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digital
daily

digital daily: Freemium 2.0

Freemium 2.0: A node is a critical piece of Web3 infrastructure. It is the information access layer sitting between the visible applications driving user adoption and base layer blockchains. Nodes record and store the history of a blockchain. When you want records from a wallet, recent application activity, or confirmation of a signed message, you ask a node. You can run your own, but the process isn't trivial. Dedicated hardware, software upgrades, and staff with expertise are required resources if your business relies on the stream of information. Much like the corporate shift to outsourced cloud computing from IT departments running servers on-premises, the operators of Web3 applications often prefer to access nodes-as-a-service. Infura, the leading node provider for the Ethereum blockchain, follows a traditional business model. Their service was free until 2019, when they transitioned to \"freemium,\" adding several tiers of paid high-performance node access. Competitors include Coinbase Cloud, which runs Ethereum nodes and an expanded set of blockchain networks, and Pokt Network, a decentralized provider of nodes with a similarly broad service base. On September 16th, Infura announced that it would lead the development of a decentralized version of its own service. It appears Infura will be both a SaaS company and the coordinator of its own decentralized competitor simultaneously. Does this strategy protect Infura's brand against decentralized competition? Can the money-losing, free service in the “freemium” model be replaced by a publicly operated network in which Infura has token upside? Like an improved version of the RedHat business model where open-source software and business critical services are paired. Or is this intentional self-cannibalization? Competition between being a public good and private service may eventually force the company to choose one winner. Only time will tell. Decentralized technology infrastructure has already begun to shift competitive landscapes. Infura serves as an example that this can happen within a company, not just between them.

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