Heard people talking about Web3 whitepapers but not sure what they are? In this blog we will explain it.
A Simple Explanation Of A Web3 Whitepaper
A Web3 whitepaper is a document tabled online often used to raise investment or support for a new blockchain project. It is similar to a prospectus for the Initial Public Offering (IPO) of a stock. A whitepaper explains the fundamentals of a blockchain business opportunity, outlining the problems that the project intends to solve. It normally takes the form of an ICO (Initial Coin Offering) which gives investors a stake and potentially a say in how the business is run.
The Importance Of A Web3 Whitepaper
A whitepaper is critical to the future success of a project on two fronts:
Investors – the most obvious one is raising funds. White papers allow investors to assess the merits of a project in everything from its architecture and viability to its risks and rewards.
Contributors – a well-written white paper may attract some of the most talented minds and engineers to the project’s team with a view to helping shape the project’s protocol.
What’s In A Web3 Whitepaper?
A Web3 whitepaper should be an authoritative document written in an academic style detailing a blockchain problem. It must also explain the anticipated challenges a project faces in reaching its desired solution. It should detail all of the technical, business and financial strategies of the project. And for it to be successful, a whitepaper must also be transparent about its tokenomics – i.e. what token holders will be entitled to along with everything that could impact the new token’s value. Investors will want to understand how they will benefit from investing in the project. That information should include how many pre-mined coins will initially be distributed along with how many of those will be assigned to the team or parties behind the project. Lock periods on pre-mined coins, exclusions for investors from particular jurisdictions and whether or not tokens entitle holders to governance rights are all points which need to be clarified in a white paper.
The Basic Components Of A Web3 Whitepaper
While all whitepapers are different, most will address the following:
Challenge – the problem the project is endeavoring to solve
Solution – the desired outcome and how to arrive at it
Features – the elements of the project that make it work
Use Cases – what kinds of businesses or individuals will utilize the project
Tokenomics – charts, graphs and tables illustrating the mechanics of the project’s token
Team – the faces and short biographies of the people behind the project, detailing their credentials
Roadmap – a list of key dates allowing investors to follow the project’s development, along with budgets and future goals
Market – an analysis of the market with the project’s growth potential and competitors
Technology – how the project intends to utilize the blockchain with Layer 1 or Layer 2 technologies
History of Web3 Whitepapers
Arguably the most famous Web3 white paper was written in 2008 by the pseudonymous Satoshi Nakamoto. The now famous Bitcoin whitepaper described the world’s first cryptocurrency and the motivation behind its release. It was just nine pages long and shared on a cryptography mailing list, yet changed the world forever. In 2014, Vitalik Buterin published his white paper for Ethereum and subsequently raised $15.5m for his project. Quoine raised an impressive $105m when it dropped its white paper in 2017, proposing to simplify the process of accessing cryptocurrencies with fiat currencies.
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