Crypto’s AirTag Moment: Unlocking Mass Adoption with Web Proofs

Author: Dan Elitzer & Peter Shoemaker Leia  Translator: @TEDAO

The early item-finding device Tile was limited by the Bluetooth range and had limited functions. Apple's AirTag has broken through the limitations of Tile by integrating the huge iPhone network and achieved global use. At present, the current popularity of Crypto is also limited to covering only existing historical users on the chain, and its scope of use and user groups are mainly limited to its own ecosystem. Web Proofs technology is expected to seamlessly connect the on-chain and off-chain worlds by integrating Web2 data with on-chain activities, bringing a wider range of application scenarios and user bases.

However, in addition to seeing the prospects of Web Proofs, we also need to think about some issues. Can the advancement of technology really be achieved as expected? Can privacy and data security be effectively guaranteed? Will traditional Internet giants face challenges?

Crypto has long attracted a small group of core users, but has not yet crossed the chasm to achieve mainstream adoption.

In addition to investment and speculation, payments lead various use cases, with trillions of dollars of stablecoins circulating on the crypto track every year, instantly transmitting value on the Internet at the lowest cost. DeFi has a series of powerful financial primitives, ranging from permissionless lending markets, decentralized exchanges to expanding income opportunities.

Other consumer-oriented applications show the dawn of early potential, but their user base is still mainly crypto-native users. Crypto has yet to break out of our largely self-referential ecosystem, a point Vitalik has recently highlighted. In fact, the total value locked (TVL) in DeFi is less than the volume of Apple stock moving in a day, and the market cap of the entire crypto industry is less than the market cap of one Apple. We can discuss all day long why traditional financial companies haven’t participated meaningfully outside of ETFs, why internet giants haven’t integrated beyond managed nodes on cloud services, and why retail services have only intermittently tried to accept crypto payments or issue NFTs. The fact is, Crypto adoption is still nascent.

But that’s about to change.

Crypto’s Superpower

Looking back at our breakneck pace to build a new financial system, what’s one thing that’s unique about this industry?

Incentives.

Back to the DeFi summer of 2020—kicked off by Compound’s yield farming, evolved by Yearn’s fair launch, injected with a spurt of the ill-fated YAM, and culminated in Uniswap’s airdrop—Crypto

became the undisputed king of capital-light customer acquisition.

Cryptois not about spending money on advertising and expecting users to come; it’s about shaping behavior and rewarding participation in a systematized, scalable way.

Airdrops are probably the most powerful engagement strategy we’ve ever seen. Often supplemented with a points campaign to further shape behavior, airdrops serve multiple purposes:

• Advertising — “Hey, you’re getting something valuable for free! Come check out our product!”

• Kickstarting the flywheel — “This product needs more liquidity or network effects to work better, so we’re subsidizing early adoption.”

• Assigning ownership and responsibility — “We need to bootstrap governance or other activities for our protocol, but this needs to be done by people with a stake in it, and you’ve done some things and it looks like you might be inclined to do it… so here you go!”

Impressively, these campaigns don’t require millions of dollars up front. By distributing ownership of the underlying protocol in the form of tokens, new entrants can effectively and efficiently attract and reward early users without requiring large amounts of capital.

While teams are getting more and more creative in defining airdrop eligibility criteria, the main limiting factor is their reach: With few exceptions, teams can only target those with some form of on-chain history, i.e., they are already part of the crypto ecosystem.Users on-chain today represent only a small fraction of the target audience these applications would ideally like to reach.

Crypto has already hit its carrying capacity, and to change that, we must expand our horizons.

The Tile Precedent

Interestingly, Crypto’s trajectory is strikingly similar to that of the Bluetooth item finder Tile.

Tile was groundbreaking for finding lost items, but only if you and your phone stayed within Bluetooth range, which was mostly useful for finding things in your own home. If your keys fell out of your pocket while you were out, you were out of luck.

Eight years after Tile launched, Apple entered the scene with their AirTags, riding on Apple’s ubiquitous Find My network. Without requiring any additional work from its existing iPhone users, Apple automatically had all of its users help create the magical experience of AirTags.Where Tile’s limited user base made it effectively a “single-player” product, AirTags leveraged over a billion active iPhone users to make items easily findable on a massive global Bluetooth network.

Tile is certainly on the right track, but for this type of product to reach its full potential, it needs to integrate with an existing, ubiquitous network.

Introduction: Web Proofs

Crypto is on the threshold of its own AirTag moment, thanks to an emerging technology called zkTLS, or Web Proofs.

Web Proofs use TLS Notary and privacy-preserving ZKPs to prove the authenticity of data from any server. To be clear, there are no guarantees of truth here, just of the data and its provenance.Web Proofs can provide strong assurance that ESPN.com reported that the Warriors beat the Lakers last night, that a user purchased an Eras Tour ticket, or that an Uber driver completed 1,000 trips and received a 5.00 rating, but they do not provide any independent verification that ESPN did not misreport the score, that the fan did not give the ticket to a friend, or that the Uber driver’s brother was not the one behind the wheel.

How is this different from just pulling data from an API and putting it on-chain?Well,API access can be easily cut off.If a tech company doesn’t like an application using their data to distribute tokens or enable financial activity outside of their platform, they can easily shut down those APIs. With Web Proofs, as long as users can access their data on the site over an HTTPS connection, it can’t be shut down. While a company may try to block access to data, they must directly impact the user experience to do so. Limiting customers’ access to their own metrics, whether by moving the data to a new website, pushing it through alternative channels like email, or incorporating a time delay, will only cause temporary setbacks and be a major annoyance to the typical user.

This means that virtually any Web2 data can be put on-chain in a verifiable manner without any action from the source of that data—and they can’t prevent it.

