our whole strategy is, we’re building value-added services on top of this. We need this infrastructure to exist first, and then we’re building value-added services on top of it. One of the things that we’re doing is building a product called dAPIs. But actually, let me back up, because there’s an even more immediate example I can give. We’re launching a product in just a few weeks here—we’ve already announced it, but we’re launching it at the ETHDenver conference in Denver, Colorado, in early February—called Beacons. And Beacons are just a very standardized, very efficient, and scalable way that you can take your API, turn it into a data feed, and make it available to smart contracts. And we provide an insurance product for those data feeds. So if you’re building a mission-critical smart contract—and that’s the thing about smart contracts, they usually are mission-critical, there’s usually something at stake, otherwise you wouldn’t be worrying so much about this whole trustless computing aspect, there’s something to be lost—API3 offers an insurance, so if that data feed were to go down, or if it were to provide incorrect data that causes your application to malfunction and then the wrong person gets paid. So the insurance product is a big part of our business model. That’s one example.

Another example is, when you have many different API companies that are providing their data feeds to smart contracts, you can mix them together, aggregate them into a super data feed. And API3—this is not actually done yet, this is something that’s still being built—builds these decentralized APIs by composing multiple single data feeds from API providers and then sells those at a premium. So those are really the two best examples of the value-add products. And that’s why the core tech, the infrastructure, we don’t really make any money on, because we just need that to exist in order to implement our own business model. So we try to be as out of the picture as possible when it comes to just connecting an API provider to a smart contract, which is why API providers love us, because that hasn’t been the case thus far. There are these middlemen who have a lot of power, who buy data from API providers and then resell it on blockchain for a lot more. And so what API providers are loving about API3 and Airnode is that it allows them to just go direct, to directly offer their services to the customer and cut out that middleman.

So back to the web server model, your incentive is different than Microsoft’s was. Microsoft had a walled-garden approach, they wanted to be the middleman, control it. But then Apache just wanted everybody, the whole thing, to grow. So API3 benefits if the more people that are operating in Web3 and doing successful things and markets are created. Your incentive is for that to be large, rather than to be a gatekeeper on that new growth.

Oh, exactly, yeah. And maybe another, since you like analogies: if you think of Red Hat, they invested a lot of money into building an easy-to-use Linux distribution so that they could build a business on top of it. They had all these value-added services—implementation services, hosting services, all these things that they did on top of Red Hat Linux—but they never were a gatekeeper of their Linux distribution, they always gave that away free.

Yeah, that makes sense. That’s definitely how the next generation of the API economy, I’m hoping, is built—with that model, that things are that open and democratic. Because I feel like in the early days of the web, of APIs—the first APIs I was like, oh, everything’s open, you can build whatever you want, I’ve got new access to mapping resources like I never imagined before, I could never build a mapping service. And then you build your whole thing, and then in like four years it’s like, wait, now I’ve got to pay all this money for the mapping resources. So I felt like it was a real bait-and-switch with the API economy early on, that the power structure saw what was happening and then started locking things down and centralizing it. So it feels like—that’s supposedly the promise here of Web3, that it’s going to keep that from happening again.

Yeah, you’re exactly right. And that is, I think, natural. The first one to dominate a market—it’s maybe impossible, or you don’t see it happen very often, where a monopoly decides to just play nice forever. Eventually a monopoly ends up like, oh, okay, well I can do less and get more if I want to, and so eventually they get a little bit too greedy, and then some innovative new option comes along and offers something different, and people are thrilled to have that. And that’s kind of what we’re looking to do. There’s certainly a monopoly in our space, and we’re not going to unseat the monopoly, but at the same time, like Microsoft still exists, right, but Linux has been able to help grow the pie, and there are all these new things that are available because of Linux that you probably wouldn’t have ever seen if Microsoft just got to be king forever. So that’s what we’re trying to do, is grow the pie, and we think there’s room for several different ways of doing business in this space.

So what’s your take on the whole pro and anti-Web3 kerfuffle right now on social media? What’s it all about, why is Web3 getting folks so worked up, for or against?

Well, for one thing, as we said before, it’s hard to really define what it is. So if you’re arguing about something that is undefined, then that argument’s not going to have a whole lot of rationality in it. If I’m arguing about one thing and you’re arguing against me about something entirely different, then what are we even talking about? And I think that’s the case with Web3. I’m assuming you’re talking about some of the Jack and Elon making comments?

Yeah, exactly, that kind of back-and-forth.

Yeah. I mean, I think it’s true that Web3 is very early, it’s true that it’s not mainstream. The argument that it’s more of a marketing gimmick—I don’t think that’s fair, I don’t think that’s really true. Of course there’s marketing involved with it, but it’s a trillion-dollar industry. There’s a lot that’s already happening, a lot of usage that’s already taking place, a lot of adoption that’s already there, and it’s growing rapidly. So give it five, ten years, maybe less, I don’t know, but I think it’s a game-changing technology. And there are a lot of people who are used to doing things a certain way, and they’re going to have to learn to adapt, and so maybe it’s hard to do that. I know it’s hard for me to do that. But it’s also not a panacea. Right now, Web3, I would say it performs horribly. When you’re used to a high-performance computing center, Web3 offers a really bad user experience. It’s got a long way to go when it comes to efficiency, user experience, ease of use.

