Web3 will kill network effect.

Network effect is the gold standard of Web2.

Platforms with network effect are almost impossible to beat by companies who don't. Companies with network effect can only be beat by other companies with better network effect.

The consequence of this is a power-law distribution:

• Facebook makes as much as Twitter and every other social network under it.
• Twitter makes as much as Snapchat and every other company under it.

In any vertical with network effect, there is only 1 clear winner. With social media network, that winner get most of the advertising.

Not so for Web3, why?:

• Participation has a cost
• Cost is often an investment
• Value through scarcity, not user data
• Web3 has no users, only usage of tokens

Participation always has a cost
Whether minting, selling, swapping, buying, staking. Everything has a cost. The cost will be less once L2s fixes their issues, but Web3 is never going to be free.

It's run and paid by the participants themselves.

Cost is often an investment
Compared to Web2s "user is the product", web3s user is an investor, are the owners of the capital and the means.

This dramatically impacts what kind of products will be built but more importantly, won't be built. (more on that later)

Value through scarcity, not user data
There is only ever going to be 21 Million u/bitcoin, there is only 10K u/BoredApeYC, only 8K u/lootproject bags.

Web3 is a map of gated cultures, requiring NFT's or tokens to access. It's not cool to be one in a billion, it's cool to be 1 in 1000 owners

Web3 has no users, only use of its tokens.
The most counterintuitive thing about Web3 is that it has no users. It only have assets on addresses on a giant public ledger.

It's the constant creation, redistribution and manipulation of these assets that makes up Web3.
The consequences of are manyfold and important:

— No advertising
— Free-2-play
— Rent seeking

and most importantly; no network effect.