Protocol As A Service
Software as a service (SaaS) has become the preeminent business model for computer businesses during the past ten years. The simplicity with which goods could be introduced gave business owners a model for starting enterprises that could easily scale using cloud infrastructure to meet customer demand without making significant upfront infrastructure investments, as had previously been the case.
Can web3 disrupt SaaS? A standard web2 proprietary platform strategy is used by the SaaS business model, and it monetizes through subscriptions. This is made possible by cloud infrastructure from companies like Amazon and Microsoft, and the SaaS company builds its own data silos for its clients.
This is very similar to how many of the biggest web2 tech companies, like Facebook, Twitter, and Google, operate, with the exception that they do so on a much bigger scale than the majority of SaaS companies. The SaaS business model has a problem since it encourages centralization. SaaS businesses centralise more as they expand. This isn't always a bad thing as long as the competitive environment is still diverse. Market segments, however, typically end up being dominated by a small number of important players.
SaaS is particularly alluring to businesses because it offers a steady source of recurring income, with clients frequently prepaying for services for an entire year. Money that the provider can utilise as a kind of interest-free loan from the client to invest in their platform. It also makes use of a highly scalable platform paradigm, which enables easy onboarding of new clients and platform scaling, however different stages of size do present unique issues for the business. It's understandable why most startups concentrate on growing into SaaS companies. The Epirus analytics platform is one example of a web3 company that launched with a SaaS model, allowing clients to pay a subscription for us to run an instance on their behalf. This is not surprising given that many of the most popular web3 businesses offer systems that help consumers transition from web2 to web3 in a more conventional way.
Centralized exchanges like Binance and Coinbase are examples of this technique at scale, despite the fact that they are not exactly SaaS companies (as they don't charge a membership fee). Web3 services are becoming more and more centralised, similar to what happened with Web2. This trend is also seen in infrastructure providers like Alchemy and Infura, who make access to web3 networks easier by offering the node architecture necessary to manage and host web3 applications. The problem with these services is that numerous web3 protocols and apps have started to largely rely on them in place of managing their own node architecture. Due to the fact that their users rely on rails, when they experience an outage, it can have a big impact on how their users reach them via websites. The SaaS business model falls short of web3 in this regard. You are limited by the siloed platforms that are typical in web2 if you don't have a service that can offer equivalent availability assurances to the underlying blockchain platform they are operating.
SaaS platforms must exist as decentralised services or protocols in order to handle this. where multiple organisations can choose a location of their choice to run the platform's basic infrastructure. This strategy has similarities to what many businesses do with open-source software, where they take an open-source code base and either host it on behalf of customers or make it available as a part of their proprietary platform. The problem with both strategies is that if open-source software is used, the SaaS platform or OSS provider may find it difficult to monetize their offerings.
The most obvious strategy for web3 is to offer token-based rewards. where businesses offering core services are compensated with a token for their dedication to your clientele This is comparable to the way decentralised exchanges like Uniswap compensate users who contribute liquidity to pools on their platform. The more difficult problem is how to encourage anyone with a successful SaaS or web2 platform to go this path and how to ensure that enough momentum can be built for such services.
Without a doubt, Coinbase deserves praise for identifying ways to offer decentralised infrastructure, which they are doing by supporting ENS and offering non-custodial wallet architecture. As a result, they may progressively switch over more of their consumers to platforms and apps that are native to the web 3.
Infura, a provider of Web3 infrastructure, recently revealed plans to decentralise its platform. The two main web3 infrastructure providers, Infura and Alchemy, are both valued as a unicorn at over $7 billion and $10 billion, respectively (although Infura's valuation is combined with Metamask as part of ConsenSys').
