Web3 threatened by Web2.5 and regulations, warns exec

As Web3 is still in its infancy, its ideals and original vision to create an interoperable financial landscape are under fire, said Jamie Burke, the founder and CEO of Web3 accelerator Outlier Ventures.

In an interview with Cointelegraph, Burke outlined several aspects of Web3 that are currently under threat from concepts such as Web2.5 and regulatory action. The director said that while these are “understandable”, it takes Web3 away from its original purpose and hinders its wider vision.

According to the director, some projects are stalling and compromising on limited versions of Web3. Working with startups, Burke said there are founders who build workarounds due to various technical constraints. “Whether it’s an independent app developer or a large corporation, they all make these compromises,” he said. This ultimately results in making products that are not interoperable. He further explained that:

“They just want to build products that people can use with Web3-like features, but because they’re built in silos, that means they’re not fully interoperable.”

This then becomes a huge problem, especially in decentralized finance (DeFi), where fluidity and composability are necessary aspects of the space. Burke argued that when these silos are created, eventually there are app chains that are not interoperable with other app chains.

And while some argue these are temporary, the executive emphasized that as business models are built within these Web2.5 paradigms, more people will want to defend them. “And so Web2.5 becomes permanent and we never really realize the full vision,” he added.

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On the other hand, Burke said the industry is also facing regulatory strikes from government factions seeking to exert control over the industry. According to Burke, both the United States and Europe have somehow indicated that they want central bank digital currencies (CBDCs) to replace stablecoins.

“They can directly control who you do what with, they have full controllability, but they are state captive by design. So the state can send it to you and they can block you,” he said.

Burke believes that as these regulatory challenges allow more scrutiny for governments, it leads to “suffocating innovation” and creates a “problematic version of Web3.” He explained that it would be better to support peer-to-peer markets instead. Burke suggested:

“What I would suggest is that when you enable basic economic primitives like digital property rights, like the sovereignty of identity and wealth, you enable peer-to-peer markets.”

Burke suggested that these markets will increase the amount of value exchanged. When this happens, it will result in greater tax revenue for the state.

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