Protocol Design: Reasons and Methods

A protocol is a formalized interaction system that can facilitate complex group behaviors. The power of internet protocols lies in their ability to connect interactions between people as well as interact with software. Software possesses high adaptability and efficiency, capable of integrating various mechanisms. Therefore, it can be said that internet protocols are one of the most important types of protocols we have.

Protocol Evolution

The evolution of the protocol has gone through the process from Web1 to Web2 and then to Web3:

Web1: Decentralized & No Clear Economic Model

The protocols of the Web1 era (, such as NNTP, IRC, SMTP, and RSS), remain neutral in terms of value flow, ownership, access rights, and payment mechanisms, without a clear economic model. These protocols are easy to understand, but over time they have gradually faced failure or change. The reasons for failure are mainly two: first, a lack of specific features that cannot compete with Web2 rivals; second, difficulties in obtaining funding.

Web2: Centralized & Clear Economic Model

Web2 addressed the limitations of the Web1 protocol, providing specific functionalities. The Web2 protocol is entirely controlled by the owners, restricted only by business strategies and legal constraints. Web2 has brought about new trends, such as Reddit replacing forums like Usenet and centralized messaging systems like WhatsApp and iMessage replacing IRC.

However, the biggest problem with Web2 networks lies in their vulnerability and overly optimized business models. These networks pursue optimization of specific metrics while neglecting things that are unrelated to their goals, resulting in a lack of innovation and the development of new products.

Web3: Decentralized & Clear Economic Model

The decentralized components introduced by Web3 have changed the protocol. Utilizing cryptography and blockchain technology can reduce reliance on trust while clarifying economic principles and supporting decentralization. Web3 offers characteristics of openness, interoperability, and open source, with a clear economic model, and is able to integrate funds within the protocol to achieve sustainable development, avoiding the monopolization of all value.

As a developer, choosing to build on a decentralized system with a clear economic model is the best choice. This ensures the system's continued existence and an understanding of the economic relationships involved, without allowing the economic relationships to develop outside of the protocol.

Web3 provides a more resilient and innovative space through decentralization and clear economic models. Similar to the diverse ecosystem of a rainforest, the Web3 system establishes the infrastructure and protocols suitable for the development of various interesting things, offering a more fertile ground for innovation.

Web3 Protocol Design Case

Taking "Unstable Confusion" as an example, this is a brand new Web3 protocol designed to address some issues present in the "Stable Horde" (, a Web2 protocol ).

Design objective: to establish a decentralized, interoperable image generation marketplace.

Main Mechanism Design:

1. Verification mechanism: Methods such as game theory and cryptography can be employed to ensure the accuracy of reasoning.

2. Pricing strategy: An order book can be established on-chain, or on-chain verified computational resources can be used to measure proxies.

3. Storage mechanism: Data can be stored on-chain, using a dedicated storage encryption network, or stored off-chain.

4. Task allocation strategy: workers can choose tasks on their own, protocol allocation of tasks, or allow users to select specific workers.

Key Points of Decentralized Protocol Design

1. Pay attention to the 7 key design elements that may lead to centralization risks: domain name, payment system, reputation, storage, matching, pricing system, and verification system.

2. Reduce switching costs and promote interoperability, encouraging entrepreneurs to build applications on the system.

3. Utilize Web3 technology to create decentralized systems, giving entrepreneurs more power and avoiding excessive centralization.

4. Conduct in-depth research on various aspects and choose the best solution. For example, in terms of verification, cryptographic solutions are often the best choice; in terms of pricing, using on-chain verification for computing resource proxies can adapt to various different tasks.

By considering these points, it can help build a system with long-term robustness and decentralized characteristics.