Language is fascinating in the way people manipulate words to fit their own contexts. It's similar to the way statisticians might manipulate data analysis to tell the story they want to tell. In both cases, the manipulation may not be intentional, but the outcomes are the same. Words and numbers are twisted to meet the needs of the person (or people) conveying them.

I think about this topic a lot when I think about web3 and blockchain. I have been working around the technology–and around the market the technology has created–for the past eight years, and I've seen the intentional and unintentional re-appropriation of words used to sell an idea. I use "sell" loosely here because it can mean anything from raising funding, selling a product, or selling unregistered securities tokens. The word I've seen misappropriated more than any other and the one that throws up immediate red flags is "protocol."

In 2016 and 2017, the most surefire way to raise the VC funding necessary to launch an initial coin offering was to call your project a protocol.

EXAMPLE SCAM "PROTOCOLS" HERE

Before you shout that your protocol actually is a protocol, I should once again make clear that even if it's not, calling your idea a protocol does not mean you are acting malevolently. And it's very possible your project is an actual protocol. On that note, let's explore what a protocol is.

In the world of computer science, a protocol is defined as:

A set of rules or procedures for transmitting data between electronic devices, such as computers. In order for computers to exchange information, there must be a preexisting agreement as to how the information will be structured and how each side will send and receive it.

Blockchains, by this definition, are very likely protocols. They define (and redefine) how data is transmitted between devices. Blockchains make use of other, older protocols. However, they are clearly creating a new way of exchanging data between devices that needs definition.

In the non-blockchain world, the Interplanetary File System (IPFS) is also a protocol. IPFS redefined the transmission of data in the form of files. Rather than the traditional method where a client exchanges messages with a specific server, IPFS redefined the relationship and said the rules were different. They said that devices could exchange information not based on the location of the information but based on the information being exchanged. IPFS introduces a content-addressable approach to retrieving data and thus is a clear protocol.

But where blockchains and IPFS proves the definition of protocol, there are many other projects–especially in web3–that call themselves protocols without meeting the clear definition. First, let's take a detour and talk about the two types of protocols that exist in the blockchain world (IPFS is not a blockchain, so it lives outside of this definition).

1. Blockchains themselves

2. Smart contract-based token mechanisms

There's a good blog post on the topic of these two types of protocols from a16z that will do a far better job than I would of going into the details. But if you think about the original computer science definition of a protocol, we can see that blockchains (as mentioned before) fit, and smart contracts might fit. It is in the smart-contract-based protocol concept where things get muddy.

If your application is minting NFTs using a smart contract, it is very unlikely that your application is a protocol. You are simply* leveraging protocols (blockchain and smart contracts) to create an end-user product. However, if your smart contract is defining its own custom rules in how data is transmitted between devices, then it probably qualifies as a protocol.

*Simply does not mean easily. Simple is very often hard.

For example, Uniswap, a decentralized finance protocol, is designed to be an automated market maker. From Uniswap's FAQ:

Uniswap is an automated market maker. In practical terms, it is a collection of smart contracts that define a standard way to create liquidity pools, provide liquidity, and swap assets.

Uniswap is creating new rules around the exchange of data through many different smart contracts that all interact together.

Let's compare that with Lens Protocol. Lens is a decentralized and open-source social media platform. They call themselves a protocol, but the line between a paradigm-shifting idea and a protocol is very blurry here. In their docs, Lens says the following:

The purpose of the Lens Protocol is to empower creators to own the links between themselves and their community, forming a fully composable, decentralized social graph. This is achieved by allowing users to create profiles and interact with each other via these profiles. "Profile" (as used here) refers specifically to Lens profiles; "user" refers to standard crypto-wallets.

Lens makes heavy use of NFTs. The standard they use is called ERC721, which is a common and widely used standard within the Ethereum blockchain ecosystem. Lens uses NFTs in creative ways, but it's not clear that they are defining a new way to exchange data between devices.

Instead, Lens looks a lot more like something I hinted at a couple of paragraphs ago and in the title: a new paradigm.

Oxford defines a paradigm as:

a typical example or pattern of something

So when someone creates a "new paradigm" they are creating what they hope to be a new example or pattern. A new way of doing things. However, paradigm shifts in web3 are often referred to as protocols.

The naming issue is not a big deal on the surface. Is Lens any less valuable if it's called a new paradigm instead of a protocol? Probably not. Is anyone hurt because Lens calls itself a protocol? I doubt it.

Where things get a little dicey in the world of very early stage web3 startups. These startups, when looking for funding are sometimes encouraged to launch tokens. To launch a token, projects general must define themselves as a protocol. Without defining the project as a protocol, a token is a much harder sell. For those investing in the token or using the token, the belief that the project is net new and requires the token to operate is core to the entire thesis. Yet, in reality, many early-stage web3 startups do not need a token and could operate just fine without one.

When I was running Graphite Docs, we were on the tail end of the initial coin offering (ICO) boom and the SEC hadn't started coming down on projects yet. When I was trying to raise funding, many of the investors I met with encouraged me to do a token sale. This made no sense. I was creating a new paradigm in productivity software, I was not creating a protocol. And even if I was creating a protocol, a token has to have a really clear purpose.

With Graphite, a token didn't make sense, and I didn't want to pretend like it did. So, I never went the token sale or future promise of a token sale route. But many other founders did. And I suspect many founders today are still doing this.

If a token makes sense, that's fine. But if your project is calling itself a protocol just so that you can raise funding and possibly do some sort of token, you are either fooling yourself or you're trying to fool the people around you.

Taking this back to Lens, I want to be clear that I do not think Lens is simply trying to launch a token and leave a bunch of people holding the bag. I think they are creating a paradigm-shifting platform that anyone can tap into. They may be a protocol. Maybe not. They are at very least a new paradigm, though.

And for many other founders out there, that should be enough.