And it kind of makes sense, because if you’re only talking about performance—you might build a distributed computing system in order to increase performance, and if you do that, you’re doing a lot of parallel processing. You’ve got 500 computers and each one’s doing different work, and then at the end they’re collecting that work back together, and they’ve done 500 times the work that one computer would have done. In blockchain, you’ve got 500 computers that are all doing the same computation. There’s no way they can do that faster than an individual computer, and then all coordinate with each other and reach consensus faster than you can do it on a centralized computer. So the performance is slow, the user experience isn’t great, the user experience in dealing with wallets needs improvement.

One of the things that you’re used to in Web2 is, your identity is owned by a big tech company. Your identity is owned by Google or Facebook or whoever you log in as, and your data’s stored there, and because of that they’re able to provide certain user experience benefits that make things really smooth and frictionless. On Web3, you own your identity. So I’ve got a wallet, it has my private keys on it, and those private keys are how I prove that I am who I am, so those private keys represent my identity. If I lose those, then my identity is gone. And that’s very similar to, if your Google account were to just get deleted, you’ve got a bunch of stuff, or maybe even more extreme, if your bank account just got deleted and you’ve got all your money in your bank account. Well, that’s the case with Web3 and crypto and being responsible for your own private keys. There’s more responsibility on the user currently, and a lot of people are working on finding ways to make that easier, less error-prone, but we’re early enough in it that you kind of have to use it at your own risk. You have to know what you’re doing.

And there’s some terms that are used a lot, like, do your own research, DYOR. Or another one is “code is law,” they say, which basically means, if it’s not—you’re not supposed to trust anybody in Web3, you’re supposed to go and verify everything yourself. And while that’s great theoretically, it’s not really practical that I’m going to go and verify every smart contract that I ever interact with on Web3. So some of those challenges have to be overcome before we can offer a great experience on Web3. But that being said, it’s still a lot better than it was three years ago, it’s improving rapidly.

So is it just for techy folks, or are there opportunities for business folks who really may not get all the technical details to jump in?

No, there are definitely opportunities for business folks. I actually write articles on Entrepreneur.com about why founders of startups ought to be looking at blockchain, considering Web3 as a place to deploy their products. Again, it’s not something that’s right for every new company, but it’s something that I think is being overlooked a lot of times for newer companies—like, hey, maybe we should build this with Web3 in mind, or maybe we should build this on Web3. But it might be more fun for entrepreneurs than for techies, in my opinion. It’s an uncharted territory where you can go out and do things. In the traditional internet, it can be challenging to find something that you can build that Google hasn’t already built, that hasn’t already been done. Whereas in this space, it’s just like the Wild West, and there’s so much opportunity.

Well, the big problem is not just finding ideas of what to be done. Once you come up with one, if you do it on Amazon, you’re never going to get investment, because the investors know that that’s the kill zone—Amazon’s just going to steal your idea and do it, so why even bother starting it. So on so many levels Web2’s depleted in that way, from being a place to see interesting things.

Yeah, that’s a great point, actually. And the other aspect of that is, you hear about ICOs, initial coin offerings. One of the things that is enabled by Web3 for entrepreneurs is the ability, in a very granular way, to offer stake to people who want to be a part of your project, and then manage that stake, rather than having to go through a traditional stock approach. So it’s like the API3 DAO, decentralized autonomous organization. I think it’s over 4,000 different people who are holding API3 tokens and are essentially stakeholders in API3 and can participate in governance of API3. It’s really an exciting way to start a company. It’s like the next way to do a VC, or to do a Silicon Valley startup, but it’s more equitable in the sense that anyone in the world can do it. You don’t have to move to Silicon Valley anymore, you can just tap into investment money, resources. You can reward employees more efficiently—you can make all of your contributors stakeholders by offering them tokens in the project. It’s just much more powerful and efficient than I think it’s been for startups previously.

Very interesting. Definitely there’s some areas I want to have you back. I want to do some conversations in the future around your business structure. You mentioned to me before the Ethereum RPC, and I want to explore how your business is structured, I want to explore the API part, and then get into some of the blockchain, the smart contracts stuff. So I’ll definitely be reaching out. But I appreciate your time today and joining me. This was fun, I had a good time.

Yeah, definitely, I enjoyed talking to you. And if you do want to have a conversation about the way the organization is structured, our lawyer, his name’s Eric, he’s on the project, he’s one of the best minds in Web3 or decentralized governance in the world. He’s the one who set up our DAO, he’s the one who structured all the organizational paperwork and structure, and he’s somebody who could talk your ear off on why we’ve done the things we’ve done. And other new DAOs end up modeling their organizational structure after API3 because of the work that he’s done.

Oh yeah, I’m going to tap into you for that one, because there’s a lot of policy, regulatory, API-related things we’ve been exploring on this show, and I think that’s in that area, very interesting.

Oh yeah, well, I appreciate it.

All right, thanks, Ryan.

Thanks again to Ryan for stopping by. For more on Ryan, you can find him on LinkedIn, but you can also visit api3.org to learn more about what he’s up to. You can subscribe to the Breaking Changes podcast at postman.com/events/breaking-changes. I’m your host, Kin Lane, and until next time, cheers.