How web3 data portability reduces the power of centralized services

Chris Dixon

How web3 data portability reduces the power of centralized services 🧵

For people new to web3, one thing that can be confusing is looking at user profiles on services like OpenSea. For example, here is my OpenSea profile

My OpenSea profile

If you are used to web2, you might think OpenSea holds the data and NFTs displayed on my profile page.

In fact, the data and NFTs are held by me, and OpenSea is just providing a view into that data.

You can easily confirm this by going to other services and viewing my profile.

Rainbow –

Showtime –

More technical people can view the data directly on the Ethereum blockchain.

In these examples, you’ll see mostly art and game objects (and my .eth name), but down the road NFTs will hold robust data sets including full social graphs

Why is data portability important?

It means that users can easily switch services if those services start charging too much, inserting ads and algorithmic feeds, throttling their traffic, or mistreating them in other ways.

This is similar to how web1 worked. For example, I host at a web hosting provider. If the host starts misbehaving, I can easily move my data to another host and switch my DNS records so points there.

And I can make this switch without losing the audience I’ve built up over time via inbound links, SEO, email subscribers, and so on.

Compare this to web2. Many people spend years building an audience on web2 services, but if those services decide to reduce your organic reach or otherwise misbehave it’s basically impossible to switch.

web3 works like web1 did. There will be centralized services built in web3 — and many will be quite useful — but their economic power and overall control will be limited by the lower switching costs due to data portability.

This is why web3 take rates are dramatically lower than web2 take rates. OpenSea, for example, charges 2.5% on transactions.

Compare this to web2 take rates. FB, Twitter, & Instagram take 100% of revenue. YouTube takes 45% of revenue. Apple and Google app stores take 30%.

The lower take rates will make web3 services especially appealing to creators who are unable to build sustainable businesses on web2 platforms.

web2’s take rate is web3’s opportunity

Corollary to this:

wrong question: are there centralized services involved?

right question: are there centralized services *with high switching costs* involved?


Originally published here.


The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the current or enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see for additional important information.