Morph Co-founder: Lack of centralized hub in the crypto industry may hinder innovation

Author: Azeem Khan, CoinDesk; Translator: Baishui, Golden Finance

Decentralization is a hotly debated topic in Web3, but one area where it could stifle innovation is venture capital. In Web2, venture capital was concentrated in the Bay Area, which created a clear center for founders who knew they needed to be there. Today, top builders are scattered around the globe, and the lack of a central hub can hinder some of the most promising innovators from getting the resources they need to build, launch, and scale companies that can move the industry forward.

Consider the example of a founder building an artificial intelligence (AI) company in Web2. If you develop an AI product anywhere in the world, it’s widely believed that you need to find your way to the Bay Area. That’s because the Bay Area is home to many of the world’s top venture capitalists (VCs), a large pool of talented professionals, successful companies that can serve as inspiration, and accelerators like Y Combinator.

Of course, there are downsides to this centralization, and like any situation, there are opportunity costs on both sides. To name a few, obtaining a US visa remains one of the most difficult obstacles international founders face. Beyond that, the Bay Area’s high cost of living is well documented. For most, relocating means moving to a place where they have no friends or family, which can present a host of mental and emotional health challenges.

Additionally, figuring out how to build a network in a new city, which is often far from any familiar places, is no easy feat. Yet, there are many who have successfully overcome these challenges and built multi-billion dollar companies over the decades. While it’s not easy, conventional wisdom suggests it’s still achievable.

Now, let’s contrast this with founders in Ghana, Argentina, or Vietnam. Builders from regions like South America, Africa, and Southeast Asia often have real use cases where blockchain can improve everyday life, especially due to a lack of strong infrastructure in areas like banking, or because young people are more willing to adopt new technologies. While these regions may have great builders, they are at a distinct disadvantage in scaling their projects into full-fledged companies because they don’t have established networks or relationships. Without a centralized hub or strong relationships, these builders face significant challenges in taking their innovations to global scale.

Building innovation hubs requires more than venture capital, but since VCs are charged with finding and funding the best companies, a significant barrier arises when there is a disconnect between the top builders and the VCs who might advance their ideas. This can mean that even if there are groundbreaking ideas and the talent to build on them, many would-be entrepreneurs don’t have access to the necessary resources. In this context, a degree of centralization — especially in innovation hubs — can actually be a positive catalyst for growth.

There is a widespread view on crypto Twitter that nothing exciting is happening and no one is developing consumer apps to attract the masses. Some even argue that venture capitalists aren’t funding these projects because they are seen as a caricature of capitalism, focused solely on backing the next infrastructure company for their own benefit.

But what if we’re looking at the problem from the wrong angle? Is it possible that some of the best builders, especially in the Global South, simply don’t have access to the resources needed to start companies that can bring users to the chain? If we accept this premise, then the solution is to build the necessary bridges, isn’t it?

Some of the best blockchain builders, especially those from the Global South, simply don’t have access to the resources needed to start companies that can bring users to blockchain.

The reality is that venture capital is neither possible nor likely to be everywhere at once. Even as the industry matures and more venture capital flows into Web3 companies, it’s unrealistic to expect that funding will be equally distributed around the world. We’re already seeing certain hubs become the destinations of choice for innovators, attracted by factors such as regulatory ease, visa access, cost of living, climate, and time zones. Cities such as New York, Lisbon, Dubai, Singapore, and Buenos Aires are emerging as hubs. But because this maturation takes time, the question remains: what can we do to foster innovation in the meantime?

None of this means the future is bleak. There are many examples of solid online and offline initiatives that aim to bring builders from around the world on board. Pop-up cities and web nations like Zuzalu and Edge Esmeralda are growing in popularity, focusing on non-traditional locations for tech innovation and bringing together young innovators from around the world. Projects like Developer DAO are working to educate and bring more builders on board Web3, while BuidlGuild is focused on doing the same thing with a focus on Ethereum.

Events like ETH Accra and ETH Vietnam take place year-round in a decentralized way, bringing together builders in cities around the world to work on exciting projects together. Companies like ETHGlobal host online and offline hackathons year-round, while the Ethereum Foundation’s (EF) Devcon Scholars program has been successful in attracting new talent by covering the costs for participants from around the world to join and learn about Ethereum.

EF also offers discounted tickets for locals who want to attend. The people working for builders and growth are out there, and these are examples of how venture capitalists can deploy capital more wisely, leaving them to source their own resources. The smartest of them will do so. Some already are.

Decentralization brings challenges and opportunities. The problems discussed above will eventually be solved — most likely by innovative thinkers building bridges between those who have the resources and those who need them to create companies. It may seem simple in hindsight, but the key is to provide funding to those doing the hard work on the ground. Often, those who are driving an industry forward have the least funding. If we want to accelerate the pace of adoption, we need to accelerate the pace of funding for those tackling the toughest challenges.

So for those venture capitalists trying to figure out where to invest their marketing budgets, instead of hosting a fancy dinner at your next conference, do something different and directly fund initiatives that bring builders together, onboard new talent, and tackle the real challenges of scaling Web3.