As far as we know, this concept was first proposed by a group of researchers at Cornell University in a 2016 Town Crier whitepaper. More recently, a number of pioneering companies, including Pluto, Clique, Opacity Network, OpenLayer, Reclaim Protocol, and others, have put versions of this approach into practical use.

Until now, teams have been primarily limited to relatively simple forms of Web Proofs, like proving ownership of a Twitter or Facebook account, to implement a rudimentary form of Sybil Defense. This is barely scratching the surface of the types of powerful interactions that are possible.

Let’s get back to airdrops: while most airdrops have had to restrict themselves to distribution only to users who are already on-chain and have transacted before, now the distribution criteria can include any internet activity.

So, what does this mean?

This is the “AirTag moment”.

Overnight, the addressable pool of airdrop recipients has expanded from a few million existing crypto users to a large portion of the world’s population. The game can now shift from a zero-sum game of competing for the attention and resources of existing crypto users to one of capturing the attention and incentivizing participation from anyone on the internet.

As a first step, you can now make tokens claimable based on:

• Artists listened to on Spotify

• Stocks held on Robinhood

• Items purchased on Amazon

• Trips taken on Uber

• Deliveries completed for DoorDash

In all of these cases, it is unlikely that any user with a significant history is fake. In most cases, these activities come with a real financial or time cost. This makes it perfect for distributing tokens to real potential users, rather than witch farmers. In this way, Web Proofs both provide greater assurance to support Proof of Humanity and facilitate the creation of true digital communities based on verifiable shared interests and activities.

One ​​of the groups that has begun to explore down this path is PleasrDAO, an on-chain collective that purchased a one-of-a-kind album by the Wu-Tang Clan legend and began selling tokens. These tokens will grant access to the music as their unlock date approaches. PleasrDAO airdropped some tokens to GME holders, explicitly stating that it wanted to attract peripheral community groups in the crypto space.

But expanding the initial airdrop audience to allow people to claim tokens based on their historical activity on Web2 platforms is just the beginning of what Web Proofs can achieve.

Where things get really interesting is when teams start using on-chain incentives to meaningfully drive off-chain behavior. Imagine this:

• To mint a music NFT, an artist must be in your top 10 most listened to on Spotify in the past month

• A $KIRKLAND meme coin with weekly inflation that you can claim based on how much you spend at Costco

• A USDC pool that automatically rewards contributors who merge PRs for important open source projects

Retroactive rewards are great, but proactive incentives are better. While we are skeptical of the “X-to-Earn” (e.g., play to earn, run to earn, sleep to earn) category, the idea of ​​providing some amount of incentive to incentivize or coordinate off-chain behavior is inherently compelling. Finding the right explicit reward, and tying it to the right verifiable action is a powerful combination.

What else can Web Proofs do?

Web Proofs is not just about incentives - there may be a much bigger unlock waiting for us.

Web Proofs provide a path to break the moat of existing Web2 markets, allowing liquidity and reputation to be freely exported. The biggest challenge in bootstrapping a market is getting enough inventory and reputable participants for a lower fee structure or better user experience to have a chance to work. By providing a way to connect on-chain and off-chain actions, Web Proofs allow users to enjoy the cryptographic guarantees of on-chain transactions while also leveraging the vast resources of existing Web2 users.

An early example is ZKP2P, a fiat deposit and withdrawal tool that supports peer-to-peer transactions where one party sends fiat using a service like Venmo or Revolute and the other sends crypto, which is automatically released based on Web Proofs once the payment is complete.

Such a system could also be applied to other markets, such as secondary ticketing markets. Imagine escrowing payments on-chain and automatically releasing them once the seller provides a Web Proof confirming that the ticket has been delivered to the buyer, thereby cutting out the high fees of platforms like Stubhub. This approach can be applied to almost any off-chain digital asset, such as traditional ICANN domains, CSGO skins, or social media accounts.

This approach could also be layered on top of existing markets, with sellers being dual-listed on both the mainstream Web2 market and an emerging Web Proof-based market. Buyers might be enticed by low prices to buy where the seller is able to complete the transaction entirely through this new platform, but they can still browse the full inventory of the existing market and be directed there to complete the transaction if needed. With the right UI, the value proposition here is very similar to the original Morpho Optimizer lending protocol, which creates a Pareto-optimal improvement on top of existing lending markets, such that a borrower is never worse off using Morpho Optimizer than using Aave or Compound (and in most cases gets a better rate).

Such markets could be further strengthened by exporting reputation from existing markets, building a history of trustworthiness to go along with cryptographic proofs of the success or failure of any future transactions. Too many user identity projects are too focused on exporting data from existing platforms for hypothetical future use. By focusing on real-time authentication and verifying the authenticity of the original source, Web Proofs can remain lightweight and useful.

Web Proofs Are the Future

As Crypto enters a critical moment in its growth, Web Proofs stand out as a powerful tool that effectively bridges the gap between early adopters and mainstream users.Just as Apple’s AirTags turned Tile’s limited potential into a global phenomenon by leveraging a massive existing network, Web Proofs provides Crypto with two-way access to nearly every existing digital service.

By enabling verifiable on-chain data from any Web2 source, Web Proofs expand the reach of crypto incentives beyond the current user base, opening the door to a larger and more diverse audience. This technology not only redefines the potential of airdrops, but also lays the foundation for unprecedented integration of on-chain and off-chain activities, while providing a powerful and reliable tool to deal with existing market competition.

Crypto’s AirTag moment has arrived; go explore and make a big cake!

Thanks to Plotchy, Kyle, Leighton, Tracy, and the Pluto team for their feedback.

Original title: Crypto’s AirTag Moment: Unlocking Mass Adoption with Web Proofs