Is Your Protocol A Puzzle?
As I was planning the tech areas of an upcoming Enterprise ICO (eICO), the nagging topic of “protocol” came up. The advantage of a protocol is that it makes us a strong asset-based player in the space with good partnerships and a maximized user base, a.k.a potentially increased token value. The challenge is, anyone can build it. If it is open-sourced, then they can just fork/copy it.
To start with, consider the user base of your existing platform if any, and what you can achieve with it. Of course, you may NOT develop the protocol anytime immediately, but knowing the direction and where you are heading is important for the members of the team, the tokenomics, and for the investors when presented to them. This will excite them if done right.
A protocol has 3 main parts:
We compromise on one to gain on the other. The ones built initially, Bitcoin, Ethereum and the like, are focused on security + decentralization and less on scalability. But the new platforms focus less on security and more on scalability as they are not financial platforms, but normal sites with utility and users. This is where most of you come in as well, with focus on scalable decentralized approach.
My big question is, why do people in your industry need a protocol? How does it help them innately that they do not want to fork out later, or not create their own? (apart from cost being a hurdle).
Users — Do you have sizable user base already in your existing platform, whom you can onboard easily later? Or do you have a plan to grow your user base fast enough to become valuable as a protocol within the 6–12 months of launching?
Codebase — A decent code base which is growing as you and your partners (more on this later) are growing, which gives them added new features on regular basis. This saves them time as they do not have to do any of this themselves and just live upon your existing protocol which is well taken care. Trust me, this is something you or anyone can do much faster than all those blockchains out there who almost make you feel like protocol is rocket science, but it is not.
Assets — This is where you can and must excel if you want to win in the long run. Create assets over time and add more assets to the platform which makes it harder for competitors to just skip your protocol, making all industry peers as our partners rather than competitors. Let’s consider an e-learning protocol for example, these are some potential assets they can have:
Teacher’s ratings — These are movable assets which anyone using the protocol can make use of only as long as they use your protocol, as data added after they fork will not be part of their dataset. So, it will come handy to all education sector businesses and you take the lead with user base + first mover advantage.
Community Reliability Score — All members in the forum or Q & A section and other parts of the community that have a reliability score based on how valuable they are and how much they contribute. This can help all platforms to easily avoid scams and so on. If you remember, Akismet for WordPress, all they did is to validate commenters from good and bad. Simple.
Profiles — You should have seen the “Telegram Passport”. It’s a way in Telegram app you can authenticate your ID and be a “valid user” and sites that integrate this need not waste money on all KYC process and tools, but just fetch info from telegram. Similar to facebook authenticate, which we all use in many sites on a day to day basis.
These are just inspirational examples. In every industry, for every platform, you can find numerous assets which makes you irreplaceable and valuable to your niche peers.
When this happens, you are becoming more valuable. All new data — users, ratings, validation, transactions and whatsoever you choose to allow from/to partners who integrate, they all become your assets making you more important for peers in your niche. This is the best opportunity of the decade for you to turn your competitors to your peers or much better, dependents of your platform.
Why do most use blockchains like Ethereum or those with larger user base and developer community? Because that’s reliable, as it will be up to date and has less chances of being abandoned compared to a private blockchain which can reach a dead end if 3 developers working on it need to go back to a day job. That’s precisely what you need to attain, not be a low reliable private blockchain, but be an Ethereum or the like, BUT for YOUR NICHE.
Partners: Connect with top brands and industry peers and see if you can strike a partnership with a win-win proposal. Especially seek deals to integrate and work with your platform in the future. The more early bird agreements you have, the better it helps with fundraising and the public sale, as it’s a sign of more UTILITY, which means more users, and hence increased value.
Your Protocol is your Life
Those who use your protocol, you can configure to allow them to create their own token on top of your protocol and use it, or use your token for their transactions. This is an executive decision to be made on your part, based on your business objectives.
If you are an existing business or an enterprise, you can sign up other real quality businesses relatively easily with the promise of the protocol and assistance for customizations or anything that you can offer for early adopters. Remember, it’s a win-win. Your efforts helps them, their platform and its userbase will help you become valuable. Like the Rifleman’s Creed, this should be your Protocol’s creed:
This is my protocol. There are many like it, but this one is mine.
My protocol is my best asset. It is my life. I must make it valuable as much as I value my life.
Without my partners, my protocol is less valuable. Without my protocol, my partners are less valuable. I must make my protocol valuable. I must make it more valuable than my competitors who are trying to make me obsolete. I must win the market before they do. I will…
You get the idea…
This makes your position stronger not only in the blockchain industry but also in your niche. Consequently, you make investors happy, and finally, your users as well. And as a side-effect, you increase your revenue chains, company valuation, and more.
Most protocols fail or just gets duplicated because they lack these primary assets that make them valuable to use and persist. When developers get together to make a geeky protocol, that’s great, but it fails these major business elements which makes it commercially viable and monetizable. Also, as all these other partner apps ask for additional features, you have an opportunity to expanding your protocol’s features. It’s in one way a model like “Learndash” or “Moodle” of Web 2.0 being implemented in Blockchain 2.0, from an edu-tech perspective.
On a side note, this will mean you are having our own forked (or developed from scratch) blockchain, although ERC20 for token sale can still be used for comfort and better conversion at the fundraising stage. This could just be a future plan, but it’s just something for you to agree on with your team and have it in your roadmap, so you can get the partners on-boarded, convey to investors and include in the marketing materials from right now.
This becomes a core part of your business’ direction. The protocol can be made open source and released to the public only after you have gained a fully successful user base and a strong foothold. Until then, focus on helping partners integrate privately. If you go open source too soon, any strong player can just grab from there and do a successful fork with the above mentioned assets (if it’s available at their disposal) making you obsolete and a charity case.
So to conclude, focus on the assets first, then if you feel you have all pieces in place, build the protocol or add it to your roadmap. But work on the marketing side of it much ahead of its completion, or else it may be too late when finish developing the protocol.
Focus on the value, partners will come in. If it appears like a “chicken and egg”, break the cycle. Either have a valuable asset first, or top notch partners. Do not pollute the blockchain space with protocol coffins.
Petit a petit, l’oiseau fait son nid.
This article was originally published in ICO Bench by Mr. KEY
